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/raid1/www/Hosts/bankrupt/TCR_Public/040308.mbx T R O U B L E D C O M P A N Y R E P O R T E R Monday, March 8, 2004, Vol. 8, No. 47 Headlines 3-D CASH & CARRY: Case Summary & 20 Largest Unsecured Creditors ABITIBI-CONSOLIDATED: S&P Cuts Rating to BB on Profits Concerns ACADEMY EVENT: Case Summary & 22 Largest Unsecured Creditors AHOLD: Shareholders Okays Approve All Extraordinary Meeting Items AIR CANADA: Court Compels Airport Authority to Abide by Agreements AIR CANADA: Reaches Tentative Settlement on Allocation of Aircraft AMERCO: Fitch Ups $152.5M Preferred Stock Rating to CCC+ from D AMERICAN COMMUNITY: S&P Raises Counterparty Credit Rating to BBpi AMERICAN PACIFIC: S&P Drops Corp. Credit Rating a Notch to B+ AMES DEPARTMENT: Sues Six Banks to Recover $8 Million Preferences ARMSTRONG: December 2003 Balance Sheet Insolvency Tops $1.3B ASTEC INDUSTRIES: Lenders Agree to Waive Loan Covenant Default ATS LIQUIDATING: Distributes Grantor Tax Letter AUBURN FUN ZONE: Case Summary & 20 Largest Unsecured Creditors BALL CORP: S&P Revises Outlook on Low-B Level Ratings to Stable BOWATER: S&P Lowers Credit Rating to BB Citing High Debt Burden BUDGET GROUP: Has Until March 30, 2004 to Decide on Leases CCP INC: Case Summary & 20 Largest Unsecured Creditors CEDARA SOFTWARE: Inks Supply & Services Pact with Japanese Firm COMMSCOPE INC: Acquires Avaya's Connectivity Solutions Business ENRON CORP: Asserts Noxtech's $22 Million Claim is Overstated ENRON CORPORATION: Court Fixes Claims Estimation Procedures EXIDE TECH: Classification & Treatment of Claims Under the Plan FEDERAL-MOGUL: Files Disclosure Statement & Amended Reorg. Plan FLEMING COMPANIES: Signs-Up Burr Pilger & Mayer as Accountants GADZOOKS INC: February Sales Decrease by 31.3% to $14.7 Million GENERAL MEDIA: Submits First Amended Reorganization Plan GENESEE: Net Assets in Liquidation Rises to $7.1MM at Jan. 2004 GLOBAL CROSSING: Agrees to Settle Verizon's Admin. Expense Claim GLOBAL MEDICAL: Inks "Agreement to Dividend Stock" with JWG HAWAIIAN: Trustee & Creditors Propose New Bidding Process HELLO NETWORK: Brings-In Finkel Goldstein as Bankruptcy Counsel HOLLINGER INTERNATIONAL: Lauds Final Delaware Chancery Court Order HOTEL NET INC: Case Summary & 20 Largest Unsecured Creditors IMPAC SAC: Fitch Takes Rating Actions on Series 1999-2 Notes INDUSTRIAL PARTS: Case Summary & 20 Largest Unsecured Creditors INTEGRATED ELECTRICAL: S&P Rates Senior Secured Bank Loan at BB INT'L FIDELITY: S&P Drops Counterparty Rating to Speculate Grade IT GROUP: Judge Walrath Okays Phillips Golman as Special Counsel ISTAR FINANCIAL: Fitch Assigns Stable Outlook to B-Level Ratings JAYS FOODS: Willis Stein to Acquire Company Out of Bankruptcy JAYS FOODS LLC: Voluntary Chapter 11 Case Summary MADISON RIVER: Reports $14.7 Million Net Loss for 2004 MAGELLAN: Katlin Gets Provisional Nod to Prosecute Class Action MALAN REALTY: Sells Milwaukee Property for $2.6 Million MAXWORLDWIDE: Shareholder Distribution Payable on March 24 MIRANT CORP: Alleges Kern Oil Violated Automatic Stay MITEC TELECOM: Q3 Results Conference Call Slated for Thursday NATIONAL WASTE: Case Summary & 20 Largest Unsecured Creditors NOTIFY TECHNOLOGY: Ability to Continue as Going Concern in Doubt NUEVO ENERGY: Reports Improved Income in 4th Quarter & FY 2003 PACIFIC AEROSPACE: Special Shareholders' Meeting is on March 19 PACIFIC GAS: Asks Nod to Set Up Disputed Claims Escrow Accounts PARMALAT: DebtTraders Begins Coverage & Sees Buying Opportunities PARMALAT: Brazilian Unit Misses $19M Payment to Banco do Brasil PARMALAT GROUP: Nicaraguan Unit Transferred $5 Million in Loans PARTNERS MUTUAL: S&P Lowers Counterparty Credit Rating to BBpi PEARL HOLDINGS: Case Summary & 7 Largest Unsecured Creditors PETCO ANIMAL: Improved Finances Spur S&P to Up Credit Rating to BB PETSMART INC: S&P Gives Positive Outlook to B-Level Ratings PG&E NATIONAL: USGen Unit Brings-In Willkie Far as Special Counsel PILLOWTEX: Gets Go-Ahead to Recharacterize 3 Crescent Lease Pacts PROJECT FUNDING: S&P Places Four Note Ratings on Watch Negative QMAX CO: Case Summary & 10 Largest Unsecured Creditors QWEST SERVICES: S&P Assigns B- Rating to $750M Sr. Secured Loan RADIOLOGIX: Q4 & FY 2003 Conference Call Set for Thurs, March 11 READER'S DIGEST: Will Present at Bear Stearns' Conference Today RELIANCE GROUP: Asks Pa. Court to Say Deductibles are RIC Assets ROGERS COMMUNICATIONS: Releases 2003 Annual Financial Statements ROSTCO ENTERPRISES: Case Summary & 20 Largest Unsecured Creditors ROYAL CARIBBEAN: S&P Affirms BB Rating & Revises Outlook to Stable SAFETY-KLEEN: Advisory Board Appoints Oolenoy Valley as Trustee SALOMON VII: Fitch Takes Rating Actions on 4 Securitizations SAN FLORIANO CO: Case Summary & 20 Largest Unsecured Creditors SEDONA CORPORATION: Registers 7.1 Million Shares for Sale SMTC MFG.: Raises CDN$40 Million Through Private Placement SLATER STEEL: Union Goes to Court to Force Acceptance of DSC Offer SOLEIL FILM: Cancels an Additional 600,000 Shares by Court Order SPIEGEL GROUP: February Net Sales Tumble 22% to $93.8 Million THOMPSON PRINTING: Case Summary & 12 Largest Unsecured Creditors UNITEDGLOBALCOM: Says B Credit Rating Unaffected by Noos News USG CORP: Court Fixes Briefing Schedules Re Judge Wolin's Recusal U S LIQUIDS: Selling Two Companies to Perma-Fix for $3.2-Mil. Cash WORLDCOM/MCI: Parker & Waichman Files Additional Claims W.R. GRACE: Creditors Panel Turns to Capstone for Financial Advice * BOND PRICING: For the week of March 8 - 12, 2004 ********* 3-D CASH & CARRY: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: 3-D Cash & Carry, Inc. 4000 Highway 431 Roanoke, Alabama 36274 Bankruptcy Case No.: 04-80098 Type of Business: The Debtor is a building supply and equipment company. Chapter 11 Petition Date: January 28, 2004 Court: Middle District of Alabama (Opelika) Judge: Dwight H. Williams Jr. Debtor's Counsel: Charles M. Ingrum, Sr. Reynolds and Ingrum, P.C. P.O. 791 Alexander City, AL 35011 Tel: 256-329-1303 Fax: 256-329-1333 Total Assets: $1,797,072 Total Debts: $1,238,745 Debtor's 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Janet Brumfield Money loaned $36,841 Air & Electric Inc. Services performed $12,000 T.B.A. Goods sold $10,000 State of Alabama Sales and Use Taxes $10,000 Josh Burns Property tax $10,000 Fleet Credit Card Service Credit Card Purchases $8,000 Capital One Credit Card Purchases $6,800 Norandex/Reynolds Goods sold $5,000 Textron Financial Security $4,800 Net Unsecured: $4,800 Capital One Credit Card Purchases $4,000 Moore Handley Inc. Goods sold $4,000 East Alabama Lumber Goods sold $3,100 Internal Revenue Service Back taxes $3,000 Staples Credit Card Purchases $3,000 State of Alabama 941 taxes $2,000 Lafarge/Blue Circle Goods sold $2,000 Caterpillar Financial Purchase Money $2,000 Services Security The Concrete Company Goods sold $1,500 Georgia Pacific Goods sold $1,000 Snapper Goods sold $1,000 ABITIBI-CONSOLIDATED: S&P Cuts Rating to BB on Profits Concerns --------------------------------------------------------------- Standard & Poor's Ratings Services lowered its long-term corporate credit rating on newsprint producer Abitibi-Consolidated Inc. to 'BB' from 'BB+'. At the same time, all ratings outstanding, including those on subsidiary Abitibi-Consolidated Co. of Canada, were lowered to 'BB' from 'BB+'. The outlook is negative. The downgrade stems from the significant deterioration in profitability and cash flow protection, due to a strong Canadian dollar and protracted weakness in North American newsprint demand, and the increased likelihood that the company will not be able to achieve financial performance through the cycle that is commensurate with the former ratings. "The ratings action also reflects concern that U.S. newsprint demand recovery from current levels might be limited, due to greater-than-expected effects of waning newspaper readership and lower commercial printing volumes," said Standard & Poor's credit analyst Clement Ma. Because industry capacity closures may be insufficient to compensate for this structural decline and it could be difficult for North American newsprint producers to earn a reasonable return, Standard & Poor's believes this industry might no longer be investment grade. The ratings on Montreal, Que.-based Abitibi reflect its high debt levels, heavy exposure to cyclical commodity-oriented groundwood papers, and weak financial performance in the wake of highly unfavorable industry conditions. These risks are partially offset by the company's market position in newsprint and groundwood papers, and its competitive cost position in North America. Abitibi's financial performance remains very weak, and cash flow protection is under significant pressure. Despite newsprint price increases implemented in 2003, the company's fourth quarter was the weakest yet through this current downturn, reflecting a significant spike in the average Canadian dollar exchange rate over the third quarter, and continuing demand weakness for newsprint. The negative outlook reflects the risks to the company of a stronger Canadian dollar, a potential labor dispute if contracts are not successfully renegotiated, and greater-than-expected pressures from structural changes to the newsprint industry. Any of these factors could further impair Abitibi's cash flow protection. Abitibi could be challenged to average the targeted EBITDA interest coverage of 4x and FFO to total debt of 20% through the cycle. Failure to make progress toward these targets in the near term will result in a downgrade. ACADEMY EVENT: Case Summary & 22 Largest Unsecured Creditors ------------------------------------------------------------ Lead Debtor: Academy Event Holding LLC 5035 Gifford Avenue Vernon, California 90058 Bankruptcy Case No.: 04-13596 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Academy Event Services LLC 04-13595 Type of Business: The Debtor is a leader in tent manufacturing, tent rental, event-related accessories and support services for the special events industry. See http://www.academytent.com/ Chapter 11 Petition Date: February 18, 2004 Court: Central District of California (Los Angeles) Judge: Barry Russell Debtors' Counsel: Monica Y. Kim, Esq. Levene, Neale, Bender, Rankin & Brill 1801 Avenue of the Stars, Suite 1120 Los Angeles, CA 90067 Tel: 310-229-1234 Estimated Assets Estimated Debts ---------------- --------------- Academy Event Holding LLC $0 to $50,000 $10 M to $50 M Academy Event Services LLC $1 M to $10 M $10 M to $50 M A. Academy Event Holding LLC's 2 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Citicorp USA, Inc. $10,499,449 153 East 53rd St. New York, NY 10043 American Capital Financial Services $7,000,000 2 Bethesda Metro Center, Suite 1400 Bethesda, MD 20814 B. Academy Event Services LLC's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Citicorp USA, Inc. $10,499,449 153 East 53rd St. New York, NY 10043 American Capital Financial Services $7,000,000 2 Bethesda Metro Center, Suite 1400 Bethesda, MD 20814 Signature Special Event Services $625,000 285 Bucheimer Road Frederick, MD 21701 Marsh Risk & Insurance Company $311,283 777 South Figueroa St. Los Angeles, CA 90017-5822 California Combining Corp. $189,949 Ace Doran Hauling & Rigging $178,850 Sapa Anodizing Inc. $108,465 Wolfwang Puck Catering $102,868 KMZR Rosenmann $83,062 On The Go Cargo $81,020 American Capital $77,188 Platinum Plus (Greg Turk) $75,504 The Zenith Insurance Company $74,144 Forge Industrial Staffing $73,645 State of NY Sales Tax $70,889 Labor Ready - Pasadena $70,750 Pasadena Tournament of Roses $66,657 Jenkens & Gilchrist $63,032 United Rentals Inc. $60,935 Tri-Rental Inc. $44,097 AHOLD: Shareholders Okays Approve All Extraordinary Meeting Items ----------------------------------------------------------------- Ahold (NYSE:AHO) announced that all agenda items were adopted during its Extraordinary General Meeting of Shareholders in The Hague held on March 3, 2004. This means the shareholders adopted each of the following items: * proposal to amend the articles of association; * approval of terms and conditions of conversion rights of cumulative preferred financing shares; and * adoption of the Corporate Executive Board's general remuneration policy. A full-text copy of the Extraordinary Meeting's Agenda distributed to shareholders is available at no charge at: http://bankrupt.com/misc/Ahold_EGMAgenda.pdf * * * As previously reported, Fitch Ratings, the international rating agency, assigned Netherlands-based food retailer Koninklijke Ahold NV a Stable Rating Outlook while removing it from Rating Watch Negative. At the same time, the agency has affirmed Ahold's Senior Unsecured rating at 'BB-' and its Short-term rating at 'B'. The Stable Outlook reflects the benefits from the shareholder approval, granted on Wednesday, for a fully underwritten EUR3billion rights issue. Ahold however continues to face financial and operational difficulties which have been reflected in the Q303 results. Ahold announced in early November its strategy for reducing debt through its EUR3bn rights issue and EUR2.5bn of asset disposals as well as improving the trading performance of its core retail and foodservice businesses. Whilst the approved rights issue addresses immediate liquidity concerns, operationally, the news is less positive with Ahold's core Dutch and US retail operations both suffering from increased competition, mainly from discounters, resulting in operating profit margin erosion. Ahold's European flagship operation, the Albert Heijn supermarket chain in the Netherlands, recently reported both declining sales and profits, as consumers turn to discount retailers. In reaction to this, Albert Heijn, has amended its pricing structure which in turn would suggest that it will be more challenging in the future to match historic operating margin levels. AIR CANADA: Court Compels Airport Authority to Abide by Agreements ------------------------------------------------------------------ The Air Canada Applicants ask the Mr. Justice Farley to enforce the terms of the Initial CCAA Stay Order and require the Greater Toronto Airports Authority to abide by their agreements with respect to the relocation of the Applicants' domestic operations to the new terminal at the Lester B. Pearson International Airport. As part of a CN$4,400,000,000 capital development and improvement program for the Airport, the GTAA has constructed the new Terminal 1 at the Airport to replace, on a staged basis, the existing Terminals 1 and 2. The first stage will open on April 6, 2004. The Applicants also ask the CCAA Court to require the GTAA to provide all of the 14 contact gates in the domestic area on a fixed preferential use basis on the opening of the initial phase of the development of the new terminal. Sean F. Dunphy, Esq., at Stikeman Elliott LLP, in Toronto, Ontario, explains that, pursuant to the parties' agreements and arrangements, Air Canada's domestic operations would migrate from Terminal 1 and Terminal 2 to the new terminal in the first phase of the opening of the new terminal. Air Canada would initially be given priority in the allocation of all domestic gates at the new terminal from its opening until the time as the gates available exceed Air Canada's requirements for its domestic operations on a "use it or lose it" basis. The agreement was affirmed by a Memorandum of Understanding, dated January 31, 2001, and supplemented by a Terminal Facilities Allocation Protocol. The parties continuously affirmed the agreement over the past three years. Mr. Dunphy relates that the MOU was based on the common understanding between the GTAA and Air Canada that the new terminal was being developed with a view to accommodating Air Canada's unique requirements as the only carrier conducting large-scale network operations from the Pearson Airport. The MOU indicates that the new terminal was designed to replace Terminals 1 and 2 where Air Canada and Air Canada Jazz currently conduct their domestic, transborder, international and regional operations. The transfer of Air Canada's operations to the new terminal facilitates contiguous operations along side Air Canada's Star Alliance and code share partners. The MOU provides that the allocation of the new terminal facilities in the domestic and transborder sector will be subject to allocation on a fixed preferential use, common use or GTAA reserved basis. All domestic contact gates and hard stand commuter gates at the new terminal would be allocated on a fixed preferential use to Air Canada at the opening of operations at the new terminal given the level and forecasts of Air Canada's domestic passenger traffic as confirmed orally and in writing up until January 28, 2004. The fixed preferential use thereafter would be subject to Air Canada losing preferential status should its planned annual passenger volume fall below 60% of all enplaned and deplaned passengers at the new terminal. As the fixed preferential user of the new terminal's facilities, Air Canada was entitled to plan and deploy the operational use of those facilities, including the planning and use of all 14 available domestic contact and nine hard stand gates. According to Mr. Dunphy, the GTAA is aware that Air Canada planned for the use of all 14 domestic contact and nine hard stand commuter gates. The TFAP affirms the agreement between the GTAA and Air Canada that all domestic gates at the new terminal would be allocated to Air Canada when the new terminal opens. In October 2003, Air Canada provided its schedule for summer 2004 -- commencing on April 6, 2004 -- to the GTAA in advance of the Fall meeting of the International Air Transport Authority in accordance with the TFAP. Air Canada's 2004 summer schedule required a level of activity such that the 14 available domestic contact gates and nine hard stand commuter gates would be utilized beyond the 60% utilization requirement established by the TFAP. Accordingly, no domestic gates at the new terminal would be available for allocation under the TFAP as common use gates. There will be no gates available for the GTAA to accommodate the primary operations of any other domestic carriers at the new terminal -- although there is adequate space at Terminal 2 or Terminal 3. But without prior consultation, on January 28, 2004, the GTAA advised Air Canada that only six of the 14 domestic contact gates at the new terminal will be available for designation as Fixed Preferential gates and that Air Canada qualified for all these gates. The GTAA also assigned to Air Canada two GTAA-reserved contact gates. The GTAA further confirmed that WestJet would be commencing operations out of the new terminal by April 2004. The GTAA designated six common use gates to be allocated to specific flights of Air Canada and WestJet in accordance with officially submitted and approved schedules. Mr. Dunphy contends that the GTAA's actions adversely affect Air Canada's operation. The task of planning and executing a complex migration of Air Canada's domestic business, which has been underway for three years now, is placed in jeopardy. More importantly, the potential cost of the GTAA allocating gates at the new terminal to other domestic carriers and forcing Air Canada to conduct split operations out of two or three terminals will be significant and will undermine Air Canada's current restructuring plan should the GTAA be allowed to alter the agreements and allocate gates to WestJet. Air Canada has worked intensively to redesign its domestic restructuring business plan to operate out of the 14 domestic contact and nine hard stand commuter gates at the new terminal so as to avoid the inefficiency and inconvenience to its passengers of a split terminal domestic operation. Mr. Dunphy maintains that the cost inefficiencies to Air Canada of splitting its domestic operations are conservatively estimated at CN$64,000,000 per year due to: (a) additional ground personnel; (b) less efficient connections and connect times; (c) less efficient fleet utilization and thus higher fleet costs; and (d) loss of revenue. Mr. Dunphy also notes that no other domestic carrier operating at Pearson Airport is required to operate a split terminal domestic airline business. The arbitrary breach of the agreements imposes a cost on Air Canada alone placing it at a material competitive disadvantage at its hub. GTAA Objects John Kaldeway, Chief Operating Officer of the Greater Toronto Airports Authority, tells Mr. Justice Farley that the Applicants' allegations are unfounded. They reflect neither the agreed principles for the allocation of terminal facilities, including the check-in counters, gates and hard stands, at the new terminal nor the course of dealings and communications between Air Canada and the GTAA over the past three years. Mr. Kaldeway contends that the position taken by Air Canada is fundamentally inconsistent with its conduct through the summer and fall of 2003 into the early part of January 2004 -- conduct on which the GTAA relied in its allocation of terminal facilities at the new terminal. Apparently, Air Canada's sudden change of position was triggered by the announcement in January 2004, that WestJet would shift its operations from Terminal 3, and some of its operations at Hamilton Airport, to the new terminal. WestJet is Air Canada's largest competitor in the domestic Canadian market. On January 14, 2004, the GTAA asked Air Canada to submit a revised schedule of its summer 2004 operations as soon as possible, so that the GTAA could begin working with Air Canada on operational issues. Air Canada did not provide any portion of its revised summer 2004 schedule to the GTAA until January 21, 2004. Air Canada provided a copy of a sample day for its new summer 2004 schedule. The sample day showed 360 domestic flight legs as compared to the 309 daily domestic flight legs indicated in Air Canada's November 2003 schedule for the summer 2004. On January 28, 2004, the GTAA advised Air Canada that it had determined that it was appropriate, under the TFAP, to designate six gates at the new terminal as available for allocation on a fixed preferential basis, and that Air Canada would qualify for all six preferential gates available. The GTAA also assigned two GTAA-reserved use gates for fixed preferential use by Air Canada. Accordingly, Air Canada will have access to all 23 contact gates and regional hard stand positions, although some on a common use basis. Air Canada will also have fixed preferential use of eight of the contact gates and one hard stand. It will be the only air carrier using the domestic hard stand positions, based on current demand. However, on January 31, 2004, Air Canada submitted a revised summer 2004 schedule to the IATA Schedule Coordinator. While air carriers submit minor modifications at this late stage, Mr. Kaldeway observes that Air Canada submitted an entirely new schedule. The daily domestic flight legs were now shown as 336, down from 360 in the sample day schedule submitted only 10 days earlier, but still up from the 309 daily domestic flight legs indicated in Air Canada's November 2003 submission. Mr. Kaldeway also tells Mr. Justice Farley that the new terminal is, and has always been designed to be, a "common use" facility. This means that air carriers do not lease terminal facilities. Rather, the terminal facilities remain under the control of the GTAA and are allocated by it, in accordance with a Terminal Facilities Allocation Protocol, sometimes on an annual basis and sometimes on an hour-by-hour basis. The allocation will vary depending on a carrier's traffic levels from time to time. Terminal 3, in which Air Canada operated Tango until very recently, has been a common use facility with a TFAP since 1998, Mr. Kaldeway says. At the time the MOU, and a number of other agreements, were entered into by GTAA and Air Canada, Mr. Kaldeway notes that Air Canada had recently merged with Canadian Airlines and was the only significant domestic air carrier. This circumstance has been reflected in two ways: (a) GTAA consulted extensively, but not exclusively, with Air Canada in respect of the design of the new terminal and the sequencing of the relocation of operations from Terminals 1 and 2 to the new terminal; and (b) The new terminal TFAP, which was adapted from the Terminal 3 TFAP, created the concept of "fixed preferential" allocation of certain terminal facilities. The new terminal TFAP, however, does not, in any circumstance, provide for the fixed preferential allocation of all contact gates and hard stands, or any other terminal facilities, to Air Canada, or any carrier, to the exclusion of other carriers. "As Air Canada's domestic market share has eroded, in the face of competition from other domestic air carriers, the GTAA, as the operator of the Airport, was bound to consider the implications of this development for the efficient utilization of the capital facilities at the Airport, including [the new terminal]. That consideration led to the decision to permit WestJet to relocate operations from [Terminal 3], as well as some of its Hamilton Airport operations, to [the new terminal]," Mr. Kaldeway says. Mr. Kaldeway points out that Air Canada's reduced schedule would have left the new terminal significantly underutilized. Mr. Kaldeway relates that the GTAA applied the TFAP and examined carefully the impact on Air Canada. The GTAA analyzed Air Canada's January 31, 2004 revised summer 2004 schedule for sample days in April, July and September 2004. The analysis was conducted under both "with WestJet" and "without WestJet" scenarios, and has been compared with the analysis for Air Canada's November 2003 schedule. Even if WestJet were not operating from the new terminal, Air Canada's revised January 31, 2004 schedule requires gating some flights at Terminal 2. With WestJet, the incremental impact on Air Canada's requirement to gate domestic flights at Terminal is minimal: Daily Air Canada Domestic Flight Legs Processed at New Terminal and Gated at Terminal 2 November 2003 January 31, 2004 January 31,2004 Schedule Schedule Without Schedule With WestJet WestJet ------------- ---------------- --------------- April 24 of 309 3 of 315 17 of 315 July 20 of 309 12 of 336 31 of 336 September 22 of 309 13 of 336 38 of 336 ============= ================ =============== The examination demonstrates that the impact of WestJet's use of the new terminal on Air Canada's access to and use of the facilities at the new terminal cannot materially affect Air Canada's business plan. Mr. Kaldeway assures Mr. Justice Farley that Air Canada's domestic operations will not be "split" after relocation because regional domestic Jazz and Air Canada mainline domestic operations, which currently are located in Terminal 1 and Terminal 2, will be unified at the new terminal. Air Canada's current split international operations -- Cuba and Asia -- will also be unified in the new terminal. Air Canada, and its Star Alliance Partner, United Airlines, will continue to operate transborder services from the east end of Terminal 2. * * * Mr. Justice Farley requires the GTAA to abide by the agreements and provide Air Canada with the fixed preferential use of all 14 contact gates at the new terminal. "We are very pleased that the court has confirmed the terms of our agreement on our relocation to the new terminal at Pearson. The new terminal represents a very significant investment for Air Canada and [the] decision means our customers will derive the benefit intended and the airline can proceed with its restructuring business plan," Montie Brewer, Air Canada Executive Vice-President, Commercial, said in a press release. Headquartered in Saint-Laurent, Quebec Canada, Air Canada -- http://www.aircanada.ca/-- represents Canada's only major domestic and international network airline, providing scheduled and charter air transportation for passengers and cargo. The Company filed for CCAA protection on April 1, 2003 (Ontario Superior Court of Justice, Case No. 03-4932) and Section 304 petition with the U.S. Bankruptcy Court for the Southern District of New York (Case No. 03-11971). Matthew A. Feldman, Esq., and Elizabeth Crispino, Esq., at Willkie Farr & Gallagher serve as the Debtors' U.S. Counsel. When the Debtors filed for protection from its creditors, they listed C$7,816,000,000 in assets and 9,704,000,000 in liabilities. (Air Canada Bankruptcy News, Issue No. 28; Bankruptcy Creditors' Service, Inc., 215/945-7000) AIR CANADA: Reaches Tentative Settlement on Allocation of Aircraft ------------------------------------------------------------------ Air Canada, Air Canada Jazz, ACPA and ALPA have issued the following statement: "A tentative settlement was reached late [Thurs]day on the subject of allocation of aircraft between Air Canada, Air Canada Jazz, the Air Canada Pilots Association (ACPA) and the Airline Pilots Association (ALPA). "Details will be released after all parties have ratified. It is expected that the ratification will be completed no later than March 19, 2004." Headquartered in Saint-Laurent, Quebec Canada, Air Canada -- http://www.aircanada.ca/-- represents Canada's only major domestic and international network airline, providing scheduled and charter air transportation for passengers and cargo. The Company filed for CCAA protection on April 1, 2003 (Ontario Superior Court of Justice, Case No. 03-4932) and Section 304 petition with the U.S. Bankruptcy Court for the Southern District of New York (Case No. 03-11971). Matthew A. Feldman, Esq., and Elizabeth Crispino, Esq., at Willkie Farr & Gallagher serve as the Debtors' U.S. Counsel. When the Debtors filed for protection from its creditors, they listed C$7,816,000,000 in assets and 9,704,000,000 in liabilities. AMERCO: Fitch Ups $152.5M Preferred Stock Rating to CCC+ from D --------------------------------------------------------------- Fitch Ratings raises AMERCO's $152.5 million preferred stock issue rating to 'CCC+' from 'D'. This action follows the resumption of quarterly dividends paid on this security beginning on March 1, 2004. AMERCO had suspended preferred stock dividend payments beginning in December 2002. Concurrent with this action, Fitch withdraws AMERCO's and AMERCO Real Estate Co.'s 'DD' senior unsecured debt ratings and 'CCC+' preferred stock rating. AMERCO expects to emerge from Chapter 11 bankruptcy protection on March 15, 2004. Based in Reno, NV, AMERCO is a holding company whose principal subsidiaries are U-Haul International, AMERCO Real Estate Co., Republic Western Insurance Co., and Oxford Life Insurance Co. U- Haul is the leading consumer truck and trailer rental company in North America. AREC is AMERCO's real estate management subsidiary and is engaged in the acquisition, ownership, and disposition of commercial real estate, principally self-storage properties. RepWest and Oxford are insurance companies provide captive insurance products to U-Haul's employees and customers and in other selected markets. AMERICAN COMMUNITY: S&P Raises Counterparty Credit Rating to BBpi ----------------------------------------------------------------- Standard & Poor's Ratings Services raised its counterparty credit and financial strength ratings on American Community Mutual Insurance Co. to 'BBpi' from 'Bpi'. The ratings action reflects the company's improved operating performance and capitalization. The ratings are based on ACMIC's extremely strong capitalization and liquidity, which are partially offset by marginal, though improving, operating performance; high product line; and geographical concentration. The company displays a high product line concentration with more than 96% of direct business in accident and health related lines. Further, the company's business is geographically concentrated with its top five states (Michigan, Indiana, Ohio, Arizona, and Illinois) constituting 90% of direct business. ACMIC, headquartered in Livonia, Michigan is a provider of managed care, major medical, medical savings accounts, level term, critical illness, dental, vision, and weekly income insurance. The company also writes a modest amount of term life, short-term disability and whole life coverage. The company's products are marketed primarily through brokers. The company, which began operations in 1947, is licensed in 23 states. In 2002, ACMIC sold its wholly owned property/casualty subsidiary, American Community Casualty Insurance Co., which had been inactive since its formation in 1985. The ratings on ACMIC were determined on a standalone basis. Ratings with a 'pi' subscript are insurer financial strength ratings based on an analysis of an insurer's published financial information and additional information in the public domain. They do not reflect in-depth meetings with an insurer's management and are therefore based on less comprehensive information than ratings without a 'pi' subscript. Ratings with a 'pi' subscript are reviewed annually based on a new year's financial statements, but may be reviewed on an interim basis if a major event that may affect the insurer's financial security occurs. Ratings with a 'pi' subscript are not subject to potential CreditWatch listings. Ratings with a 'pi' subscript generally are not modified with "plus" or "minus" designations. However, such designations may be assigned when the insurer's financial strength rating is constrained by sovereign risk or the credit quality of a parent company or affiliated group. AMERICAN PACIFIC: S&P Drops Corp. Credit Rating a Notch to B+ ------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on Las Vegas, Nevada-based American Pacific Corp. to 'B+' from 'BB-'. The outlook is negative. "The downgrade follows a sharp decrease in American Pacific's recent operating profitability, and material concerns over the company's longer-term cash generating capability due to the uncertain status of the Space Shuttle program," said Standard & Poor's credit analyst Franco DiMartino. Perchlorate chemicals sales during the most recent quarter fell 75% from the prior year and full-year fiscal 2004 sales are expected to be materially lower than the $68 million average of the last three fiscal years. Perchlorate chemicals sold for the Shuttle program are also subject to a 20% contractual price reduction during fiscal 2004. Although the company benefits from a debt-free capital structure, decreased demand due to the lower projected number of launches once the Space Shuttle returns to flight could materially impact operating profitability and free cash generation. The long-term demand for the company's perchlorate chemicals is uncertain at this point and highly dependent on the Bush Administration's new initiative for the space exploration program. The ratings reflect American Pacific's position as the sole supplier of ammonium perchlorate (AP), a virtually debt-free capital structure, and a meaningful cash position. These positives are more than offset by the small, specialized AP market, uncertainty regarding the future of the Space Shuttle program, a narrow customer base, demand dependent on governmental appropriations, and a modest financial profile, as evidenced by fiscal 2003 sales of less than $70 million. AP is used as an oxidizing agent for composite solid propellants for rockets and booster motors. The market is mature, with demand driven by a relatively small number of Department of Defense and National Aeronautics and Space Administration (NASA) contractors. Substantially all of American Pacific's AP business is with Alliant Techsystems Inc. Risks inherent in government contracts and dependence on congressional appropriations are negative considerations in the long-term demand outlook. Moreover, the company's single operating facility is subject to the hazards associated with chemical manufacturing. American Pacific also makes sodium azide, the primary component of a gas generant used in certain automotive airbag safety systems, and Halotron, a chemical used in fire extinguishing systems ranging from portable fire extinguishers to airport firefighting vehicles. AMES DEPARTMENT: Sues Six Banks to Recover $8 Million Preferences ----------------------------------------------------------------- Ames Merchandising Corporation made certain transfers to GMAC Commercial Credit LLC and its subsidiaries and affiliates, including as successor-in-interest to Bank of America Commercial, BNY Financial Corp., Finova Capital Corp., Nationsbanc Commercial Corp. and Omni/Bank of America. Bijan Amini, Esq., at Storch Amini & Munves. P.C., in New York, notes that pursuant to Section 547(b) of the Bankruptcy Code, a debtor-in-possession may avoid any transfer of an interest of the debtor in property: (a) to or for the benefit of a creditor; (b) for or on account of an antecedent debt owed by the debtor before the transfer was made; (c) made while the debtor was insolvent; (d) made on or within 90 days, or in certain circumstances within one year, before the filing of the petition; and (e) that enables such creditor to receive more in satisfaction of its claims than it would receive in a case under Chapter 7 of the Bankruptcy Code if the transfer had not been made. According to Mr. Mr. Amini, during the 90-day period before the Petition Date, Ames made these transfers: GMAC Entity Amount ----------- ------ GMAC Commercial Credit LLC 4,028,898 Bank Of America Commercial 3,254,299 BNY Financial Corp. 403,699 Finova Capital Corp. 18,961 Nationsbanc Commercial Corp. 247,597 Omni/Bank Of America 36,928 Mr. Amini states that these Avoidable Transfers were for the benefit of the GMAC Creditors, and were made on account of antecedent debts owed by Ames. The Avoidable Transfers to GMAC were also made while Ames was insolvent. Moreover, the Transfers enabled GMAC Creditors to recover more than they would have received if: * the Avoidable Transfers had not been made; * the case were a case under Chapter 7; and * GMAC received payment of its debt to the extent provided by the provisions of the Bankruptcy Code. Thus, Mr. Amini asserts that the Avoidable Transfers should be avoided and set aside as preferential and the money transferred should be returned to Ames. Ames is entitled to recover from GMAC an amount to be determined at trial that is not less than $7,990,382, plus interest to the date of payment and the costs of the action. The Debtors, therefore, ask the Court to direct GMAC to pay to their estate the Avoidable Transfers, plus interest and costs. Headquartered in Rocky Hill, Connecticut, Ames Department Stores, Inc., is a regional discount retailer that, through its subsidiaries, currently operates 452 stores in nineteen states and the District of Columbia. The Company filed for chapter 11 protection on August 20, 2001 (Bankr. S.D.N.Y. Case No. 01-42217). Albert Togut, Esq., Frank A. Oswald, Esq. at Togut, Segal & Segal LLP and Martin J. Bienenstock, Esq., and Warren T. Buhle, Esq., at Weil, Gotshal & Manges LLP represent the Debtors in their restructuring efforts. When the Company filed for protection from their creditors, they listed $1,901,573,000 in assets and $1,558,410,000 in liabilities. (AMES Bankruptcy News, Issue No. 51; Bankruptcy Creditors' Service, Inc., 215/945-7000) ARMSTRONG: December 2003 Balance Sheet Insolvency Tops $1.3B ------------------------------------------------------------ Armstrong Holdings, Inc. (OTC Bulletin Board: ACKHQ) reported fourth quarter 2003 net sales of $805.8 million that were 7.1% higher than fourth quarter net sales of $752.1 million in 2002. Excluding the favorable effects of foreign exchange rates of $36.9 million, consolidated net sales increased by 2.1%. An operating loss of $6.1 million was recorded for the fourth quarter of 2003 compared to an operating loss of $2,485.8 million in the fourth quarter of 2002. For the year ending December 31, 2003, net sales were $3,259.0 million, an increase of 2.7% from the $3,172.3 million reported for 2002. Excluding the favorable effects of foreign exchange rates of $142.5 million, consolidated net sales decreased 1.7%. An operating loss for 2003 of $10.4 million compared to an operating loss of $2,337.3 million for 2002. During 2003, Armstrong recorded non-cash charges related to asbestos of $81 million. During the fourth quarter of 2002, Armstrong recorded a non-cash charge of $2.5 billion to increase the Company's estimated asbestos-related liability. During 2003, Armstrong implemented several manufacturing and organizational cost changes to improve its cost structure and enhance its competitive position. The costs for these initiatives incurred in 2003 totaled approximately $55 million, of which approximately $33 million was for accelerated depreciation. The remaining amount was primarily for severances and related inventory obsolescence. Armstrong also implemented several initiatives in 2002, primarily for reorganizing our flooring organizations in Europe. The cost of these initiatives in 2002 was approximately $2 million. In addition to the above items, results for 2003 reflect higher raw material costs and the effects of lower sales volumes that were partially offset by lower selling, general and administrative (SG&A) costs. Pension income recorded in 2003 was $11.6 million, a decline of $27.6 million from the 2002 credit recorded of $39.2 million. At December 31, 2003, Armstrong's balance sheet shows a shareholders' equity deficit of $1,330.2 million compared to $1,346.7 million the prior year. Segment Highlights for the Full Year 2003 Resilient Flooring net sales of $1,181.5 million in 2003 increased from net sales of $1,152.3 million in 2002. 2003 sales compared to 2002 were favorably impacted by $43.9 million from the translation effect of the changes in foreign exchange rates. Amendments to distributor agreements in the fourth quarter of 2002 resulted in $19.2 million of revenue recorded in 2003 for products that were shipped in the fourth quarter of 2002. Operating income of $55.9 million in 2003 declined by $8.6 million from the operating income in 2002 of $64.5 million. Charges for various cost reduction initiatives accounted for approximately $11 million of the decrease, with $7 million being associated with accelerated depreciation. Partially offsetting the negative effects of these items were operating income gains from an increase in laminate sales, and significant reductions in SG&A costs and reduced spending on advertising. Wood Flooring net sales of $738.6 million in 2003 increased 2.7% from $719.3 million in the prior year. This increase was driven primarily by improved pricing and increased volume in certain products. An operating loss of $4.0 million was recorded in 2003 compared to operating income of $53.0 million in 2002. Approximately $40 million of the $57 million decline in operating income was due to increases in lumber costs. Also contributing to the decline were $28.2 million of expenses associated with cost reduction initiatives, of which $24.6 million was for accelerated deprecation. Partially offsetting these expenses were gains from the selling price increases and reduced expenditures in SG&A, the latter partially as an effect of the cost reduction initiatives. Textiles and Sports Flooring net sales of $271.9 million increased in 2003 compared to $247.2 million in 2002. Excluding the translation effect of the changes in foreign exchange rates of $49.8 million, net sales decreased 8.4% due to weak European markets. An operating loss of $9.8 million in 2003 increased by $5.1 million from the operating loss of $4.7 million recorded for 2002. 2003 results include expense of $7.5 million associated with cost reduction initiatives. Partially offsetting the effects of the cost reduction expenses and lower sales volumes were reduced manufacturing expenses and SG&A expenditures. Building Products net sales of $862.2 million in 2003 increased from $826.6 million in the prior year. Excluding the translation effect of the changes in foreign exchange rates of $48.9 million, sales decreased by 1.5%, primarily due to lower sales volume in commercial markets, partially offset by improved pricing in the U.S. commercial and residential markets. Operating income decreased to $95.2 million from operating income of $96.5 million in 2002. This decrease resulted from lower sales volume, increased energy costs, wage and salary inflation, price concessions in Europe and expense for cost reduction initiatives. Improved U.S. pricing and manufacturing cost improvements partially offset this decrease. Operating income for 2003 also benefited by approximately $4.1 million due to the translation effect of the changes in foreign exchange rates. Cabinets net sales in 2003 of $204.8 million decreased from $226.9 million in 2002 due primarily to reductions in volume. An operating loss of $11.1 million in 2003 compared to an operating loss of $3.9 million in the prior year. The operating loss was predominantly due to the negative effects of lower volume. Partially offsetting the decline were lower selling expenses. Armstrong Holdings, Inc. is the parent company of Armstrong World Industries, Inc., a global leader in the design and manufacture of floors, ceilings and cabinets. In 2003, Armstrong's net sales totaled more than $3 billion. Based in Lancaster, PA, Armstrong operates 44 plants in 12 countries and has approximately 15,200 employees worldwide. More information about Armstrong is available on the Internet at http://www.armstrong.com/ ASTEC INDUSTRIES: Lenders Agree to Waive Loan Covenant Default -------------------------------------------------------------- Astec Industries, Inc. (Nasdaq: ASTE) reported results for the fourth quarter and year ended December 31, 2003 in line with its preliminary projection issued on February 24, 2004. Revenues for the fourth quarter of 2003 were $87.8 million compared with $105.4 million for the fourth quarter of 2002. Domestic sales were $63.1 million for the fourth quarter of 2003, or 71.9% of 2003 fourth quarter revenues, compared to domestic sales of $87.2 million for the fourth quarter of 2002, or 82.7% of 2002 fourth quarter revenues. International sales were $24.7 million for the fourth quarter of 2003, or 28.1% of 2003 fourth quarter revenues, compared to international sales of $18.2 million for the fourth quarter of 2002, or 17.3% of 2002 fourth quarter revenues. The Company reported a net loss of $24.1 million, or $1.23 per diluted share, for the fourth quarter of 2003 compared with a net loss of $10.3 million, or $0.53 per diluted share, for the fourth quarter of 2002. The net loss for the fourth quarter of 2003 was within the range of expectations given by the Company in its February 24, 2004 press release. Revenues for 2003 were $426.6 million compared with $480.6 million for 2002. Domestic sales were $331.0 million for 2003, or 77.6% of 2003 revenues, compared to domestic sales of $401.3 million for 2002, or 83.5% of 2002 revenues. International sales were $95.6 million for 2003, 22.4% of 2003 revenues, compared to international sales of $79.3 million for 2002, or 16.5% of 2002 revenues. The Company reported a net loss of $29.0 million, or $1.47 per diluted share, for 2003 compared with a net loss of $4.7 million, or $.24 per diluted share, for the prior year. Consolidated financial statements for the fourth quarter and year ended December 31, 2003 and additional information related to segment revenues and profits are attached as addenda to this press release. Astec's backlog at December 31, 2003 as previously released was $79.4 million compared to $60.7 million for 2002. Astec's backlog at January 31, 2004, was $90.7 million compared with $65.7 million at January 31, 2003. Commenting on the announcement, Dr. J. Don Brock, Chairman and Chief Executive Officer, stated, "As I mentioned in our February 24, 2004 press release, we are disappointed in the financial results for the fourth quarter of 2003 and for the full year but are looking forward to 2004. The primary factors in the fourth quarter that negatively affected our earnings results were a goodwill impairment charge of approximately $16.3 million related to Statement of Financial Accounting Standards No. 142; underabsorbed overhead of approximately $2.9 million; a writedown of approximately $1.9 million on used and rental equipment to reflect the decreased market value due to poor economic conditions; and pre-tax losses from the Trencor and Astec Underground start-up operations at Loudon, Tennessee of approximately $3.6 million." Dr. Brock added, "On the positive side, our underabsorbed overhead in the fourth quarter decreased from the prior year fourth quarter because of measures taken to reduce manufacturing expenses, and interest expense has declined $1.3 million for the fourth quarter which reflects the debt reduction of $58.5 million in 2003. Our backlog at December 31, 2003 was $79.4 million compared to $60.7 million at December 31, 2002 for a 30.8% increase. Our backlog at January 31, 2004 was $90.7 million compared to $65.7 million at January 31, 2003 for a 38.1% increase. We believe we have hit the bottom of the economic cycle and have turned upward based on our backlog and customer activity. We anticipate that the six-year highway bill will be renewed, and we believe that an improving economy should increase state highway funding revenues and private commercial projects." At December 31, 2003, Astec was not in compliance with a financial covenant under its credit facilities. The Company received a waiver for non- compliance for the fourth quarter of 2003 and has entered into amendments with its lenders effective as of December 31, 2003 which revise the financial covenant for the next three quarters. Astec will reclassify the revolving portion of its credit facility for the second quarter ended June 30, 2003 and for the third quarter ended September 30, 2003 in accordance with Emerging Issues Task Force (EITF) Issue 95-22 "Balance Sheet Classification of Borrowings Outstanding under Revolving Credit Agreements That Include both a Subjective Acceleration Clause and a Lock-Box Arrangement." The effect will be to reclassify debt previously reported as long-term debt amounting to $27.8 million and $39.6 million in the second and third quarters of fiscal 2003, respectively, to current liabilities. In accordance with EITF 95- 22, Astec will also be classifying the revolving portion of its credit facility as current liabilities in its financial statements as of December 31, 2003. The reclassifications will not have an impact on the Company's total assets, shareholder's equity, liquidity or the results of operations for the impacted quarters or for the year ended December 31, 2003 and will not affect the financial covenants in the Company's credit facilities. The reclassifications will be reflected in the Company's filings. Astec Industries, Inc. is a manufacturer of specialized equipment for building and restoring the world's infrastructure. Astec's manufacturing operations are divided into four business segments: aggregate processing and mining equipment; asphalt production equipment; mobile asphalt paving equipment; and underground boring, directional drilling and trenching equipment. ATS LIQUIDATING: Distributes Grantor Tax Letter ----------------------------------------------- The ATS Liquidating Trust (ATISZ.PK) announced that the Trustee is mailing a Grantor Letter to holders of record of interests in the Trust. The letter contains information regarding allocable portions of all items of Trust income, deductions and credits which must be reported on income tax returns. This information may be relevant to certain holders as they prepare their tax returns for 2003. The Trustee recommends that holders consult their tax advisor concerning specific tax consequences and tax reporting relating to the tax information provided in the Grantor Letter. The Trustee cannot and will not provide advice on the personal tax treatment of the tax information. Those interest holders who held their shares of Advanced Tissue Sciences in street name will not receive such a letter directly from the Trust. However, a sample letter can be found on the Trust web site at http://www.advancedtissue.com/under the link labeled Tax Information for 2003. It contains the necessary financial information for holders to calculate their allocable share of the Trust's income and expenses. Holders of record should have received previously from the Trustee a Form 1099-Div and related tax information concerning the 2003 distribution of beneficial interests in the trust based on their shares in ATS. As a result of the Chapter 11 Liquidating Plan of Reorganization which was confirmed by the Bankruptcy Court by a final order dated March 21, 2003 and which became effective on March 31, 2003, the stock of ATS was cancelled and its former stockholders now hold non-trading interests in the ATS Liquidating Trust. According to the terms of the Plan, the Interests in the ATS Liquidating Trust are not to trade and the Liquidating Trustee will only recognize as beneficiaries of the Trust those equity holders of record as of the effective date of the Plan. Any trading that may be occurring after the effective date of the Plan under the symbol "atisz.pk" or otherwise is unauthorized by the Plan and will not be recognized by the Trustee. As a result of the terms of the Plan and the order of the bankruptcy court confirming the Plan, the Securities and Exchange Act of 1934 as amended and the rules promulgated thereunder no longer apply to the Company since it has no issued stock, no shareholders, and is no longer in business. However, to the extent applicable, the above cautionary statement is made by the Trust under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. AUBURN FUN ZONE: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Auburn Fun Zone, Inc. 1221 Commerce Drive Auburn, Alabama 36830 Bankruptcy Case No.: 04-30390 Type of Business: The Debtor is a Child Care Center. Chapter 11 Petition Date: February 11, 2004 Court: Middle District of Alabama (Montgomery) Judge: William R. Sawyer Debtor's Counsel: Collier H. Espy, Jr. Espy, Metcalf & Poston, P.C. P.O. Drawer 6504 Dothan, AL 36302-6504 Tel: 334 793-6288 Total Assets: $295,000 Total Debts: $1,763,516 Debtor's 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Auburn Bank This Debt is believed $395,000 P.O. Box 3110 to be unsecured as to Auburn, AL 36831-3110 corporate debtor Although it may be secured by property owned individually by _____________. Southeastern Skate Supply $130,712 Destin Bank Roller skates; $100,000 lockers & tables in warehouse in Opelika to be surrendered Amerifirst Bank Childcare equipment $100,000 Frontier Bank (2) Old bluebird $120,000 buses ($10,000) & virtual roller coaster ($25,000) Watch Me Grow $30,000 Aliant Bank Bumper Cars $40,000 Colonial Bank Old Equipment $20,000 Bakers Grading, Paving & $11,000 Seal Coating Brendle Installation of $11,000 sprinkler system Spencer Lumber $11,000 Northland Group, Inc. $10,072 Platinum Plus $9,903 Jackson Heating & Air $8,638 Landmark Sign Co. Acct balance includes $7,800 work in Montgomery location & also an NSF check for approx. $3,700 issued in 10/03 Advantage Cap Company $6,184 A-Com Protection Services Judgment recovered in $5,833 Inc. the district CT of Lee Cty (DV-2003-0813) on 1/30/04 Davis Dyar $5,790 Blue Cross Blue Shield Past due health $5,781 Payment Processing insurance premiums ASCOM $5,388 BALL CORP: S&P Revises Outlook on Low-B Level Ratings to Stable --------------------------------------------------------------- Standard & Poor's Rating Services revised its outlook on Broomfield, Colorado-based Ball Corp. to stable from negative. This action follows the company's strong earnings and free cash generation for the fourth quarter of 2003 and for the year as a whole, and incorporates expectations of continuing improvement to the company's financial profile. Ratings on the metal can and plastic packaging producer, including the 'BB+' corporate credit rating were affirmed. Total debt outstanding at Dec. 31, 2003, was $1.69 billion. Following Ball's debt-financed acquisition of Schmalbach-Lubeca AG (now Ball Packaging Europe) in December 2002 for approximately $909 million, management has used free cash generation to reduce debt in line with expectations factored into the ratings. "Ratings also incorporate Standard & Poor's expectation that Ball will remain focused on debt reduction utilizing excess cash flows in 2004 to reduce debt by $150 million to $200 million, and thus restoring credit measures to levels appropriate for the rating," said credit analyst Liley Mehta. The ratings reflect the company's solid market positions and stable cash flow generation, which are offset by management's aggressive financial policies and intense competition in the global beverage can market. With annual revenues of almost $5 billion, Ball is the world's largest beverage can producer, with leading shares in the two largest can markets, North America and Europe. The Ball Packaging Europe acquisition improved the company's geographic diversity and reduced its high customer concentration. Ball also benefits from better growth prospects, as the European market is still expanding in the mid-single-digit percentage area, whereas the North American market is mature. Nevertheless, competition is intense and stems from large global rivals and intermaterial substitution. While the integration of the acquired business was challenging given its size and that it was the company's first foray into Europe, management's good track record for buying and integrating businesses has continued, and the expected earnings contribution has been achieved. BOWATER: S&P Lowers Credit Rating to BB Citing High Debt Burden --------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on newsprint producer Bowater, Inc. The corporate credit rating is lowered to 'BB/Stable/--' from 'BB+/Negative/--', and the senior unsecured bank loan and senior unsecured debt ratings are each lowered to 'BB' from 'BB+'. "The downgrade reflects Standard & Poor's expectations that Bowater's debt burden will remain stubbornly high relative to free operating cash flow for at least the next year, despite gradually improving market conditions and substantially lower capital spending," said Standard & Poor's credit analyst Pamela Rice. Debt increased by about $140 million in 2003 to $2.5 billion at year end, in part because of elevated capital spending and despite the receipt of $150 million in timberland sale proceeds. The ratings and outlook incorporate expectations that Bowater will begin generating positive free cash flow in 2004, and during the next few years, will use its discretionary cash flow and proceeds from any asset sales to lower debt by several hundred million dollars so as to be free cash flow neutral or better through the bottom of future industry cycles. The rating action also reflects concern that U.S. newsprint demand may already have permanently declined more than Standard & Poor's had anticipated because of waning newspaper readership and lower commercial printing volumes. Because industry capacity closures may be insufficient to compensate for this structural decline and it may be difficult for North American newsprint producers to earn a reasonable return, Standard & Poor's believes this industry may no longer be investment grade. The ratings reflect Bowater's high debt burden caused by three years of weak earnings and elevated capital spending and prospects for modest, though improving, cash-flow generation in the near term. These factors outweigh the company's leading market positions in cyclical newsprint, pulp, and coated groundwood paper, substantial operating leverage, and valuable timberland holdings. BUDGET GROUP: Has Until March 30, 2004 to Decide on Leases ---------------------------------------------------------- Pursuant to Section 365(d)(4) of the Bankruptcy Code, the Budget Group Debtors sought and obtained Court approval to extend their deadline to assume or reject all of the remaining leases, subleases or other agreements to which they are a party and that may be considered unexpired non-residential real property leases, through and including March 30, 2004. Headquartered in Daytona Beach, Florida, Budget Group, Inc., operates under the Budget Rent a Car and Ryder names -- is the world's third largest car and truck rental company. The Company filed for chapter 11 protection on July 29, 2002 (Bankr. Del. Case No. 02-12152). Lawrence J. Nyhan, Esq., and James F. Conlan, Esq., at Sidley Austin Brown & Wood and Robert S. Brady, Esq., and Edward J. Kosmowski, Esq., at Young, Conaway, Stargatt & Taylor, LLP, represent the Debtors in their restructuring efforts. When the Company filed for protection from their creditors, they listed $4,047,207,133 in assets and $4,333,611,997 in liabilities. (Budget Group Bankruptcy News, Issue No. 35; Bankruptcy Creditors' Service, Inc., 215/945-7000) CCP INC: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------ Debtor: C.C.P., Inc. c/o Wollmuth Maher & Deutsch LLP One Gateway Center, Ninth Floor Newark, New Jersey 07102 Bankruptcy Case No.: 04-17386 Type of Business: The Debtor is a contract manufacturer of liquid and powder products. The company also develops and provides custom hair, skin and personal care products. Chapter 11 Petition Date: March 4, 2004 Court: District of New Jersey (Newark) Debtor's Counsel: Paul R. DeFilippo, Esq. Wollmuth Maher & Deutsch LLP One Gateway Center, 9th Floor Newark, NJ 07102 Tel: 973-733-9200 Fax: 973-733-9292 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Prime Graphics Trade $154,209 Chemical International Corp. Trade $153,407 Brickforce Trade $151,296 SONOCO Trade $132,805 Gallard-Schlesinger Trade $97,157 Industries FMC Corporation Trade $92,502 Mississippi Lime Co. Trade $50,600 Brenntag Northeast Inc. Trade $39,338 Lithografix Company Inc. Trade $37,198 Andrews Drive Inc. Trade $35,604 Gibbons del Deo Dolan Legal $33,794 Griffinger Nalco Company Trade $33,130 Berry Plastics Corporation Trade $32,922 Cooper & Dunham LLP Legal $31,500 Beveridge & Diamond Legal $30,496 Protameen Chemicals Inc. Trade $29,314 Ayres International Trade $28,604 Cerestar, USA Trade $26,060 State Container Corp. Trade $24,313 Superior Materials Inc. Trade $33,794 CEDARA SOFTWARE: Inks Supply & Services Pact with Japanese Firm --------------------------------------------------------------- Cedara Software Corp. (TSX:CDE/OTCBB:CDSWF), a leading independent developer of medical software technologies for the global healthcare market, has signed an agreement with Aloka Co. Ltd. of Tokyo Japan, to supply certain of its medical imaging technologies and services to Aloka. The agreement is valued at a minimum of Cdn$3.1 million. "We are pleased that Cedara has been successful in securing this major agreement with Aloka, a leading manufacturer of medical devices," said Abe Schwartz, Cedara's President and CEO. For more information about Cedara's range of medical image management products, visit the Cedara Web site at http://www.cedara.com/ Cedara Software Corp. is a leading independent provider of medical technologies for many of the world's leading medical device and healthcare information technology companies. Cedara software is deployed in thousands of hospitals and clinics worldwide. Cedara's advanced medical imaging technologies are used in all aspects of clinical workflow including the operator consoles of numerous medical imaging devices; Picture Archiving and Communications Systems (PACS); sophisticated clinical applications that further analyze and manipulate images; and even the use of imaging in minimally-invasive surgery. Cedara is unique in that it has expertise and technologies that span all the major digital imaging modalities including magnetic resonance imaging (MRI), computed tomography (CT), digital X-ray, ultrasound, mammography, cardiology, nuclear medicine, angiography, positron emission tomography (PET) and fluoroscopy. The company's December 31, 2003, balance sheet discloses a working capital deficit of about CDN$5 million, and Cedara appears each week in the Troubled Company Reporter's list of large companies with insolvent balance sheets. COMMSCOPE INC: Acquires Avaya's Connectivity Solutions Business --------------------------------------------------------------- On January 31, 2004, CommScope, Inc., a Delaware corporation, through CommScope Solutions Holdings, LLC (formerly known as SS Holdings, LLC), a Delaware limited liability company and a wholly owned subsidiary of CommScope, acquired the Connectivity Solutions business of Avaya Inc., a Delaware corporation, pursuant to an asset purchase agreement dated October 26, 2003, between CommScope, CSH and Avaya. ACS is engaged in the business of the design, development, manufacture and marketing of enterprise structured cabling solutions for Local Area Networks, structured cabling and equipment for telephone central offices and secure environmental enclosures for telecommunications service providers. The principal assets of the ACS business include: intellectual property; contracts; equipment; inventory; accounts receivable; manufacturing facilities in Omaha, Nebraska, Bray, Ireland, and Brisbane, Australia; leased warehouse facilities in Hilversum, The Netherlands and Singapore; and leased operational headquarters and research and development facilities in Richardson, Texas. Approximately 1,900 employees of the ACS business have become employees of CommScope and its subsidiaries. Under the terms of the Asset Purchase Agreement, CommScope and CSH acquired substantially all of the assets, subject to specified liabilities, of ACS in consideration for the payment to Avaya of $250,000,000 in cash and 1,761,538 shares of CommScope's common stock, par value $0.01 per share, subject to post-closing adjustment. (The closing of certain limited international operations is expected to occur later this year, and a portion of the cash purchase price was withheld pending such closing). CommScope also assumed up to approximately $65 million of specified liabilities of ACS, primarily related to employee benefits. The purchase price was based on arms-length negotiations between the parties and will be adjusted based on the Closing Net Assets (as defined in the Asset Purchase Agreement) of ACS as of the close of business on the business day prior to the closing date. The cash portion of the purchase price was funded from CommScope's existing cash balances and $100 million of borrowings under CommScope's new amended and restated $185 million senior secured credit facility. Certain of CommScope's operating subsidiaries, are the primary borrowers under the Credit Agreement. CommScope and each of its other material domestic subsidiaries have guaranteed the performance of the Borrowers under the Credit Agreement. The Credit Agreement is secured by substantially all of the property and assets of CommScope. The Credit Agreement consists of a $110 million revolving credit facility and a $75 million term loan facility maturing on January 31, 2009. CommScope (NYSE: CTV) -- http://www.commscope.com/-- (S&P, BB Corporate Credit & B+ Subordinated Debt Ratings, Stable) is a world leader in the design and manufacture of 'last mile' cable and connectivity solutions for communication networks. We are the global leader in structured cabling systems for business enterprise applications and the world's largest manufacturer of coaxial cable for Hybrid Fiber Coaxial applications. Backed by strong research and development, CommScope combines technical expertise and proprietary technology with global manufacturing capability to provide customers with high-performance wired or wireless cabling solutions from the central office to the home. ENRON CORP: Asserts Noxtech's $22 Million Claim is Overstated ------------------------------------------------------------- On October 10, 2002, NOxTech, Inc. filed Claim No. 9197 for $21,950,403 against Enron North America Corporation. The Claim is based on amounts allegedly owed to NOxTech pursuant to an Exclusive License Agreement dated July 21, 2000, by and between NOxTech and ENA. After reviewing the Claim, ENA concluded that: -- the Claim is overstated; -- NOxTech failed to set forth the alleged fraud in the inducement claim with specificity; -- NOxTech failed to include documentation to support the claims; and -- NOxTech failed to provide documentation supporting the calculation of the damages for the alleged claim. Accordingly, the Debtors ask the Court to disallow and expunge the Claim or reduce Claim No. 9197 to the extent NOxTech is able to introduce sufficient documentation to support the Claim, and allow NOxTech's claim in an amount the Court will determine. Melanie Gray, Esq., at Weil, Gotshal & Manges LLP, in New York, notes that NOxTech may have engaged in improper conduct in breach of the Contract, the result of which may be to deprive ENA of the value of the Contract. Thus, ENA expressly reserves the right to seek damages against NOxTech and to seek to equitably subordinate its alleged claim. (Enron Bankruptcy News, Issue No. 100; Bankruptcy Creditors' Service, Inc., 215/945-7000) ENRON CORPORATION: Court Fixes Claims Estimation Procedures ----------------------------------------------------------- The US Bankruptcy Court for the Southern District of New York rules that the estimation and settlement of Claims against the Enron Corp. Debtors, and the adjudication of Counterclaims, will be conducted in accordance with these procedures: Debtors' Objection and Notice to Claimants A. Estimation Objection/Notice Package The Debtors may prepare and file with the Bankruptcy Court an objection to any Claim for the purposes of estimation, which will state with particularity the legal and factual bases for their objection. The Estimation Objection will provide, at a minimum, these information, if applicable: (i) the Claim number on the claims register; (ii) the name of the Claimant; (iii) the basis for asserting the Claim is contingent or unliquidated and subject to Section 502(c) of the Bankruptcy Code; (iv) to the extent a Claim is asserted in the proof of claim as liquidated but the assertion is disputed by the Debtors, a declaration providing the specific legal and factual grounds and evidence supporting the dispute; (v) to the extent a Claim is asserted in the proof of claim as liquidated and the assertion is not disputed but the liquidated amount of the Claim is disputed by the Debtors, a declaration providing the specific legal and factual grounds and evidence supporting the dispute; and (vi) the evidence to support the assertion of the objection, including names of all persons employed by or within the control of the Debtors, who are likely to have discoverable information relating to the Estimation Objection and any documents that the Debtors may rely upon in support of the Estimation Objection. The Estimation Objection will not exceed seven pages in length, including the declaration, exclusive of documentary and statutory exhibits. The Debtors will serve the affected Claimant with (i) a notice of the Estimation Objection, (ii) a copy of the relevant Estimation Objection, (iii) a form to be completed and verified by each Claimant and setting forth the elements and evidence to support the Claimant's Claim and (iv) a copy of the Claims Procedures Order will constitute the Court's Rule 16 Scheduling Order. B. Assertion of Counterclaims The Debtors may assert a Counterclaim against a particular Claimant whose Claim is the subject of an Estimation Objection by setting forth in the Estimation Objection the elements and verified statement of evidence supporting the Counterclaim including names of all persons employed by or within the control of the Debtors, who are likely to have discoverable information relating to the Counterclaim and any documents that the Debtors may rely upon in support of the Counterclaim. In the event that a Counterclaim is submitted by the Debtors in the Estimation Objection, the Debtors' Estimation Objection will not exceed 15 pages in length. C. Service of Notice Package Service of the Notice Package will be effectuated: (a) in accordance with Bankruptcy Rules 2002 and 7004, Federal Rule of Civil Procedure and the Case Management Order; (b) by first class mail, postage prepaid, upon the signatory on the Claimant's proof of claim and other representative identified in the proof of claim and any attachment thereto; and (c) by first class mail, postage prepaid, on any attorney who has entered a notice of appearance on the Claimant's behalf in the Debtors' Chapter 11 cases. D. Estimation Notice The Estimation Notice will (i) provide the Claimant 135 days notice of the hearing on the Estimation Objection and (ii) direct the Claimant to complete and return the executed Statement of Claim within 30 days of the service date of the Estimation Notice. Claimant's Response - Statement of Claim A. Statement of Claim Within 30 days of the service date of the Estimation Notice, the Claimant will complete, execute, and serve upon the Debtors, attorneys for the Debtors and attorneys for the Creditors' Committee, the Statement of Claim setting forth, among other things, a detailed explanation, and, if appropriate, itemization by amount of the Claimant's Claim and the evidence to support the assertion of the Claim, including names of all persons employed by or within the control of the Claimant, who are likely to have discoverable information relating to the Claim and any documents that the Claimant may rely upon in support of the Claim, not to exceed 10 pages in length. Any Statement of Claim that fails to specify an amount greater than $0 will be deemed to be $0 for allowance and distribution purposes. The Claimant's timely filed proof of claim form and all of the documents attached thereto will remain part of the record for estimation purposes and should not be included in or attached to the Statement of Claim. B. Claimant's Response to Counterclaim In the event that the Debtors assert a Counterclaim, the Claimant will respond to the Counterclaim on or before 30 days following service of the Debtors' Estimation Objection by completing, executing and serving upon the Estate Parties a statement of position outlining the Claimant's arguments and defenses with respect to the Counterclaims, including the evidence to support the assertion of such response, including names of all persons employed by or within the control of the Claimant, who are likely to have discoverable information relating to the Counterclaim and any documents that the Claimant may rely upon in support of the Counterclaim response, which will not exceed 10 pages in length. C. Default, Grace Period and Discharge The Claimant will serve the Statement of Claim upon the Estate Parties in accordance with the terms of the Estimation Notice and the Case Management Order. If a Claimant fails to return timely a completed and executed Statement of Claim and Response to Counterclaim, as applicable, so as to be received on or before the 30th day following the date of service of the Estimation Notice, and receives a written grace period notice from the Debtors and does not complete and return the Statement of Claim so as to be received by the Estate Parties on or prior to the 15th day following the date of service of such grace period notice, such Claimant's Claim will be deemed forever discharged, disallowed, waived and expunged against the Debtors and the Debtors' Chapter 11 estates, and the Bankruptcy Court will enter an appropriate order in connection therewith. Debtors' Reply - Statement of Position In the event that a Claimant timely serves a Statement of Claim, the Debtors may, in their discretion, on or before 30 days following the service of a Statement of Claim, respond to the Statement of Claim by completing, executing, and serving upon the relevant Claimant, with a copy to the attorneys for the Creditors Committee, a statement outlining the Debtors' arguments and defenses with respect to the Claim and the elements and evidence set forth in the Statement of Claim. The Debtors' Statement of Position will not exceed 10 pages in length. Opt-Out Procedures A. Right to Opt Out for Fully Liquidated Claims In the event that an Estimation Objection disputes the allowance of a fully liquidated Claim, the holder thereof will have the absolute right to exclude such Claim from these Procedures, provided that, within 30 days of the service date of the Estimation Notice, the Claimant will complete, execute, and serve upon the Debtors the appropriately marked opt out form and, to the extent desired, by submitting an additional pleading supporting such election. Claimants seeking exemption pursuant to this opt out provision will not be required to complete and serve the Statement of Claim prior to the Court's ruling on the Exemption Request. To the extent that a Claimant with an otherwise Exempted Claim does not make such election on the Opt Out Form, the Claimant will be bound by these Procedures, and the Claimant will have the Claim heard by the Bankruptcy Court pursuant to the terms and conditions hereof. B. Requests to Opt Out or Have Modified Procedures for Overly Complex Claims In the event that the facts and circumstances surrounding a Claim are too complex to be readily ascertained in the context of these Procedures, the holder of such Claim will have the right to request exclusion of such Claim from these Procedures, provided that, within 30 days of the service date of the Estimation Notice, the Claimant will complete, execute, and serve upon the Debtors the appropriately marked Opt Out Form and, to the extent desired, by submitting an additional pleading supporting the request. Claimants seeking exemption pursuant to this opt out provision will not be required to complete and serve the Statement of Claim prior to the Court's ruling on the Exemption Request. A Claimant's alleged Overly Complex Claim will be exempted from these Procedures only upon the express consent of the Debtors or entry of an order by the Bankruptcy Court granting the Claimant's Exemption Request. In the event an Overly Complex Claim is exempt from these Procedures, all rights of the Debtors or any party-in-interest will be fully preserved, including any right to seek estimation of the Claim outside of these Procedures. In lieu of granting the Exemption Request, the Bankruptcy Court may, in its discretion, modify these Procedures and order the alleged Overly Complex claim to be estimated in accordance therewith. C. Right to Sever Affirmative Request for Relief on Counterclaims A Claimant will have the absolute right to exclude from these Procedures the adjudication of the Debtors' right to affirmative recovery on any Counterclaim by marking the appropriate box on the Statement of Claim form; provided, however, the Bankruptcy Court may nevertheless consider any Counterclaim asserted by the Debtors as a defense or offset in connection with estimation of the Claimant's Claim. To the extent that the Debtors assert a Counterclaim in their Estimation Objection, and the affected Claimant does not timely submit a demand to exclude the adjudication thereof from these Procedures, the Claimant will be bound by these Procedures, and the Counterclaim will be adjudicated by the Bankruptcy Court. Claims Resolution Process A. Initial and Mandatory Disclosures Unless otherwise ordered by the Court, the information required to be provided in the Estimation Objection and Statement of Claim or, in the case of a Counterclaim, the Statement of Position and Response to Counterclaim will be deemed to satisfy any initial or mandatory disclosure required by Rule 26 of the Federal Rules of Civil Procedure, as applicable pursuant to Rule 9014 of the Federal Rules of Bankruptcy Procedure. B. Settlement Offer At any time after receipt of a Statement of Claim, the Debtors may offer, in writing, to settle a particular Claim or Counterclaim, as the case may be. The Debtors may make a Settlement Offer to any Claimant who timely submits a completed and signed Statement of Claim. Each Settlement Offer will constitute a statement made for settlement purposes only and, pursuant to Rule 408 of the Federal Rules of Evidence, will be inadmissible in any proceeding with respect to the Claim or a Counterclaim. C. Claimant's Acceptance of Settlement Offer Any recipient of a Settlement Offer will be required to accept or reject the Settlement Offer or submit in writing, a counter-offer within 10 days of service by the Debtors or the Claimant, as the case may be. D. Acceptance or Rejection of Counteroffer If a Counteroffer is tendered, the Debtors or Claimant will be required to accept or reject the Counteroffer, in writing within 10 days of the service of the Counteroffer. E. Creditors Committee Involvement The Debtors will consult with, and provide periodic updates to, the Creditors' Committee on the number, size and nature of the Claims and on the Debtors' general plans to resolve the Claims. In the event that (1) a settlement provides for allowance of a Claim in an amount greater than $100,000,000, (2) a settlement constitutes 20% or more of the estimated total allowed Claims against a particular Debtor and more than $1,000,000, (3) a settlement provides for allowance of a Claim in an amount greater than $20,000,000 and constitutes more than 105% of the amount reflected on the Debtors' books and records or (4) a settlement provides for allowance of a Claim of an employee or insider in an amount greater than $100,000, then the Debtors will obtain the consent of the Creditors Committee prior to the acceptance or rejection of any Settlement Offer or Counteroffer, and prior to filing any Settlement Stipulation in respect of the Settlement Offer or Counteroffer; provided, however, that in the case of De Minimis Settlements, prior approval of the Creditors Committee will not be required. Additional Discovery A. Additional Discovery In the event that the Debtors or any Claimant determines that additional discovery beyond the initial and mandatory disclosures in connection with the estimation of any Claim or the adjudication of any Counterclaim is required, the parties will negotiate in good faith the terms of an expedited discovery schedule, in writing signed in accordance with the requirements of Civil Rule 26(g), as applicable pursuant to Bankruptcy Rule 9014, such that all discovery will be concluded no later than 20 days prior to the Estimation Hearing. If a consensual discovery schedule cannot be negotiated, either party may arrange a telephonic chambers conference on notice to the other party and counsel to the Creditors Committee, provided that the conference must be requested and held no later than 50 days prior to the Estimation Hearing. The Court will have the right to limit the number or types of discovery requests in accordance with the expedited nature of these Procedures. B. Limited Use of Discovery To the extent that facts obtained through discovery refute, contradict or impeach material facts asserted by either party in their declarations or certified statements, either party may submit to the Bankruptcy Court a written summary of the disputed facts, not to exceed five pages, providing specific citations to the facts, no later than 15 days prior to the Estimation Hearing. In the event a party submits Discovered Evidence, the non-submitting party will have the right to dispute the admissibility or asserted interpretation of Discovered Evidence in a written statement not to exceed five pages, including the specific disputes and reasons therefore no later than five days prior to the Estimation Hearing. Submissions to the Court A. Exemptions Challenged by the Debtors In the event that the Debtors refuse a Claimant's Exemption Request or object to a Claimant's Exemption Election on the basis that the Claim is contingent, unliquidated, and properly subject to estimation pursuant to these Procedures, the Debtors will, within 25 days of service of the Claimant's Exemption Request or Election, compile and file with the Bankruptcy Court the Claimant's proof of claim, the Notice Package, the Claimant's Exemption Request or Election, and the Debtors' response to the Exemption Request or Election for a ruling on whether the Claim will be subject to estimation in accordance with these Procedures. A hearing may be requested by the Claimant pursuant to a Claimant's Exemption Request or Election or by the Debtors in their response thereto. The Exemption Hearing will be noticed for hearing on the next Hearing Day that is at least seven calendar days after the Exemption File is filed with the Clerk of the Court and notice thereof is served upon the appropriate parties, or on other day as the Court so orders. In the absence of a request for an Exemption Hearing, the Court may, in its discretion, schedule an Exemption Hearing, or enter an order resolving the dispute based on the Exemption File without a hearing. In the event that the Debtors refuse a Claimant's Exemption Request or object to a Claimant's Exemption Election with respect to any Claim, these Procedures will be suspended with respect to the Claim until an order is entered resolving the disputed Exemption Request or Exemption Election. In the event a Claimant's Exemption Request or Election is denied by the Court, the the Court will establish a schedule for the submission of a Statement of Claim by the Claimant, the Debtors' Statement of Position and the Estimation Hearing, if any, in the order resolving the disputed Exemption Request or Exemption Election. B. Estimation or Adjudication by the Court In the absence of an Exemption Request or Election and unless a Claim is exempted by Court order or otherwise settled in accordance with these Procedures, the Debtors will compile and file with the Bankruptcy Court the Claimant's proof of claim, the Notice Package, the Claimant's Statement of Claim, and the Debtors' Statement of Position for purposes of a hearing on estimation of the Claim pursuant to the Estimation Objection, and, if applicable, adjudication of a Counterclaim, in accordance with the Claims Procedures Order. B. Extension of Time Periods Upon mutual written consent, the parties may extend any time period provided in these Procedures prior to the Debtors' filing of the Claim File with the Bankruptcy Court. Estimation Hearing A. Hearing Unless otherwise ordered by the Bankruptcy Court, an Estimation Hearing will be held 135 days after service of the Estimation Objection, or as soon thereafter as a regularly scheduled omnibus hearing may occur. B. Oral Argument Subject to the Bankruptcy Court's discretion to increase or decrease the hearing time, each party will have 15 minutes to explain its position to the Bankruptcy Court. C. Evidentiary and Legal Record The evidentiary and legal record will be confined to the Claim File and any Discovered Evidence; provided, however, that the Bankruptcy Court may allow or require additions to the record when deemed necessary or appropriate. D. Resolution Upon the Bankruptcy Court's review of the evidentiary submissions and oral argument at the Estimation Hearing, the Bankruptcy Court will estimate the relevant Claims and adjudicate Counterclaims for all purposes under the Bankruptcy Code, provided that no party's right to reconsideration under Section 502(j) will be impaired. These Procedures will not have any preclusive or collateral effect on third party litigation. Nothing in these Procedures will be construed to limit either the Debtors' or a Claimant's valid right of setoff to the extent available under state law as preserved under Section 553 of the Bankruptcy Code, or a Claimant's valid right of recoupment under non-bankruptcy law. Pursuant to Section 502(d) of the Bankruptcy Code, any Claim of a Claimant from which property is recoverable under Section 542, 543, 550, or 553 or that is a transferee of a transfer avoidable under Section 522(f), 522(h), 544, 545, 547, 548, or 549 of the Bankruptcy Code will be disallowed, unless the Claimant has paid the amount, or turned over the property, for which Claimant is liable under Section 522(i), 542, 543, 550, or 553. Settlement Stipulations A. De Minimis Settlements If the Debtors and a Claimant agree to a compromise and settlement of a Claim and, in connection therewith, the Claimant is to be granted an allowed Claim equal to or less than $20,000,000, where the settlement amount constitutes less than 20% of the estimated total allowed Claims for the relevant Debtor, the Debtors will file with the Clerk of the Bankruptcy Court and send to BSI, as Claims Agent, a stipulation setting forth the agreed upon amount. The De Minimis Stipulation will become effective and binding upon all parties-in-interest upon its filing with the Clerk and will not require the endorsement or approval of the Bankruptcy Court; provided, however, that, prior to the effective date of any chapter 11 plan for the Debtors, any De Minimis Stipulation will be served upon attorneys for the Creditors Committee 10 days prior to the submission to the Clerk of the Bankruptcy Court; and, provided further, that, in the event that the Creditors' Committee serves a written objection on the Debtors prior to the expiration of the 10-day period, the Debtors will have the option of (y) withdrawing the De Minimis Stipulation and (z) treating the De Minimis Stipulation as a Settlement Stipulation; and, provided, further, that, under no circumstances will a De Minimis Stipulation provide for payment other than in accordance with the terms and conditions of a plan confirmed in the Debtors' Chapter 11 cases in accordance with Section 1129 of the Bankruptcy Code. B. Court-Approved Settlements If the Debtors and a Claimant agree to a compromise and settlement of a Claim and, in connection therewith, the Claimant is to be granted an allowed Claim in excess of $20,000,000, the Debtors will seek Bankruptcy Court approval of a compromise and settlement and corresponding stipulation and order in accordance with the terms and conditions of the Case Management Order on 10 days' notice. If no objections to the Settlement Stipulation are timely filed, the Debtors will submit an order approving the Settlement Stipulation without further notice or hearing. If an objection is timely interposed, the matter will be scheduled for hearing at the next omnibus hearing date; provided, however, that, under no circumstances will a Settlement Stipulation provide for payment other than in accordance with a confirmed plan in the Debtors' Chapter 11 cases. If the Bankruptcy Court does not approve the Settlement Stipulation, the Debtors, at their discretion, may elect to negotiate further with the Claimant or may deem settlement negotiations terminated and seek to estimate the Claim pursuant to the Claims Procedures Order. Moreover, Judge Gonzalez determines that: -- the form of Statement of Claim is approved; -- Claims that are subject to the Mediation Order of Trading Cases will not be subject to the Claims Procedures at any time; and -- the Debtors will not file an Estimation Objection to Claims that are the subject of pending claims resolution proceedings. (Enron Bankruptcy News, Issue No. 100; Bankruptcy Creditors' Service, Inc., 215/945-7000) EXIDE TECH: Classification & Treatment of Claims Under the Plan --------------------------------------------------------------- This table summarizes the Classes of Claims and Equity Interests under Exide Technologies and its debtor-affiliates' Joint Reorganization Plan. The projected recoveries are based on certain assumptions contained in the valuation analysis and subject to dilution for a Company Incentive Plan. Projected ----------------- Class Claims Recovery Treatment ----- ------ -------- --------- Administrative $1.0M Plan: 100% Paid in full Claims Chapter 7: 0% DIP $192.4M Plan: 100% Paid in full Facility Chapter 7: 0% Priority $1.4M Plan: 100% Paid in full Tax Claims Chapter 7: 0% Other $1.2M Plan: 100% Paid in full Priority Chapter 7: 0% Claims (P1 & S1) Other $1.2M Plan: 100% Paid in full Secured Chapter 7: 0% Claims (P2 & S2) Prepetition $802.7M Plan: 99.4% * Class P3 Option A: Credit Chapter 7: 2% Facility Pro Rata Share of 90% of Claims New Exide Common Stock (P3 and S3) after distributions to Option B Electors Plan: 35.9% * Class P3 Option B: Chapter 7: 2% Pro Rata Share of 90% of New Exide Common Stock with value of Elector's Claim set at $1 over liquidation value. Prepetition Foreign Secured Claims governed by Amended Prepetition Foreign Credit Agreement. General $303.8M Plan: 16-21% * Class P4-A Unsecured Chapter 7: 0% Claims of Pro Rata share of Class Exide (P4) P4 Distribution based on the Allowed amount of Claims $314.9M Plan: 29-37% * Class P4-B: Chapter 7: 0% Pro Rata share of Class P4 Distribution allocable to Allowed Class P4-B and PC-4 Claimholders will be aggregated, with Class P4-B receiving 86.67% of the aggregate amount. $325.8M Plan: 4-6% * Class P4-C: Chapter 7: 0% Pro Rata share of Class P4 Distribution allocable to Allowed Class P4-B and P4-C Claimholders will be aggregated, with Class P4-C receiving 13.33% of the aggregate amount. Equity 27.4 Plan: 0% Cancelled, not entitled Interests million Chapter 7: 0% to receive distribution shares or retain any property General $35.1 Plan: 0% Cancelled, not entitled Unsecured Chapter 7: 0% to receive distribution Claims of or retain any property Subsidiary Debtors (S4) Class S5 N/A Plan: 0% Cancelled, not entitled Equity Chapter 7: 0% to receive distribution Interests or retain any property Headquartered in Princeton, New Jersey, Exide Technologies is the world-wide leading manufacturer and distributor of lead acid batteries and other related electrical energy storage products. The Company filed for chapter 11 protection on April 14, 2002 (Bankr. Del. Case No. 02-11125). Matthew N. Kleiman, Esq., and Kirk A. Kennedy, Esq., at Kirkland & Ellis, represent the Debtors in their restructuring efforts. On April 14, 2002, the Debtors listed $2,073,238,000 in assets and $2,524,448,000 in debts. (Exide Bankruptcy News, Issue No. 41; Bankruptcy Creditors' Service, Inc., 215/945-7000) FEDERAL-MOGUL: Files Disclosure Statement & Amended Reorg. Plan --------------------------------------------------------------- Federal-Mogul Corporation (OTC Bulletin Board: FDMLQ) has jointly filed with the Unsecured Creditors Committee, the Asbestos Claimants Committee, the Future Asbestos Claimants Representative, the Agent for the Prepetition Bank Lenders and the Equity Committee a Disclosure Statement and an Amended Plan of Reorganization with the U.S. Bankruptcy Court in Delaware. This Amended Joint Plan of Reorganization has the support of High River Limited Partnership, an entity that is affiliated with Carl Icahn. A hearing to consider approval of the Disclosure Statement has been scheduled for April 13 and 14, 2004. Upon its approval by the Court, the Disclosure Statement, along with the Amended Joint Plan of Reorganization, will be mailed to all creditors and stockholders in order to solicit their votes to accept the Plan. About Federal-Mogul Federal-Mogul is a global supplier of automotive components, sub- systems, modules and systems serving the world's original equipment manufacturers and the aftermarket. The company utilizes its engineering and materials expertise, proprietary technology, manufacturing skill, distribution flexibility and marketing power to deliver products, brands and services of value to its customers. Federal-Mogul is focused on the globalization of its teams, products and processes to bring greater opportunities for its customers and employees, and value to its constituents. Headquartered in Southfield, Michigan, Federal-Mogul was founded in Detroit in 1899 and today employs more than 45,000 people in 24 countries. On October 1, 2001, Federal-Mogul decided to separate its asbestos liabilities from its true operating potential by voluntarily filing for financial restructuring under Chapter 11 of the Bankruptcy Code in the United States and Administration in the United Kingdom. For more information on Federal-Mogul, visit the company's Web site at http://www.federal-mogul.com/ FLEMING COMPANIES: Signs-Up Burr Pilger & Mayer as Accountants -------------------------------------------------------------- The Fleming Debtors want to employ Burr Pilger & Mayer LLP as accountants for their convenience store wholesale distribution business, nunc pro tunc to December 15, 2003. Services Specifically, Burr Pilger will: (1) reconcile and review of account detail for accuracy and completeness of all major balance sheets; (2) vouch disbursements on a test basis to external documentation and posting to the correct general ledger account; (3) observe inventory at various dates, conduct test counts, and reconcile them to the perpetual inventory and reserve for obsolete inventory; (4) reconcile payroll expense for the year to federal tax documents, such as W-2s; (5) on a test basis, vouch certain employee payments for payroll to supporting documents such as timesheets, pay rate authorizations, and withholding authorizations; trace posting to the proper general ledger account; (6) review gross margin calculation by divisions and by accounting period; (7) review leases for proper payment of rent and rent- related expenses; (8) confirm selected accounts receivable balances with customers; (9) review adequacy of any reserves and estimates on the balance sheet at year's end; (10) review and note for completeness state, local and federal tax filings; (11) test and reconcile depreciation expenses; (12) review goodwill adequacy and amortization; (13) analyze and review sales trends by product, by division and by time period; (14) review accruals for sick time and vacation time; and (15) assist with fresh-start accounting and other issues regarding the Debtors' Chapter 11 cases. According to Christopher J. Lhulier, Esq., at Pachulski Stang Ziehl Young Jones & Weintraub PC in Wilmington, Delaware, the Debtors selected Burr Pilger since each of the "Big Four" accounting firms -- Deloitte & Touche LLP, Ernst & Young LLP, PricewaterhouseCoopers LLP, and KPMG LLP -- are already otherwise involved in these cases. The Debtors' only option was to choose a boutique accounting firm. The firm has provided services to the Debtors since December 15, 2003. Compensation The Debtors will compensate Burr Pilger on a progress billing. On a quarterly basis, and upon the filing of its quarterly fee application, Burr Pilger will reconcile its fees to actual time incurred. Burr Pilger's invoices for these fees will be: December 15, 2003 $50,000 December 29, 2003 50,000 January 12, 2004 50,000 January 26, 2004 50,000 February 8, 2004 50,000 February 22, 2004 50,000 The balance is due when the work is completed. At the end of January 2004, Burr Pilger has incurred a total of $180,000 in fees. Given Burr Pilger's boutique nature and firm size, it is not in a position to incur fees in excess of $180,000 without receiving payment in the near future. In this regard, the Debtors seek the Court's authority to immediately pay the $180,000, subject to final review in the formal fee application process. Stephen D. Mayer, Managing Partner at Burr Pilger's San Francisco, California, office, informs the Court that, to save time and estate funds, where inventory observations were required at Fleming Convenience locations outside of northern California, Burr Pilger "outsourced" the work to firms that were geographically closer. Specifically, the outsourced work was limited to taking inventory, on-site, at the locations where the Fleming Convenience inventory was located. Any required analysis related to the inventory raw data was and will continue to be conducted entirely by Burr Pilger. All outsourced work was conducted under the guidance and responsibility of Burr Pilger. In the aggregate, the anticipated total cost for the outsourced work will not exceed $15,000. Mr. Mayer assures the Court that neither the outside firms nor Burr Pilger have any relationship which would preclude them from being "professional persons" as that term is used in the Bankruptcy Code. At the Debtors' behest, Judge Walrath approves the Application. Headquartered in Lewisville, Texas, Fleming Companies, Inc. -- http://www.fleming.com/-- is the largest multi-tier distributor of consumer package goods in the United States. The Company filed for chapter 11 protection on April 1, 2003 (Bankr. Del. Case No. 03-10945). Richard L. Wynne, Esq., Bennett L. Spiegel, Esq., Shirley Cho, Esq., and Marjon Ghasemi, Esq., at Kirkland & Ellis, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from its creditors, they listed $4,220,500,000 in assets and $3,547,900,000 in liabilities. (Fleming Bankruptcy News, Issue No. 26; Bankruptcy Creditors' Service, Inc., 215/945-7000) GADZOOKS INC: February Sales Decrease by 31.3% to $14.7 Million --------------------------------------------------------------- Gadzooks, Inc. (OTC Pink Sheets: GADZQ) announced that sales for the four weeks of fiscal February ended February 28, 2004 decreased 31.3 percent to $14.7 million from $21.4 million for fiscal February 2003. Reported sales for fiscal February do not reflect sales for 127 stores being liquidated by the Great American Group on behalf of the Company subsequent to February 11, 2004, the day prior to the liquidation commencement. Pursuant to the liquidation arrangement, Great American controls the proceeds from the liquidation sales, pays most of the Company's store level operating expenses incurred during the liquidation and guarantees to the Company a certain recovery of the beginning retail value of inventories in the liquidating stores. For the February period, the Company's eighth month as a female-only concept, comparable store sales decreased 14.2 percent. The reported comparable store sales figure represents the results of only the 252 stores that the Company currently intends to retain and operate. Fiscal February 2004 sales for those 252 stores totaled $12.2 million. Headquartered in Carrollton, Texas, Gadzooks, Inc. -- http://www.gadzooks.com/-- is a mall-based specialty retailer providing casual apparel and related accessories for youngsters, between the ages of 14 and 18. the Company filed for chapter 11 protection on February 3, 2004 (Bankr. N.D. Tex. Case No. 04- 31486). Charles R. Gibbs, Esq., and Keith Miles Aurzada, Esq., at Akin Gump Strauss Hauer & Feld, LLP represent the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed $84,570,641 in total assets and $42,519,551 in total debts. GENERAL MEDIA: Submits First Amended Reorganization Plan -------------------------------------------------------- General Media, Inc., the publisher of Penthouse magazine, together with eight of its direct and indirect subsidiaries, announced the filing of a First Amended Plan of Reorganization with the United States Bankruptcy Court. Under the Plan, if confirmed, holders of the Company's 15% Senior Notes due 2004 and the Company's general unsecured creditors would receive payment of their allowed claims in full in cash, the Company's outstanding Class A Preferred Stock would be reinstated, and the common stock of the reorganized Company would be issued to Penthouse International, Inc. (OTC Bulletin Board: PHSL.OB), which has not filed for bankruptcy protection and currently owns 99.5% of General Media, Inc. Penthouse International, Inc. will retain ownership of General Media, Inc. in consideration for a capital contribution of between $38 and $50 million. This plan supercedes a prior plan under which control of General Media and its subsidiaries would have been transferred to its bondholders, principally an entity affiliated with Marc Bell, formerly of Globix Corporation. General Media has received a commitment for $30 million of secured exit financing extended by certain funds and accounts managed by Post Advisory Group of Los Angeles, California. Penthouse International, Inc. has also received a commitment from its majority shareholder, Dr. Luis Enrique Fernando Molina G., to provide Penthouse with such additional amount of funding as shall be necessary to finance the full-payment plan. The previous plan of reorganization, which was withdrawn by General Media on Tuesday, provided that holders of the Company's Senior Notes would exchange them for 1 million shares of common stock of the reorganized Company, representing 100% of the new common equity, plus up to $27 million principal amount of new notes, while general unsecured creditors, whose claims aggregate approximately $10-$12 million, would have shared pro rata in $2 million in cash and $3 million principal amount of new notes. In connection with the new Plan that pays creditors in full, the Company will enter into an agreement pursuant to which Company founder Robert C. Guccione will remain as publisher and editor-in- chief of Penthouse magazine. "The financial commitments we received to fund this new plan represent an important vote of confidence on the part of Dr. Molina and Post Advisory Group, which will enable the Company to repay all the Company's debts in full and emerge as a strong and viable enterprise for many years to come. We look forward to a prompt and successful conclusion to the Company's chapter 11 case," commented Robert C. Guccione, Chairman and Chief Executive Officer of General Media, Inc. and founder of Penthouse magazine. The Company filed a voluntary Chapter 11 petition on August 12, 2003. GENESEE: Net Assets in Liquidation Rises to $7.1MM at Jan. 2004 --------------------------------------------------------------- Genesee Corporation (OTC Bulletin Board: GENBA, GENBB) issued its statement of net assets in liquidation and statement of changes in net assets in liquidation as of and for the fiscal 2004 third quarter ended January 31, 2004. The Corporation is operating under a plan of liquidation and dissolution that was approved by shareholders in October 2000. Under this plan, the Corporation has divested its operating businesses and liquidated substantially all of its other assets. In accordance with generally accepted accounting principles, the Corporation has adopted the liquidation basis of accounting, under which the Corporation reports net assets in liquidation and changes in net assets in liquidation, which are based predominantly on management's estimates. The Corporation reported net assets in liquidation at January 31, 2004 of $7.1 million, or $4.24 in net assets per share, compared to net assets in liquidation at November 1, 2003 of $6.7 million, or $3.99 in net assets per share. The primary reason for the increase in net assets in liquidation during the third quarter is a change in estimate of income taxes due from a liability of $250,000 to an asset of $115,000. At the close of business on December 31, 2003 the Corporation's Class B Common Stock was delisted from the Nasdaq National Market and the Corporation's stock books for its Class A and Class B Common Stock were closed. The Corporation expects to file a certificate of dissolution with the New York State Department of State in the future. These actions are pursuant to the Corporation's Plan of Liquidation and Dissolution that was adopted by shareholders in October 2000. While the Corporation is expecting to further reduce its compensation and overhead costs by the end of April 2004, there will be a further phase required to wind up its business, necessitated by certain assets and liabilities having a longer maturity or term. The duration of this additional phase is unknown at this time. The net assets in liquidation reported in this news release reflect management's current estimates of the net realizable value of the Corporation's assets and the settlement costs of the Corporation's liabilities. The actual values and costs are expected to differ from the amounts reported and could be greater or lesser than the amounts reported. The Corporation has a Contingent Liability Reserve Policy whereby it maintains a cash contingency reserve equal to $2.5 million, or approximately $1.50 per outstanding share of common stock, for unexpected expenses of the Corporation. The amount of the reserve may be modified in the future by the Board as deemed necessary. The balance of this reserve remains at $2.5 million as of January 31, 2004; however, it is not classified as restricted or as a liability in the Statement of Net Assets in Liquidation. The Corporation has paid partial liquidating distributions totaling $37.50 per share including $7.50 per share on March 1, 2001, $13.00 per share on November 1, 2001, $5.00 per share on May 17, 2002, $5.00 per share on August 26, 2002, $3.00 per share on October 11, 2002, $2.50 per share on March 17, 2003, and $1.50 per share on April 28, 2003 under the Plan of Liquidation and Dissolution adopted by the Corporation's shareholders in October 2000. GLOBAL CROSSING: Agrees to Settle Verizon's Admin. Expense Claim ---------------------------------------------------------------- The telephone operating companies of Verizon Communications Inc. ask the Court to compel the Global Crossing Debtors to immediately pay their administrative expenses pursuant to Section 503(b)(1) of the Bankruptcy Code. Philip D. Anker, Esq., at Wilmer, Cutler & Pickering, in New York, relates that through its domestic telephone operating companies, Verizon is one of the largest providers of telecommunications services to Global Crossing. It is also a member of the Official Committee of Unsecured Creditors in the Debtors' Chapter 11 cases. Mr. Anker states that within the past months, the Debtors have failed to pay large portions of postpetition invoices to Verizon without justification. As of October 31, 2003, the Debtors owed Verizon $25,398,342 in postpetition, past-due charges. Verizon has been working with the Debtors for many months to try to resolve the problem consensually, but those efforts have not proved successful. The Debtors have not disputed the vast majority of Verizon's charges but they simply declined to pay them. As of October 31, 2003, at least $21,200,000 in Verizon charges for postpetition services were past due, undisputed and yet unpaid. Verizon has provided a detailed backup with respect to the postpetition amount past due to the Debtors. While the Debtors have made some payments since that time, additional Verizon charges have come due. The net past due, undisputed amount owed to Verizon for postpetition services has not decreased. Mr. Anker notes that this is not the first time that the Debtors refused to pay undisputed postpetition payables to Verizon. Commencing in March 2003, the Debtors began a pattern of not paying large portions of invoices. For example, for invoices rendered and payable in March 2003, the Debtors failed to pay $11,000,000, and, similarly, for invoices payable in June 2003, they also failed to pay over $7,000,000. In July, Verizon prepared and sent the Debtors a draft motion to compel payment. Verizon subsequently received payment in a sufficient amount that it determined at that time not to file the motion and seek the Court's assistance. While the Debtors did not pay the full amount they then owed, Verizon assumed that the Debtors would become and remain current. However, according to Mr. Anker, the exact opposite has proved true. Once they no longer faced the prospect of having to address their defaults in the Court immediately, the Debtors resumed their pattern of failing to pay tens of millions of dollars in undisputed charges each month, with payments dipping most dramatically in months at the end of calendar quarters. Thus, beginning again in September 2003, Global Crossing began failing to pay -- without disputing -- millions of dollars in invoices for postpetition charges. Mr. Anker tells the Court that the situation has become intolerable. Nevertheless, Verizon again sought to resolve the issue consensually without having to trouble the Court. Its business representatives contacted the Debtors' business representatives, as well as their counsel. Verizon's counsel provided the Debtors' counsel with a draft of their Motion to Compel, but these repeated efforts have no longer succeeded. Verizon again finds itself in the position that the Debtors are refusing to pay tens of millions of dollars in postpetition invoices without apparent reason. Because Verizon is being compelled to provide service to the Debtors under the various utility orders entered in these Chapter 11 cases, Verizon may soon find itself in the position of becoming a forced, unsecured DIP lender without any appropriate and customary protections. Accordingly, Verizon asks the Court to compel the Debtors to make immediate payment for unpaid, postpetition services provided amounting to $21,200,000 -- representing currently past due, postpetition charges. Verizon also asks the Court to direct the Debtors to pay all other undisputed Verizon invoices for postpetition services as and when due. * * * The Debtors objected to Verizon's request. Thereafter, both parties' business representatives and counsels met to discuss Verizon's demand for payment. Accordingly, the parties determined to resolve Verizon's request on the terms set forth in a Court-approved agreement. The salient terms of the Agreement are: GX Payments on Account of Verizon Claimed Past-Due Amounts (A) Payments Already Made Global Crossing represented that, between December 1 & 9, 2003, it had sent checks totaling $4,500,000 to Verizon in partial payment of the Verizon Claimed Past-Due Amount, in addition to payments made to Verizon during this same period for charges that came due after November 30, 2003, and that are not included in the Verizon Claimed Past-Due Amount. To the extent that the Payments Already Made in respect of the Verizon Claimed Past-Due Amount are greater or less than $4,500,000, Global Crossing increases or decreases the amount of its payment due on December 17, 2003, by the amount of such difference. (B) Installment Payments In addition to payments made in December 2003 for invoices that came due in that month, on account of the Verizon Claimed Past-Due Amount, Global Crossing has made these payments to Verizon by the dates specified: -- December 17, 2003: $5,000,000; -- December 31, 2003: $2,500,000; and -- January 9, 2004: $2,600,000 plus all remaining unpaid portions of the Verizon Claimed Past-Due Amount, except for those amounts disputed by Global Crossing in accordance with the provisions of the Agreement. (C) Formerly Disputed Charges In respect of previously billed charges that Global Crossing disputed, Verizon responded to the alleged billing dispute by denying such dispute. These charges, totaling $1,800,000, are now included in the Verizon Claimed Past-Due Amount: -- On December 17, 2003, Global Crossing paid Verizon $700,000; -- On December 22, 2003, Global Crossing paid $250,000 in additional charges; -- On January 9, 2004, Global Crossing paid $850,000 in IXNET charges that are included in the Claimed Past-Due Amount. (D) Missing Invoices On account of invoices that came due after the Petition Date totaling $250,000 that Global Crossing asserts it has not received: * Verizon will send additional copies of the Missing Invoices, totaling $100,000, to Global Crossing for the billing account numbers -- BANs -- with the three largest outstanding balances in respect of allegedly Missing Invoices. Upon receipt of these invoices, Global Crossing will either pay the invoices in full or dispute those invoices in accordance with the requirements under the applicable tariff or agreement between the Parties; * Global Crossing will: (i) review the then-current charges for all other BANs with Missing Invoices; and (ii) either pay such Missing Invoices or dispute the Missing Invoices in accordance with the Dispute Procedures. (E) Invoices with Balance Transfer Issues Global Crossing will pay to Verizon $1,500,000 in respect of invoices included in the Verizon Claimed Past Due Amount that were originally included on the same BANs that Verizon employed before the Petition Date, but that Verizon has subsequently transferred to BANs created after the Petition Date; Another $400,000 in invoices included in the Verizon Claimed Past-Due Amount continues to appear on Prepetition BANs. Verizon will transfer these charges to Postpetition BANs. Global Crossing will pay such charges in full when the next payment is due under those Postpetition BANs for then-current charges payable under the same BANs. (F) Misapplied Payments Global Crossing claims that Verizon misapplied $1,100,000 in payments to different Postpetition BANs from the Postpetition BANs to which Global Crossing intended the payment to be applied. With respect to these Allegedly Misapplied Payments, Global Crossing will supply to Verizon either: -- specific detail regarding the Allegedly Misapplied Payments, so that the Parties may agree on the accounts to which to apply these payments; or -- a full accounting of all applicable payments Global Crossing has made to Verizon since July 1, 2003. (G) Collocation Invoices The Verizon Claimed Past-Due Amount includes $1,300,000 in invoices for collocation services and facilities. Global Crossing will notify Verizon whether and to what extent it disputes these invoices. To the extent that Global Crossing does not dispute such invoices, it will make payment to Verizon of the charges by December 31, 2003. Global Crossing acknowledges that this amount has not been paid, and Verizon acknowledges that Global Crossing notified Verizon that it disputed such invoices. To the extent that it disputes such invoices and Verizon subsequently denies the dispute, Global Crossing will make payment of the charges or will escalate the disputes. (H) Disputed Invoices Global Crossing has now disputed an additional $4,100,000 in invoices included in the Verizon Claimed Past-Due Amount, which disputes remain outstanding. Verizon will review such disputes. To the extent that Verizon denies the disputes, Global Crossing will make payment of the invoices or will escalate the disputes. Payments Going Forward (A) Pay or Dispute Global Crossing will: (a) remit to ensure that Verizon receives payment of, or dispute, each Verizon invoice dated in November 2003 by the applicable due date for each such invoice; and (b) pay or dispute each Verizon invoice dated on or after December 1, 2003, to ensure that Verizon receives payment or the applicable billing dispute by the applicable due date of such invoice. (B) Method of Dispute Any such dispute by Global Crossing will be in writing and will conform to the notice and other requirements for so disputing an invoice set forth in the applicable tariff or agreement between the Parties. (C) Method of Payments of Invoices Verizon will send all such invoices for Wholesale Services to the proper address or addresses. Global Crossing will pay all sent Verizon invoices by either wire transfer or by check sent to the lockbox designated by Verizon and appropriate remittance advice will accompany any such payments. Global Crossing may, in its sole discretion, select either method of remittance. Unless Verizon directs otherwise, Global Crossing will make no further payments to Verizon payment centers. Any payments not paid by wire or into the lockbox will not be deemed timely. (D) Required GX Actions Upon Verizon's Denial of a Dispute If Verizon denies in writing a Global Crossing dispute of an invoice, Global Crossing will either pay the denied amount of the dispute or escalate the dispute within 10 days of Verizon's denial of the dispute. Any such escalation will comply with and be in accordance with the requirements for escalating a dispute set forth in the applicable agreement between the Parties, or as otherwise specified in the Verizon communication denying the dispute. (E) Timing of Payment For a period of 12 months following December 9, 2003, Global Crossing is required to pay each Verizon invoice within 21 days of the date of the Verizon invoice. Headquartered in Florham Park, New Jersey, Global Crossing Ltd. -- http://www.globalcrossing.com/-- provides telecommunications solutions over the world's first integrated global IP-based network, which reaches 27 countries and more than 200 major cities around the globe. Global Crossing serves many of the world's largest corporations, providing a full range of managed data and voice products and services. The Company filed for chapter 11 protection on January 28, 2002 (Bankr. S.D.N.Y. Case No. 02- 40188). When the Debtors filed for protection from their creditors, they listed $25,511,000,000 in total assets and $15,467,000,000 in total debts. (Global Crossing Bankruptcy News, Issue No. 56; Bankruptcy Creditors' Service, Inc., 215/945-7000) GLOBAL MEDICAL: Inks "Agreement to Dividend Stock" with JWG ----------------------------------------------------------- On January 31, 2004, Global Medical Products Holdings, Inc. entered into an "Agreement to Dividend Stock" with JWG Enterprises, Inc., whereby Global Medical Products Holdings, Inc. will receive 20 percent of the equity of GlobeLink Capital, Inc. (formerly GlobeLinkCapital.Com, Inc.) in the form of a stock dividend. Global Medical Products Holdings, Inc. will in turn pass 50 per cent of the dividend through to its shareholders. GlobeLink Capital, Inc. is a joint venture Nevada corporation presently with principle investors - JWG Enterprises, Inc., Alie Chang and Felizian Paul. Matt Fong of Strategic Advisory Group (and former Treasurer of the State of California) has accepted an offer to be an advisor to GlobeLink Capital, Inc. and has accepted a shareholder position in GlobeLink Capital, Inc. On January 16, 2004 Beijing Guo Xin Well-tel Technology Co., Ltd., as a Division of the Ministry of Information Industry of The People's Republic of China, entered into an exclusive agreement with EarthNetMedia, Inc. and its affiliate, The Emco/Hanover Group. This agreement provides for the development of certain Chinese companies that are in need of funding and market outlets outside of China. EarthNetMedia, Inc. and The Emco/Hanover Group, through JWG Enterprises, Inc., have assigned all of their respective rights to the agreement to GlobeLink Capital, Inc. It is the intention of the parties to also dividend certain securities of GlobeLink Capital, Inc. to Global Medical Products Holdings, Inc. On January 16, 2004, EarthNetMedia, Inc. signed a "Letter of Intention for Co-operation" with Hangzhou Trunkingcom Science Technologies Co. Ltd., Hangzhou City, China, and Bejing Guo Xin Well-tel Technology Co., Ltd. - A Division of The Ministry of Information Industry, People's Republic of China, Beijing, China. This agreement states that EarthNetMedia, Inc. will use best efforts to obtain funds and will work with the other parties to the agreement in research, development and manufacturing. EarthNetMedia, Inc. has assigned this agreement to GlobeLink Capital, Inc. Redwood Securities Group, Inc. has received from Global Medical Products Holdings, Inc. a Letter of Instruction, requesting certain information required under Section 12-G of The Securities Act of 1934. Upon receipt of such information and its filing with the Securities and Exchange Commission, Global will then set a record date for the payment of a dividend of certain shares of Redwood Securities Group, Inc. to shareholders of Global Medical Products Holdings, Inc. Redwood Securities Group, Inc. has now officially opened its City of Industry (Los Angeles), California office. Global Medical's June 30, 2003 balance sheet shows a total stockholders' deficit of $310,128. HAWAIIAN: Trustee & Creditors Propose New Bidding Process --------------------------------------------------------- Hawaiian Airlines Trustee Joshua Gotbaum and its Official Committee of Unsecured Creditors asked the bankruptcy court to approve a new, competitive process to solicit potential investors in the airline. Gotbaum and the Committee believe that, to get top dollar for Hawaiian, there needs to be open competition, and the process they are proposing would provide it. "Hawaiian Airlines is not only one of the nation's best airlines, it's also one of the most profitable," said Gotbaum. "We've received plenty of calls from interested investors, and the way to get the best deal for Hawaiian is to let them compete for it." Gotbaum noted that three proposals had already been filed, and that the new joint process would make it easier for others to come forward. Under the process, qualified investors would be required to make formal proposals in May. The Trustee and Committee would then evaluate them and propose the best one to the bankruptcy court. Hawaiian's Official Committee of Unsecured Creditors decided the joint proposal was in the best interest of unsecured creditors and the estate. A Committee spokesperson said, "In order to ensure the continued viability of Hawaiian and maximize the recovery to unsecured creditors, there needs to be a level playing field for all potential investors. The procedures presented in the joint proposal will provide the stepping stone for the exit from bankruptcy and the future success of Hawaiian." The joint Trustee/Committee proposal will be heard in bankruptcy court on April 1. Under the proposed schedule, Hawaiian Airlines could exit from Chapter 11 by end of summer. Based on its as-yet unaudited financial results, Hawaiian finished 2003 with nine straight months of operating profits, generating $78 million in operating profits on $705 million of revenues. Hawaiian's audit may result in adjustments to its accounts, so Hawaiian's final financial results for 2003, expected by mid- March, may vary. In addition, Hawaiian has achieved the nation's best on-time performance for the past three months since it began reporting its results to the U.S. Department of Transportation. The process schedule proposed by the Trustee and Committee is as follows (subject to change depending on the bankruptcy court's availability): March/April Potential investors sign confidentiality agreements and are given information about Hawaiian's operations and finances. April 21, 2004 Potential investors submit written "expressions of interest," non-binding proposals concerning how they value the company and what investment they might make in exchange for a particular percentage of the company's stock. The Trustee and Committee focus on the best proposals and continue to provide information to improve them. May 12, 2004 Deadline to submit binding written proposals to the Trustee and Committee. The Trustee and Committee will then meet with potential investors to determine the best proposal. They may decide to permit a final round of bids. May 20, 2004 By this date, the Trustee and Committee will select the proposal they jointly determine to be in the best interests of Hawaiian and creditors and propose it to the bankruptcy court. May 25, 2004 Bankruptcy court hearing to confirm selection of the winning bidder. May 31, 2004 After court approval of the winning proposal, the Trustee, Committee, and winning investor will file an amended plan of reorganization and amended disclosure statement incorporating that proposal. June 25, 2004 Bankruptcy court hearing on disclosure statement. August 10, 2004 Bankruptcy court hearing on confirmation of plan of reorganization. End of summer Hawaiian Airlines exits Chapter 11. The Committee is comprised of representatives from Air Line Pilots Association, International; Association of Flight Attendants; Aviation Insurance Services of Nevada; International Association of Machinists and Aerospace Workers, AFL-CIO; Panda Travel; Pratt & Whitney; and Starr Seigle Communications, Inc. Brett H. Miller of Otterbourg, Steindler, Houston & Rosen, P.C., in New York is lead counsel to the Committee. About Hawaiian Airlines Hawaiian Airlines, the nation's number one on-time carrier, is recognized as one of the best airlines in America. Business travelers recently surveyed by Conde Nast Traveler rated Hawaiian Airlines as having the best in-flight service and meals of any U.S. carrier. Hawaiian was recently ranked fourth best in the nation overall by Travel + Leisure. Celebrating its 75th year of continuous service, Hawaiian Airlines is Hawaii's biggest and longest-serving airline, and the second largest provider of passenger air service between Hawaii and the mainland U.S. Hawaiian offers nonstop service to Hawaii from more mainland U.S. gateways than any other airline. Hawaiian also provides approximately 100 daily jet flights among the Hawaiian Islands, as well as service to American Samoa and Tahiti. Hawaiian Airlines, Inc. is a subsidiary of Hawaiian Holdings, Inc. (AMEX and PCX: HA). Since the appointment of a bankruptcy trustee on May 16, 2003, Hawaiian Holdings has had no involvement in the management of Hawaiian Airlines and has had limited access to information concerning the airline. Additional information on Hawaiian Airlines is available at http://www.HawaiianAir.com/ HELLO NETWORK: Brings-In Finkel Goldstein as Bankruptcy Counsel --------------------------------------------------------------- Hello Network.com, Inc., asks the U.S. Bankruptcy Court for the Southern District of New York for permission to retain Finkel Goldstein Berzow Rosenbloom & Nash, LLP as its bankruptcy attorneys. The Debtor relates that it selected Finkel Goldstein because the firm has a considerable experience in bankruptcy matters and is qualified to represent the Debtor in bankruptcy proceeding. Finkel Goldstein will: a. provide the Debtor with necessary legal advice in connection with the operation and sale of its business or assets daring the Chapter 11 proceeding; b. represent the Debtor in all court proceedings and proceedings before the United States Trustee; c. prepare on behalf of the Debtor all necessary petitions, orders, applications, motions, reports and other legal papers and plan documents; d. negotiate a sale of all operating assets and intellectual property; e. perform all other legal services for the Debtor which may be necessary herein. Kevin J. Nash, Esq., a partner of Finkel Goldstein will bear the primary responsibility in this engagement. Mr. Nash reports that the firm has received a $15,000 retainer from the Debtor. Mr. Nash however, did not disclose the firm's standard hourly rates. Headquartered in New York, New York, Hello Network.com, Inc. -- http://www.hellonetwork.com/-- is the leading developer of the first Java-based end-to-end Streaming Media Platform that delivers both live and on-demand video, audio and data to any Java-enabled device without reliance on embedded chipsets or native implementations in the wireless arena and without the use of plug- ins, downloads or player installations in wired environments. The company filed for chapter 11 protection on February 23, 2004 (Bankr. S.D.N.Y. Case No. 04-11134). Kevin J. Nash, Esq., at Finkel Goldstein Berzow Rosenbloom & Nash, LLP represents the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed $291,906 in total assets and $30,530,741 in total debts. HOLLINGER INTERNATIONAL: Lauds Final Delaware Chancery Court Order ------------------------------------------------------------------ Hollinger International Inc. (NYSE: HLR) said that Vice Chancellor Leo E. Strine, Jr. entered the final Order and Judgment from the Delaware Chancery Court in the recently concluded trial involving the Company, Conrad M. Black and Hollinger Inc. Hollinger International said that the Order and Judgment allows it to pursue the Strategic Process without interruption and to evaluate all potential alternatives to maximize value for all of its shareholders. Hollinger International noted that the objective of the Process for which it has retained Lazard continues to be the same as the day it was announced in November: to evaluate a wide variety of options and determine the impact of these alternatives on the Company's shareholders. The Company said that it was pleased with the preliminary interest displayed in its properties. Now, with major impediments to the Process removed by the Order and Judgment, the Company is moving forward actively with the Process. Lazard invited offers for all of Hollinger International, as well as offers for each of the Telegraph Group, the Chicago Group, the Jerusalem Post and the Canadian Group. In response to inquiries on this matter, the Company stated that it welcomes the Barclay brothers to participate in the Process. The Company also said that, in accordance with the Order and Judgment and as a condition to the effectiveness of the injunctive relief granted, it will offer to provide a loan to HLG for $7.4 million plus certain costs and expenses to enable HLG to make the payment of interest due on March 1, 2004 on its Senior Notes, for which there is a 30-day grace period for payment. If made, the loan from the Company to HLG will bear an annual interest rate 2.5% less than the rate of HLG's Senior Notes, will mature on September 30, 2004, and will be secured by a first priority lien on unencumbered Class A shares of Hollinger International Inc. that are owned by HLG having a market value of at least 200% of the amount of the loan. Additionally, the loan would require HLG to pay reasonable costs and expenses, and to fund a secured reserve account to cover interest payments on the loan. The Company will also offer, as an alternative to the loan, to guarantee a similar loan made by a financial institution to HLG, which should provide HLG more flexibility to work within its existing debt restrictions. According to the Order and Judgment, the Company's obligation to make such a loan or guarantee offer is conditioned on HLG taking prompt steps to require Mr. Black, David Radler and Ravelston Corporation Ltd. to repay their obligation to HLG. Hollinger International Inc. may also seek relief from the Court to withhold sufficient funds from any transaction arising out of the Process to repay or assure satisfaction of any outstanding obligations in respect of the loan made or guaranteed by the Company. Hollinger International Inc. is a global newspaper publisher with English-language newspapers in the United States, Great Britain, and Israel. Its assets include The Daily Telegraph, The Sunday Telegraph and The Spectator magazine in Great Britain, the Chicago Sun-Times and a large number of community newspapers in the Chicago area, The Jerusalem Post and The International Jerusalem Post in Israel, a portfolio of new media investments and a variety of other assets. The company's September 30, 2003, balance sheet shows a working capital deficit of about $293 million. HOTEL NET INC: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Hotel Net Inc. aka Brunners Inn & Suites 2927 East Verbena Drive Phoenix, Arizona 85048 Bankruptcy Case No.: 04-02875 Type of Business: The Debtor operates a hotel. Chapter 11 Petition Date: February 24, 2004 Court: District of Arizona (Phoenix) Judge: Eileen W. Hollowell Debtor's Counsel: Allan D. Newdelman, Esq. Allan D. Newdelman PC 80 East Columbus Avenue Phoenix, AZ 85012 Tel: 602-264-4550 Fax: 602-277-0144 Total Assets: $5,572,690 Total Debts: $4,531,730 Debtor's 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Internal Revenue Service 940 & 941 Taxes $190,000 for 2003 and 2004 Board of Equalization $20,000 Certificate $49,200 of deposit in favor of board of equalization as security deposit for sales taxes (balance owed) SBC Payment Center Vendor $45,177 Everest Construction Inc. Construction repairs $41,155 State of California Edd 2003 and 2004 Payroll $35,816 Tax Liability Board of Equalization Unsecured portion $29,200 (after cd) for 2003 and 2004 sales taxes Financial Credit Network Vendor $29,169 Imperial Irrigation District Services #6965, $17,300 6967, 6969 & 6970 State Compensation Fund 2003 and 2004 $13,114 Worker's compensation Tax Liability Imperial Valley Press Vendor $10,960 Qwest Interprise Vendor $10,173 Winstar Communications Vendor $9,524 Home Depot Credit Services Vendor $6,523 Qwest Business Services Vendor $5,864 Q-96 Vendor $4,727 MCI Vendor $3,951 Qwest Vendor $3,940 SBC Smart Yellow Pages Vendor $4,503 Smith-Kandal Insurance Vendor $4,361 US Food Services Vendor $3,975 IMPAC SAC: Fitch Takes Rating Actions on Series 1999-2 Notes ------------------------------------------------------------ Fitch Ratings has upgraded one, affirmed three classes and downgraded two classes from Impac SAC mortgage pass-through certificates, series 1999-2, as follows: --Class A affirmed at 'AAA'; --Class M-1 upgraded to 'AA+' from 'AA'; --Class M-2 affirmed at 'A'; --Class M-3 affirmed at 'BBB'; --Class B-1 downgraded to 'CCC' from 'B-'; --Class B-2 downgraded to 'D' from 'C'. The downgrade of classes B1 and B-2 are taken due to the level of losses incurred, future loss expectations and the high delinquencies in relation to the applicable credit support levels as of the February 2004 distribution date. In addition, class B-1 was downgraded to 'CCC' because subsequent recoveries were used to increase the class B-2 certificate balance to which realized losses had been allocated. The upgrade and affirmations on the senior classes reflect credit enhancement consistent with future loss expectations. INDUSTRIAL PARTS: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Industrial Parts Depot Inc. 23231 South Normandie Torrance, California 90501 Bankruptcy Case No.: 04-12620 Type of Business: The Debtor is a global manufacturing and distribution company that owns and operates all the equipment necessary for providing high quality components, products and services, for heavy duty equipment. See http://www.ipdparts.com/ Chapter 11 Petition Date: February 6, 2004 Court: Central District of California (Los Angeles) Judge: Ellen Carroll Debtor's Counsel: Lawrence Peitzman, Esq. Peitzman, Glassman & Weg LLP 1801 Avenue of the Stars, Suite 1225 Los Angeles, CA 90067 Tel: 310-552-3101 Estimated Assets: $1 Million to $10 Million Estimated Debts: $10 Million to $50 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Condumex Incorporated Trade $304,414 P.O. Box 911520 Dallas, TX 75391-1520 Oregon Steel Mills Trade $274,553 P.O. Box 952406 St. Louis, MO 63195 Federal Mogul Corp. Trade $196,800 Eaton Corporation Trade $166,759 Interface Solutions, Inc. Trade $161,694 Quaker City Castings Trade $151,890 Burgess-Norton Trade $139,802 Ipsco Sales Inc. Trade $125,644 Daido Metal Sales Co., Inc. Trade $94,561 Defiance Precision Prod. Trade $90,192 Custom Alloy Scrap Sales Trade $86,582 Deloitte & Touche LLP Trade $76,002 Chin Teng Mach Co. Trade $61,691 Gallo, Oscar Former employee $59,062 Miba Gleitlager Trade $58,269 GH Hensley Industries Trade $50,841 Ira Svendsgaard & Assoc. Trade $48,078 Federal Mogul Friedberg G Trade $47,597 Hal E. Brown Former employee $46,042 Ray Ebbs Former employee $45,208 INTEGRATED ELECTRICAL: S&P Rates Senior Secured Bank Loan at BB --------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BB' senior secured bank loan rating and recovery rating of '2' to the $175 million senior secured credit facility of Integrated Electrical Services Inc. (BB/Stable/--), indicating the strong likelihood of substantial (greater than 80%) recovery of principal by senior lenders in the event of a default. At the same time, Standard & Poor's withdrew its rating on the company's $125 million senior secured facility and affirmed its other ratings on the Houston, Texas-based electrical contracting services provider. Pro forma for the transaction, IES had $253 million of total debt (including present value of operating leases) outstanding as of Dec. 31, 2003. The outlook is stable. The senior secured credit facility consists of a $50 million term loan and a $125 million revolving credit facility, which replaces IES' existing senior secured credit facility. IES used the proceeds from the $50 million term loan in addition to cash to call $75 million of its 9-3/8% $150 million senior subordinated notes. The senior secured credit facility, which matures in 2008, is secured by substantially all property and tangible and intangible assets and all outstanding capital stock of the company's subsidiaries. "Leading market positions, a highly variable cost structure, and the expectation that the company's internal growth strategy will lead to improved operational execution limit downside risk," said Standard & Poor's credit analyst Heather Henyon. "Cyclical end- markets, meaningful geographic concentrations, and a somewhat leveraged capital structure constrain upside ratings potential." The company has stated its goal of reducing total balance-sheet debt to less than $200 million, from about $248 million in 2003. Currently, balance sheet debt is $223 million. As a result, in the intermediate term, credit protection measures should strengthen as market conditions improve, with funds from operations to total debt averaging in the 20% area and total debt to EBITDA in the 3x- 3.5x range. Share repurchases are expected to be a secondary use of funds and remain modest in size. INT'L FIDELITY: S&P Drops Counterparty Rating to Speculate Grade ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its counterparty credit and financial strength ratings on International Fidelity Insurance Co. to 'BBpi' from 'BBBpi'. "The rating action reflects the company's weak operating performance and moderate product concentration, offset by its extremely strong capitalization," said Standard & Poor's credit analyst Tom Taillon. Based in Newark, New Jersey, International Fidelity Insurance Co. writes a wide range of surety bonds, including contract and performance bonds for the construction industry, licensed and permit bonds guaranteeing the performance of small- and medium- sized businesses, and bail bonds. The company, which commenced operations in 1905, is licensed to operate in all 50 states, the District of Columbia, and Puerto Rico. The company is rated on a stand-alone basis. IT GROUP: Judge Walrath Okays Phillips Golman as Special Counsel ---------------------------------------------------------------- Pursuant to Section 327(e) of the Bankruptcy Code and Rule 2014 of the Federal Rules of Bankruptcy Procedure, The IT Group Debtors sought and obtained Judge Walrath's permission to employ Phillips, Goldman & Spence, P.A. as special counsel, nunc pro tunc to January 14, 2004, to assist them in filing a complaint against their controlling shareholder, The Carlyle Group, and its affiliated entities as a result of the written demand by the Official Committee of Unsecured Creditors. The Debtors' lead counsel, Skadden Arps Slate Meagher & Flom LLP, is unable to represent them in an action against Carlyle. The Debtors will compensate the firm based on its hourly rates: Senior partners $325 Junior partners 275 Associates 225 Legal assistants 110 - 130 The hourly rates are subject to periodic adjustment to reflect economic and other conditions. Phillips Goldman will also be reimbursed for all other expenses incurred. Headquartered in Monroeville, Pennsylvania, The IT Group, Inc. -- http://www.theitgroup.com-- together with its 92 direct and indirect subsidiaries, is a leading provider of diversified, value-added services in the areas of consulting, engineering and construction, remediation, and facilities management. The Company filed for chapter 11 protection on January 16, 2002 (Bankr. Del. Case No. 02-10118). David S. Kurtz, Esq., at Skadden Arps Slate Meagher & Flom, represents the Debtors in their restructuring efforts. On September 30, 2001, the Debtors listed $1,344,800,000 in assets and 1,086,500,000 in debts. (IT Group Bankruptcy News, Issue No. 42; Bankruptcy Creditors' Service, Inc., 215/945-7000) ISTAR FINANCIAL: Fitch Assigns Stable Outlook to B-Level Ratings ---------------------------------------------------------------- Fitch Ratings affirms iStar Financial Inc.'s 'BBB-' senior unsecured debt rating and 'BB' preferred stock rating. The Rating Outlook is Stable. iStar's rating strengths focus on its capitalization, solid historic asset quality measures, and consistently improving funding and liquidity profile. Other strengths are centered on iStar's structuring acumen, liquidity management, and operating cash flow. Credit statistics for the company's credit tenant lease (CTL) and mortgage lending assets remain sound. The remaining weighted average CTL maturity is now 9.9 years, up from 9.4 years at year-end 2002. The last dollar loan-to-value of mortgage lending originations also improved in 2003 to 67.5% from 68.4% in 2002. In 2003 and year-to-date in 2004, iStar has continued to make significant strides towards its goal of becoming a predominantly unsecured borrower and unencumbering its balance sheet. Since December 2003, iStar has raised approximately $1 billion net of unsecured capital with proceeds largely used to repay secured debt or to refinance higher cost existing unsecured obligations. In addition, iStar announced on Mar. 2, 2004 that it was proceeding with an additional $250 million issuance of unsecured debt to repay secured debt. iStar also announced in its YE financial press release that it was exploring a new unsecured revolving credit facility to fund new assets. Currently, iStar warehouses its new assets in a secured revolving credit facility. All new originations going forward are expected to be funded on an unsecured basis. In 2003, iStar's net charge-offs were only 0.17% of average managed assets, while delinquent assets at year-end were approximately 0.75% of average managed assets. While this is higher than the company's previous fiscal-year end where both metrics were zero, they are still very low relative to others in both the commercial finance and commercial real estate sectors. Fitch believes that the company's attention to structuring details such as letters of credit or deposits from weaker borrowers and lessors, cross-collateralization of loans on multiple properties, and focus on financing primarily key operational properties has helped the company avoid losses. In aggregate, iStar's efforts to unencumber its balance sheet have meet Fitch's expectations. However, Fitch does have some concerns regarding the composition of the unencumbered asset portfolio relative to the encumbered asset portfolio. The unencumbered pool has a higher concentration of hotel loans, a weaker weighted average internal asset rating, a higher average loan-to value, and a lower proportion of investment grade CTL's than the encumbered pool. Management has indicated that some of the difference is related to the transition phase that the company is in as a part of its switch from being a secured to an unsecured borrower. Fitch also believes that this will begin to improve as the company unencumbers nearly $1 billion of assets over the next 6 to 9 months as well as finances new originations on an unsecured basis. Another concern focuses on management's indication that leverage may increase from its historic highs of 1.7 times to 1.8x into the 2.0x to 2.1x range. iStar expects to compensate for this by improving its asset quality. In Fitch's view, by focusing new business on higher rated CTL's and lower LTV loans, the company may receive some capital relief. However, competitive elements may challenge the company to achieve a material improvement in these measures. Additional concerns focus on the company's significant asset concentrations, wherein the top ten assets are equivalent to approximately 57% of total equity. While iStar has demonstrated the level of due diligence involved with committing to its larger transactions, the concentration risk still remains. Headquartered in New York City, iStar provides structured financing and corporate leasing of high quality commercial real estate nationwide. iStar leverages its expertise in real estate, capital markets, and corporate finance to serve corporations with sophisticated financing requirements. As of Dec. 31, 2003, loans and other lending investments totaled $3.7 billion and real estate subject to credit tenant leases totaled $2.5 billion. JAYS FOODS: Willis Stein to Acquire Company Out of Bankruptcy ------------------------------------------------------------- Willis Stein & Partners, a Chicago-based private equity firm, has signed an Asset Purchase Agreement to acquire the assets of Jays Foods LLC, a leading Chicago-based snack food manufacturer. Willis Stein expects to close the acquisition by mid to late April. Subject to higher and better offers in Jay's bankruptcy proceedings assigned before Judge Goldgar in Chicago, Willis Stein's offering $26 million to acquire the company. Jays, which is headquartered in Chicago, is well known for its flagship brand, Jays Potato Chips, a top selling potato chip in Chicago, as well as its popular slogan, "Can't stop eating 'em." Jays produces other popular brands such as Krunchers Potato Chips and O-Ke-Doke popcorn, and markets pretzels, tortilla chips and other products under the Company's flagship Jays trademark. The agreement comes at a critical juncture for Jays, whose financial condition has been challenged and filed for bankruptcy protection under chapter 11 of the U.S. Bankruptcy Code to effect a Section 363 sale of its assets. Willis Stein has announced its intention to keep the Jays Chicago- based plant open and grow the business under a broader, experienced management team led by food industry veteran, Tim Healy. Healy has held senior executive positions at General Foods, H.J. Heinz, Nutrasweet and Frito Lay, and led the successful turnaround of Select Beverages, the third largest independent DSD franchise soft drink bottler in the US, a situation where he and his management team served the same Midwest market and the same retail customers as Jays serves today. Tim Healy, who will become Jays Chairman, said, "We are committed to Jays' consumer customers, retailers and employees, who have built Jays into an icon brand that we want to perpetuate. We intend to create an exciting, new regional snack food company by investing in the manufacturing facility, improving Jays' distribution system, developing innovative new products, and acting as a flexible, responsive partner to our retail trade customers." Based on the capital infusion and turnaround strategy, Jays expects to quickly exit bankruptcy. According to Healy, the new Jays organization will play a key role in Willis Stein's broader snack food initiative, which he will lead as Chairman and CEO. On February 27, 2004, Willis Stein closed on its acquisition of Lincoln Snacks, whose popular brands include POPPYCOCK(R), JUST THE NUTS(R), FIDDLE FADDLE(R), and SCREAMING YELLOW ZONKERS(R). "We are thrilled to maintain Chicago as the home of the popular Jays brand at a time when so many other brands have departed," said Avy Stein, Managing Partner of Willis Stein. "After all, we can't stop eating 'em." Over the last two years, Chicago has suffered the loss of many longstanding, flagship brands including Fannie May, Frango Mint, Brachs Candies, among others. About Jays Foods LLC Jays Food is a full-line snack company that manufactures, markets and distributes its products to seven Midwest states. Its flagship brand, Jays, is a top-selling potato chip brand in Chicago, with twenty different varieties. The company also produces and distributes the Krunchers potato chip and O-Ke-Doke popcorn brands. About Willis Stein & Partners Willis Stein & Partners is a leading private equity firm that focuses on investments in profitable, well-managed, and growing businesses in the consumer products and services, media, business services, manufacturing, health care and telecommunications industries. The principals of Willis Stein have made investments in 45 companies and currently manage approximately $3 billion of equity capital. For more information, visit http://www.willisstein.com/ JAYS FOODS LLC: Voluntary Chapter 11 Case Summary ------------------------------------------------- Debtor: Jays Foods, L.L.C. 825 East 99th Street Chicago, Illinois 60628 Bankruptcy Case No.: 04-08681 Type of Business: The Debtor manufactures and distributes a full line of snacks including its signature Jays Potato Chips, O-KE-DOKE popcorns, Krunchers! Potato Chips, and a line of Hot Stuff snacks. Chapter 11 Petition Date: March 5, 2004 Court: Northern District of Illinois (Chicago) Judge: A. Benjamin Goldgar Debtor's Counsels: David Missner, Esq. Marc I. Fenton, Esq. Thomas Zwartz, Esq. Piper Rudnick LLP 203 North Lasalle Suite 1800 Chicago, Illinois 60601 Tel: 312-368-4000 MADISON RIVER: Reports $14.7 Million Net Loss for 2004 ------------------------------------------------------ Madison River Communications (MADRIV) announced its financial and operating results for the fourth quarter and the year ended December 31, 2003. 2003 Fourth Quarter Financial and Operating Results For the fourth quarter ended December 31, 2003, the Company reported revenues of $48.8 million, an increase of $2.2 million, or 4.8%, over revenues of $46.6 million in the fourth quarter ended December 31, 2002. Local service revenues increased $1.2 million, or 3.4%, in the fourth quarter of 2003 compared to the fourth quarter of 2002. The increase is attributed to higher penetration of local services and an increase in network access revenues related to certain cost study adjustments in the Company's RLEC operations. In addition, in the fourth quarter of 2003, long distance revenues increased $0.3 million and Internet and enhanced data service revenues increased $0.8 million compared to the fourth quarter of 2002. The increases are attributed to increases in long distance accounts and DSL connections served. For the fourth quarter of 2003, the Company reported operating income of $9.1 million, a decrease of $0.7 million, or 6.8%, from operating income of $9.8 million for the fourth quarter ended December 31, 2002. The decrease in operating income is attributed primarily to higher operating expenses of $2.9 million partially offset by higher revenues of $2.2 million. Historically, the Company's operations were organized into two operating divisions, the Local Telecommunications Division, or LTD, and the Integrated Communications Division, or ICD. The LTD was responsible for the integration, operation and development of the Company's four rural local exchange carriers ("RLECs") acquired since January 1998. The ICD was developed as a competitive local exchange carrier using an edge-out strategy whereby markets were established in territories in close proximity to the Company's RLECs. The Company no longer views the provision of such competitive services as a separate division, but as a line of business within its RLEC operations as the management responsibility for these edge-out operations is within the respective RLECs. The Company's RLEC operations, which include the LTD, represent the operations of the four RLECS providing a variety of telecommunications services, including local and long distance voice services, high-speed data and Internet access to business and residential customers predominantly in the Southeast and Midwest regions of the United States. Included within the RLEC operations are the edge-out services, or EOS, that are similar to those provided by the ICD. Accordingly, in the following discussion of the Company's operations, the historical LTD operations are referred to as the RLEC operations and the historical ICD operations as edge-out services. For financial reporting purposes, the Company intends to continue reporting segment results for the RLEC operations and the edge-out services. Operating expenses in the fourth quarter of 2003 were $39.7 million, an increase of $2.9 million, or 7.9%, over operating expenses of $36.8 million in the fourth quarter of 2002. The increase is attributed primarily to higher short-term incentive accruals of $2.8 million in the fourth quarter of 2003 compared to the same period in 2002. In addition, during the fourth quarter of 2003, the Company accrued a one-time charge of $1.1 million for potential sales tax liabilities that may be retroactively imposed on the RLECs. Finally, in the fourth quarter of 2003, the Company recognized $0.6 million in expenses for DSL modems used in the RLEC operations. Prior to the third quarter of 2003, under the Company's accounting policies, the cost of DSL modems were capitalized. However, beginning in the third quarter of 2003, the Company began expensing DSL modems as their cost fell below the threshold for capitalization. Partially offsetting these factors is a benefit of $0.3 million for adjustments made to restructuring accruals in the fourth quarter of 2003 to recognize differences between actual results and the original estimate of restructuring expenses properly recorded in accordance with Emerging Issues Task Force Issue 94-3 ("EITF 94-3"). In addition, the Company recorded $0.5 million less in long-term incentive plan expenses in the fourth quarter of 2003 compared to the fourth quarter of 2002. Adjusted Operating Income (Loss) (1), previously referred to as "Adjusted EBITDA", is operating income (loss) before depreciation, amortization and non-cash long-term incentive plan expenses. Please refer to Footnote 1 - "Non-GAAP Financial Measures" for a reconciliation of Adjusted Operating Income to net income (loss). For the fourth quarter ended December 31, 2003, the Company reported Adjusted Operating Income of $23.2 million, computed by taking operating income of $9.1 million and adding back depreciation and amortization expenses of $12.7 million and long- term incentive plan expenses of $1.4 million. Adjusted Operating Income in the fourth quarter of 2003 decreased $1.2 million, or 4.8%, from the $24.4 million in Adjusted Operating Income reported in the fourth quarter of 2002. Included in the Adjusted Operating Income of $23.2 million is the $0.3 million benefit from the adjustments made to the restructuring accrual. In the fourth quarter of 2003, the Company incurred a net loss of $2.9 million compared to a net loss of $7.3 million in the fourth quarter of 2002, an improvement of $4.4 million, or 60.9%. The improvement is attributed primarily to a $1.9 million income tax benefit in the fourth quarter of 2003 compared to $1.7 million in income tax expense in the fourth quarter of 2002, a net change of $3.6 million. The income tax benefit in the fourth quarter of 2003 is attributed to the favorable impact from a $2.7 million income tax refund recognized by the Company that offset income tax expense whereas no comparable benefit was recognized in the fourth quarter of 2002. In addition, other income increased $1.2 million in the fourth quarter of 2003 to $1.6 million from $0.4 million in the fourth quarter of 2002 primarily as a result of $1.0 million in higher accruals for Rural Telephone Bank dividends and Rural Telephone Finance Cooperative patronage capital allocations. In the fourth quarter of 2003, operating income for the RLEC operations was $12.2 million, a decrease of $0.9 million, or 6.7%, from $13.1 million in the fourth quarter of 2002. The decrease is attributed to higher operating expenses of $3.5 million partially offset by higher revenues of $2.6 million. Operating expenses in the RLEC operations increased in the fourth quarter of 2003 compared to the fourth quarter of 2002 as a result of higher short-term incentive expenses of $2.5 million, the one-time accrual for the potential sales tax liabilities of $1.1 million and the impact of expensing DSL modems of $0.6 million. These were partially offset by lower long-term incentive plan expenses of $0.5 million. Operating income margin in the RLECs was 26.8% in the fourth quarter of 2003 compared to 30.5% in the fourth quarter of 2002. Revenues in the RLECs were $45.5 million in the fourth quarter of 2003 compared to revenues of $42.9 million in the fourth quarter of 2002, an increase of $2.6 million, or 6.0%. Local service revenues increased $1.3 million due to higher penetration of local services and network access revenues as discussed above. Internet and enhanced data revenues increased $0.8 million and long distance revenues increased $0.3 million as a result of more DSL connections and long distance accounts, respectively, being in service in the fourth quarter of 2003 compared to the same period in 2002. On a sequential quarter basis, revenues in the RLECs increased $2.5 million. In the fourth quarter of 2003, the RLEC operations reported Adjusted Operating Income of $22.9 million and an Adjusted Operating Income margin of 50.2%. The Adjusted Operating Income margin (1), previously referred to as "Adjusted EBITDA Margin", is computed by dividing the RLEC's Adjusted Operating Income of $22.9 million by the RLEC's revenues of $45.5 million. For the same quarter of 2002, the RLEC operations reported Adjusted Operating Income of $23.8 million and an Adjusted Operating Income margin of 55.5%. Sequentially, Adjusted Operating Income decreased $1.0 million, or 4.3%, from the third quarter of 2003. Please refer to Footnote 1 - "Non-GAAP Financial Measures" for a reconciliation of Adjusted Operating Income to net income (loss). As of December 31, 2003, the RLEC operations had 210,084 voice access and DSL connections in service or an increase of 3,408 connections, or 1.6%, from December 31, 2002. The change consisted of an increase in DSL connections of 7,758, offset by a decrease in voice access lines of 4,350, or 2.3%. Compared to December 31, 2002, DSL connections at December 31, 2003 increased 47.2% as each of the RLECs showed significant increases. Much of the increase can be attributed to the Company's "No Limits" package, a bundle of voice and data services, including DSL, offered by the Company for a flat monthly charge subject to signing a one-year contract. As of December 31, 2003, our penetration rate for DSL as a percentage of residential access lines less second lines was 20.5% compared to 13.6% at December 31, 2002. At December 31, 2003, our RLECs had 185,903 voice access lines in service compared to 190,253 voice access lines in service at December 31, 2002. Approximately 53.9% of the decrease of 4,350 voice access lines during 2003 is attributed to the removal of 2,344 second lines. Much of the decrease in second lines is attributed to the increasing DSL connections as second lines are being replaced with the Company's DSL service. In addition, excluding the impact of second lines that were removed, our Illinois operations had a decrease of 2,496 voice access lines which accounts for over 100% of the total decrease in voice access lines excluding second line losses. The decrease in voice access lines in the Company's Illinois operations is attributed primarily to the weak economic conditions in that area. In the remaining RLECs, we had an increase in the number of voice access lines served when the impact of second line losses is excluded. On a sequential quarter basis, voice access and DSL connections in the RLECs increased by 1,297 connections at December 31, 2003, or 0.6%, from September 30, 2003. The increase is attributed to an increase in DSL connections of 2,987, or 14.1%, partially offset by a decrease in voice access lines of 1,690, or 0.9%. The decrease in voice access lines is attributed primarily to the Company's Illinois operations which accounted for 64.3% of the decrease. Of the 210,084 total connections at December 31, 2003, approximately 126,415 are residential lines, 59,488 are business lines and 24,181 are DSL connections. The RLEC operations had approximately 96,586 long distance accounts for a penetration rate of 52.0% of its voice access lines. In addition, the RLEC operations had 23,773 dial-up Internet subscribers at December 31, 2003. In the fourth quarter of 2003, revenues from edge-out services were $3.3 million, a decrease of $0.4 million, or 9.1%, from revenues of $3.7 million in the fourth quarter of 2002. The decrease is attributed primarily to a decrease in the number of connections served in the edge-out markets. On a sequential quarter basis, revenues declined $0.1 million. The Company's edge- out services incurred an operating loss of $3.1 million in the fourth quarter of 2003, an improvement of $0.2 million, or 6.3%, from an operating loss of $3.3 million in the same quarter of 2002. The improvement is attributed to lower operating expenses primarily as the result of a benefit of $0.3 million for an adjustment made to restructuring accruals. The net loss in edge- out services was $10.0 million in the fourth quarter of 2003 and the fourth quarter of 2002. Adjusted Operating Income in the edge-out services for the fourth quarter of 2003 was $0.3 million which includes the $0.3 million benefit for the restructuring adjustment. The $0.3 million in Adjusted Operating Income was a decrease of $0.3 million from the $0.6 million in Adjusted Operating Income reported in the fourth quarter of 2002. Please refer to Footnote 1 - "Non-GAAP Financial Measures" for a reconciliation of Adjusted Operating Income to net income (loss). As of December 31, 2003, the edge-out services had 14,462 voice access lines and approximately 682 high-speed connections in service compared to 16,344 voice access lines and 705 high-speed connections in service as of December 31, 2002. This is a decrease of 1,882 voice access lines, or 11.5%, and 23 high-speed connections, or 3.3%. Included in the loss of voice access lines were over 800 lines from one customer in North Carolina as the result of a merger. J. Stephen Vanderwoude, Chairman and Chief Executive Officer, commented, "We are very proud of our achievements this year. Our operating companies provided another strong year while we were able to amend our loan agreement with the RTFC that provided the company with financial flexibility and liquidity." 2003 Year-End Financial and Operating Results For the year ended December 31, 2003, revenues were $186.4 million, an increase of $2.2 million, or 1.2%, compared to revenues of $184.2 million in the year ended December 31, 2002. The RLEC operations reported revenues of $172.5 million and the edge-out services reported revenues of $13.9 million. The RLEC's revenues in 2003 increased approximately $3.6 million over revenues in 2002. The increase is primarily attributed to a $2.8 million increase in Internet and enhanced data service revenues and a $1.0 million increase in long distance revenues as a result of increases in DSL connections and long distance accounts, respectively. In addition, miscellaneous revenues increased $1.9 million which primarily reflects the negative impact of a $1.5 million bad debt charge for pre-bankruptcy filing amounts due from MCI WorldCom and Global Crossing in 2002 whereas no comparable bad debt charges were recognized in 2003. These increases in revenues were partially offset by a $2.0 million decrease in local service revenues attributed primarily to lower network access revenues in 2003 compared to 2002. For the year ended December 31, 2003, revenues from edge-out services decreased $1.2 million, or 8.6%, compared to the same period in 2002. The decrease is attributed primarily to the decrease in the number of voice access lines and high-speed data connections served. Operating income in 2003 was $42.5 million, an increase of $13.6 million, or 47.2%, from operating income of $28.9 million in 2002. The increase is attributed primarily to lower cost of services and selling, general and administrative operating expenses in 2003 in both the RLEC operations and the edge-out services. A portion of the lower operating expenses is attributed to a $2.7 million non- cash gain from a pension plan curtailment in 2003 and a favorable change of $3.4 million in restructuring accruals. In addition, operating income in 2003 did not include a bad debt charge comparable to the bad debt charge of $1.5 million for MCI WorldCom and Global Crossing recorded in 2002. During the first quarter of 2003, benefits associated with the Company's non-contributory, defined benefit pension plan were frozen. This curtailment resulted in a one-time, non-cash net gain of $2.8 million that reduced pension expenses by $2.7 million and reduced capital additions by $0.1 million. The gain was recognized in the first quarter of 2003. Although further accrual of benefits by plan participants is frozen, the Company has a continuing obligation to fund the plan and continues to recognize net periodic pension expense. Approximately $2.1 million of the net gain was recognized as a reduction of expenses in the RLEC operations and $0.6 million as a reduction of expenses in the edge-out services. In 2002, the Company's operating income included a restructuring charge of $2.7 million. In 2003, the Company's operating income included a benefit of $0.7 million for adjustments made to its restructuring accruals to recognize differences between actual results and the original estimate of restructuring expenses properly recorded in accordance with EITF 94-3. This change in restructuring charges increased operating income by $3.4 million in 2003 when compared to 2002. Partially offsetting these increases were higher operating expenses in 2003 related to increased short-term incentive accruals of $2.5 million, the one-time accrual for potential sales tax liabilities of $1.1 million and DSL modem expenses of $0.9 million. In the RLECs, operating income in 2003 was $54.5 million compared to $49.7 million in 2002, an increase of $4.8 million, or 9.5%. The increase is attributed primarily to the impact of the $1.5 million bad debt charge on the prior year's results and lower cost of services and lower selling, general and administrative operating expenses including the $2.1 million impact of the pension curtailment gain and $0.2 million from changes in restructuring accruals. Partially offsetting these increases are higher short-term incentive accruals of $2.3 million, the accrual for potential sales tax liabilities of $1.1 million and DSL modem expenses of $0.9 million. Operating income margin in the RLECs was 31.6% in 2003 compared to 29.5% in 2002. The edge-out services reported an operating loss of $12.0 million in 2003 compared to an operating loss of $20.8 million in 2002, an improvement of $8.8 million, or 42.6%. Approximately $3.2 million of the improvement is the result of the $0.6 million benefit from adjustments to the restructuring accrual in 2003 versus the $2.6 million in restructuring expenses recorded in 2002. The remaining difference is attributed primarily to lower operating expenses. The Company reported a net loss of $14.7 million in 2003 compared to a net loss of $39.4 million in 2002, an improvement of $24.7 million, or 62.8%. The improvement is attributed primarily to the $13.6 million increase in operating income, a $1.3 million decrease in interest expense as a result of lower average outstanding balances and lower weighted average interest rates, and a $3.4 million change in income taxes. In 2003, the Company recognized an income tax benefit of $1.8 million, primarily attributed to the recognition of a $2.7 million refund that offset income tax expense, compared to income tax expense of $1.6 million in 2002. In addition, other income improved $6.1 million in 2003 compared to 2002. The Company reported net other income of $3.6 million in 2003 compared to net other expenses of $2.5 million in 2002. During 2002, the Company recorded two significant writedowns for declines in the value of investments deemed to be other than temporary. These writedowns resulted in a $4.5 million loss related to a marketable equity security investment and a $2.1 million loss related to an investment accounted for under the equity method. No comparable writedowns were recorded in 2003. In the RLEC operations, net income was $24.2 million in 2003 and $8.5 million in 2002. The edge-out services reported net losses of $38.9 million and $47.9 million in 2003 and 2002, respectively. Adjusted Operating Income improved by $15.2 million, or 17.9%, to $100.0 million in 2003 compared to $84.8 million in 2002. The RLECs reported Adjusted Operating Income of $96.8 million in 2003 compared to $90.5 million in 2002. Adjusted Operating Income from the edge-out services was $3.2 million in 2003 compared to an Adjusted Operating Loss of $5.7 million in 2002. The RLECs had an Adjusted Operating Income margin of 56.1% for 2003 and 53.6% for 2002. Please refer to Footnote 1 - "Non-GAAP Financial Measures" for a reconciliation of Adjusted Operating Income to net income (loss). As of December 31, 2003, the Company had approximately $59.1 million in liquidity consisting of $28.1 million in cash on hand and $31.0 million that is fully available under two lines of credit with the Rural Telephone Finance Cooperative. The lines of credit, which together total $41.0 million, mature in March 2005 and the Company intends to negotiate the extension of these lines of credit during 2004. Capital expenditures for 2003 were approximately $12.2 million. Military officials at Fort Stewart have announced that the 3rd Infantry Division, stationed at Fort Stewart in Hinesville, Georgia, has received orders to prepare for a full deployment by February 2005. Coastal Utilities, Inc., an RLEC owned by Madison River Communications, provides services to customers in Hinesville including Fort Stewart. The Company plans to assess the impact of the full deployment on its operations and cash flows. In July 2003, the Company completed an amendment to its loan agreement with the RTFC that, among other things, allows the Company greater operating flexibility through an increase in its liquidity. Under the terms of the amendment, the maturity of the loan was extended by one year to 2016 with a reduction in scheduled principal payments through 2010. The amendment also provided for revised financial covenants including RTFC approval of a rolling three-year capital expenditure budget and a requirement for the Company to obtain RTFC consent for any acquisitions or dispositions of incumbent local exchange companies. In addition, the amendment requires annual mandatory pre-payments of principal, beginning in 2005 utilizing 2004 fiscal year financial results, equivalent to the Company's excess cash flow as defined in the amendment. During 2002, after consultation with its tax advisors, the Company amended certain prior year income tax returns that resulted in refunds to the Company of approximately $7.8 million. The Company received the refunds in 2002 and properly recorded them as deferred income tax liabilities. In the third quarter of 2003, the Internal Revenue Service, as part of an audit, verbally notified the Company that the Company's position would be disallowed and in the fourth quarter, the Company received formal notice of disallowance. The refunds impacted by this IRS notification totaled $5.1 million. The remaining $2.7 million was recognized as an income tax benefit in the fourth quarter of 2003. Based on discussions with its tax advisors, the Company believes that its position is appropriate under current tax laws and the Company intends to defend the position taken in its amended income tax returns. No assurance can be made at this time as to the ultimate outcome of this matter although it could take up to two years to resolve. In the third quarter of 2003, in accordance with Financial Accounting Standard No. 5, the Company accrued interest expense of $1.3 million to recognize a contingent liability meeting the criteria for accrual related to the interest component of this issue. The Company accrued an additional $0.1 million in interest expense in the fourth quarter of 2003. The Company anticipates that interest expense related to this liability will be approximately $0.4 million annually until the issue is resolved. In December 2003, James Kirby tendered his resignation as a member of the Board of Managers and Michael Cole was elected to replace the vacated position. Mr. Cole, a nominee to the Board of Managers by affiliates of Madison Dearborn Partners, is a director of Madison Dearborn Partners LLC, a Chicago-based investment firm that manages total equity capital of over $9 billion. In January 2004, Albert Dobron tendered his resignation as a member of the Board of Managers. This vacated position is not expected to be filled in the near term but Providence Equity Partners reserves the right to fill this position in the future should it so desire. In February 2004, James Ogg announced his resignation from the Board of Managers. Richard A. May was elected to fill this vacancy. Mr. May is the Chairman and CEO of Great Lakes REIT, a position he has held since he co-founded the real estate investment trust in 1992. In December 2003, the Company's parent, Madison River Telephone Company, LLC, amended its loan agreements with the former shareholders of Coastal Communications, Inc. ("CCI") and is in full compliance with the terms of the amended loan agreements. The primary change to the loan agreements related to the amortization schedule for the notes. As part of the agreement, in January 2004, the Company accelerated the full payment of a $2.3 million mortgage note payable at CCI payable to the former shareholders of CCI that was scheduled to mature in April 2006 and bore an interest rate of 8% per year. The Company also announced that Paul Sunu, Chief Financial Officer of Madison River Communications, will be presenting at the Wachovia Fixed Income Media & Communications Conference. The presentation will take place on April 14th in New York. Madison River Capital, LLC operates as Madison River Communications and is a wholly owned subsidiary of Madison River Telephone Company, LLC. Madison River Communications operates and enhances rural telephone companies and uses advanced technology to provide competitive communications services in its edge-out markets. Madison River Telephone Company, LLC is owned by affiliates of Madison Dearborn Partners Inc., Goldman, Sachs & Co. and Providence Equity Partners, the former shareholders of Coastal Utilities, Inc. and members of management. As reported in Troubled Company Reporter's May 13, 2003 edition, Standard & Poor's Ratings Services revised the outlook on Madison River Telephone Co. LLC (corporate credit rating 'B') and related entities to negative from stable because of the continued loss in access lines related to the economy, and the uncertainty related to the full impact of Fort Stewart, Georgia's troop deployment on that local community's access lines. MAGELLAN: Katlin Gets Provisional Nod to Prosecute Class Action --------------------------------------------------------------- On June 23, 1997, Harold Katlin commenced a class action suit against David Tremoglie, Behavioral Care Associates, P.C., Psychresource Associates, Inc., Advantage Behavioral Systems, Inc., Green Spring Health Services, Inc. and Keystone Health Plan East, Inc., in the Philadelphia County Court of Common Pleas. It is currently on appeal to the Superior Court of Pennsylvania. According to Jill L. Makower, Esq., at Todtman, Nachamie, Spizz & Johns, in New York, the Class Action was brought to recover damages sustained by Mr. Katlin as a result of the wrongful acts and omissions of the Magellan Health Defendants. Based on information provided by the Defendants in the Class Action, these insurance policies provide coverage for the claims made in the Class Action: Insurer Policy No. Coverage Amount ------- ---------- --------------- Pacific Insurance Company HMA9603379-2 $1,000,000/ 3,000,000 Continental Insurance Co. HMC9603524-2 20,000,000 Plymouth Insurance Co. Ltd. 96PLY5000 10,000,000 Plymouth Insurance Co. Ltd. 96PLY6000 15,000,000/ 30,000,000 XL Insurance Co. Ltd. XLUMB-01007 75,000,000 Steadfast Insurance Company 7920496-03 10,000,000 Steadfast Insurance Company 7920496-04 10,000,000 The Policies provide that the insolvency or bankruptcy of the debtor, or the insolvency of its estate, will not release the insurers from the payment of damages for injuries sustained during the term of and within the coverage of the Policy. The Policies further provide that in case judgment against the debtor in an action brought to recover damages for injury sustained during the term of the Policy will remain unsatisfied after entry of judgment against the debtor, then an action may be maintained against the insurer under the terms of the Policy for the amount of the judgment, but not exceeding the amount of the Policy coverage. In the event that Mr. Katlin obtains judgment against any of the Debtors in the Class Action and the judgment remains unsatisfied, Mr. Katlin can then commence an action against the insurer. By this motion, Mr. Katlin asks the Court to modify the automatic stay to permit him to continue to prosecute the Class Action against the Debtor Defendants to: -- establish the Debtor Defendants' liability; -- enter any judgment to be awarded against the Debtor Defendants; and -- enforce any judgment against the Debtor Defendants' liability insurance policies. Mr. Katlin agrees that he will be paid from the insurers to the extent that his claim is insured, and will have an allowed general unsecured claim to the extent the applicable insurance Policies do not provide coverage with respect to any portion of the insured claim. * * * Judge Beatty modifies the automatic stay to permit Mr. Katlin to take all steps necessary to seek and obtain approval of and effectuate a settlement to the extent that the Settlement seeks recovery solely from the proceeds of the Debtors Defendants' liability policies. Furthermore, Mr. Katlin's request is adjourned indefinitely for all other purposes so that, in the event that the Settlement is not approved, the Court will hold a hearing on Mr. Katlin's request to lift the automatic stay to permit him to continue the Class Action against the Debtor Defendants. Magellan Health Services is headquartered in Columbia, Maryland, and is the leading behavioral managed healthcare organization in the United States. Its customers include health plans, corporations and government agencies. The Company filed for chapter 11 protection on March 11, 2003, and confirmed its Third Amended Plan on October 8, 2003. Under the Third Amended Plan, nearly $600 million of debt will drop from the Company's balance sheet and Onex Corporation will invest more than $100 million in new equity. (Magellan Bankruptcy News, Issue No. 24; Bankruptcy Creditors' Service, Inc., 215/945-7000) MALAN REALTY: Sells Milwaukee Property for $2.6 Million ------------------------------------------------------- Malan Realty Investors, Inc. (NYSE: MAL), a self-administered real estate investment trust (REIT), has completed the sale of a property in Milwaukee, Wisconsin. The property, with 117,791 square feet of gross leasable area, is located at 2701 S. Chase Avenue and contains a Chuck E. Cheese's Restaurant. The property sold for approximately $2.6 million, after expenses. Malan also announced it is calling for redemption on April 14, 2004, $5.0 million of its 9.5% Convertible Subordinated Debentures due July 15, 2004. The portion of the Debentures being called will be redeemed at par, plus accrued but unpaid interest, and retired. The aggregate principal balance of the Debentures is currently $12.1 million. "We are pleased to reduce the balance on the Debentures prior to the redemption date later this year," said Jeffrey Lewis, president and chief executive officer of Malan Realty Investors. "With the size of our portfolio now below 2 million square feet, we expect to make additional sales throughout 2004 as we complete the liquidation." The portion of the Debentures to be redeemed will be selected by lot. The transfer books for the Debentures will be closed on March 15, 2004 for purposes of this selection process. The transfer books will be reopened on the next business day. The Debentures currently trade on the New York Stock Exchange under the CUSIP number 561063-AA-6001. Prior to 5:00 p.m., Eastern Time, on April 14, 2004, holders of Debentures called for redemption may convert their Debentures into shares of Malan common stock at a price of $17.00 per share, or approximately 58.82 shares per $1,000 principal amount of Debentures. Cash will be paid in lieu of fractional shares. On March 3, 2004, the closing price of Malan common stock on the New York Stock Exchange was $5.02 per share. Holders of Debentures called for redemption who do not convert their Debentures into Malan common stock will have such Debentures redeemed on April 14, 2004. Upon redemption, they will receive $1,023.49 per $1,000 principal amount of Notes (consisting of the redemption price of $1,000 plus accrued and unpaid interest thereon from January 15, 2004 up to but not including April 14, 2004 of $23.49). No further interest will accrue thereafter on Debentures called for redemption. A notice of redemption is being mailed to all registered holders of the Debentures, including, where applicable, information concerning the specific Debentures selected by lot for redemption. Copies of the notice of redemption may be obtained from The Bank of New York, the paying agent and conversion agent, by calling Roxane Ellwanger at (312) 827-8574. The address of The Bank of New York is 2 N. LaSalle Street, Suite 1020, Chicago, Illinois 60602. Malan Realty Investors, Inc. owns and manages properties that are leased primarily to national and regional retail companies. In August 2002, the company's shareholders approved a plan of complete liquidation. The company owns a portfolio of 25 properties located in eight states that contains an aggregate of approximately 2.0 million square feet of gross leasable area. MAXWORLDWIDE: Shareholder Distribution Payable on March 24 ---------------------------------------------------------- MaxWorldwide, Inc. (OTC Pink Sheet: MAXW), announced that the Board of Directors declared on February 26, 2004 a distribution of $0.50 per share of common stock outstanding, payable on March 24, 2004 to stockholders of record as of March 15, 2004. The distribution is being made in connection with the Plan of Liquidation and Dissolution adopted by the company in July 2003. MIRANT CORP: Alleges Kern Oil Violated Automatic Stay ----------------------------------------------------- As of the Petition Date, Debtor Mirant Americas Energy Marketing LP and Kern Oil & Refining Co. were parties to these agreements: * Gas Master Service Agreement dated as of February 2000; * Transaction Agreement dated as of February 2002; and * Master Monthly Netting, Close-Out Netting and Margin Agreement dated as of August 22, 2001. On October 23, 2003, Jeff P. Prostok, Esq., at Forshey & Prostok LLP, in Fort Worth, Texas, recalls that the Mirant Debtors sought to reject the three Kern Contracts. Kern Oil objected, asserting that, in its judgment, the Contracts constitute "forward contracts" as defined in Section 101(25) of the Bankruptcy Code and "Prepetition Trading Contracts" as defined in the Final Order regarding the Debtors' continued performance under Prepetition Trading Contracts. Kern Oil also stated that it had liquidated the Contracts and would "avail[] itself of the rights and remedies provided in the [Contracts], the Final Order and the Bankruptcy Code." These rights and remedies, according to Kern Oil, include the right to set off amounts due to MAEM for natural gas shipped after the Petition Date from amounts due to Kern Oil under the Contracts. Kern Oil announced that it would withhold payments for gas sold in "September and October 2003 and any other future amounts that may be due and owing." On November 19, 2003, the Court allowed the Debtors to reject the Kern Contracts while reserving the parties' rights with respect to certain aspects of the Contracts, including the legal characterization of the Contracts. According to Mr. Prostok, Kern Oil failed and refused to pay MAEM for natural gas supplied to Kern Oil in the months of September, October and November 2003, in these amounts: September 2003 $294,612 October 2003 316,565 November 2003 466,822 --------- TOTAL $1,077,999 On October 24, 2003, Kern Oil paid MAEM for the gas delivered in September 2003, only to "reverse" the payment on October 27, 2003, through Kern Oil's bank and the Automated Clearing House system. Accordingly, MAEM asks the Court to: (a) declare that Kern Oil's purported liquidation of the Contracts violated the automatic stay pursuant to Sections 362(a)(1), (3) and (6) of the Bankruptcy Code; (b) declare that Kern Oil's reversal of the October 23, 2003 Payment violated the automatic stay pursuant to Section 362(a)(3); (c) declare that MAEM was damaged by at least $1,077,999 due to Kern Oil's non-payment of the gas MAEM delivered to Kern Oil from September 1, 2003 through December 31, 2003, despite numerous demands; (d) compel Kern Oil to pay MAEM $1,077,999, plus post-judgment interest; and (e) declare that Kern Oil's purported setoff of claims against MAEM violated the automatic stay pursuant to Section 362(a)(3). Headquartered in Atlanta, Georgia, Mirant Corporation -- http://www.mirant.com/-- together with its direct and indirect subsidiaries, generate, sell and deliver electricity in North America, the Philippines and the Caribbean. The Company filed for chapter 11 protection on July 14, 2003 (Bankr. N.D. Tex. 03- 46590). Thomas E. Lauria, Esq., at White & Case LLP represent the Debtors in their restructuring efforts. When the Company filed for protection from their creditors, they listed $20,574,000,000 in assets and $11,401,000,000 in debts. (Mirant Bankruptcy News, Issue No. 24; Bankruptcy Creditors' Service, Inc., 215/945-7000) MITEC TELECOM: Q3 Results Conference Call Slated for Thursday ------------------------------------------------------------- OPEN TO: Analysts, investors and all interested parties DATE: Thursday, March 11, 2004 TIME: 10:00 AM Eastern Time CALL: 514-807-8791 (for all Montreal and overseas participants) 1-800-814-3911 (FOR ALL OTHER NORTH AMERICAN CALLERS) Please dial in 15 minutes before the conference call begins. If you are unable to call in at this time, you may access a tape recording of the meeting by calling 1-877-289-8525 and entering the passcode 21041248(pound key). on your phone. This tape recording will be available on Thursday, March 11 as of 12:00 PM until 11:59 PM on Thursday, March 18. Media wishing to quote an analyst should contact the analyst personally for permission. To first-time analysts: Please contact Maison Brison at 514-731-0000 prior to the day of the conference call. Interested parties may also listen live at http://www.newswire.ca/ or at http://www.q1234.com/ * * * In it's latest Form 10-Q filing, the company reported that: GOING CONCERN UNCERTAINTY Mitec Telecom's consolidated financial statements have been prepared on a going concern basis. The going concern basis of presentation assumes that the Corporation will continue in operation for the foreseeable future and will be able to realize its assets and discharge its liabilities and commitments in the normal course of business. There is doubt about the appropriateness of the use of the going concern assumption because of the Corporation's recent losses, negative cash flows, deficiency in working capital and the violation of a number of its Canadian debt covenants as of April 30, 2003. As such, the realization of assets and the discharge of liabilities in the ordinary course of business are subject to significant uncertainty. The unaudited interim consolidated financial statements do not reflect adjustments that would be necessary if the going concern basis was not appropriate. If the going concern basis was not appropriate for these unaudited interim consolidated financial statements, significant adjustments would be necessary in the carrying value of assets and liabilities, the reported revenues and expenses, and the balance sheet classifications used. In the previous fiscal year, the Corporation issued common shares and warrants in the amount of $5,171,000, secured additional and special credit facilities up to a maximum of $5,000,000, commenced rationalization of a number of its operations and began the process of disposing of non-core assets. During the current year, the Corporation concluded the sale of Microwave Technology Company Limited, its subsidiary in Thailand, to the Thai management team on July 7, 2003. On August 29, 2003, the Corporation concluded the sale of selected assets (inventory and fixed assets) of Beve for an amount of 37 million SEK ($6.4 million CDN) to NOTE AB. The buyer, also assumed some capital leases. On October 9, 2003, the Corporation raised $8,219,130 in a private placement financing issuing 7,972,411 units (each unit comprised of 1 common share and 1/2 purchase warrant). On October 14, the Corporation concluded a sale-leaseback transaction of the building in Pointe-Claire for $3.3 million in cash and free rent for five years. This transaction enabled the Corporation to draw down the last tranche of the La Financiere loan and the special loan from CIBC. Management's on-going plans with respect to the uncertainties are as follows: 1. Continuing discussions with its lenders in respect to its debt covenants, waivers and/or modifications. Management was able to re-negociate the banking arrangement during the quarter and as of October 31, 2003, the Corporation met the bank covenants. 2. Pursuing the sale of certain of its non-core assets, primarily property and inventory. Management expects to realize on the real estate assets in Sweden and generate cash proceeds in excess of the related indebtedness. 3. Continuing to rationalize operations and reduce expenses. Management believes that with the above plans, sufficient funds will be generated to maintain the support of the Corporation's lenders and other creditors and to enable the Corporation to continue it's operations as a going concern. The third tranche from LaFinanciere ($1.25 million) and the special guaranteed loan ($0.4 million) are available to cover cash flow requirements. There can, however, be no assurance that the plans described above will result in sufficient funds being generated. The Corporation's continuation as a going concern is dependent upon, amongst other things: the continuing support of the Corporation's lenders, maintaining a satisfactory sales level, the support of its customers, the continued viability of the Corporation's significant customers, a return to profitable operations and the ability to generate sufficient cash from operations, financing arrangements and new capital to meet its obligations as they become due. These matters are dependent on a number of items outside of the Corporation's control and there is uncertainty about the Corporation's ability to successfully conclude on the matters. NATIONAL WASTE: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: National Waste Services of Virginia, Inc. 836 Postles Corner Road Little Creek, Delaware 19961 Bankruptcy Case No.: 04-10709 Type of Business: The Debtor collects, processes and disposes solid non-hazardous waste and recycling materials. See http://www.natwaste.com/ Chapter 11 Petition Date: March 4, 2004 Court: District of Delaware Judge: Peter J. Walsh Debtor's Counsel: Michael Gregory Wilson, Esq. Hunton & Williams 951 East Byrd Street Richmond, VA 23219 Tel: 804-788-8200 Fax: 804-788-8218 Estimated Assets: $10 Million to $50 Million Estimated Debts: $10 Million to $50 Million Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Ryan Incorporated Central $300,000 P.O. Box 206 Janesville, Wisconsin 53547-0206 General Excavating, Inc. $110,000 County of Page $108,362 Carter Machinery Company, Inc. $96,794 Gannett Fleming, Inc. $92,307 Cananwill, Inc. $89,709 Capital Strategies $60,000 Neff Equipment Sales & Lease L.L.C. $51,745 Cedar Mountain Stone Corp $41,836 Emmart Oil $35,653 Walsh,Colucci, Lubeley, Emrich & Terpak $31,201 Edwin L.Huffman, Inc. $28,896 Brett Aggregates, Inc. $20,915 Town of Stanley $20,621 J.W. Burress, Inc. $20,436 John Deere Credit $17,009 Phoenix I Inc. $10,610 Southern Health Services, Inc. $9,242 SCS Engineers $7,713 Gebhardt & Smith LLP $7,029 NOTIFY TECHNOLOGY: Ability to Continue as Going Concern in Doubt ---------------------------------------------------------------- Due to Notify Technology Corporation's present financial condition, its current stage of research and development of new product and its business plans, there is substantial doubt as to the ability of the Company to continue as a going concern. To date, its NotifyLink product line is only beginning to contribute revenue and its Visual Got Mail Solution sales are highly concentrated in one customer. The success of Notify Technology's business operations will depend upon its ability to obtain further financing until such time, if ever, as there is favorable market acceptance for its new wireless software products. It is not possible for the Company to predict with assurance the outcome of these matters. If unable to obtain further financing and profitable operations from its new software wireless products, then its business will fail. During fiscal 2001, the Company financed its operations through a combination of existing cash balances, the sale of common stock, the sale of preferred stock and the proceeds from the exercise of warrants and options. During fiscal 2002 and fiscal 2003, it financed its operations through a combination of gross margin from sales of product and services and existing cash balances. The Company's ability to fund its recurring losses from operations depends upon the success of its wireline Visual Got Mail Solution and the success in its wireless products designed for wireless e- mail notification and wireless e-mail notification market solutions, and raising other sources of financing. Notify Technology believes that its existing cash balances are sufficient to fund operations through at least June 30, 2004. However, to fund operations beyond June 30, 2004, the Company will need to raise additional funds or reduce its level of spending. There is no assurance that it will be successful in acquiring or raising these additional funds or reducing expenses sufficiently. NUEVO ENERGY: Reports Improved Income in 4th Quarter & FY 2003 -------------------------------------------------------------- Nuevo Energy Company (NYSE:NEV) reported income from continuing operations for the fourth quarter 2003 of $8.4 million, or $0.42 per diluted share versus $4.3 million, or $0.22 per diluted share in the year ago period. The 95% year-to-year increase in income from continuing operations reflects higher realized commodity prices and lower interest expense. Net income was $8.4 million, or $0.42 per diluted share in the fourth quarter 2003, compared to a net loss of $11.9 million, or ($0.62) per diluted share in the fourth quarter 2002. Net income included an insignificant loss from discontinued operations in the fourth quarter 2003 versus a loss of $16.2 million in the year ago period. Net cash provided by operating activities was $35.5 million in the fourth quarter 2003 compared to $55.2 million in the same period in 2002. Discretionary cash flow, a non-GAAP financial measure, was $33.7 million in the fourth quarter 2003 compared to $36.9 million in the fourth quarter 2002. For the year 2003, Nuevo reported a 61% increase in income from continuing operations to $37.1 million, or $1.89 per diluted share, compared to $23.1 million, or $1.30 per diluted share in the year ago period primarily due to higher crude oil and natural gas production and prices. Net income of $51.5 million, or $2.62 per diluted share compared to $12.3 million, or $0.69 per diluted share in 2002. Net income included income from discontinued operations of $5.9 million and a cumulative effect of a change in accounting principle of $8.5 million in 2003 versus a loss from discontinued operations of $10.8 million in 2002. Net cash provided by operating activities increased 35% to $165.8 million in 2003 compared to $122.7 million in 2002. Discretionary cash flow, a non-GAAP financial measure, was $152.6 million in 2003, an increase of 20% from $127.2 million in 2002. "Building upon the successes achieved in 2002, the year 2003 was another year of significant accomplishments for Nuevo," commented Jim Payne, Chairman, President and CEO. "We achieved our top priorities for the year of monetizing non-core assets and significantly transforming the balance sheet while increasing oil and gas production and maintaining a disciplined capital program." 2003 HIGHLIGHTS -- Sold $132 million of non-core assets, -- Reduced high cost debt outstanding by approximately $185 million, and -- Achieved 4% production growth from continuing operations with a relatively flat E&P capital program. FOURTH QUARTER 2003 Production and Prices Total production from continuing operations was 49.5 thousand barrels of oil equivalent (MBOE) per day in the fourth quarter 2003, the highest quarterly level in two years, compared to 49.1 MBOE per day in the year ago period. Increased production in the fourth quarter 2003 versus the year ago period is attributable to increased production from the Pakenham Field in West Texas and the Point Pedernales Field offshore California (increased working interest), which more than offset normal field declines. Production from discontinued operations was 4.1 MBOE per day in the fourth quarter 2002 versus no production from discontinued operations in the fourth quarter 2003 due to asset sales. Crude oil production of 42.8 thousand barrels (MBbls) per day in the fourth quarter 2003 was relatively flat with 42.5 MBbls per day in the comparable period in 2002. The realized crude oil price increased 8% to $19.35 per barrel in the fourth quarter 2003 versus $17.90 per barrel in the year ago period. Included in the realized crude oil prices are hedging losses of $4.24 per barrel in the fourth quarter 2003 and $1.56 per barrel in the comparable period a year ago. Nuevo's fourth quarter 2003 natural gas production was 40.0 million cubic feet (MMcf) per day compared to 39.8 MMcf per day in the fourth quarter 2002. Nuevo's realized natural gas price increased 55% to $3.73 per thousand cubic feet (Mcf) in the fourth quarter 2003 compared to $2.40 per Mcf in the year ago period. Included in the realized natural gas price is a hedging gain of $0.14 per Mcf in the fourth quarter 2003 compared to a hedging loss of $0.01 per Mcf in the fourth quarter 2002. Costs and Expenses Total costs and expenses in the fourth quarter 2003 were $65.3 million versus $58.8 million in the year ago period. Lease operating expense (LOE) was $38.8 million in the fourth quarter 2003 compared to $29.1 million in the year ago period due to an additional crude oil lifting in the Congo and incremental field expenses commensurate with a higher working interest in the Point Pedernales Field. In addition, the natural gas cost contributed $10.3 million to LOE in the fourth quarter 2003 versus $5.6 million in the comparable period in 2002. Natural gas is used to generate steam which in turn facilitates production of heavy oil onshore California. DD&A declined 10% to $18.4 million in the fourth quarter 2003 compared to $20.4 million in the year ago period primarily due to a lower DD&A rate. DD&A averaged $4.04 per barrel of oil equivalent (BOE) in the fourth quarter 2003 compared to $4.52 per BOE in the year ago period. General and administrative costs increased 47% to $8.8 million in the fourth quarter 2003 versus $6.0 million in the same period in 2002 due to higher employee expenses related to the attainment of bonus targets, and costs associated with the issuance of restricted stock in January 2003. Interest expense declined 49% to $5.2 million in the fourth quarter 2003 compared to $10.2 million in the year ago period due to the redemption of $184.6 million of the 9 1/2% Notes in 2003. YEAR 2003 Prices and Production Total production from continuing operations increased 4% to 48.8 thousand barrels of oil equivalent (MBOE) per day in 2003 compared to 46.9 MBOE per day in the year ago period. Production from our discontinued operations was 1.3 MBOE per day in 2003 and 4.6 MBOE per day in 2002. Oil production increased 2% to 42.4 barrels per day compared to 41.6 barrels per day in 2002 primarily due to increased production from the Point Pedernales Field offshore California (increased working interest). Nuevo's realized crude oil price increased 11% to $20.30 per barrel in 2003 from $18.21 per barrel in 2002. Included in the realized crude oil prices are hedging losses of $2.89 per barrel in 2003 and $0.62 per barrel in the comparable period a year ago. Nuevo's 2003 natural gas production increased 22% to 38.5 MMcf per day compared to 31.5 MMcf per day in 2002 due to a full year of production in 2003 from the Pakenham Field, which more than offset a production decline at the Pitas Point Field offshore California. The 2003 realized natural gas price of $3.99 per Mcf increased 47% from the realized natural gas price of $2.72 Mcf for the same period in 2002. Included in the realized natural gas price is a hedging loss of $0.15 per Mcf in 2003 compared to a hedging loss of $0.01 per Mcf in 2002. Costs and Expenses Total costs and expenses in 2003 were $256.6 million versus $223.1 million in the year ago period. LOE was $159.8 million in 2003 compared to $133.0 million in 2002 due to the inclusion of the Pakenham Field for the full year 2003, and incremental field expenses commensurate with a higher working interest in the Point Pedernales Field. In addition, the natural gas cost contributed $45.1 million to LOE in 2003 versus $28.6 million in 2002. Total LOE per BOE averaged $8.98 in 2003 versus $7.77 in 2002. Exploration costs declined 53% to $2.1 million in 2003 compared to $4.5 million in 2002 which included a $2.4 million non-cash write off of the Anaguid permit in Tunisia. DD&A decreased 3% to $70.8 million in 2003 compared to $73.1 million in 2002 due to increased production and a lower DD&A rate. DD&A averaged $3.98 per BOE in 2003 compared to $4.28 per BOE in the year ago period. General and administrative expenses increased 10% to $28.5 million in 2003 compared to $25.9 million in 2002 due to higher employee expenses related to the attainment of bonus targets, and costs associated with the issuance of restricted stock in January 2003. The gain on the disposition of properties was $5.8 million in 2003 and reflects the release of funds held in escrow for properties sold in 1999. This compares to a gain of $16.6 million in 2002 which reflects a settlement with ExxonMobil. Interest expense declined 21% to $29.8 million in 2003 versus $37.9 million in 2002 due to the redemption of $184.6 million of high cost debt in 2003. Interest expense excludes a loss on the early extinguishment of debt of $12.6 million in 2003. Capital Expenditures Capital expenditures (excluding acquisitions) in the fourth quarter 2003 were $15.6 million compared to $39.0 million in the fourth quarter 2002. Capital expenditures (excluding acquisitions) in 2003 were $66.7 million compared to $80.2 million in 2002. Balance Sheet On December 31, 2003, Nuevo adopted Financial Interpretation No. 46R, Consolidation of Variable Interest Entities, and reclassified $115.0 million of $2.875 Term Convertible Securities, Series A (TECONS), from mezzanine financing to long-term debt. As a result, total debt was $355 million at December 31, 2003 versus $438.3 million at year-end 2002. Total debt at year-end 2002 excluded $115.0 million of TECONS. At year-end 2003, Nuevo's debt to capital ratio, as defined in our credit agreement, declined to 38% compared to 57% at year-end 2002. The fixed charge coverage ratio improved to 5.0 times for the four quarters ending December 31, 2003 versus 3.7 times at year-end 2002. During 2003, Nuevo repaid $184.6 million of high coupon debt. In February 2004, Nuevo completed the final redemption of $75.0 million of the 9 1/2% Senior Subordinated Notes due 2008. 2003 Reserves Nuevo's reserves were 207.9 million barrels of oil equivalent (MMBOE) at December 31, 2003, relatively flat with reserves of 209.6 MMBOE at December 31, 2002, after deducting 39.9 MMBOE for the sales of reserves in 2003. In 2003, Nuevo had a 91% production replacement rate at a finding and development cost of $3.81 per BOE. Nuevo's five-year average production replacement rate is 163% at a finding and development cost of $4.20 per BOE. Nuevo Energy Company is a Houston, Texas-based company primarily engaged in the acquisition, exploitation, development, exploration and production of crude oil and natural gas. Nuevo's domestic producing properties are located onshore and offshore California and in West Texas. Nuevo is the largest independent producer of crude oil and natural gas in California. The Company's international producing property is located offshore the Republic of Congo in West Africa. To learn more about Nuevo, please refer to the Company's internet site at http://www.nuevoenergy.com. As reported in the Troubled Company Reporter's February 17, 2004 edition, Fitch Ratings placed the debt ratings of Nuevo Energy on Watch Positive following the announcement that Plains Exploration & Production Company will acquire Nuevo. Currently, Fitch rates Nuevo's senior subordinated debt 'B' and its trust convertible securities 'B-'. PACIFIC AEROSPACE: Special Shareholders' Meeting is on March 19 --------------------------------------------------------------- The Special Meeting of Shareholders of Pacific Aerospace & Electronics, Inc., a Washington corporation will be held at the offices of Davis Wright Tremaine LLP, located at 2600 Century Square, 1501 Fourth Avenue, Seattle, Washington, on March 19, 2004, at 9:00 a.m. Pacific Standard Time, for the following purposes: 1. To approve a 1-for-11,000 reverse stock split of the Company's then authorized, issued and outstanding shares of common stock (without affecting the per share par value). The Reverse Split is proposed for the purpose of terminating the Company's reporting obligations under the Securities Exchange Act of 1934, as amended; 2. To approve a reduction in the authorized common stock of the Company (without affecting the per share par value) from 100,000,000 to 10,000,000. Adoption of the Reduction in Authorized common stock is contingent on approval of Proposal 1, the Reverse Split; 3. To elect five members of the Board of Directors to serve until the next annual meeting of shareholders or until their respective successors are duly elected and qualified; 4. To ratify the appointment of KPMG LLP as the independent auditors of the Company for the fiscal year ending May 31, 2004; and 5. To transact any other business that may properly come before the Special Meeting. This meeting shall also act as the Company's annual meeting of shareholders for the fiscal year ended May 31, 2003. Currently, the Board of Directors is not aware of any other business to come before the Special Meeting. Only shareholders of record on January 20, 2004, are entitled to notice of, and to vote at, the Special Meeting or any adjournments of the meeting. Under the Washington Business Corporation Act, certain shareholders are entitled to dissenters' rights solely with respect to Proposal 1. A brief description of the dissenters' rights statute is included in the Notice of Special Meeting mailed to shareholders. Shareholders who are considering exercising their dissenters' rights must comply fully with the statutory requirements and, accordingly, should read the dissenters' rights statute in its entirety. Pacific Aerospace's November 30, 2003, balance sheet reports a total stockholders' equity deficit of $13.4 million. PACIFIC GAS: Asks Nod to Set Up Disputed Claims Escrow Accounts --------------------------------------------------------------- Pacific Gas and Electric Company seeks the Court's authority to establish and maintain certain disputed claims escrow accounts. Pursuant to the confirmed Plan, PG&E has agreed to establish one or more escrow accounts for the purpose of setting aside funds to make distributions on disputed claims to the extent these become allowed claims. The amount deposited into escrow does not limit PG&E's obligation to pay all allowed claims. Disputed Claims Escrow On or shortly after the Effective Date of the Plan, PG&E anticipates that it will pay, in cash, $9,000,000,000 in Allowed Claims. Although the vast majority of claims are undisputed or have been resolved, there are some Disputed Claims, which have not yet been resolved. Pursuant to the Plan, PG&E has agreed to establish escrows for the payment of the Disputed Claims. No escrow is required for "pass-through" Claims in Class 8 Environmental Claims, Fire Suppression Claims, Pending Litigation Claims and Tort Claims or Class 10 Workers' Compensation Claims. The only other classes of claims with material disputed amounts are Class 5, 6 and 7, and certain unclassified priority tax claims. Class 7 Disputed Claims Proposed Claim Creditor Face Amount Escrow Amount ----- ------------------------ ----------- ------------- 13034 AES NewEnergy, Inc. $8,947,319 $8,947,319 7915 Boston Properties, Inc. 13,038,402 13,038,402 and Boston Properties Limited Partnership 13051 Idaho Power Company 497,832 497,832 8846 Energy Services Ventures, 346,835 346,835 Inc. 8045 Sacramento Municipal 1,530,473 1,530,473 Utility District 4383 Tenderland Power Company 31,342 31,342 ------------ ------------- Class 7 Total: $24,392,205 $24,392,205 ============ ============= AES NewEnergy's Claim No. 13034 Face Amount does not represent the full face amount of the Claim, as filed, because portions of the Claim are non-Class 7. Idaho Power Company's Claim No. 13051 Face Amount does not represent the full face amount of the Claim, as filed, because a portion of the Claim was withdrawn. Class 5 & Class PTC Disputed Claims Proposed Claim Creditor Face Amount Escrow Amount ----- ------------------------ ----------- ------------- 11603 Associated Developers $503,758 $503,758 Group 7211 Bank of America, N.A. 1,263,065 1,263,065 8802 California Independent 56,505,301 38,505,301 System Operator Corp. 13281 California Power 124,270 124,270 Exchange Corp. 13462 Cambridge Consulting 36,991 36,991 Group 9579 The CIT Group/Credit 788,466 788,466 Finance, Inc. 8809 Coral Power, LLC 38,636 38,636 8855 Duke Energy Oakland, LLC 44,764,441 0 8850 Duke Energy Trading & 11,299,480 11,299,480 Marketing, LLC 8837 El Paso Merchant Energy, 2,099,692 2,099,692 LP 140 Georgia-Pacific Corp. 1,711,821 1,711,821 6738 Midway-Sunset Cogeneration 876,472 876,472 Company 8872 Mirant Americas Energy 7,846,214 7,846,214 Marketing, LP 8875 Mirant Delta, LLC 16,639,577 0 8876 Mirant Potrero, LLC 3,917,510 0 11027 Modesto Irrigation District 11,999,044 11,999,044 13331 Northern California Power 6,070,953 6,070,953 Agency 13390 Nuevo Energy Company 743,005 743,005 12385 City of Palo Alto 6,109,881 122,190 7875 The Prudential Insurance 3,733,052 3,733,052 Company of America (Midsun) 8824 San Diego Gas and Electric 18,460,000 0 Company 12640 The City and County of 22,358,872 22,358,872 San Francisco 12602 The City of Santa Clara, 3,241,097 3,241,097 d/b/a Silicon Valley Power 7903 SPP Director of Power & 3,537,514 3,537,514 Fuels Contracts Sierra Pacific Power Company 13471 The Port Of Stockton 264,743 264,743 11550 Turlock Irrigation 1,024,496 1,024,496 District 7863 Williams Energy Services; 747,900 747,900 Williams Energy Marketing & Trading Company -- Total of Remaining Claims 12,915 12,915 Under $20,000 ----------- ------------- Class 5 Subtotal: 226,719,175 118,937,040 ----------- ------------- 13360 Dept. of The Treasury $57,562,724 $1,800,000 12342 Dept. of The Treasury 53,022,740 0 Internal Revenue Service 13310 Dept. of The Treasury 56,789,128 0 Internal Revenue Service 12362 Franchise Tax Board 22,324,955 14,500,000 12509 Franchise Tax Board 3,304,350 0 13024 State Board of Equalization 3,920,896 1,000,000 ----------- ------------- Class PTC Subtotal: 196,924,796 34,300,000 ----------- ------------- Class 5, PTC Total: $423,643,971 $153,237,040 =========== ============= Bank of America's Claim No. 7211 Face Amount represents the Class 5 disputed portion of the full face amount of the Claim, as filed, for $939,724,065. California ISO's Claim No. 8802 Face Amount does not represent the full face amount of the Claim, as filed, because a $27,900,000 portion and another $72,300,000 portion of the Claim was resolved by separate stipulations. The Proposed Escrow Amount for the Claim is comprised of the Class 5 portion of the Claim that is not related to a claim due under its Reliability Must Run agreements with PG&E. The Face Amount of Coral Power's Claim does not represent the full face amount of the Claim, as filed, because portions of the Claim are non-Class 5, 7 or PTC. Midway Sunset's Claim No. 6738 Face Amount represents the maximum amount payable by PG&E pursuant to a stipulation. City of Santa Clara's Claim No. 12602 Face Amount does not represent the full face amount of the Claim, as filed, because portions of the Claim were withdrawn, and other portions of the Claim are non-Class 5, 7 or PTC. The Face Amount of the State Board of Equalization's Claim represents the full face amount of the Claim, as filed, less the previously paid amount. Total Remaining Claims Under $20,000 and Their Class 5 Face Amounts Claim Creditor Face Amount ----- ----------------------------------- ----------- 8831 Amador Water Agency $827 12619 East Bay Municipal Utility District 9,117 13425 San Jose Downtown Association 2,971 Existing Agreements Regarding Disputed Claims Escrow PG&E has entered into two agreements with creditors that specify the amounts and certain terms of the Disputed Claims escrow for the creditors. The agreements relate to a stipulation with Class 6 claimholders, and a settlement agreement and stipulation with Enron Energy Services, Inc. and Enron Energy Marketing Corp. The Class 7 Escrow The Disputed Claims in Class 7 total $24,400,000. PG&E seek the Court's authority to establish a separate escrow for all Disputed Claims in Class 7 in that amount as well. The Class 5 and Tax Claims Escrows PG&E has determined that the face amount of the Disputed Claims in Class 5 totals $226,700,000, and the face amount of the Disputed Tax Claims totals $196,900,000. PG&E does not believe that it would be appropriate to reserve funds in escrow for certain Class 5 Claims or portions of it, or disputed Tax Claims. In particular, PG&E will not reserve funds for Disputed RMR Claims or Duplicate Claims in Class 5. PG&E believes that it will be able to satisfy any Allowed RMR Claims in the ordinary course of business. The Disputed RMR Claims total $101,800,000, and the Duplicate Claims total $6,000,000. Accordingly, the amount of the escrow on account of Class 5 Disputed Claims would be limited to $118,900,000 -- the total Disputed Claims of $226,700,000 less $107,800,000 in RMR and Duplicate Claims. PG&E also finds it inappropriate to establish a reserve for Disputed Tax Claims to the extent the Tax Claims exceed $34,300,000 in the aggregate. Accordingly, PG&E asks the Court for permission to establish separate escrow accounts for: (a) $34,300,000 Disputed Tax Claims; and (b) $118,900,000 Disputed Claims in Class 5. Headquartered in San Francisco, California, Pacific Gas and Electric Company -- http://www.pge.com/-- a wholly-owned subsidiary of PG&E Corporation (NYSE:PCG), is one of the largest combination natural gas and electric utilities in the United States. The Company filed for Chapter 11 protection on April 6, 2001 (Bankr. N.D. Calif. Case No. 01-30923). James L. Lopes, Esq., William J. Lafferty, Esq., and Jeffrey L. Schaffer, Esq., at Howard, Rice, Nemerovski, Canady, Falk & Rabkin represent the Debtors in their restructuring efforts. On June 30, 2001, the Company listed $23,216,000,000 in assets and $22,152,000,000 in debts. (Pacific Gas Bankruptcy News, Issue No. 72; Bankruptcy Creditors' Service, Inc., 215/945-7000) PARMALAT: DebtTraders Begins Coverage & Sees Buying Opportunities ----------------------------------------------------------------- DebtTraders initiates coverage of Parmalat Finanziaria SpA and its subsidiaries with an extensive analysis of the current situation, as well as its assessment of value for several classes of debt. In particular, DebtTraders assigned a BUY recommendation on Senior Notes of Parmalat Dairy & Bakery, Inc., a major Canadian subsidiary of the Company, with maturities ranging from '05 to '10 with a SAFETY rating of 90%, and ATTRACTIVENESS ratings in the range of 81% to 86%. At the current price range of 78.00 to 85.00, the notes yield 13.2% to 17.6%. Dairy & Bakery, unlike the Italian, U.S., Brazilian, and other subsidiaries of the Company, has not filed for bankruptcy. Even in a bankruptcy situation followed by a fire sale of assets, the trading firm expects full recovery on the notes due to the low leverage of the subsidiary (debt-to-EBITDA of 4.4 times) resulting in IRRs of 12% to 18%. A decision by Finanziaria, the Italian parent, to sell this subsidiary would make the notes more attractive, as a sale would expedite recovery on the notes. "We believe debt issued or guaranteed by Finanziaria carries a high risk profile due to structural subordination to potential inter-company debt, however, at a price of 12.00, offers an upside of 80% given our Base Case valuation of 21.60, largely based on Finanziaria's indirect ownership of two of the most valuable international entities. Due to the aforementioned risk, however, we are not issuing a recommendation on this debt. We believe debt issued or guaranteed by Parmalat SpA is overvalued at 12.50, compared to our Base Case value of 8.60, due to a significant amount of structurally senior debt according to our estimates. Finally, we value the debt issued by Parmalat Participacoes do Brasil Ltda and guaranteed by Parmalat Brasil, S.A. Industria de Alimentos at 18.90, however point out several unknowns surrounding this debt such as the amount outstanding, seniority, and EBITDA generation potential of Parmalat Brasil Alimentos depending on whether the unit will stay as a going concern, or be compelled to sell its assets on a piecemeal basis. These bonds are currently priced at 15.00." Potential for value appreciation exists however, and can be summarized as: 1) improvement of operating profitability from the lower end of our dairy universe to average, or above average levels due to normalization of operations and removal of excessive costs; 2) an earlier than expected conclusion of the bankruptcy process that is moving forward at a faster-than-expected pace, which would reduce the discount applied to recovery calculations; 3) an orderly sale of certain subsidiaries with multiple suitors in contested auctions at premium multiples; and 4) potential value to be added to the estate through disgorgement of personal and family assets of Calisto Tanzi, Finanziaria's former chairman and chief executive, funds found in certain bank accounts, or other means (none assumed in the analysis). "We understand that preliminary details of a restructuring plan may be released as early as March, much earlier than the deadline in June, and a creditor vote may be scheduled in April-May. However, in our Base Case we assume a bankruptcy process of two years, still far shorter than regular procedures, which may last as long as seven years. Similar to the restructuring plan offered for Cirio Finanziaria SpA that defaulted on ?1.6 billion of debt, Parmalat's restructuring plan may offer a debt swap for equity at Finanziaria, as well as new debt to certain classes of claim holders. We believe, however, that the sustainable debt capacity of Parmalat is no more than ?1.5 billion (5.0 times Base Case EBITDA), hence the restructuring package is likely to involve a high equity content." In the report, readers will find in Chapter I a description of the group's outstanding debt securities (Capital Structure), its organization structure (Corporate Structure), an analysis of the group's business and cash generating potential (Financial Analysis), a sum-of-the parts valuation of subsidiaries and of the Group (Valuation), a depiction of various scenarios to value debt issued or guaranteed by Finanziaria or Parmalat SpA (Scenario Analysis), DebtTraders' views on the restructuring plan (Thoughts on the Reorganization Plan) and descriptions of the group's main subsidiaries (Overview of Subsidiaries); in Chapter II a report on Dairy & Bakery, in Chapter III a report on Parmalat Par; followed by appendices detailing the Extraordinary Administration process in the Italian bankruptcy law (App. 1), the Cirio Finanziaria SpA bankruptcy (App. 2), a summary of Parmalat SpA bond covenants (App. 3), and a table of currency rates (App. 4). DebtTraders' clients can access extensive background documents- consolidated and subsidiary filings, financial models, prospectuses and bankruptcy documents at http://www.DebtTraders.com/ PARMALAT: Brazilian Unit Misses $19M Payment to Banco do Brasil --------------------------------------------------------------- On February 13, 2004, Parmalat Brasil SA Industria de Alimentos missed a BRL55,000,000 or $19,000,000 payment to Banco do Brasil SA, its biggest creditor, the Bloomberg News reports, citing Folha de S. Paulo. The Brazilian unit needs BRL75,000,000 to BRL100,000,000 to maintain its operations. But it has another credit line of EUR40,000,000 at a retail bank that it can still use, Folha said. This is not the first time Parmalat Brasil failed to make payments to Banco do Brasil, the newspaper said. More Woes State-run development bank, the BNDES, has turned its back on Parmalat Brasil. "The BNDES will not lend one cent to Parmalat," the bank's president, Carlos Lessa, told Reuters. "But if a cooperative takes control of the company it can come and talk to us. "We're not going to let the milk industry collapse." Headquartered in Wallington, New Jersey, Parmalat USA Corporation -- http://www.parmalatusa.com/-- generates more than 7 billion euros in annual revenue. The Parmalat Group's 40-some brand product line includes milk, yogurt, cheese, butter, cakes and cookies, breads, pizza, snack foods and vegetable sauces, soups and juices and employs over 36,000 workers in 139 plants located in 31 countries on six continents. The Company filed for chapter 11 protection on February 24, 2004 (Bankr. S.D.N.Y. Case No. 04- 11139). Gary Holtzer, Esq., and Marcia L. Goldstein, Esq., at Weil Gotshal & Manges LLP represent the Debtors in their restructuring efforts. On June 30, 2003, the Debtors listed EUR2,001,818,912 in assets and EUR1,061,786,417 in debts. (Parmalat Bankruptcy News, Issue No. 6; Bankruptcy Creditors' Service, Inc., 215/945-7000) PARMALAT GROUP: Nicaraguan Unit Transferred $5 Million in Loans --------------------------------------------------------------- The Minister of Industry and Commerce in Nicaragua revealed that Parmalat Nicaragua transferred a $5,000,000 loan from Central American banks to the Company's headquarters in Italy a month before the parent company's scandal surfaced, AP Online relates. In a television interview aired on Canal 63, Minister Mario Arana said that Parmalat had promised to pay the loan in the next 15 days. Recently, the banks that made the loan -- Nicaragua's Central American Bank and Panama's Tower Bank -- froze Parmalat's assets. Parmalat's manager in Nicaragua, Aldo Camorani, said that Minister Tanzi called him in November 2003 and ordered him to send money. "This now could be interpreted as strange, but it wasn't strange," Mr. Camorani said. "It was clean and documented." Headquartered in Wallington, New Jersey, Parmalat USA Corporation -- http://www.parmalatusa.com/-- generates more than 7 billion euros in annual revenue. The Parmalat Group's 40-some brand product line includes milk, yogurt, cheese, butter, cakes and cookies, breads, pizza, snack foods and vegetable sauces, soups and juices and employs over 36,000 workers in 139 plants located in 31 countries on six continents. The Company filed for chapter 11 protection on February 24, 2004 (Bankr. S.D.N.Y. Case No. 04- 11139). Gary Holtzer, Esq., and Marcia L. Goldstein, Esq., at Weil Gotshal & Manges LLP represent the Debtors in their restructuring efforts. On June 30, 2003, the Debtors listed EUR2,001,818,912 in assets and EUR1,061,786,417 in debts. (Parmalat Bankruptcy News, Issue No. 6; Bankruptcy Creditors' Service, Inc., 215/945-7000) PARTNERS MUTUAL: S&P Lowers Counterparty Credit Rating to BBpi -------------------------------------------------------------- Standard & Poor's Ratings Services lowered its counterparty credit and financial strength ratings on Partners Mutual Insurance Co. to 'BBpi' from 'BBBpi'. "This rating action reflects the company's weak earnings and very high geographical concentration, which are partially offset by its strong capitalization," said Standard & Poor's credit analyst Tom Taillon. Partners Mutual is a regional property/casualty insurer based in Waukesha, Wisconsin. It mainly writes private passenger automobile, commercial and homeowners' multiperil, and workers' compensation insurance. The company commenced operations in 1932. The company is rated on a stand-alone basis. PEARL HOLDINGS: Case Summary & 7 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Pearl Holdings Group Inc. dba Dublin's Irish Whiskey Pub dba Above Dublin's 8240 Sunset Boulevard West Hollywood, California 90046 Bankruptcy Case No.: 04-12448 Type of Business: The Debtor operates an Irish pub and restaurant. Chapter 11 Petition Date: February 4, 2004 Court: Central District of California (Los Angeles) Judge: Maureen Tighe Debtor's Counsel: Nicholas S. Nassif, Esq. Law Offices of Nicholas S. Nassif 3055 Wilshire Boulevard, Suite 900 Los Angeles, CA 90010 Tel: 213-736-1899 Total Assets: $34,000 Total Debts: $3,712,000 Debtor's 7 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Internal Revenue Service Federal Withholding $1,200,000 Special Procedures/Bankr. Taxes 300 N. Los Angeles M/S 5022 Los Angeles, CA 90012 State Board of Equalization Sales Taxes $225,000 John Bedekian Judgment-Promissory $165,000 Note 8240 Sunset Associates Rent & insurance $130,000 premiums Jeffrey Lever Promissory note $30,000 Clarendon America Insurance Insurance deductible $10,000 Co. NTN Communications Cable $2,000 PETCO ANIMAL: Improved Finances Spur S&P to Up Credit Rating to BB ------------------------------------------------------------------ Standard & Poor's Ratings Services raised its ratings on PETCO Animal Supplies Inc. The corporate credit rating was raised to 'BB' from 'BB-'. The outlook is stable. The upgrade reflects PETCO's improved financial profile and continued strength in its operations. Due to the company's better operating performance and modest debt reduction, credit protection measures have strengthened. Standard & Poor's expects PETCO's operations to remain solid, supported by its successful operating strategy and merchandising skills. "The ratings continue to reflect PETCO's participation in the competitive and highly fragmented pet food, supplies, and services industry; an aggressive growth strategy; and substantial debt leverage," said Standard & Poor's credit analyst Ana Lai. "These risks are mitigated by the company's consistent operating performance and good market position as one of the leaders in the industry." PETCO's strategy of targeting customer convenience has proven successful, resulting in healthy same-store sales trends. Despite a challenging retail environment, PETCO reported strong same-store sales increases of 5.6% in the first nine months of 2003, following an 8% increase in 2002. Operating margins expanded to more than 19.8% for the 12 months ended Nov. 3, 2003, from 18.4% a year ago due to the leveraging of same-store sales increases and a shift to higher-margin pet services and supply products. By targeting convenience shoppers, PETCO is able to charge higher prices and achieve higher margins on pet food and supplies than its key competitor, PETsMART Inc. Industry demographics are expected to remain favorable because the largest pet owning segment -- families with children under 18 years old -- should continue to increase. Although the industry has some resistance to economic slowdowns, customers could trade down to less expensive products and reduce discretionary purchases. PETCO's consistent sales and earnings growth, together with modest debt reduction over the past two years, has resulted in stronger credit protection measures. In 2003, the company redeemed about $50 million of its subordinated notes and repaid $50 million of its term loan. For the 12 months ended Nov. 3, 2003, EBITDA coverage of interest improved to 2.8x from about 2.0x in 2002, and total debt to EBITDA improved to 4.0x from more than 5.0x in the same period. Despite an aggressive growth strategy, store expansion has been manageable and largely funded with internally generated cash flow. As a result, debt leverage is expected to remain appropriate for the rating. PETSMART INC: S&P Gives Positive Outlook to B-Level Ratings ----------------------------------------------------------- Standard & Poor's Rating Services raised its corporate credit rating on PetsMart Inc. to 'BB-' from 'B+'. The outlook is positive. The upgrade reflects PetsMart's significant operating improvement over the past three years due to strong sales trends and an enhanced distribution network. As a result, credit protection measures have improved significantly over this period. A higher rating could be considered over the next two years if the company continues to improve credit protection measures while prudently managing its growth. "The ratings reflect PetsMart Inc.'s participation in the competitive and highly fragmented pet supplies retail industry and its improving, but still inconsistent, operating history," said Standard & Poor's credit analyst Patrick Jeffrey. "These risks are mitigated somewhat by the company's leading position in the industry and its significantly improved operating performance." As the leading operator of specialty pet supply stores, Phoenix, Arizona-based PetsMart has made significant progress in turning around its operations, resulting in solid same-store sales increases of 7% in fiscal 2003, 9.6% in 2002, and 6.5% in 2001. This is attributed to PetsMart's successful store reformatting, expanded focus on pet services, and improved operating efficiency. The reformatting of the company's store base into the Eagle format (which offers customers an easier shopping experience) from its warehouse-style stores has improved traffic and sales trends. This initiative was substantially completed in 2003. PetsMart opened 60 net new stores in 2003, compared with about 23 net new stores in 2002. As the company completed its store reformatting program in 2003, it is expected to further increase its store openings over the next few years to about 100 annually. Operating efficiency improvements were largely driven by recent enhancement to PetsMart's distribution network, resulting in better in-stock position and lower inventory levels at its stores. Increased sales leverage and the growth of the company's higher- margin pet services contributed to the operating margin expanding to 17.1% in 2003, up from 12.5% in 2001. Despite the significant improvement, PetsMart's operating margins remain low relative to those of its main competitor, PETCO Animal Supplies Inc. PetsMart's better results have significantly improved cash flow generation, with lease-adjusted EBITDA increasing to about $513 million in 2003, from $244 million in 2001. As a result, cash flow protection measures strengthened, with EBITDA interest coverage at 3.3x in 2003, up from 1.9x in 2001. The company's debt leverage also improved, with total debt to EBITDA at about 3.2x, down from 5.4x in 2001. Still, PetsMart's historical operating performance has been inconsistent, and the pet food supplies and services industry remains highly competitive. These risks are somewhat mitigated by the company's leading industry position. Although PetsMart has generated improved levels of operating cash flow, this has been largely absorbed by significant capital expenditures related to its store growth strategy. PG&E NATIONAL: USGen Unit Brings-In Willkie Far as Special Counsel ------------------------------------------------------------------ Pursuant to Sections 327(e) and 328(a) of the Bankruptcy Code, USGen New England, Inc. seeks the Court's authority to employ Willkie Farr & Gallagher, LLP, as special corporate counsel to assist the general bankruptcy counsel, Blank Rome, LLP, with respect to certain matters in USGen's Chapter 11 case. Specifically, USGen proposes to employ Willkie Farr to perform all necessary services as special corporate counsel in connection with the sale of all or substantially all of USGen's assets to a certain potential buyer, including: (a) providing USGen with advice; (b) representing USGen; and (c) preparing all necessary corporate documents on USGen's behalf. Willkie Farr represents the NEG Debtors in their Chapter 11 cases. Willkie Farr will not represent USGen in any issue, matter or claim related to the NEG Debtors. USGen selects Willkie Farr as special corporate counsel because of the firm's prepetition representation of USGen, which included negotiations with the Potential Buyer. Accordingly, USGen believes that Willkie Farr is both well qualified and uniquely able to represent it in its Chapter 11 case in a most efficient and timely manner. Willkie Farr will be compensated for services in accordance to the firm's normal hourly rates: Partners $530 - 785 Associates 240 - 525 Legal Assistants 110 - 190 Matthew A. Feldman, Esq., a partner at Willkie Farr's Business Reorganization and Restructuring Department, assures the Court that the firm does not represent or hold any interest adverse to USGen or its estate. Headquartered in Bethesda, Maryland, PG&E National Energy Group, Inc. -- http://www.pge.com/-- develops, builds, owns and operates electric generating and natural gas pipeline facilities and provides energy trading, marketing and risk-management services. The Company filed for Chapter 11 protection on July 8, 2003 (Bankr. D. Md. Case No. 03-30459). Matthew A. Feldman, Esq., Shelley C. Chapman, Esq., and Carollynn H.G. Callari, Esq., at Willkie Farr & Gallagher represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $7,613,000,000 in assets and $9,062,000,000 in debts. (PG&E National Bankruptcy News, Issue No. 16; Bankruptcy Creditors' Service, Inc., 215/945-7000) PILLOWTEX: Gets Go-Ahead to Recharacterize 3 Crescent Lease Pacts ----------------------------------------------------------------- On January 1, 2000, Debtor Pillowtex Corporation and General Electric Corporation entered into three lease agreements pursuant to which GECC agreed to lease to Pillowtex certain production equipment for use in the Debtors' manufacturing operations: (a) Production Equipment Lease Agreement No. Series 19-A, having a capitalized lessor's cost of $362,000; (b) Production Equipment Lease Agreement No. Series 20-D, having a capitalized lessor's cost of $933,637; and (c) Production Equipment Lease Agreement No. Series 25-C, having a capitalized lessor's cost of $1,647,400. GECC subsequently assigned all its right, title interest and obligations under the Lease Agreements to American Equipment Leasing, a predecessor-in-interest to CitiCapital Technology Finance, Inc. On May 9, 2002, the Debtors assumed the Lease Agreements. On September 30, 2003, CitiCapital assigned to Crescent Financial LLC, an affiliate of GGST LLC, the Lease Agreements and substantially all of CitiCapital's rights, title, interest, claims and remedies under the Lease Agreements and in the Equipment for $688,000. Under the Assignment, CitiCapital retained any right, title or interest in any rent or lease payments, insurance proceeds, condemnation awards and other amounts and security made to, received by, or payable by Pillowtex under the Lease Agreements on or prior to September 30, 2003. On October 7, 2003, the Court approved the sale of substantially all of the Debtors' assets to GGST. The terms of the Sale Agreement requires that the parties must jointly determine prior to the closing of the sale of the Assets, whether each Subject Capital Lease must be treated as a true lease or recharacterized as a financing lease or secured loan under the Bankruptcy Code. Accordingly, with the Court's consent, the Debtors, Crescent and GGST stipulate that: (a) The Lease Agreements are not true leases under the Bankruptcy Code and therefore recharacterized as financing leases or secured loans; (b) The Equipment is property of the Debtors' estates; (c) Crescent, as assignee of CitiCapital under the Lease Agreements, has a valid, binding, enforceable and perfected, first priority security interest in the Equipment and accordingly, a secured claim against Pillowtex equal to the liquidation value of the Equipment; (d) As of the Petition Date, the aggregate balance due or to become due under the Lease Agreements was $1,107,785; (e) The liquidation value of the Equipment is $688,600; (f) In consideration of the Secured Claim, the Debtors will transfer to GGST good legal and beneficial title to the Equipment, free and clear of all liens, claims, encumbrances and interests of any kind or nature; (g) GGST will have an allowed unsecured prepetition non- priority deficiency claim against Pillowtex for $315,745, without being required to file proofs of claim; and (h) Crescent and GGST fully and forever release and discharge the Debtors from any and all claims against the Debtors that Crescent or GGST has or may have under or relating to the Lease Agreements. Headquartered in Dallas, Texas, Pillowtex Corporation -- http://www.pillowtex.com/-- sells top-of-the-bed products to virtually every major retailer in the U.S. and Canada. The Company filed for Chapter 11 protection on November 14, 2000 (Bankr. Del. Case No. 00-4211). David G. Heiman, Esq., at Jones, Day, Reavis & Poque represents the Debtors in their restructuring efforts. On July 30, 2003, the Company listed $548,003,000 in assets and $475,859,000 in debts. (Pillowtex Bankruptcy News, Issue No. 60; Bankruptcy Creditors' Service, Inc., 215/945-7000) PROJECT FUNDING: S&P Places Four Note Ratings on Watch Negative --------------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings on the class I, II, III, and IV notes issued by Project Funding Corp. I on CreditWatch with negative implications. Project Funding Corp. I is a project funding CDO collateralized by a pool of project finance loans. The transaction was originated in March 1998 by Credit Suisse First Boston. The CreditWatch placements reflect a structural feature of the transaction related to the timing of when the transaction switches to sequential payment from a pro rata payment sequence. As long as the transaction remains in pro rata mode, principal cash is distributed pro rata across the senior, mezzanine, and subordinate notes, and credit support is provided only by excess spread. Once the transaction switches to its sequential payment sequence, overcollateralization provides the senior notes with additional credit support. Among the events that would switch the transaction from pro rata to sequential paydown would be a reduction in the number of loans in the collateral pool to fewer than 10, combined with certain conditions regarding the overall credit quality of the collateral pool, or if the transaction experiences defaults (net of recoveries) greater than or equal to 2% of the cutoff date asset balance. Given the relatively small number of loans remaining within the collateral pool and the continuing pro rata paydowns on the liabilities, the transaction has an increasing exposure to the default of any one asset as the concentration within the collateral pool increases. The overall collateral credit quality of the assets within the collateral pool has remained stable, and the transaction has seen no asset defaults since origination. Standard & Poor's will review the results of current cash flow runs generated for Project Funding Corp. I to determine the level of future defaults the tranches can withstand under various default timing and interest rate stress scenarios, while still paying all of the principal and interest due. The results of these cash flow runs will be compared with the projected default performance of the loans remaining in the portfolio to determine whether the ratings currently assigned to each class of notes remain consistent with the amount of credit enhancement currently available. Standard & Poor's noted that the ultimate potential for movement on the ratings assigned to the class I and class II notes was uncertain, but could potentially include downgrades to non-investment grade ratings. RATINGS PLACED ON CREDITWATCH NEGATIVE Project Funding Corp. I Rating Class To From I AAA/Watch Neg AAA II A/Watch Neg A III BBB/Watch Neg BBB IV BB/Watch Neg BB QMAX CO: Case Summary & 10 Largest Unsecured Creditors ------------------------------------------------------ Debtor: QMAX Co. P.O. Box 877 Williams, Arizona 86046 Bankruptcy Case No.: 04-02679 Chapter 11 Petition Date: February 20, 2004 Court: District of Arizona (Phoenix) Judge: Sarah Sharer Curley Debtor's Counsel: Donald W. Powell, Esq. Carmichael & Powell, P.C. 7301 North 16th Street, #103 Phoenix, AZ 85020 Tel: 602-861-0777 Fax: 602-870-0296 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 10 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Fann Contracting, Inc. $1,498,251 P.O. Box 4356 Prescott, AZ 86302 Crusher Rental & Sales, Inc. $146,959 J & D Excavators, Inc. $20,697 Cummins Rock Mountain, LLC $9,755 Scott Boehm $6,000 Jenkins, Jensen & Bayles, LLP $1,233 Reuter Equipment Co. $1,036 McGraw Hill Construction $770 RDO Equipment Company $220 Airgas $54 QWEST SERVICES: S&P Assigns B- Rating to $750M Sr. Secured Loan --------------------------------------------------------------- Standard & Poor's Ratings Services today assigned its 'B-' bank loan rating to Qwest Services Corp.'s $750 million senior secured revolving credit facility. A recovery rating of '2' also was assigned to the loan, indicating expectations for a substantial recovery of principal (80%-100%) in the event of a default. In rating the committed $750 million revolving credit, Standard & Poor's also factored in the company's ability to obtain an additional $1 billion through a term loan subject to bank lenders' approval. QSC is a funding unit for Denver, Colorado-based diversified telecommunications provider Qwest Communications International Inc. The outstanding ratings on Qwest, including the 'B-' corporate credit rating, were affirmed. The outlook is developing. "The ratings on Qwest reflect the high degree of risk that continues to surround the diversified telecommunications carrier due to the ongoing criminal investigation by the U.S. Department of Justice, a separate investigation by the Securities and Exchange Commission, a General Services Administration investigation, and various shareholder lawsuits," said Standard & Poor's credit analyst Catherine Cosentino. These issues are the factors behind the below-average business risk, since they outweigh the core incumbent local exchange carrier's fundamentally sound business. The company may also face some potentially significant shortfalls in the funding of its pensions and other post-retirement benefits. For 2002, the company had a gross pension and OPEB liability of about $14.5 billion, compared with total pension and OPEB-related assets of $10 billion. However, Standard & Poor's recognizes that Qwest continues to hold a leading position in its local exchange markets in a 14-state region in the Western U.S., with 16.2 million access lines. In terms of Qwest's business profile, the company continues to benefit from the relative stability of Qwest Corp.'s core local exchange telephone business. This business generated operating cash flow margins of 46% for the nine months ended Sept. 30, 2003. Qwest has also secured interLATA relief in all 14 of its states, providing it the flexibility to increase revenue per customer in these jurisdictions, as well as to assist in the company's local win-back efforts. The latter issue is particularly important given ongoing retail consumer access line losses, which totaled 229,000 in the fourth quarter of 2003. RADIOLOGIX: Q4 & FY 2003 Conference Call Set for Thurs, March 11 ---------------------------------------------------------------- In connection with Radiologix's (Amex: RGX) upcoming fourth quarter and fiscal year end 2003 results release, Radiologix invites you to listen to its conference call with Stephen D. Linehan, president and C.E.O. and Sami S. Abbasi, executive vice president and C.O.O. The conference call will be broadcast live over the Internet on Thursday, March 11, 2004, at 8:00 a.m. CT, 9:00 a.m. ET. What: Radiologix, Inc. Fourth Quarter and Fiscal Year End 2003 Results Conference Call When: Thursday, March 11, 2004, at 8:00 a.m. Central Time Where: http://www.radiologix.com(from the "Investor Relations" drop-down menu, click on "Conference Calls & Presentations") How: Live over the Internet -- simply navigate to the Web address above Contact: Paul R. Streiber (214) 303-2702 paul.streiber@radiologix.com If you are unable to participate during the live Webcast, the call will be archived on Radiologix's site, http://www.radiologix.com/ To access the replay, from the "Investor Relations" drop-down menu, click on "Conference Calls & Presentations." Minimum requirements to listen to the broadcast: the Windows Media Player software, downloadable free from http://www.microsoft.com/windows/windowsmedia/EN/default.aspand at least a 28.8Kbps connection to the Internet. If you experience problems listening to the broadcast, send an email to webcastsupport@tfprn.com About Radiologix Radiologix -- http://www.radiologix.com/-- is a leading national provider of diagnostic imaging services, owning and operating multi-modality diagnostic imaging centers that use advanced imaging technologies such as positron emission tomography ("PET"), magnetic resonance imaging ("MRI"), computed tomography ("CT") and nuclear medicine, as well as x-ray, general radiography, mammography, ultrasound and fluoroscopy. The diagnostic images created, and the radiology reports based on these images, enable more accurate diagnosis and more efficient management of illness for ordering physicians. Radiologix owns or operates 107 imaging centers located in 15 states. * * * As reported in the Troubled Company Reporter's February 9, 2004 edition, Standard & Poor's Ratings Services affirmed its 'B+' corporate credit and 'B' senior unsecured debt ratings on Radiologix Inc., but revised the diagnostic imaging provider's outlook to negative from stable. "The outlook revision indicates that Standard & Poor's could lower the ratings if competitive factors continue to depress scan volumes in key markets, and erode the company's cash flow and financial insulation to levels inconsistent with the current rating," said Standard & Poor's credit analyst Jill Unferth. READER'S DIGEST: Will Present at Bear Stearns' Conference Today --------------------------------------------------------------- Thomas O. Ryder, Chairman and Chief Executive Officer of The Reader's Digest Association, Inc. (NYSE: RDA), will present at the Bear Stearns 17th Annual Media, Entertainment and Information Conference at The Breakers Hotel in Palm Beach, Florida today, March 8, 2004. The Reader's Digest presentation is scheduled to begin at 4:00 PM. It will be accessible via an audio-only Webcast on the Reader's Digest Investor Relations Web site, http://www.rd.com/corporate or by clicking directly http://customer.nvglb.com/BEAR002/030804a_cy/default.asp?entity=readersdiges t The link to the presentation will go LIVE just prior to the start of the presentation and will be archived for 14 days. The Webcast may be played on Windows Media Player or Real Player. This event requires that you register prior to accessing any of the Webcast and requires that you have "cookies" enabled for you browser. For information about the conference, please call (212) 272-6921. The Reader's Digest Association, Inc. is a global publisher and direct marketer of products that inform, enrich, entertain and inspire people of all ages and cultures around the world. Revenues were $2.5 billion for the fiscal year ended June 30, 2003. The company's principal Web site is http://www.rd.com/ Global headquarters are located at Pleasantville, New York. * * * As reported in the Troubled Company Reporter's February 23, 2004 edition, Standard & Poor's Ratings Services assigned its 'BB-' rating to Reader's Digest Association Inc.'s privately placed, Rule 144A offering of $300 million senior unsecured notes due 2011. Proceeds from this offering are expected to be used to repay a portion of outstanding debt under the company's term loan. Standard & Poor's affirmed its ratings, including its 'BB' corporate credit rating, on the company. The rating outlook remains negative. Pleasantville, New York-based Reader's Digest publishes the world's highest circulating, paid magazine and is a leading direct marketer of books. Pro forma total debt as of Dec. 31, 2003, was $806 million. "The negative outlook reflects the company's currently lackluster profitability and the modest cushion against the bank agreement's maximum debt leverage covenant," said Standard & Poor's credit analyst Hal Diamond. "Standard & Poor's would consider revising the outlook to stable over the near to intermediate term if the company is able to improve profitability and widen the cushion of covenant compliance," Mr. Diamond added. RELIANCE GROUP: Asks Pa. Court to Say Deductibles are RIC Assets ---------------------------------------------------------------- M. Diane Koken, Pennsylvania Insurance Commissioner, and Liquidator of Reliance Insurance Company, sought and got the Commonwealth Court to: (1) declare that large deductible reimbursements paid by RIC insureds under large deductible insurance policies are assets of the RIC estate; (2) declare that the benefits of the insureds' payments under the insured-funded arrangements are assets of the RIC estates; (3) confirm her right to collect and retain the large deductible reimbursements along with the corresponding right to draw down and retain the large deductible insured collateral if the insured fails to reimburse her for the deductible; and (4) confirm the obligation of certain guaranty associations to cooperate in the collection efforts for the large deductible reimbursements. The Guaranty Associations are: -- the California Insurance Guaranty Association, -- the Georgia Insurers Insolvency Pool, -- the Illinois Insurance Guaranty Fund, -- the Massachusetts Insurers Insolvency Fund, -- the New Jersey Workers Compensation Security Fund, -- the Kansas Insurance Guaranty Association, -- the New York Property/Casualty Insurance Security Fund, and -- the Texas Property/Casualty Insurance Guaranty Association Ann B. Laupheimer, Esq., at Blank Rome LLP, in Philadelphia, Pennsylvania, explained that the Liquidator seeks to protect non- covered claimants from actions by the Guaranty Associations that will dilute their recoveries, and to preserve the rights of all policyholders in the same distribution class to share assets in proportion to their claims. Prior to liquidation, RIC entered into about 1,400 insurance policies that include large deductible provisions. Most policies involve workers compensation insurance with a deductible endorsement and a separate "Deductible Reimbursement Agreement" attached. The Deductible Endorsement and Reimbursement Agreement obligate the insured to reimburse RIC up to a very high deductible -- often $250,000 to $1,000,000 per claim -- for the paid loss and allocated loss adjustment expense. The separate agreements require large deductible policyholders to provide RIC with a letter of credit or other form of collateral sufficient to cover the ultimate expected incurred losses or 125% of the unpaid reserves within the deductible. If the insured fails to reimburse RIC for the deductible, RIC draws down the collateral. RIC holds $1,400,000,000 in collateral. The Dispute Under an existing agreement, RIC was to handle the billing and collection of policyholder reimbursements under the large deductible policies. RIC would remit 80% of deductible amounts collected to the Guaranty Associations and holdback 20% in a separate escrow account for its own benefit or for the Guaranty Associations' benefit, when ownership rights are resolved. RIC's Liquidation transferred the obligation to pay the large deductible policy claims from RIC to the Guaranty Associations. Once these claims are paid, the Guaranty Associations step into the shoes of the policyholder to present their claim, along with other policyholders, against the assets of RIC. The Guaranty Associations, by virtue of their claim payments, acquire an entitlement to the reimbursements for claims, large deductible or otherwise. The transfer of obligation gave rise to a dispute between the Liquidator and the Guaranty Associations over who is entitled to collect the large deductible reimbursements. The RIC estate estimates its losses and loss adjustment expenses at $6,500,000,000. Most of these claims are covered by the Guaranty Associations. Approximately 30% to 50% are non-covered claims, or those not covered by the Guaranty Associations. The non-covered claimants must pay their own losses and wait for the liquidation process to make a distribution, which may take years. On the other hand, the covered claims receive payment from the Guaranty Associations relatively quickly. The Guaranty Associations are subrogated to the covered claimant's right to recover from the estate. Thus, when assets are distributed by the Liquidator, they will be paid pro rata to both the non- covered claimants and the Guaranty Associations. Since the Guaranty Associations do not cover all claims, the Liquidator strives to maximize asset recoveries so as to distribute as much as possible to all policyholders. The Liquidator believed that the large deductible reimbursements are general assets, which should be distributed to non-covered claimants and the Guaranty Associations equally. The Guaranty Associations argued that they alone are entitled to recover the large deductibles because they paid the claims. The Liquidator wanted to recover the deductibles and distribute them to all policyholders and the Guaranty Associations, while the Guaranty Associations wanted these assets for their exclusive benefit. The negative impact to non-covered claimants is in the hundreds of millions of dollars. Ms. Laupheimer acknowledged that the Guaranty Associations, as the largest single policyholder-class creditor, should receive most of the deductible reimbursements. However, the Guaranty Associations maintained that they should receive all deductible reimbursements, reducing the assets available for distribution to all policyholders who do not receive the benefit of the Guaranty Associations' coverage. Headquartered in New York, New York, Reliance Group Holdings, Inc. -- http://www.rgh.com/-- is a holding company that owns 100% of Reliance Financial Services Corporation. Reliance Financial, in turn, owns 100% of Reliance Reliance Insurance Company. The Company filed for chapter 11 protection on June 12, 2001 (Bankr. S.D.N.Y. Case No. 01-13403). When the Company filed for protection from their creditors, they listed $12,598,054,000 in assets and $12,877,472,000 in debts. (Reliance Bankruptcy News, Issue No. 48; Bankruptcy Creditors' Service, Inc., 215/945-7000) ROGERS COMMUNICATIONS: Releases 2003 Annual Financial Statements ---------------------------------------------------------------- Rogers Communications Inc. (S&P, BB+ L-T Corporate Credit Rating, Negative) announced the filing and availability of their 2003 annual financial statements as well as the financial statements of its wholly owned subsidiary Rogers Cable Inc. On February 4, 2004, RCI publicly announced by press release that it has filed with securities regulators its consolidated financial and operating results for the fourth quarter of 2003 and for the year ended December 31, 2003. The boards of directors of each of RCI and Cable have approved the audited consolidated financial statements and notes thereto for the year ended December 31, 2003, and Management's Discussion and Analysis in respect of such annual financial statements. RCI and Cable filed their 2003 annual financial statements and MD&A with Canadian and U.S. securities regulators. RCI and Cable posted their 2003 annual consolidated financial statements for the year ended December 31, 2003, and accompanying MD&A, on the "Investor Relations" section of their Web site at http://www.rogers.com/ Rogers Cable Inc. is a wholly owned subsidiary of Rogers Communications Inc. Rogers Cable passes 3.2 million homes in Ontario, New Brunswick, Newfoundland and Labrador, and at 71% has the highest basic penetration of any cable operator in North America. The Company pioneered high-speed Internet access with the first commercial launch in North America in 1995 and now approximately 25% of homes passed are Internet customers. With 99% of its network digital ready, Rogers leads the Canadian market in offering High Definition TV, a suite of Rogers On Demand services including Video On Demand, Personal Video Recorders and Time- shifting channels) as well the largest line-up of digital, ethnic and sports programming. Approximately one quarter of Rogers basic subscribers are also digital customers and over 35% are Rogers Hi- Speed residential and business customers. Rogers Cable also owns and operates 279 Rogers Video Stores. Rogers Communications Inc. (TSX: RCI.A and RCI.B; NYSE: RG) is Canada's national communications company, which is engaged in cable television, Internet access and video retailing through Rogers Cable Inc.; digital PCS, cellular, data communications and paging through Rogers Wireless Communications Inc. and radio, television broadcasting, televised shopping, and publishing businesses through Rogers Media Inc. ROSTCO ENTERPRISES: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------------- Debtor: Rostco Enterprises Inc. 2429 South 51ST Avenue #101 Phoenix, Arizona 85043 Bankruptcy Case No.: 04-02186 Type of Business: The Debtor distributes and operates "Ornaments & Ink" retail stores in regional malls around the country, offering an assortment of more than 700 personalized Christmas ornaments and gifts. See http://www.ornamentsandink.com/ Chapter 11 Petition Date: February 12, 2004 Court: District of Arizona (Phoenix) Judge: James M. Marlar Debtor's Counsel: Paul Sala, Esq. Allen & Sala, P.L.C. Viad Corporate Center 1850 North Central Avenue, #1150 Phoenix, AZ 85004 Tel: 602-256-6000 Fax: 602-252-4712 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Deb & Co. Credit line $811,429 2154 Chestnut Avenue Buena Vista, VA 24416 Kurt S. Adler, Inc. Credit line $448,862 1107 Broadway New York, NY 10010 This Little Piggy, Inc. Credit line $405,240 6831C Whitfield Industrial Ave. Sarasota, FL 34243 Roman, Inc. Credit line $308,493 555 Lawrence Avenue Roselle, IL 60172-1599 Gift Giant, Ltd. Credit line $178,980 Mead Consumer & Office Credit line $56,450 Product National Distribution Credit line $38,344 Service Amcal Calendars Credit line $37,269 Carlton Cards Retail, Inc. Credit line $32,992 Roadway Express Credit line $28,023 United Parcel Service Credit line $24,952 Browntrout Publishers, Inc. Credit line $21,884 Overnite Transportation Credit line $21,532 Company Lang Companies Credit line $19,878 Insight Logistics, LLC Credit line $18,685 John F. Turner & Co. Credit line $16,767 Dell Account Credit line $8,714 Entertainment Calendar Credit line $6,354 Simon & Schuster Credit line $4,716 Purchase Power Credit line $4,516 ROYAL CARIBBEAN: S&P Affirms BB Rating & Revises Outlook to Stable ------------------------------------------------------------------ Standard & Poor's Ratings Services changed the outlook on Miami, Florida-based cruise company Royal Caribbean Cruises Ltd. to stable from negative. Concurrently, Standard & Poor's affirmed its 'BB+' corporate credit rating and other ratings on RCL. About $5.8 billion of total debt was outstanding on Dec. 31, 2003. Ratings for RCL reflect its high debt leverage for the rating, the capital-intensive nature of the cruise industry, and the sensitivity of the travel and leisure sector to economic cycles. These factors are partially offset by RCL's solid brands, a relatively young and high-quality fleet of ships, high barriers to entry in the cruise industry, an experienced management team, and the expectation for meaningful balance sheet improvement in the next two years. Operating performance in the cruise industry gradually improved in the second half of 2003, following the end of major combat operations in Iraq, and as the U.S. economy grew more quickly. This trend has continued into 2004 with bookings continuing to increase and the pricing environment improving. Both RCL and its larger competitor, Carnival Corporation, expect growth in net revenue yields in the 5%-7% range in 2004. With its expected yield growth, and considering RCL's anticipated capacity growth of 11% in 2004, revenue is likely to rise in the mid- to high-teen percentage range. "While total debt to EBITDA remains weak for the ratings, Standard & Poor's expects that RCL's credit measures will improve meaningfully during the next two years as the company completes a major fleet expansion program in the second quarter of 2004 and uses free cash flow to reduce debt," said Standard & Poor's credit analyst Craig Parmelee. SAFETY-KLEEN: Advisory Board Appoints Oolenoy Valley as Trustee --------------------------------------------------------------- Pursuant to the Safety-Kleen Debtors' confirmed Chapter 11 Plan, the Safety-Kleen Trust Advisory Board appoints Oolenoy Valley Consulting, LLC as the Trustee of the Safety-Kleen Creditor Trust. Specifically, Oolenoy Valley will: (i) liquidate and convert to cash the Trust Assets; (ii) make timely distributions to the holders of Allowed Claims in Classes 4 through 7; (iii) review, pursue and compromise objections to Claims in Classes 4 through 7; (iv) pursue and settle any other Trust Claims; and (v) "not unduly prolong" the duration of the Trust. Oolenoy Valley has the power to appoint one or more individuals or corporations either to act as co-trustee or as separate trustee of all or any part of the Trust Assets. The Trust will continue until the earlier of: -- termination of the Trust as approved by the Bankruptcy Court after distribution of all of the Trust Assets, or -- five years after the Effective Date; provided, however, that the power to appoint co-trustees, and provision for the Trustee's compensation will survive the termination. Donna L. Culver, Esq., at Morris Nichols Arsht & Tunnell in Wilmington, Delaware, represents the Trustee. (Safety-Kleen Bankruptcy News, Issue No. 74; Bankruptcy Creditors' Service, Inc., 215/945-7000) SALOMON VII: Fitch Takes Rating Actions on 4 Securitizations ------------------------------------------------------------ Fitch has taken rating actions on the following Salomon Brothers Mortgage Securities VII, Inc., mortgage pass-through certificates: Salomon Brothers Mortgage Securities VII, Inc., mortgage pass- through certificates, series 2002-1 --Class A affirmed at 'AAA'; --Class B-1 affirmed at 'A'. Salomon Brothers Mortgage Securities VII, Inc., mortgage pass- through certificates, series 2002-UST1 Group 1 --Class A-1, PO affirmed at 'AAA'; --Class B-1 affirmed at 'AAA'; --Class B-2 upgraded to 'AAA' from 'AA+'; --Class B-3 upgraded to 'AAA' from 'AA-'; --Class B-4 upgraded to 'AA' from 'BBB+'; --Class B-5 upgraded to 'A' from 'BB+'. Salomon Brothers Mortgage Securities VII, Inc., mortgage pass- through certificates, series 2002-UST1 Group 2 --Class A-2 affirmed at 'AAA'. Salomon Brothers Mortgage Securities VII, Inc., mortgage pass- through certificates, series 2002-HYB1 Group 1 --Class A-1 affirmed at 'AAA'; --Class M-1 upgraded to 'AAA' from 'AA'; --Class M-2 upgraded to 'AA' from 'A'; --Class M-3 upgraded to 'A' from 'BBB'; --Class B-1 upgraded to 'BBB' from 'BB'; --Class B-2 upgraded to 'BB' from 'B'. Salomon Brothers Mortgage Securities VII, Inc., mortgage pass- through certificates, series 2002-HYB1 Group 2 --Class A-2 affirmed at 'AAA'. Salomon Brothers Mortgage Securities VII, Inc., mortgage pass- through certificates, series 2002-HYB1 Group 3 --Class A-3 affirmed at 'AAA'. Salomon Brothers Mortgage Securities VII, Inc., mortgage pass- through certificates, series 2002-HYB1 Group 4 --Class A-4 affirmed at 'AAA'. Sovereign Bank Mortgage Loan Trust, series 2002-1 --Class A affirmed at 'AAA'; --Class B-1 affirmed at 'AA'; --Class B-2 affirmed at 'A'; --Class B-3 affirmed at 'BBB'; --Class B-4 affirmed at 'BB'; --Class B-5 affirmed at 'B'. The rating actions reflect credit enhancement relative to future loss expectations and the affirmations on the above classes reflect credit enhancement consistent with future loss expectations. SAN FLORIANO CO: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: San Floriano Company L.P. 425 Via Chico Palos Verdes Estates, California 90274 Bankruptcy Case No.: 04-02574 Chapter 11 Petition Date: February 19, 2004 Court: District of Arizona (Phoenix) Judge: Charles G. Case II Debtor's Counsel: David A. Damore, Esq. Damore Law, PC 6902 East First Street, #100 Scottsdale, AZ 85251 Tel: 480-947-9481 Fax: 480-947-9715 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Gorry Meyer & Rudd, LLP Legal fees $19,286 APS Utilities $4,640 Bonita S. Mosher, Esq. Legal Fees $2,626 For Rent Magazine Advertising $2,580 Hughes Solutions Supply Services $2,246 Service Roadrunner Fire & Safety Safety Equipment $2,105 Equipment Sunstate Mechanical Services Services $1,929 Lopez Carpet Cleaning Carpet Cleaning $1,700 Services La Vina Del Senor Services $1,030 J.R. McCade Co., Inc. Services $899 Dunn-Edwards Corporation Services $874 Jasper's Clear Pool Whole Services $863 Sale Group California Franchise Tax 2004 Annual Tax $800 Board Cheaper Window Glass, Inc. Glass Replacement $796 The Door & Screen Company of Services $764 America Royal Southwest Inc. Services $763 Bravo, Inc. Services $610 Tony's Pest Control Company Pest Control Services $345 Reliable Office Supplies Office Supplies $288 Federal Express Corporation Services $220 SEDONA CORPORATION: Registers 7.1 Million Shares for Sale --------------------------------------------------------- Sedona Corporation is offering to sell 7,127,411 shares of its common stock. The Company's prospectus relates to the sale from time to time by the shareholders listed in the "Principal and Selling Shareholders" section of up to 7,127,411 shares of the common stock, $0.001 par value per share, including: * 5,651,347 shares of Sedona's common stock beneficially owned by the selling shareholders; and * 1,476,064 shares of Sedona's common stock issuable upon the exercise of warrants held by the selling shareholders to purchase shares of the Company's common stock at prices ranging from $0.35 to $0.70. Only the resale of the shares received upon exercise of the warrants is covered by the prospectus; it will not cover the initial issuance of the warrant shares. No underwriter is being used in connection with this offering of the common stock. The selling shareholders may offer and sell their shares to or through broker-dealers, who may receive compensation in the form of discounts, concessions or commissions from the selling shareholders, the purchasers of the shares, or both. The selling shareholders and any broker-dealer executing selling orders on their behalf may be deemed to be an "underwriter" within the meaning of the Securities Act of 1933, as amended, in which event commissions received by such broker-dealer may be deemed to be underwriting commissions. Sedona will not receive any direct proceeds from the resale of shares, but will receive proceeds related to the exercise of the warrants held by the selling shareholders. There is no assurance that any of the warrants will be exercised, and therefore the Company may not receive any proceeds. The price of Sedona's common stock being offered under the prospectus will be determined based upon the market price of Sedona's common stock at the time of resale. Sedona's common stock is traded on the OTCBB under the symbol SDNA. As of January 30, 2004, the closing price of one share of its common stock was $0.60. SEDONA(R) Corporation (OTCBB: SDNA) is the leading technology and services provider that delivers verticalized Customer Relationship Management solutions specifically tailored for the small to mid- sized business market. Utilizing SEDONA's CRM solutions, community and regional banks, and insurance companies can effectively identify, acquire, foster, and retain loyal, profitable customers. At September 30, 2003, the Company's balance sheet shows a working capital deficit of about $2 million, and a total shareholders' equity deficit of about $2.2 million. SMTC MFG.: Raises CDN$40 Million Through Private Placement ---------------------------------------------------------- SMTC Manufacturing Corporation of Canada (SMX:TSX) closed its previously announced bought-deal underwritten private placement of 33,350,000 Special Warrants to qualified investors at a price of CDN$1.20 per Special Warrant, representing an aggregate amount of issue of CDN$40,020,000. The financing was underwritten by a syndicate of Canadian investment dealers comprised of Orion Securities Inc., CIBC World Markets Inc., GMP Securities Limited and RBC Dominion Securities Inc. Each Special Warrant is exercisable into one unit consisting of one exchangeable share of SMTC Canada, and one half of a warrant to purchase an exchangeable share. Each whole warrant will be exercisable into one exchangeable share of SMTC Canada at an exercise price of CDN$1.85 per share for a period of 60 months following the closing of the offering. Subject to satisfaction of applicable legal requirements, each exchangeable share can be exchanged on a one-for-one basis for one common share of SMTC Corporation (U.S. incorporated) (SMTX:Nasdaq). SMTC Canada is an indirect, wholly-owned subsidiary of SMTC Corporation. The net proceeds from the Offering are being held in escrow pending receipt of shareholder approval and, upon release from escrow, will be used for debt reduction, as part of a concurrent agreement with SMTC's lenders, and working capital. The Special Warrants will be exerciseable for units on the earlier of: (i) the sixth business day after the date on which a receipt has been issued by applicable Canadian securities regulatory authorities for a final prospectus qualifying the distribution of the exchangeable shares and warrants issuable upon exercise of the Special Warrants (the "Prospectus Qualification Date"), and (ii) the first business day following the date that is 12 months following the closing date. If the Prospectus Qualification Date has not occurred on or before the date that is 90 days following the closing date or if SMTC Corporation has not, within 120 days of the closing date, registered in the United States the common stock underlying the exchangeable shares issuable in connection with the offering, each Special Warrant shall thereafter entitle the holder to receive upon exercise, without payment of additional consideration, 1.1 units, in lieu of, one unit. Subject to customary restrictions, the exchangeable shares and warrants issuable upon the exercise or deemed exercise of the special warrants will, in the absence of SMTC obtaining a receipt for a prospectus qualifying the distribution of those securities, be tradeable without restriction under applicable Canadian securities laws four months after the closing of this offering. The transaction is subject to the receipt of all necessary shareholder, regulatory and stock exchange approvals and other customary conditions. Shareholder approval is intended to be sought, on a best efforts basis, within the next 60 days, but in any event no later than 90 days. About SMTC: SMTC Corporation is a global provider of advanced electronic manufacturing services to the technology industry. The Company's electronics manufacturing, technology and design centers are located in Appleton, Wisconsin, Boston, Massachusetts, San Jose, California, Toronto, Canada, and Chihuahua, Mexico. SMTC offers technology companies and electronics OEMs a full range of value-added services including product design, procurement, prototyping, printed circuit assembly, advanced cable and harness interconnect, high precision enclosures, system integration and test, comprehensive supply chain management, packaging, global distribution and after-sales support. SMTC supports the needs of a growing, diversified OEM customer base primarily within the networking, communications and computing markets. SMTC is a public company incorporated in Delaware with its shares traded on the Nasdaq National Market System under the symbol SMTX and on The Toronto Stock Exchange under the symbol SMX. Visit SMTC's web site, www.smtc.com for more information about the Company. The securities being offered have not been registered under the United States Securities Act of 1933, as amended, and may not be offered or sold within the United States absent U.S. registration or an applicable exemption from U.S. registration requirements. This release does not constitute an offer for sale of securities in the United States. The company's Sept. 28, 2004, balance sheet is upside-down by $19 million. SLATER STEEL: Union Goes to Court to Force Acceptance of DSC Offer ------------------------------------------------------------------ Following a rally in front of Hamilton's downtown Toronto Dominion Bank branch and no word from TD or Scotiabank, the United Steelworkers' Ontario/Atlantic Director Wayne Fraser said the union will go ahead with a court motion, asking Mr. Justice James Farley to become involved and consider the offer by DSC Managers LP to purchase Slater Steel's Hamilton Specialty Bar Division. The motion was expected to be filed Thursday (March 4) afternoon. "The (in total) $37-million offer is in the banks' interest," Fraser said. "It is better than any offer that would be made if the plant is liquidated." Fraser said the union is also going ahead with a cross-Canada campaign to put pressure on the banks to make way for the DSC offer. The offer, tabled Wednesday, would see the American investment firm pay $13 million in cash and take on $24 million in pension and medical liabilities for the insolvent Hamilton factory. "This is about more than the banks," added Steelworkers' Ontario/Atlantic Assistant Director Marie Kelly. "This is about doing the right thing for the community. We will fight tooth and nail to make sure this deal is not allowed to die." Kelly led negotiations with DSC in February, which ended in a collective agreement that would increase wages and benefits, and protect pensions in the new company. Steelworkers and others across Canada have already been contacted to send letters to TD President and CEO Ed Clark, and to Scotiabank Chairman and CEO Richard Waugh, calling on the two banks to do their part in saving hundreds of jobs. "Both banks make huge profits," said Kelly. "They have the power to make or break the potential deal." In the late '90s, another campaign to put pressure on Scotiabank in particular was successful in that the bank eventually agreed to stop its investment in Oregon Steel, a company that was refusing to negotiate with striking workers in Pueblo, Colorado. "We know people will want the banks to do the right thing," said Fraser. "Workers with good-paying jobs have long-term relationships with these financial institutions. But they will know whom to blame if hundreds of those good-paying jobs are sacrificed. I am confident they would move their investments." SOLEIL FILM: Cancels an Additional 600,000 Shares by Court Order ---------------------------------------------------------------- Soleil Film and Television, Inc. (Pink Sheets:SLTV) announced that an additional 600,000 shares of common stock have been cancelled by Court Order. The Company reported that it has succeeded in entering the defaults of holders of an additional 1,550,000 shares, on which judgments are pending and it has a default hearing on the holder of 1,200,000 shares on Monday, March 8, 2004, in Los Angeles Federal Court. So far, the company reports, it has cancelled 3,965,800 shares. "When all defaults have been reduced to judgment, we expect to have cancelled a total of 7,115,800 shares," according to Kenneth Eade, Company Counsel and CFO. About Soleil Film and Television Soleil is engaged in the business of television production and film development and production. The company's library includes the award-wining celebrity biography series, "Autograph," which won a Bronze Medal at the New York festivals in 2003 and a Gold Globe Award from the World Media Festival in Hamburg, in 2003. Current film projects include "Say It In Russian," starring Agata Gotova and Angie Everhart, now in pre-production, and "Fallacy," starring John Savage ("Deer Hunter"), Stephen Baldwin, Gary Busey, Cary Tagawa, Agata Gotova and Carlene Moore. Chief Executive Officer Agata Gotova developed the "Faces & Names" and "Autograph" television series. "Soleil Films knows that independent films depend on financing, which is risk capital typically put up by a small group of investors. If the film is successfully made and distributed, the investors can usually look forward to a return within one to two years. After the film is made, its success depends on a distributor investing a significant amount of money into its promotion. Soleil has taken the risk, uncertainty and time out of the equation," according to Eade. The company's unique business model allows investors to purchase shares representing equity of the company. The film is made, and, since it is an equity investment, investors have a built-in exit strategy at the moment of their investment, and their investment risk is spread out over the company's entire library. The cost of the film is booked as an asset, making it more attractive to distributors and setting a break-even book value of the film. Soleil has formed a consortium of experienced filmmakers, as is evident in its latest film to be released this summer, "Fallacy." This consortium of top industry professionals has extensive experience in making lower budget films at a high level of quality, giving them the appearance and value of higher budget films. SPIEGEL GROUP: February Net Sales Tumble 22% to $93.8 Million ------------------------------------------------------------- The Spiegel Group reported net sales of $93.8 million for the four weeks ended February 28, 2004, a 22 percent decrease compared to net sales of $120.1 million for the four weeks ended February 22, 2003. For the eight weeks ended February 28, 2004, total sales declined 25 percent to $192.2 million from $255.7 million in the same period last year. The company also reported that comparable-store sales for its Eddie Bauer division decreased 2 percent for the four-week period and 4 percent for the eight-week period ended February 28, 2004, compared to the same periods last year. The Group's net sales from retail and outlet stores fell 16 percent for the month compared to the same period last year, primarily due to the impact of store closings. The company operated 440 stores at the end of February 2004 compared to 571 stores at the end of February 2003. Most of the store closings resulted from actions taken as part of the company's ongoing reorganization process. The Group's direct net sales (catalog and e-commerce) decreased 27 percent for the month compared to the same period last year, primarily due to a planned reduction in catalog circulation, lower customer demand, and to a lesser extent, the impact of higher backorders resulting from lower inventory levels. Headquartered in Downers Grove, Illinois, Spiegel, Inc. -- http://www.spiegel.com/-- is a leading international general merchandise and specialty retailer that offers apparel, home furnishings and other merchandise through catalogs, e-commerce sites and approximately 560 retail stores. The Company filed for Chapter 11 protection on March 17, 2003 (Bankr. S.D.N.Y. Case No. 03-11540). James L. Garrity, Jr., Esq., and Marc B. Hankin, Esq., at Shearman & Sterling represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $1,737,474,862 in assets and 1,706,761,176 in debts. THOMPSON PRINTING: Case Summary & 12 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Thompson Printing Co., Inc. 40 Fairfield Place West Caldwell, New Jersey 07006 Bankruptcy Case No.: 04-17330 Type of Business: The Debtor is in the business of printing high end brochures for Fortune 500 companies, among others. See http://www.thompsonprinting.com/ Chapter 11 Petition Date: March 4, 2004 Court: District of New Jersey (Newark) Debtor's Counsel: Richard Trenk, Esq. Booker, Rabinowitz, Trenk, Lubetkin, Tully, DiPasquale & Webster, P.C. 100 Executive Drive, Suite 100 West Orange, NJ 07052 Tel: 973-243-8600 Total Assets: $603,508 Total Debts: $6,467,533 Debtor's 12 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Bobst Group $356,101 146 Harrison Avenue Roseland, NJ 07068-1294 Lindemeyr Munroe $331,287 115 Moonachie Avenue Moonachie, NJ 07074 AGFA Finance $211,042 Hudson City Paper Co. $55,539 AGFA Corporation $53,844 Gaccione, Pomaco & Malanga $35,112 Bobst Group $30,517 Pitman Company $26,541 H.A. Metzger, Inc. $26,392 Colortec $24,590 Jeanne Ciszek $19,707 CCI $19,148 UNITEDGLOBALCOM: Says B Credit Rating Unaffected by Noos News ------------------------------------------------------------- Standard & Poor's Ratings Services ratings and outlook for Denver, Colorado-based diversified cable operator UnitedGlobalCom Inc. (B/Stable/--) are not affected by the company's announcement that it is in discussions to buy Noos, the largest French cable operator, from Suez, for a maximum of 660 million euros. While the company has amassed a cash balance of around $1 billion with its recent equity rights offering, Standard & Poor's had expected that a substantial portion of these monies would be used for acquisitions, given the company's historical proclivity for them. UGC is the largest international broadband communications provider of video, voice, and Internet services with operations in numerous countries. Based on the Company's operating statistics at September 30, 2003, UGC's networks reached approximately 12.6 million homes passed and 9 million RGUs, including approximately 7.4 million video subscribers, 717,900 voice subscribers, and 868,000 high speed Internet access subscribers. The company filed for Chapter 11 relief on January 12, 2004 (Bankr. S.D.N.Y Case No. 04-10156). USG CORP: Court Fixes Briefing Schedules Re Judge Wolin's Recusal ----------------------------------------------------------------- With Judge Wolin's recusal issues back before the Court of Appeals, Petitioners USG and Kensington International, Inc., seek to set a briefing schedule. The Court of Appeals denies USG and Kensington's request, and imposes its own briefing schedules. Third Circuit Judge Julio M. Fuentes rules that: (1) Petitioners' briefs and the joint appendix must be filed and served on or before 12 noon on February 23, 2004; (2) Respondents' briefs must be filed and served on or before 12 noon on March 12, 2004; (3) Petitioners' reply briefs must be filed and served on or before 12 noon on March 19, 2004; and (4) Oral argument will take place on April 19, 2004. Parties are directed to file two copies of each brief with each member of the Court's panel, addressed: The Honorable Julio M. Fuentes Martin Luther King, Jr. Federal Building & US Courthouse Room 5032 50 Walnut Street Newark, New Jersey 07102 The Honorable D. Brooks Smith Allegheny Professional Center Suite 203 1798 Old Route 220 North Duncansville, Pennsylvania 16635-8341 The Honorable Leonard I. Garth Martin Luther King, Jr. Federal Building & US Courthouse Room 5040 50 Walnut Street Newark, New Jersey 07102 Four copies of each brief should be filed with the Clerk's office. All briefs will be filed and served via overnight or hand-delivery and must be received by the Judges, Clerk's Office and opposing counsel or before the set deadline. Counsel may agree to accept service electronically. To the extent that the Petitioners seek to have USG Corporation and the Official Committee of Unsecured Creditors of USG designated as Petitioners, that request is granted, but only for purposes of the briefing schedule and oral argument. Owens Corning asked the Third Circuit to compel the filing of the Joint Appendix presented to Judge Wolin in connection with the Recusal Hearing. W. R. Grace opposed this request. Judges Fuentes, Smith and Garth grant Owens Corning's request to compel the filing of the Joint Appendix. Headquartered in Chicago, Illinois, USG Corporation -- http://www.usg.com/-- through its subsidiaries, is a leading manufacturer and distributor of building materials producing a wide range of products for use in new residential, new nonresidential and repair and remodel construction, as well as products used in certain industrial processes. The Company filed for chapter 11 protection on June 25, 2001 (Bankr. Del. Case Nos. 01-02094). David G. Heiman, Esq., at Jones, Day, Reavis & Pogue and Paul E. Harner, Esq., at Jones, Day, Reavis & Pogue represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $3,252,000,000 in assets and $2,739,000,000 in debts. (USG Bankruptcy News, Issue No. 61; Bankruptcy Creditors' Service, Inc., 215/945-7000) U S LIQUIDS: Selling Two Companies to Perma-Fix for $3.2-Mil. Cash ------------------------------------------------------------------ U S Liquids Inc. (OTC Pink Sheets: USLQ) a provider of waste management services, announced the signing of a letter of intent to sell substantially all of the assets of USL Environmental Services, Inc. d/b/a A&A Environmental of Baltimore, MD and U S Liquids of Pennsylvania, Inc. d/b/a EMAX of Pittsburgh, PA to Perma-Fix Environmental Services, Inc. Perma-Fix will pay in cash, at closing, $3.2 million for the assets of A&A and EMAX, subject to a net working capital adjustment. The closing is subject to the completion of due diligence, the execution of a definitive agreement, approval by the Board of Directors of Perma-Fix and certain other conditions, all of which are expected to be finalized during the first quarter of 2004. The two companies had unaudited combined revenues of approximately $15.0 million in 2003. A&A is a full line provider of environmental, marine and industrial maintenance services. A&A has been in business for over 45 years and was formed specifically to meet the needs of today's environmental and plant managers. A&A offers expert environmental services such as 24 hour emergency response, vacuum services, hazardous and non-hazardous waste disposal, ship and bilge cleaning and other remediation services. EMAX provides a variety of environmental services through its field and industrial services group, such as transportation of drums and bulk loads, tank cleaning, industrial maintenance, dewatering, drum management and chemical packaging. EMAX also has a wastewater treatment group, which provides for the treatment of non- hazardous wastewaters such as leachates, oily waters, industrial process waters, off-spec products and grease trap waste. U S Liquids Inc.'s September 30, 2003, balance sheet reports a total stockholders' equity deficit of $4.7 million. WORLDCOM/MCI: Parker & Waichman Files Additional Claims ------------------------------------------------------- Parker & Waichman LLP and affiliated counsel -- http://www.worldcomstockfraud.com-- announce that they have filed a new round of claims on behalf of current and former WorldCom (Pink Sheets:WCOEQ) (Pink Sheets:MCWEQ), (Pink Sheets:MCIAV) and MCI shareholders. Many of these new claims have been filed on behalf of current and former WorldCom employees and Salomon Smith Barney clients who purchased shares of WorldCom or MCI based on the inappropriate advice of Salomon Smith Barney analysts and brokers. Parker & Waichman continues to encourage all current and former WorldCom and MCI shareholders to evaluate their legal options before participating in the class action lawsuit. Parker & Waichman continues to offer free lawsuit case evaluations at: http://www.worldcomstockfraud.com/ and http://www.worldcomemployeelawsuit.com/ Parker & Waichman continues to believe that many current and former WorldCom and MCI shareholders may be better served by opting-out of the WorldCom class action lawsuit to pursue individual claims. Current and former WorldCom and MCI shareholders and employees can visit http://www.worldcomstockfraud.com/and http://www.worldcomclassaction.com/to view and download the WorldCom class action opt-out form, "Notice of Class Action." Current and former WorldCom and MCI shareholders that do not specifically opt-out of the class action by filing the required form or information are automatically included in the class action lawsuit. No official "opt-out" date has been announced, Parker & Waichman will provide the date on its websites as soon as it is made available. WorldCom, now operating under the MCI name, is expected to emerge from bankruptcy in the near future. Existing shares of WorldCom and MCI are likely to be cancelled when the company emerges from bankruptcy. The likely cancellation of these shares will mean that shares trading under the ticker symbols WCOEQ and MCWEQ will have no value. MCI WorldCom is expected to issue new shares when it emerges from bankruptcy. These shares are trading on a "when issued" basis under the symbol MCIAV. For more information on specific WorldCom or MCI shares please visit: http://www.worldcomstockfraud.com/ For more information on Parker & Waichman, LLP please visit: http://www.yourlawyer.com/or call 1-800-LAW-INFO. Current and former shareholders are also encouraged to visit: http://www.injurytalk.com/ W.R. GRACE: Creditors Panel Turns to Capstone for Financial Advice ------------------------------------------------------------------ The Official Committee of Unsecured Creditors appointed in the Chapter 11 cases of W.R. Grace & Co. and its debtor-affiliates seeks Judge Fitzgerald's permission to retain Capstone Corporate Recovery LLC to replace FTI Consulting, Inc., as its financial advisors. The New Capstone Thomas Flyahan, Managing Director of J.P. Morgan Chase & Co., Chair of the Committee, relates that the Creditors Committee previously employed FTI Policano and Manzo, also known as FTI Consulting, Inc., as its financial advisors. Edwin N. Ordway, Jr., a Managing Director of FTI, and certain other senior financial advisors at FTI, were the individuals with principal responsibility for handling the engagement on FTI's behalf. Effective as of January 28, 2004, Mr. Ordway and certain other individuals who had day-to-day responsibility for providing the financial advisory services to the Creditors Committee withdrew from FTI and formed, with others, Capstone. The Creditors Committee has considered this change and determined that it would be beneficial to the creditors for which it acts, as well as to the Debtors and their estates, for the Advisory Professionals to continue to render financial advisory services to the Committee. The Creditors Committee seeks to retain Capstone as its financial advisor nunc pro tunc to February 4, 2004, the date that the Committee advised Capstone of its desire to retain their services. Upon Court approval, FTI's financial advisory services for the Committee will be deemed terminated. Compensation Capstone's professionals' current hourly rates are: Members/Manager $475 to $495 Professional Staff $250 to $395 Support Staff $ 50 to $175 Services to be Rendered Capstone will provide general financial advisory services in connection with W.R. Grace & Co.'s Chapter 11 cases, consistent with the financial advisory services that FTI has performed over the past two years. In consultation with the Creditors Committee and its counsel, Capstone may be requested to perform these specific types of services for the Committee: (a) Advise and assist the Committee in its analysis and monitoring of the Debtors' historical, current and projected financial affairs, including schedules of assets and liabilities, statement of financial affairs, periodic operating reports, analyses of cash receipts and disbursements, analyses of cash flow forecasts, analyses of trust accounting, analyses of various asset and liability accounts, analyses of cost-reduction programs, analyses of any unusual or significant transactions between the Debtors and any other entities including business acquisitions, and analyses of proposed restructuring transactions; (b) Develop a monthly monitoring report to enable the Committee to effectively evaluate the Debtors' performance on an ongoing basis; (c) Monitor any sale processes undertaken by the Debtors to sell all or parts of the Debtors' businesses; (d) If requested by the Committee and its counsel, assist and advise the Committee and its counsel in reviewing and evaluating any court motions filed or to be filed by the Debtors or any other parties-in-interest; (e) Analyze and critique any debtor-in-possession financing arrangements; (f) Analyze and advise the Committee as to whether additional cost cutting measures are available; (g) Analyze issues relating to asbestos claims, including: (1) Debtors' claims estimates and processes used to develop the estimates; (2) the adequacy of recorded reserves; and (3) the proposed program to process, analyze, and establish asbestos related claims; (h) Assist the Committee in analyzing all non-asbestos claim liability -- EPA, tax -- to include adequacy of reserves, claims process and reporting; (i) Advise and assist the Committee in reviewing executory contracts and provide recommendations with respect to the assumption or rejection of those contracts; (j) Advise and assist the Committee in identifying and reviewing preference payments, fraudulent conveyances and other causes of action; (k) Analyze the Debtors' assets and the unsecured creditors recovery under various recovery scenarios; (l) Analyze alternative reorganization scenarios in an effort to maximize the recovery to general unsecured creditors and develop negotiation strategies to support the Committee's position; (m) Assist and advise the Committee in evaluating and analyzing restructuring proposals by the Debtors; (n) Assist the Committee and its counsel in the negotiation of any and all aspects of a restructuring; (o) Review and provide analysis of any plan of reorganization and disclosure statement relating to the Debtors; (p) Assist and advise the Committee in implementing a plan of reorganization of the Debtors; (q) Perform a liquidation analysis of the Debtors and advise the Committee and counsel in that connection; (r) Advise and assist the Committee in its assessments of the Debtors' management team, including the development of incentives and performance goals for remaining employees; (s) Advise and assist the Committee in its review of the Debtors' existing management processes, including organizational structure, cash management and management information and reporting systems; (t) Advise and assist the Committee in its analysis of intercompany debt, transactions and other obligations of the Debtors, including transactions between the Debtors and their non-filed subsidiaries and affiliates; (u) Advise and assist the Committee in evaluating the retention arrangements for advisors to be retained by the Debtors; (v) Render expert testimony and litigation support services, as requested from time to time by the Committee and counsel, regarding the feasibility of a plan of reorganization and other matters; (w) Attend Committee meetings and court hearings as may be required in the role as advisors to the Committee; and (x) Provide other services that are consistent with the Committee's role and duties as may be requested from time to time. Continued Role for FTI The Creditors Committee will from time to time request Capstone to provide consultation with respect to tax issues of the Debtors. In providing this service to the Committee, Capstone will employ the services of tax professionals at FTI Consulting, to the extent Capstone cannot provide the services in house. Capstone will obtain, coordinate, supervise, and direct the services of the tax professionals of FTI in providing the requested tax advisory services to the Committee. The fees and expenses of the tax professionals of FTI resulting from this arrangement, subject to Court order, will be included in Capstone's fee applications and no separate fee applications will be submitted by FTI. The hourly fees charged by FTI's tax professionals currently range from $375 to $625. Disinterestedness Edwin N. Ordway, Jr., a principal at Capstone, assures the Court that Capstone is a disinterested party within the meaning of the Bankruptcy Code and neither represents nor holds any interests adverse to the Creditors Committee or the Debtors' estates. Mr. Ordway further advises that Capstone is involved in numerous cases, proceedings and transactions involving many different professionals, the Debtors' bankruptcy counsel, and other attorneys, accountants and financial consultants, some of which may represent claimants and parties-in-interest in the Debtors' Chapter 11 cases. In addition, Capstone may in the future be working with or against other professionals involved in these cases in matters wholly unrelated to these cases. Based on Mr. Ordway's current knowledge of the professionals involved, and to the best of his knowledge, none of these business relationships constitute interests materially adverse to the Debtors' estates or their creditors. However, Mr. Ordway cautions that Capstone may provide services to certain creditors of the Debtors in matters wholly unrelated to these Chapter 11 cases. Capstone believes that the connections have no bearing on the services for which the firm is being retained in these cases. Neither Capstone nor, to the best of Mr. Ordway's knowledge, any employee of Capstone is or was a creditor or equity holder of the Debtors. Neither Capstone, nor any employee of Capstone is or was a consultant or advisor for any outstanding security of the Debtors, nor was any employee of Capstone, within two years before the Petition Date, a director, officer or employee of the Debtors or an investment banker of the Debtors. However, the Debtors have numerous relationships with third parties and creditors. Consequently, although every reasonable effort has been made to discover and eliminate any conflicts, Mr. Ordway cannot be absolutely certain that has been done. He promises a prompt disclosure of any further information as appropriate. (W.R. Grace Bankruptcy News, Issue No. 55; Bankruptcy Creditors' Service, Inc., 215/945-7000) * BOND PRICING: For the week of March 8 - 12, 2004 -------------------------------------------------- Issuer Coupon Maturity Price ------ ------ -------- ----- Adelphia Communications 3.250% 05/01/21 38 Adelphia Communications 6.000% 02/15/06 38 Allegiance Telecom 11.750% 02/15/08 56 American & Foreign Power 5.000% 03/01/30 69 Asarco Inc. 8.500% 05/01/25 71 Atlas Air Inc. 10.750% 08/01/05 39 Best Buy 0.684% 06/27/21 74 Better Mining 13.000% 09/15/09 71 Burlington Northern 3.200% 01/01/45 57 Comcast Corp. 2.000% 10/15/29 37 Cummins Engine 5.650% 03/01/98 73 Cox Communications Inc. 2.000% 11/15/29 34 Delta Air Lines 7.900% 12/15/09 73 Delta Air Lines 8.300% 12/15/29 62 Delta Air Lines 9.000% 05/15/16 67 Delta Air Lines 9.250% 03/15/22 65 Delta Air Lines 9.750% 05/15/21 67 Delta Air Lines 10.375% 12/15/22 68 Elwood Energy 8.159% 07/05/26 69 Enron Corp. 6.750% 08/01/09 23 Exide Corp. 2.900% 12/15/05 3 Federal-Mogul 7.500% 01/15/09 26 Fibermark Inc. 10.750% 04/15/11 69 Finova Group 7.500% 11/15/09 64 Inland Fiber 9.625% 11/15/07 55 International Wire Group 11.750% 06/01/05 74 Kaiser Aluminum 12.750% 02/01/03 15 Level 3 Communications 6.000% 09/15/09 67 Level 3 Communications 6.000% 03/15/10 68 Levi Strauss 11.625% 01/15/08 70 Levi Strauss 12.250% 12/15/12 69 Liberty Media 3.750% 02/15/30 68 Liberty Media 4.000% 11/15/29 73 Mirant Corp. 2.500% 06/15/21 65 Mirant Corp. 5.750% 07/15/07 66 Northern Pacific Railway 3.000% 01/01/47 55 RCN Corporation 10.000% 10/15/07 54 RCN Corporation 10.125% 01/15/10 55 Select Notes 5.700% 06/15/33 75 Universal Health Services 0.426% 06/23/20 67 ********* 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, Aileen M. Quijano 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. 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