/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/040406.mbx T R O U B L E D C O M P A N Y R E P O R T E R Tuesday, April 6, 2004, Vol. 8, No. 68 Headlines ADELPHIA COMMS: Wants to Set Up WNSA Station Sale Bidding Protocol AEGIS COMMS: Records $26 Million Equity Deficit at December 2003 AIR CANADA: Estimated Post-Filing Obligations Top C$1.5 Billion AIR CANADA: Trinity Will Not Seek Extension of Investment Pact AIR CANADA: Pursuing Alternatives to Trinity Investment Agreement AIR CANADA: FY 2003 Operating Loss Balloons to $684 Million AK STEEL: Will Increase Carbon Steel Price by $150/Ton on May 1 AK STEEL: Inks 3-Year Labor Accord with UAW for Coshocton Works ALLIED WASTE: Completes Amendment to Senior Credit Facility AMERICAN AIRLINES: Reports Better Than Expected March Traffic AMSCAN: Launches Tender Offer for 9.875% Senior Subordinated Notes ARBOR INC: Inks Stock Exchange Agreement with China Laizhou ARCHIBALD CANDY: Sells Fannie May/Fanny Farmer to Alpine for $39M ARMSTRONG HLDGS: Directors Van Campbell & John Krol Leave Board BLUE DOLPHIN: Auditors Express Going Concern Uncertainty BROWN JORDAN: S&P Places Junk Credit & Debt Ratings on Watch Pos. CASINO WINDSOR: Closes For Now Pending Labor Dispute Resolution CENTERPOINT ENERGY: Hosting 1st Quarter 2004 Webcast on April 22 CHARTER COMMS: S&P Rates Bank Loan & Second-Lien Notes at Low-Bs CINEMARK: Reports Early Settlement of Sr. Debt Cash Tender Offer COMM 2000-FL3: Fitch Downgrades & Places Ratings on Watch Negative COMMSCOPE INC: Redeeming 4% Convertible Sub. Notes on April 26 COVANTA: Wants Court to Expunge Ex-Employees' Improper Claims CVF TECH: Stockholders' Deficit Widens to $3.7M at December 2003 DELCO REMY: S&P Revises Outlook Citing Stable Credit Measures DII IND.: Court Clears Houlihan's Retention as Financial Adviser DOMAN INDUSTRIES: International Forest Nixes Acquisition Talks DOW CORNING: Breast Implant Case Settlement Takes Effect June 1 DPL CAPITAL: S&P Cuts Ratings on 3 Related Synthetic Transactions EASYLINK: Auditors Maintain Going Concern Qualification at 2003 EDISON INTERNATIONAL: Fitch Ups Various Credit Ratings ENCOMPASS: Disbursing Agent Wants Mitigation Claims Disallowed ENRON CORP: Obtains Court Okay for Eight Settlement Agreements ENRON CORP: Wooing Court to Expunge R. Harwood's $20 Mill. Claim FEDERAL FORGE: Committee Hires McDonald Hopkins as Counsel FERRELLGAS PARTNERS: Commences Public Offering of Common Units FIBERMARK INC: Obtains Interim Approval of DIP Credit Facility GENESCO: Completes Hat World Acquisition for $177.4 Million Cash GENTEK: Alleges John Spangler's Injury Claim Lacks Legal Support GEORGIA-PACIFIC: Elects to Redeem 9.125% Debentures on May 6, 2004 GEORGIA-PACIFIC: Increasing Consumer Products Prices on July 1 GLIMCHER REALTY: Looking for New CFO as Melinda A. Janik Resigns GLOBAL ENVIRONMENTAL: Case Summary & 20 Largest Creditors GOLDEN SAND ECO-PROTECTION: Installs Traci Anderson as New Auditor GS MORTGAGE: Fitch Takes Rating Actions on 3 Securitizations HALE-HALSELL: Signs-Up Conner & Winters as Special Counsel HEALTHSOUTH CORPORATION: Board Member Larry Striplin Resigns HIDDEN POINTE: Case Summary & 20 Largest Unsecured Creditors HIGH VOLTAGE: Brings-In Grant Thornton as Tax Consultants ICEWEB INC: Says Sherb & Co. as New Auditor is More Cost-Effective INSITE VISION: Recurring Losses Trigger Going Concern Doubt INTEGRATED HEALTH: Rotech Wants Until July 8 to File Final Report INTERNATIONAL PAPER: Releasing 1st Quarter Earnings on April 23 INT'L STEEL: S&P Rates Proposed $600MM Sr. Unsec. Notes at BB INTERNATIONAL WIRE: Pays $1.2 Million Critical Vendors' Claims INTERPUBLIC GROUP: Fitch Revises Outlook to Stable from Negative KB HOME: Leslie Moonves & Melissa Lora Join Board of Directors LENNAR CORPORATION: Moody's Raises Ratings Outlook to Positive LEVEL 3 COMMS: First Quarter Conference Call Set for April 29 MADISON SQUARE: S&P Assigns Low-B Ratings to 6 Series 2004-1 Notes MANSOUR'S INC: Case Summary & 20 Largest Unsecured Creditors MEGAN GROUP INC: Case Summary & 40 Largest Unsecured Creditors METALDYNE CORP: Lenders Agree to Forgive Form 10-K Filing Delay MIDWEST GENERATION: Plans to Refinance Parent's $693 Million Debt MIKOHN GAMING: S&P Affirms B- Ratings & Revises Outlook to Neg. MILLBROOK PRESS: Agrees to Sell Roaring Brook Press to Holtzbrinck MIRANT: Inks Stipulation Prepaying Rent Due Under 2 Lease Deals M-WAVE INC: Completes First Step in Silicon Valley Financing Deal NATIONAL CENTURY: Reaches Pact Allowing Individual Balloting NET PERCEPTIONS: Obsidian Gives Up Offer Following Patent Sale NEW WORLD: S&P Hatchets Ratings Citing Declining Performance NOVA BIOGENETICS: Sherb Resigns After 10-QSB Filing Without Review OCCUPATIONAL HEALTH: Plans Full Promissory Notes Payment this Year OWENS CORNING: Acquires Outstanding Shares of Mexican Venture OWENS CORNING: Wants Go-Signal for OC Korea Stock Redemption PARMALAT GROUP: Hungary Court Okays Parmalat Hungaria Liquidation PG&E NAT'L: Pushing Nod for Proposed Cost Allocation Methodology PHARMACEUTICAL FORMULATION: 2003 Net Sales Climbs 21.6% to $72MM PH OF SAVANNAH: Case Summary & 20 Largest Unsecured Creditors PLYMOUTH RUBBER: Reports Improved Results for First Quarter 2004 PRIMUS INTERNATIONAL: S&P Assigns B+ Corporate Credit Rating REDDI BRAKE SUPPLY: Accepts Change of Auditor After Sellers Merger RENAL CARE: S&P Assigns Low-B Corporate Credit & Sub. Debt Ratings REVLON: Stockholders Okay Issuance of 265MM More Class A Shares R.G. BARRY: KPMG LLP Uncertain About Going Concern Viability ROYSTER-CLARK: S&P Lowers & Removes Ratings from CreditWatch STOLT NIELSEN: Delays Planned 5-Year Senior Unsecured Bond Issue SUN MICRO: Agrees to Settle Outstanding Litigation with Microsoft SUN MICROSYSTEMS: Reducing Workforce by 3,300 to Save Costs SUN MICROSYSTEMS: Appoints Jonathan Schwartz as President and COO UNITEDGLOBALCOM: Selling Euro 500M 1-3/4% Convertible Senior Notes UNITED STATES SHIPPING: S&P Rates New $225M Bank Facility at BB US AIRWAYS: Launches Regional Jet Division -- MidAtlantic Airways VALCOM: Losses & Chapter 11 Bankruptcy Spurs Going Concern Doubt VERESTAR: SES AMERICOM Acquires Bankrupt Company for $18.5 Million WATERMAN INDUSTRIES: Employs Aegis Bancorp as Investment Banker WESTPOINT STEVENS: Obtains Approval for $100K Atkins Break-Up Fee WHX CORP: Handy & Harman Unit Enters Into $163MM Financing Deal WOMEN FIRST: Fails to Comply with Nasdaq's Listing Standards WORLD AIRWAYS: Hollis Harris Discloses 10.2% Equity Stake WORLDCOM INC: Proposes Modifications to Global Services Pact WORLDGATE: 2003 Audit Report Contains Going Concern Qualification W.R. GRACE: Pursuing Court Nod for 2004-2006 Key Employee Plan * The Garden City Group Names M. Linda Mazzitti Vice President * Large Companies with Insolvent Balance Sheets ********* ADELPHIA COMMS: Wants to Set Up WNSA Station Sale Bidding Protocol ------------------------------------------------------------------ In April 2000, the Adelphia Communications Debtors purchased the assets and the rights to the Federal Communications Commission license related to radio station 107.7 FM -- WNSA -- in Buffalo, New York. Upon purchasing the Station, the ACOM Debtors invested significantly in upgrades to the Station, ultimately creating one of the region's most sophisticated FM radio plants and allowing the Station to broadcast at its full license capacity for the first time. The Station's broadcasting signal reaches clearly into Rochester and Buffalo, in New York, and its broadcast range encompasses eight counties in western New York state. The ACOM Debtors seek the Court's authority to sell the Station Assets to Entercom pursuant to the terms of the Purchase Agreement, subject to higher or better offers. The ACOM Debtors will sell the Assets free and clear of all Encumbrances, with the exception of Permitted Liens. To maximize the likelihood of competitive bidding that will result in the highest and best offer, the ACOM Debtors require Entercom Buffalo, LLC and Entercom Buffalo License, LLC to subject their proposal to these bidding procedures: (1) Any party wishing to submit a competing bid for the Station Assets must submit its offer, in writing, by not later than 12:00 noon, prevailing Eastern Time, on April 19, 2004 to: (a) Shelley C. Chapman, Esquire Willkie Farr & Gallagher LLP 787 Seventh Avenue New York, New York 10019; (b) Jim Zerefos Adelphia Communications 5619 DTC Parkway Greenwood Village, Colorado 80111; (c) W. Dean Salter, Esquire Holme Roberts & Owen LLP 1700 Lincoln Street, Suite 4100 Denver, Colorado 80203; (d) Armand Sadoughi Lazard Freres & Co. LLC 30 Rockefeller Plaza, 62nd Floor New York, New York 10020; (e) Mark Broude, Esquire Latham & Watkins LLP 885 Third Avenue, Suite 1000 New York, New York 10022; and (f) John C. Donlevie Entercom Buffalo, LLC 401 City Avenue, Suite 809 Bala Cynwyd, Pennsylvania 19004 (2) To be considered a "Qualified Bidder," the party must accompany the written offer with: (a) the identity of the potential bidder and of the officer or authorized agent who will appear on the bidder's behalf; (b) evidence, satisfactory to the ACOM Debtors, of the bidder's financial and operational ability to complete the transaction or transactions contemplated by the offer and satisfy the requirements of the Bankruptcy Code with respect to the sale; and (c) a certified check payable to the ACOM Debtors in the amount equal to 10% of the cash portion of the party's bid to be held by the ACOM Debtors' counsel without interest. The sum will be credited to the purchase price if the bidder is the successful bidder. If not, the sum will be returned to the potential bidder in accordance with the Bidding Procedures. Entercom will be deemed a Qualified Bidder and the Purchase Agreement will be deemed to satisfy the Bid Requirements. (3) In the event that an offer is received from a Qualified Bidder, the ACOM Debtors will provide notice of the time and place an auction will be conducted to consider any and all bids to: (a) the counsel to the Creditors Committee; (b) the counsel to the agents for the ACOM Debtors' lenders; (c) the counsel to the Equity Committee; (d) the Office of the U.S. Trustee; (e) Entercom and its counsel; and (f) all Qualified Bidders submitting a bid. Any Qualified Bidder may appear and bid for the Station Assets. The ACOM Debtors may conduct the Auction via Teleconference. (4) These requirements apply to all competing offers: (a) All bidders must agree to be bound by: (i) the terms of the Purchase Agreement and the Ancillary Agreements, including the purchase of the Station Assets; and (ii) the form and terms of the Sale Order; (b) All bidders must provide adequate assurance of their ability to perform under all portions of the Purchase Agreement and the Ancillary Agreements, both from a financial and operating point of view; (c) All competing bidders must submit an opening bid providing for a $350,000 minimum initial increase from the proposed Purchase Price, with successive bids by any party thereafter increasing the bid over previous bids by $100,000 increments; (d) Competing bids will not be conditioned on the outcome of unperformed due diligence by the bidder or any financing contingency; and (e) Entercom will be permitted to bid and submit a higher offer. (5) Subject to further Court order, all bidders must deliver with their bid a marked copy of the Purchase Agreement and the Ancillary Agreements containing only conforming changes and in form ready for execution by the ACOM Debtors. (6) Each offer made or deemed to be made will remain open and irrevocable until the earliest to occur of: (a) 30 days after the entry of the Sale Order and the dissolution of any stays of the Sale Order; (b) 48 hours after the withdrawal of the Station Assets for sale; or (c) the consummation of a transaction involving any other bidder. (7) The ACOM Debtors reserve the right to: (a) determine at their discretion which offer, if any, is the highest and best offer; and (b) reject at any time before the Court approves an offer, any offer that they, in their sole discretion and without liability, deem to be: (i) inadequate or insufficient; (ii) not in conformity with the requirements of the Bankruptcy Code, the Bankruptcy Rules, the Local Bankruptcy Rules or the terms and conditions of the Purchase Agreement or the Bidding Procedures; or (iii) contrary to the best interests of their estates. The ACOM Debtors will have no obligation to accept or submit for Court approval any offer presented at the Auction. The ACOM Debtors reserve the right, in their sole discretion, to withdraw their request. (8) If no offer is received from a Qualified Bidder, no Auction will be conducted and the ACOM Debtors will sell the Purchased Assets to Entercom. The ACOM Debtors believe that the Bidding Procedures are fair and reasonable, and are not likely to dissuade any serious potential Alternative Buyer from bidding on the Station Assets. The Bidding Procedures will not only afford Entercom some measure of protection for its "stalking horse" bid, but will also benefit the ACOM Debtors by creating a bidding process that ensures: (1) the ACOM Debtors' ability to compare the relative values of competing offers, if any, by requiring all potential Alternative Buyers to bid off the same form of contract; (2) that a potential Alternative Buyer has the financial wherewithal to consummate its purchase; (3) meaningful bidding increments; and (4) that any alternative purchase agreement will likely be consummated, by the absence of terms and conditions that could create significant leeway for the potential Alternative Buyer to terminate the agreement without penalty. In addition, the $100,000 bidding increment is designed to insure that only serious bidders participate in the bidding process. The initial bidding increment is not designed to chill competitive bidding. Accordingly, the ACOM Debtors ask the Court to approve the Bidding Procedures. (Adelphia Bankruptcy News, Issue No. 55; Bankruptcy Creditors' Service, Inc., 215/945-7000) AEGIS COMMS: Records $26 Million Equity Deficit at December 2003 ---------------------------------------------------------------- Aegis Communications Group, Inc. (OTC Bulletin Board: AGIS), a marketing services company that enables clients to make customer contact efforts more profitable, reported its results for the quarter and year ended December 31, 2003. REVENUES Fourth quarter 2003 revenues from continuing operations were $30.2 million as compared to $33.3 million for the same period last year, a decrease of $3.1 million, or 9.5%. For the year ended December 31, 2003, revenues from continuing operations were $139.9 million versus $135.9 million in the prior year, an increase of $4.0 million, or 2.9%. The decline in revenues versus the quarter ended December 31, 2002, was related to two clients who reduced volumes quarter over quarter, however this was partially offset by the increase in an outbound program with another existing client. The increase in revenues for the year ended December 31, 2003, versus 2002 was primarily a result of expansion of work from clients in the cable television and membership services industries partially offset by a decrease in volumes from clients in the telecommunications and financial services industries. OPERATING LOSS The Company reported an operating loss for the quarter ended December 31, 2003. Operating loss for the fourth quarter of 2003 was $6.0 million as compared to operating losses of $2.5 million in the fourth quarter of 2002. For the year ended December 31, 2003, the Company incurred an operating loss of $12.8 million, versus a loss of $14.6 million for the same period ended 2002. The decline in operating performance over the quarterly comparative periods is primarily attributable to the decline in revenue referred to above, and $2.1 million in one-time selling, general and administrative expenses associated with the terminated merger agreement with Allserve and the subsequent closing of the Deutsche Bank/Essar transaction that took place in the fourth quarter of 2003. "While we are disappointed with our performance, we clearly incurred significant incremental administrative expense and management distraction as a result of our deal activity during the fourth quarter. However, the key endorsement of our Company by the investment of Deutsche Bank and the Essar Group, respectively a major global financial institution and one of India's premier and largest companies, is certainly a positive event for our organization," commented Herman Schwarz, the Company's President and Chief Executive Officer. "These new investors, the Board and management are working closely together to clearly differentiate the Company's capabilities, increase profitability, deepen business with Aegis' excellent customer base and identify new business opportunities for increasing shareholder value. Our Company is excited about the new ownership and the resulting opportunities we believe it will bring," continued Schwarz. At December 31, 2003, Aegis Communications Group, Inc.'s balance sheet shows a total shareholders' deficit of $26,449,000 compared to $45,550,000 the prior year NET LOSS The Company incurred a net loss applicable to common shareholders of $1.8 million, or $0.03 per common share, for the quarter ended December 31, 2003. During the prior year comparable quarter, the Company incurred a net loss applicable to common shareholders of approximately $5.3 million, or $0.10 per common share. For the year ended December 31, 2003, the Company generated a net loss applicable to common shareholders of $19.1 million, or $0.33 per common share, as compared to $70.8 million or $1.35 per common share for the year ended December 31, 2002. Excluding net income from discontinued operations, a gain on sale of the related assets, a gain on the early extinguishment of debt and the cumulative effect of a change in accounting for goodwill, we incurred a net loss from continuing operations of $17.1 million or $0.30 per share for the period ended December 31, 2003, as compared to a net loss of $27.0 million or $0.52 per share for the period ended December 31, 2002. Revenue Mix. Together, inbound CRM and non-voice & other revenues represented 70.2% of the Company's revenues in the fourth quarter of 2003 versus 79.9% in the fourth quarter of 2002. Outbound CRM revenues accounted for 29.8% of total revenues for the three months ended December 31, 2003, as compared to 20.1% in the comparable prior year period. The increase in outbound CRM for the fourth quarter of 2003 versus the fourth quarter of 2002 is due to an increase in volume associated with an existing client program. Cost of Services. For the quarter ended December 31, 2003, cost of services decreased by approximately $1.4 million, or 6.0%, to $22.1 million versus the quarter ended December 31, 2002. Cost of services as a percentage of revenues for the quarter ended December 31, 2003 increased to 73.3%, from 70.6% during the comparable prior year period. The reduction in direct labor costs in recognition of increased downward pressure on revenues, is primarily responsible for the reduction in cost of services. The increase in cost of services as a percentage of revenues is primarily attributable to call center overhead costs, which, because of their generally fixed nature, were reduced by a lesser degree than the general decline in revenue. For the year ended December 31, 2003, cost of services increased $6.2 million to $99.7 million compared to 2002. As a percentage of sales, cost of services rose slightly over the same period, from 68.8% to 71.2%. The increase year over year is primarily due to data and sales lead costs for an enhanced pay for performance project that began in January 2003 and increased telecommunications costs associated with the increase in revenues. Additionally, as a result of expansion of work from existing clients, we also incurred additional labor costs associated with training employees for the increase in volumes. Selling, General and Administrative. Selling, general and administrative expenses increased 27.4% to $11.4 million in the quarter ended December 31, 2003, versus $9.0 million the prior year fourth quarter. As a percentage of revenue, selling, general and administrative expenses for the quarter ended December 31, 2003, were 37.9% as compared to 26.9% for the prior year period. For the year ended December 31, 2003, selling, general and administrative expenses were $41.5 million, or 29.7% of revenues versus $43.1 million, or 31.7% of revenues for the year ended December 31, 2002. The increase in selling, general and administrative expenses over the three months ended December 31, 2003, is primarily attributable to $2.1 million in one-time expenses related to the terminated merger agreement with Allserve and the subsequent closing of the Deutsche Bank/Essar transaction. The decrease year over year is primarily due to a slight increase in revenue over the same period as well as the result of the Company's emphasis on controlling overhead costs. Depreciation and Amortization. Depreciation and amortization expenses, excluding acquisition goodwill amortization, decreased $0.7 million, or 21.5% in the quarter ended December 31, 2003, as compared to the quarter ended December 31, 2002. As a percentage of revenue, depreciation and amortization expenses were 8.8% in the quarter ended December 31, 2003, versus 10.2% in the quarter ended December 31, 2002. For the years ended December 31, 2003 and 2002, respectively, depreciation and amortization expenses were $11.5 million, or 8.2% of revenues and $13.0 million, or 9.6% of revenues. The reduction in depreciation expense is due to the effects of reduced capital spending coupled with more mature assets becoming fully depreciated. Gain on Early Extinguishment of Debt. The Company retired $15.4 million in subordinated debt with the proceeds of the November 5, 2003, transaction with Deutsche Bank and Essar. We paid $8.1 million in cash and recorded $6.2 million in gain on early extinguishment of debt. The gain has been reduced by $1.1 million, which, if not owed to AllServe for the breakup fee as a result of the terminated agreement on November 5, 2003, will be distributed to the subordinated debt holders, net of certain expenses, as part of the Deutsche Bank/Essar agreement. Income Tax Provision. The Company has not provided an income tax benefit to the operating losses incurred during the quarter and year ended December 31, 2003, as such benefit would exceed the projected realizable deferred tax asset. Discontinued Operations. As reported previously, on April 12, 2002, the Company completed the sale of assets of Elrick & Lavidge, its marketing research division, to Taylor Nelson Sofres Operations, Inc., a wholly-owned subsidiary of United Kingdom based Taylor Nelson Sofres plc. The Company recognized a gain on disposal of the segment of $8.3 million, which was reported in its second quarter 2002 results. Pursuant to an agreement dated October 7, 2003, the Company and Taylor Nelson Sofres Operations, Inc. reached an agreement regarding certain purchase price adjustments. In light of the above referenced agreement, the gain on the disposal of this segment was reduced by $0.1 million during the quarter ending September 30, 2003. Additionally, during the quarter ended December 31, 2003, the Company reduced the gain by $0.5 million as a result of additional reserves for an existing lease agreement. Elrick & Lavidge's revenues, reported in discontinued operations, for the year ended 2002 were $6.2 million. Change in Accounting Principle. In connection with the adoption of SFAS 142, the Company completed the transitional goodwill impairment test during the quarter ended September 30, 2002. A third party engaged by the Company performed the valuation. As a result of the performance of the impairment test, the Company concluded that goodwill was impaired, and accordingly, recognized a goodwill impairment loss of $43.4 million. The non- cash impairment charge was reported as a cumulative effect of an accounting change retroactive to January 1, 2002, in accordance with the provisions of SFAS 142. The goodwill impaired was related to prior acquisitions for which the perceived incremental value at the time of acquisition did not materialize. The Company did not recognize any goodwill impairment in 2003. Cash and Liquidity. Cash and cash equivalents (excluding restricted cash) at December 31, 2003 and 2002, were $1.7 million and $1.6 million respectively, while working capital totaled $5.7 million and $4.8 million. Outstanding bank borrowings under the Company's revolving line of credit at December 31, 2002 were $5.9 million. On November 5, 2003, all amounts owed under the Company's line of credit were paid in full using a portion of the proceeds from the Deutsche Bank/Essar transaction. On January 26, 2004, we entered into a new credit agreement with Wells Fargo Foothill that will allow the company to borrow up to $25.0 million, with a maturity date of January 26, 2007. The Company was not in compliance with covenants under the new credit agreement for the two-month period ended February 29, 2004. On March 30, 2004, the Company entered into an amended agreement, waiving all defaults and revising covenants. The maturity date of the amended agreement has remained unchanged. Deutsche Bank/Essar Transaction. On November 5, 2003, the Company completed a transaction whereby Deutsche Bank AG - London and Essar Global Limited, part of the Essar Group, a diversified industrial group out of India, provided approximately equal portions of a $28.231 million investment in the Company in return for three-year secured promissory notes and warrants to purchase up to 80 percent of the Company's common stock on a fully-diluted basis. In accordance with the terms of its then-existing senior and subordinated loans, as well as the terms of its agreement with Deutsche Bank and Essar, the Company was required to repay or otherwise retire its obligations to various lenders from the proceeds of this transaction (and, to the extent the subordinated debt was not paid off, the holders of the subordinated debt discharged the debt and released the Company from any further liability under their promissory notes). On January 28, 2004, $8.0 million of the first required installment was paid as a result of entering into a new credit facility with Wells Fargo Foothill. On that same date the promissory notes were amended. The principal amount of the amended notes in the aggregate was $20.231 million, with each note still payable in two installments. The first installment of $4.344 million was due as the cash collateralized letters of credit were replaced under the new credit facility and the funds released to the Company. The Company made additional payments totaling $2.0 million dollars in March 2004 on the first installment. While the Company made payments of $10.0 million of the required $12.344 million due in 2004, a portion of the amounts coming due were not paid as prescribed thus resulting in a default under the notes and new credit agreement. On March 30, 2004, the Company executed amended agreements with revised covenants and received waivers for all defaults in the notes. In addition, the amended notes included an extension of the due date for the balance of initial installment payments of $2.344 million to January 3, 2005. Accordingly, these balances have been reclassified to long-term debt as of December 31, 2003, thus improving our working capital position. The principal amounts of the amended Notes were increased to include capitalized interest of $0.166 million through March 30, 2004. The aggregate amount of the amended notes at March 30, 2004, is $18.398 million. Aegis Profile Aegis Communications Group, Inc. is a marketing services company that enables clients to make customer contact efforts more profitable. Aegis' services are provided to a blue chip, multinational client portfolio through a network of client service centers employing approximately 3,700 people and utilizing approximately 4,600 production workstations. Further information regarding Aegis can be found at http://www.aegiscomgroup.com/ AIR CANADA: Estimated Post-Filing Obligations Top C$1.5 Billion --------------------------------------------------------------- At February 29, 2004, Ernst & Young Inc., the Court-appointed Monitor, estimates that Air Canada's post-filing obligations total CN$1,519,000,000, consisting of: CN$323,000,000 Trade credit 177,200,000 Accrued and unpaid aircraft lease charges 145,800,000 Undue and unremitted trust amounts 388,100,000 Owing to the CIBC, Amex Bank of Canada and GE Capital Corporation re post-filing credit facilities 485,300,000 Accrued and unpaid payroll and other employee related charges -------------- CN$1,519,000,000 Total Air Canada's cash on hand as of February 29, 2004, was CN$827,300,000. Accordingly, Air Canada's Post-Filing Obligations exceeded cash on hand by CN$692,100,000. Deferred ticket revenues, representing advance ticket sales collected, were CN$503,600,000 on February 29, 2004 or CN$61,000,000 less than at April 1, 2003. After performing a detailed analysis of the February 29, 2004 deferred ticket revenues, Air Canada estimates that CN$499,100,000 of the balance relates to tickets sold subsequent to April 1, 2003 and this amount is not included in the CN$692,100,000 Post-Filing Deficiency amount. According to Ernst & Young President Murray McDonald, the Post- Filing Deficiency amount of CN$692,100,000 has increased from October 31, 2003 at which time it was CN$417,700,000. When combined with the CN$503,600,000 post-filing advance tickets sales, the overall deficiency is significant. The Monitor notes that in the event the airline's restructuring is not successful and the Company is liquidated there will be limited assets available from realization to fund post-filing obligations. Air Canada Estimated Post-Filing Liabilities As At February 29, 2004 (Excluding Ticket Related Obligations) Trade Credit Fuel (CN$7,300,000) Aircraft Maintenance 8,900,000 Airport Related Charges, Including Rent 49,700,000 Estimated Travel Agent Commissions 31,300,000 Jazz & Zip 30,800,000 Other Estimated Trade Liabilities 209,600,000 ---------------- Total Estimated Trade Credit 323,000,000 Aircraft Leases 177,200,000 ---------------- Unremitted Collections Jazz - GST - Estimated Foreign Taxes, Fuel Taxes and AIF not yet due 102,700,000 Airport Improvement Fees 12,800,000 Transportation Tax 10,400,000 Security Tax 14,700,000 US Immigration Tax 5,200,000 ---------------- Total Unremitted Collections 145,800,000 Credit Facilities 388,100,000 Employee-Related Obligations 485,300,000 ---------------- Total Estimated Post-Filing Liabilities CN$1,519,400,000 ================ 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 C$9,704,000,000 in liabilities. (Air Canada Bankruptcy News, Issue No. 30; Bankruptcy Creditors' Service, Inc., 215/945-7000) AIR CANADA: Trinity Will Not Seek Extension of Investment Pact -------------------------------------------------------------- Trinity Time Investments Limited will not seek extension of its Investment Agreement with Air Canada which expires on 30th April, and that it has released Air Canada from its exclusivity obligations under the Agreement with effect from April 2. Trinity has also confirmed to General Electric Capital Corporation and Deutsche Bank Securities Inc. that it will not seek to extend agreements with them which would expire concurrently. Harold Gordon, a director of Trinity, said: "We are of course disappointed in this outcome. We have decided that we will not seek extension of the Investment Agreement in the present circumstances in light of several factors. "Firstly, it has become apparent from the review conducted with our advisers and partners, Goldman Sachs, that despite industry leading management initiatives under Robert Milton and much good progress in the CCAA re-structuring, Air Canada's financial performance is somewhat weaker than had been expected under plans previously reviewed by us during the equity solicitation process. In particular, labor cost and productivity savings promised by Air Canada's unions under Air Canada's collective agreements are not being fully achieved, while at the same time yields and margins remain under pressure and fuel costs are at all time highs. Air Canada's earnings outlook is adverse to our expectations, reflecting among other things a more intense competitive environment generally and a higher level of domestic capacity and competition than expected. "More importantly, Trinity believes that in the current industry environment, Air Canada's organized labour structures impair its ability to succeed. We applaud the recent initiative of Air Canada's management and District 140 of the IAMAW relative to pension structure. This represents a meaningful step away from the confrontational approach adopted by Air Canada's union leaders to date. Regretfully, this step is not reflective of the positions taken by union leaders representing more than two-thirds of Air Canada's employees. We have concluded from this that without a change in the manner in which Air Canada's employees are organized and their interests represented, Air Canada will not likely achieve a sufficient fresh start to prosper and grow in the competitive environment which it faces after emerging from CCAA protection. We deeply respect the commitment and professionalism of Air Canada's management and its employees. We sincerely hope they will be able to complete the re- structuring and do not rule out a continued participation if circumstances change sufficiently." 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 C$9,704,000,000 in liabilities. AIR CANADA: Pursuing Alternatives to Trinity Investment Agreement ----------------------------------------------------------------- Air Canada said that while it regrets the decision by Trinity Time Investments Limited to not seek extension of its Investment Agreement beyond April 30, 2004, it remains focused on completing its restructuring and emerging successfully from CCAA protection as soon as possible. As a result of Trinity's announcement, Air Canada is free to pursue alternative equity financing arrangements and is doing so. In that regard, Air Canada has contacted General Electric Capital Corporation and Deutsche Bank Securities, both of whom have substantial financing commitments to the Corporation to discuss alternatives resulting from Trinity's announcement. "Our restructuring has become more challenging as a result of record high fuel prices, increased domestic capacity by our low cost competitors and the geopolitical issues faced by the airline industry as a whole," said Robert Milton, President and Chief Executive Officer. "However, our 2004 revenues are tracking in line with what we projected in our business plan last October during the equity solicitation process. We are seeing year over year unit cost declines in the range of 14 per cent. Our cash balances are healthy with over $900 million in cash on hand and close to another $500 million of additional credit available. We have made major progress on important aspects of our restructuring, including a significant fleet, debt and lease restructuring, major reductions in supplier arrangements and changes to our fare structures and distribution channels. "Trinity's announcement expressly states that investment in Air Canada remains a possibility if circumstances change sufficiently to meet the concerns identified by Trinity, especially relating to arrangements with Air Canada's labour unions. We are well positioned to carry on business effectively while considering the concerns raised by Trinity as well as alternative equity arrangements. We trust that our unions and other stakeholders will recognize the urgency of resolving the remaining obstacles to our exit from CCAA, particularly since the arrangements with GE and Deutsche Bank also expire at the end of April, unless extended by agreement. "I want to reassure our customers and employees that it's business as usual at Air Canada as it has been throughout our restructuring, especially as we go into our strongest travel period of the year, with very strong liquidity levels. "The stakeholders in Air Canada's restructuring, including our largest creditors have reconfirmed their support in ensuring the airline's survival. The progress achieved in Air Canada's restructuring to date clearly justifies our continued resolve to overcome this latest challenge." The Air Canada Ad Hoc Unsecured Creditors Committee has indicated that it is disappointed with the adverse developments in the Trinity equity initiative. At the same time, the UCC confirmed its desire to continue to work with Air Canada management and the Monitor to establish an appropriate new equity solicitation process as a component of a successful restructuring and emergence from CCAA, subject to the satisfactory resolution of the fundamental issues that adversely affected the Trinity Time initiative. In addition, GE, the corporation's largest aircraft lessor and exit financing lendor, has indicated that given the dynamic competitive environment in the airline industry, its priority remains the successful completion of the CCAA process as soon as possible. GE has indicated that it is supportive of management's efforts to find constructive solutions and is committed to working with Air Canada and to maintain an open dialogue with all stakeholders to find an urgent resolution. "When we announced our restructuring one year ago, we predicted that the task before us would be painful and the challenges daunting. We have clearly reached the point where our unions and the employees they represent need to voice loudly and clearly that there is a will and a way to ensure our cost competitiveness and convince Victor Li or any other investor that Air Canada's people accept that the world has changed. "The year has been particularly difficult for our employees and I thank them for their hard work and dedication in taking care of our customers whose continued support has been heartening. "The remaining hurdles are surmountable and with goodwill and cooperation on the part of all parties, I remain convinced Air Canada will emerge from CCAA protection a much stronger airline," concluded Mr. Milton. 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 C$9,704,000,000 in liabilities. AIR CANADA: FY 2003 Operating Loss Balloons to $684 Million ----------------------------------------------------------- Air Canada reported an operating loss before reorganization and restructuring items of $684 million for the year ended December 31, 2003 compared to an operating loss before non- recurring labor expenses of $192 million for the year ended December 31, 2002. On April 1, 2003, Air Canada obtained an order from the Ontario Superior Court of Justice providing creditor protection under CCAA. Air Canada also made a concurrent petition under Section 304 of the U.S. Bankruptcy Code. As a result of restructuring under CCAA, the Corporation has and will continue to record a number of significant reorganization and restructuring items directly associated with the restructuring. These "reorganization and restructuring items" represent revenues, expenses, gains and losses, and provisions for losses that can be directly associated with the reorganization and restructuring of the business under CCAA, and do not relate to the normal operating expenses of the airline. For the year 2003, these mainly non-cash reorganization and restructuring items amounted to $1,050 million. Including these reorganization and restructuring items, the net loss was $1,867 million compared to a net loss of $828 million in 2002. In 2002, an income tax valuation allowance was recorded to reduce the value of the Mainline carrier's future income tax asset by its full carrying value of $400 million. This allowance had no impact on Air Canada's cash position or operating results. As at December 31, 2003, the Corporation's cash and cash equivalents amounted to $670 million. At December 31, 2003, CDN$840 million was available from the US$700 million debtor-in- possession financing facility from GE Canada Finance Holding Company. In January 2004, CDN$300 million of funds were drawn from this facility. As at April 1, 2004, the Corporation's combined cash balance, measured on the basis of cash in its Canadian and United States bank accounts, amounted to an estimated $910 million remaining before taking into account the amounts available under the DIP facility. "Our restructuring has become more challenging as a result of record high fuel prices, increased domestic capacity by our low cost competitors and the geopolitical issues faced by the airline industry as a whole", said Robert Milton, President and Chief Executive Officer. "However, our 2004 revenues are tracking in line with what we projected in our business plan last October. Furthermore, we are seeing year over year unit cost declines in the range of 14%. Our cash balances are healthy. We have made major progress on most key aspects of our restructuring, including a significant fleet, debt and lease restructuring, major reductions in supplier arrangements and changes to our fare structures and distribution channels. We are well positioned to carry on business effectively while seeking alternative equity arrangements in light of [Frid]day's announcement by Trinity Time Investment Limited that it is not seeking extension of its Investment Agreement beyond April 30, 2004. We trust that our unions and other stakeholders will recognize the urgency of resolving the remaining obstacles to our exit from CCAA, particularly since the arrangements with GECAS and Deutsche Bank also expire at the end of April, unless extended by agreement. "The past year has been particularly difficult for Air Canada's employees. I thank them for their hard work and dedication in taking care of our customers whose continued support has been heartening. It remains business as usual for our customers as it has throughout our restructuring," concluded Mr. Milton. Air Canada's 2003 Management's Discussion & Analysis and Audited Consolidated Financial Statements & Notes will be available on Air Canada's Web site http://www.aircanada.com/and will also be available at http://SEDAR.com/ 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. AK STEEL: Will Increase Carbon Steel Price by $150/Ton on May 1 --------------------------------------------------------------- AK Steel (NYSE: AKS) said that it will increase transactional prices for carbon steel products by $150 per ton beginning on May 1, 2004. The increase applies primarily to steel sold in the spot market. AK Steel also said that the applicable carbon steel surcharge for April will be $97 per ton. AK Steel implemented a surcharge program for its carbon steels beginning with January 2004 shipments to partially offset extraordinary increases in raw material costs, particularly costs of energy and steel scrap. The amount of the surcharge is adjusted monthly based upon changes in raw material costs. Headquartered in Middletown, Ohio, AK Steel -- whose December 31, 2003 balance sheet shows a $52.8 million shareholders' equity deficit -- produces flat-rolled carbon, stainless and electrical steel products for automotive, appliance, construction and manufacturing markets, as well as tubular steel products. AK STEEL: Inks 3-Year Labor Accord with UAW for Coshocton Works --------------------------------------------------------------- AK Steel Corporation (NYSE: AKS) said that members of the United Autoworkers of America (UAW) have voted to accept a progressive three-year labor agreement covering 460 hourly employees at the company's Coshocton (OH) Works. AK Steel said the contract is patterned after recently negotiated labor agreements in the steel industry, providing for seven flexible job classifications, a defined contribution pension plan and cost-sharing provisions for active and retiree health care benefits. "We are pleased that the leadership and members of the UAW have recognized AK Steel's need for progressive and competitive labor agreements in order to return to profitability," said James L. Wainscott, president and CEO of AK Steel. "The new Coshocton agreement is the first step in bringing AK Steel's employment costs to a level in balance with our domestic competitors." The new agreement, ratified Thursday, is in effect until April 1, 2007. The agreement provides for lump sum payments in lieu of base wage increases, establishes phased in wage rates for newly hired employees and implements recently established steel industry vacation and holiday schedules. The agreement is the first labor contract between AK Steel and the UAW since Coshocton Works hourly employees voted to be represented by the UAW in September 2002. The UAW also represents a total of about 1,700 employees at AK Steel's Butler (PA) and Rockport (IN) Works. The Coshocton Works finishes specialty flat-rolled stainless steels for automotive, appliance and other markets. Headquartered in Middletown, Ohio, AK Steel -- whose December 31, 2003 balance sheet shows a $52.8 million shareholders' equity deficit -- produces flat-rolled carbon, stainless and electrical steel products for automotive, appliance, construction and manufacturing markets, as well as tubular steel products. ALLIED WASTE: Completes Amendment to Senior Credit Facility ----------------------------------------------------------- Allied Waste Industries, Inc. (NYSE: AW) announced that its wholly-owned subsidiary, Allied Waste North America, Inc. (AWNA), has successfully completed the amendment to its Senior Credit Facility, which will result in increased flexibility in funding the $1 billion cash tender offer of its 10% senior subordinated notes due 2009 announced on March 22, 2004. These transactions will enable Allied to take advantage of favorable market conditions and interest rates, a step that would reduce Allied's overall interest cost and extend maturities. The amendment to its Senior Credit Facility allows AWNA, among other things, the ability to issue up to $1.1 billion of indebtedness, of which up to $500 million may consist of senior secured debt and the remainder of which shall be senior unsecured debt, and apply the proceeds of such issuance to the repayment of the Notes. Additionally, the amendment allows AWNA to use its revolving line of credit and/or cash flows from operations to redeem the remaining $50 million of AWNA's 7 7/8% senior secured notes, due 2009, at the redemption price of 103.9375. AWNA expects to deliver the notice of redemption for such notes today and complete the redemption after the required thirty-day notice period. Allied also announced the funding of a new $150 million Term Loan D due 2010 under AWNA's Senior Credit Facility, priced at LIBOR plus 250 bps, 25 bps lower than its other outstanding term loans. The proceeds will be used to partially fund the tender of the Notes. Allied Waste Industries, Inc., a leading waste services company, provides collection, recycling and disposal services to residential, commercial and industrial customers in the United States. As of December 31, 2003, the Company served customers through a network of 313 collection companies, 165 transfer stations, 166 active landfills and 57 recycling facilities in 37 states. * * * As reported in the Troubled Company reporter's March 2, 2004 edition, Fitch Ratings affirmed Allied Waste North America's (NYSE: AW) senior secured credit facility at 'BB', senior secured notes at 'BB-', senior unsecured subordinated notes at 'B', and mandatory convertible preferred stock at 'B-'. The Rating Outlook is Stable. AW has improved its capital structure during 2003 through healthy cash flow generation, divestitures, conversion of preferred stock to common stock, and equity issuance. AW divested over $300 million in 2003, and cash proceeds boosted cash flow that was available to reduce debt. In addition, net proceeds from equity issuance (gross proceeds were $445 million) were used to bring down debt. Including repayment of $225 million and $94 million made in January 2004, total debt fell more than $950 million over the past year, despite slight declines in revenues and margins amid a difficult operating environment. AMERICAN AIRLINES: Reports Better Than Expected March Traffic ------------------------------------------------------------- American Airlines, the world's largest carrier, reported better than expected monthly traffic, setting the highest March load factor on record at 75.1 percent -- an increase of 3.6 points compared to last year. Traffic was particularly robust during the second half of the month. For the full month, traffic increased 10.9 percent year over year, while capacity increased only 5.6 percent. March traffic results exceeded the company's forecast for 6.1 percent growth year over year. International traffic recorded the strongest gains relative to last year with a March load factor improvement of 4.6 points to 74.8 percent. The higher load factor was achieved despite a 13.4 percent increase in capacity year over year. Traffic increases also outstripped capacity additions in domestic markets with a load factor improvement of 3.1 points compared to last year, on a 2.6 percent capacity increase. American boarded 7.9 million passengers in March. About American Airlines American Airlines is the world's largest carrier. American, American Eagle and the AmericanConnection(R) regional carriers serve more than 250 cities in over 40 countries with more than 3,900 daily flights. The combined network fleet numbers more than 1,000 aircraft. American's award-winning Web site, AA.com, provides users with easy access to check and book fares, plus personalized news, information and travel offers. American Airlines is a founding member of the oneworld(TM) Alliance. * * * As reported in the Troubled Company Reporter's February 13, 2004 edition, Standard & Poor's Ratings Services assigned its 'CCC' rating to AMR Corp.'s $300 million senior convertible notes due 2024 (guaranteed by subsidiary American Airlines Inc.; both rated B-/Stable/--), a Rule 415 shelf drawdown. The rating is two notches below the corporate credit rating of AMR, because the large amount of secured debt and leases relative to AMR's owned and leased asset base places senior unsecured creditors in an essentially subordinated position. "The convertible note offering bolsters AMR's liquidity in advance of heavy upcoming debt maturities and pension obligations," said Standard & Poor's credit analyst Philip Baggaley. "The company continues to make progress on narrowing losses, reflecting mostly substantial labor cost concessions agreed in April 2003, and on gradually restoring a weak financial profile," the credit analyst continued. The 'B-' corporate credit ratings on AMR Corp. and American Airlines Inc. reflect a weak financial profile following several years of huge losses, heavy upcoming debt and pension obligations, and participation in the competitive, cyclical, and capital- intensive airline industry. An improved cost structure following substantial labor concessions and adequate near-term liquidity are positives. AMR's improving operating results and liquidity should enable it to maintain credit quality consistent with its rating, despite heavy financial obligations. AMR Corp.'s December 31, 2003, consolidated balance sheet shows more than $29 billion in liabilities and shareholder equity has dwindled to $46 million. AMSCAN: Launches Tender Offer for 9.875% Senior Subordinated Notes ------------------------------------------------------------------ Amscan Holdings, Inc. commenced a cash tender offer and consent solicitation for any and all of its outstanding $110,000,000 aggregate principal amount of 9.875% Senior Subordinated Notes due 2007. In conjunction with the tender offer, consents are being solicited to effect certain amendments to the indenture governing the Senior Subordinated Notes. The offer to purchase will expire at 12:00 Midnight, New York City time, on April 29, 2004, unless extended or terminated. The solicitation of consents will expire at 5:00 p.m., New York City time, on April 15, 2004, unless extended or terminated. Holders tendering their Senior Subordinated Notes will be required to consent to certain proposed amendments to the indenture governing the Senior Subordinated Notes, which will eliminate substantially all of the affirmative and restrictive covenants, certain repurchase rights and certain events of default and related provisions contained in the indenture. If the offer to purchase is consummated, tendering holders who validly tender and deliver consents by the offer expiration date will, upon the terms and subject to the conditions set forth in the Offer to Purchase and Consent Solicitation Statement, receive the offer consideration of $1,032.92 per $1,000 of principal amount of the Senior Subordinated Notes tendered, plus all accrued and unpaid interest to, but not including, the date of payment for such Senior Subordinated Notes accepted for purchase, which would be promptly following the offer expiration date. Amscan will also, upon the terms and subject to the conditions set forth in the Offer to Purchase and Consent Solicitation Statement, make a consent payment of $2.50 per $1,000 principal amount of Senior Subordinated Notes to all holders of Senior Subordinated Notes for which consents have been validly delivered and not revoked on or prior to the consent expiration date (which will be April 15, 2004, unless extended or terminated) for a total consideration of $1,035.42, plus all accrued and unpaid interest to, but not including, the date of payment for such Senior Subordinated Notes accepted for purchase. Holders who validly tender their Senior Subordinated Notes after the consent expiration date will receive only the offer consideration but not the consent payment. Amscan intends to finance the tender offer and consent solicitation with a portion of the debt and equity financing arranged in connection with its merger with a subsidiary of AAH Holdings Corporation, a company affiliated with Berkshire Partners LLC and Weston Presidio. The completion of this merger is one of the conditions to Amscan's obligations to accept Senior Subordinated Notes for payment pursuant to the tender offer and consent solicitation. The terms and conditions of the tender offer and consent solicitation, including Amscan's obligation to accept the Senior Subordinated Notes tendered and pay the purchase price and consent payments, are set forth in Amscan's Offer to Purchase and Consent Solicitation Statement, dated April 2, 2004. Amscan may amend, extend or, subject to certain conditions, terminate the tender offer and consent solicitations at any time. Amscan has engaged Goldman, Sachs & Co. to act as the exclusive Dealer Manager and Solicitation Agent in connection with the tender offer and consent solicitation. Questions regarding the tender offer and consent solicitation may be directed to Goldman, Sachs & Co., Credit Liability Management Group, at (877) 686-5059 (toll free). Requests for documentation may be directed to Bondholder Communications Group, the information agent for the tender offer and consent solicitation, at (888) 385-2663 (toll free). Elmsford, New York-based Amscan designs, manufactures and distributes decorative party goods, including paper and plastic tableware, accessories and novelties. Amscan also designs and distributes home, baby, wedding and other gift items. * * * As reported in the Troubled Company Reporter's March 31, 2004 edition, Standard & Poor's Ratings Services placed its ratings on party goods manufacturer Amscan Holdings Inc. on CreditWatch with negative implications following the company's announcement that it had agreed to be acquired by Berkshire Partners LLC and Weston Presidio. On CreditWatch are Amscan's 'BB-' corporate credit and senior secured bank loan ratings and its 'B'subordinated debt rating. CreditWatch with negative implications means that the ratings could be affirmed or lowered following the completion of Standard & Poor's review. "Standard & Poor's expects that Amscan will be more highly leveraged following the proposed acquisition, which would leave it with a weaker financial profile," said Standard & Poor's credit analyst David Kang. Before resolving the CreditWatch listing, Standard & Poor's will continue to monitor developments and meet with management to discuss the company's business strategy, future capital structure, and financial policy. ARBOR INC: Inks Stock Exchange Agreement with China Laizhou ----------------------------------------------------------- On February 5, 2004, Arbor, Inc., a corporation organized under the laws of the State of Nevada, a certain principal Arbor shareholder, China Laizhou Bay Mining International Corporation, a corporation organized under the laws of the British Virgin Islands, and each of the shareholders of Laizhou, entered into a Stock Exchange Agreement and Plan of Reorganization. Pursuant to the Agreement, Arbor received from the Laizhou Shareholders all of the issued and outstanding common stock of Laizhou in exchange for Eight Million Five Hundred Thousand (8,500,000) shares of restricted (as defined in Rule 144 of the Securities Act of 1933, as amended) common stock of Arbor. Five Million (5,000,000) of the Arbor Shares were issued by Arbor to the Laizhou Shareholders. The remaining Three Million Five Hundred Thousand (3,500,000) Arbor Shares were transferred by the Principal Arbor Shareholder to the Laizhou Shareholders. The Arbor Shares were issued in reliance upon the "safe harbor" provided by Regulation S promulgated under the Securities Act of 1933, as amended for offers and sales of securities occurring outside the United States. The Agreement also provided that the Arbor Shares may be offered and sold by the holder thereof only if such offer and sale is made in compliance with the terms of the Agreement and Regulation S. Arbor's Board of Directors considered various factors in approving the Agreement, including: (i) Arbor's current lack of operations; (ii) the available technical, financial and managerial resources possessed by Laizhou; (iii) prospects for the future; (iv) the quality and experience of management services available and the depth of Laizhou management; (v) Laizhou's potential for growth or expansion in China; (vi) Laizhou's profit potential; and (vii) anticipated increase in stockholder value as a result of the Agreement. Arbor's Board of Directors considered various factors, but primarily that management has not been able to expand Arbor's operations beyond owning part of an entity with a small real estate project in Brazil. In considering the Agreement with Laizhou, Arbor's Board of Directors considered Laizhou's profitable operations and the market potential in China. Given those circumstances, Arbor's Board decided that the best course of action for Arbor and its stockholders was to enter into and conclude the proposed Agreement with Laizhou, after which Arbor's management would resign. In agreeing to the Agreement, Arbor's Board hoped that by relinquishing control to Laizhou's management and adopting Laizhou's assets and operations, such a move would eventually add value to Arbor and the interests of its stockholders. Arbor's Board of Directors did not request a fairness opinion in connection with the Agreement. According to Arbor, the Company and Laizhou did not have any preexisting relationship prior to the Agreement. Prior to the Agreement, none of Arbor's stockholders held shares of Laizhou nor did any of the stockholders of Laizhou hold shares of Arbor. Pursuant to the Agreement, Mr. Costas Takkas resigned as the President and Chief Executive Officer of Arbor and Mr. Stephen Spoonamore resigned as the Secretary for Arbor. The Board of Directors of Arbor appointed Mr. Dong Chen as President and Ms. Juan Chen as Chief Financial Officer and Secretary. Following the Closing Date of the Agreement and subject to compliance with Rule 14f-1 of the Securities Exchange Act of 1934, as amended, the Board of Directors shall be expanded to add three additional members, to bring the total of directors to five. At Sept. 30, 2004. Arbor, Inc.'s total stockholders' equity deficit tops $172,437. ARCHIBALD CANDY: Sells Fannie May/Fanny Farmer to Alpine for $39M ----------------------------------------------------------------- Archibald Candy Corporation has agreed to sell selected assets of its Fannie May/Fanny Farmer businesses to Alpine Confections, Inc. for a cash sale price of approximately $38.9 million. The agreement is the culmination of a Section 363 bankruptcy sale process that concluded with an auction on Thursday, April 1. The transaction, approved by the presiding bankruptcy judge, Pamela S. Hollis, is expected to close within several weeks. Under the agreement, Alpine has agreed to purchase selected assets, including the Fannie May and Fanny Farmer brands, intellectual property and 31 company-owned retail stores. Jim Ross, Archibald's Chief Restructuring Officer, said, "We are very pleased with the outcome of the bankruptcy auction, both in terms of the number of bidders and the high degree of interest shown in the Fannie May and Fannie Farmer assets. Our financial advisor, Mike Levy and his team from Paragon Capital Partners, LLC, did an outstanding job in soliciting competing bids and orchestrating a spirited auction. We continue to work hard to generate the maximum amount of proceeds from the sale of Archibald's assets, in order to get the best possible outcome for our creditors." Alpine Confections is a leading candy producer with four state-of- the-art production facilities in the U.S. and Canada. Founded in Alpine, Utah, the company produces and licenses well-known brands of fine candies, including Maxfield's, Mrs. Fields, Harry London, Hallmark Chocolatier, Dolce d'Or and Botticelli. In connection with its preliminary bid in January, Alpine Confections received an interim license to manufacture Fannie May candy, and it has been distributing Fannie May product since mid- February through third-party retailers such as supermarkets and drug store chains and on the Fannie May web site. ARMSTRONG HLDGS: Directors Van Campbell & John Krol Leave Board --------------------------------------------------------------- Armstrong Holdings, Inc. (OTC Bulletin Board: ACKHQ) announced that Van C. Campbell and John A. Krol retired from its Board of Directors. Mr. Campbell served on Armstrong's board since 1991, and Mr. Krol since 1998. "Van and Jack have made tremendous contributions to Armstrong over the years of their service," said Chairman and CEO Michael D. Lockhart. "We wish them the best upon their retirement from the Armstrong Board." 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/ BLUE DOLPHIN: Auditors Express Going Concern Uncertainty -------------------------------------------------------- Blue Dolphin Energy Company (Nasdaq: BDCO) announced that the audit report on its financial statements for the year ended December 31, 2003, filed on March 30, 2004 with the Securities and Exchange Commission in the Company's Annual Report on Form 10-KSB, was modified for a going concern uncertainty by its independent auditors. This announcement is made in compliance with the new Nasdaq Rule 4350 (b), which requires separate disclosure of receipt of an audit opinion that contains a going concern modification. This does not reflect any change or amendment to the financial statements filed on March 30, 2004. There was no change to the auditor's opinion from prior years' audits. The Company's plans for 2004 to address the going concern issue and associated risks are described further in the Management's Discussion and Analysis section of the Form 10-KSB, in Note 2 to the 2003 financial statements and elsewhere in the Form 10-KSB. Blue Dolphin Energy Company is engaged in the gathering and transportation of natural gas and condensate, and the acquisition and development of oil and gas properties. Questions should be directed to Haavard Strommen, Manager of Finance, at the Company's offices in Houston, Texas, 713-227-7660. For further information see our Home Page at http://www.blue-dolphin.com/ BROWN JORDAN: S&P Places Junk Credit & Debt Ratings on Watch Pos. ----------------------------------------------------------------- Standard & Poor's Ratings Services placed its 'CC' corporate credit and 'C' subordinated debt ratings for furniture manufacturer Brown Jordan International Inc. on CreditWatch with positive implications. At the same time, Standard & Poor's withdrew its 'CC' senior secured debt rating on the company. Total debt outstanding as of Sept. 26, 2003, was $255.4 million. "The CreditWatch listing reflects Brown Jordan's recent announcement that it had refinanced its bank debt with a $90 million, asset-based revolving credit facility and a $135 million second-lien term loan," said Standard & Poor's credit analyst Martin S. Kounitz. "Proceeds of the refinancing were used to fully repay its existing bank debt. The transaction has improved the company's liquidity position. Brown Jordan also announced that it had recently made its Feb. 15, 2004, interest payment on its 12.75% senior subordinated notes maturing 2007." Standard & Poor's will resolve the CreditWatch listing after it meets with the Pompano Beach, Fla.-based company's management and reviews its operating and financial strategies, as well as details of the new secured credit facilities. Any upgrade, however, would be limited by Brown Jordan's well-below-average business risk profile and high debt leverage. Brown Jordan is a designer, manufacturer, and distributor of casual indoor and outdoor furniture, chairs, and ready-to-assemble products for residential and commercial use. CASINO WINDSOR: Closes For Now Pending Labor Dispute Resolution --------------------------------------------------------------- Casino Windsor temporarily closed its doors to the public at 6 p.m. on Friday, April 2, 2004 due to a labor dispute. Casino Windsor's unionized workers have chosen to strike at 12:01 am on Saturday, April 3. As a result, Casino Windsor closed for business until an agreement can be reached and subsequently ratified. Casino Windsor employs 3,000 unionized workers represented by the Canadian Auto Workers, Local 444. Kevin Laforet, Casino Windsor's President and CEO said, "Despite our best efforts to reach a fair and workable agreement, we unfortunately find ourselves in this position of having to temporarily close the facility. We sincerely apologize to our many loyal customers for the inconvenience this labor dispute and closure may cause." News of Casino Windsor's reopening will be made available with updates on its website http://www.casinowindsor.com,and through additional news releases and advertising. CENTERPOINT ENERGY: Hosting 1st Quarter 2004 Webcast on April 22 ---------------------------------------------------------------- CenterPoint Energy, Inc. (NYSE: CNP) will host a live webcast of its conference call to present its first quarter 2004 results on Thursday, April 22, 2004 at 10:30 a.m. Central time / 11:30 a.m. Eastern time. What: CenterPoint Energy First Quarter 2004 Earnings Conference Call Webcast When: Thursday, April 22, 2004 at 10:30 a.m. Central time / 11:30 a.m. Eastern time Where: http://www.CenterPointEnergy.com/investors/events/ Click the link, "CenterPoint Energy, Inc. First Quarter 2004 Earnings Conference Call" How: Live over the Internet -- Simply log on to the web at the address above. Contact: Marianne Paulsen (713) 207-6500 The webcast will be archived at http://www.centerpointenergy.com/ CenterPoint Energy, Inc. (Fitch, BB+ Preferred Securities and Zero-Premium Exchange Notes' Ratings, Negative), headquartered in Houston, Texas, is a domestic energy delivery company that includes electric transmission and distribution, natural gas distribution and sales, interstate pipeline and gathering operations, and more than 14,000 megawatts of power generation in Texas, of which nearly 3,000 megawatts are currently in mothball status. The company serves nearly five million customers primarily in Arkansas, Louisiana, Minnesota, Mississippi, Oklahoma, and Texas. Assets total $21 billion. With more than 11,000 employees, CenterPoint Energy and its predecessor companies have been in business for more than 130 years. Visit http://www.CenterPointEnergy.com/for more information. CHARTER COMMS: S&P Rates Bank Loan & Second-Lien Notes at Low-Bs ---------------------------------------------------------------- Standard & Poor's assigned its 'B' bank loan rating and a recovery rating of '1' to the amended and restated $6.5 billion senior secured credit facilities of Charter Communications Operating LLC. At the same time, a 'B-' rating and a recovery rating of '1' were assigned to the proposed $1.5 billion senior second-lien notes due 2014, being offered under Rule 144A with registration rights by Charter Communications Operating LLC and Charter Communications Operating Capital Corp. The recovery rating of '1' denotes a high expectation of full recovery of principal in the event of a default or bankruptcy. The issuers are indirect subsidiaries of cable TV system operator Charter Communications Inc. (Charter; CCC+/Developing/--) and are analyzed on a consolidated basis with that entity. The new ratings have been assigned based on a preliminary term sheet and a draft offering memorandum, and could be subject to change based on a review of final document terms. Notching of the proposed bank facility and notes are dependent on the issue amounts remaining at or below the proposed levels. Proceeds from the notes, together with about $5.1 billion in borrowings under the amended credit facilities, will be used to repay the roughly $2.4 billion aggregate outstanding amount under the senior secured credit facilities of Charter subsidiaries CC VI Operating Co. LLC, Falcon Cable Communications LLC, and CC VIII Operating LLC. The ratings on the CC VI and CC VIII facilities will be withdrawn if the proposed financing is completed. The Falcon facility is unrated. The existing ratings on Charter and all related entities were affirmed. The outlook is developing. "If Charter successfully completes the proposed transactions, the outlook would be revised to positive based on improvement in the financial profile from a more than $6 billion reduction in debt maturities through 2008 that will result from the refinancing," said Standard & Poor's credit analyst Eric Geil. "If the company does not complete the proposed offerings, the outlook will be revised to negative because of rising pressure from upcoming bank debt amortization and tightening covenants." The ratings on Charter continue to reflect high financial risk from elevated leverage due to acquisition- and capital spending- related debt, and uncertain intermediate-term likelihood of meaningful free cash flow generation. The company also faces considerable operating challenges from weak video subscriber trends and its limited ability to raise prices because of intense satellite TV competition. These factors are partly mitigated by a good business risk profile from Charter's position as the dominant provider of pay TV services in its markets, respectable EBITDA margins, strong growth in high-speed data services, opportunities for increased cash flow from other advanced digital services, scale benefits from a large subscriber base totaling roughly 6.2 million, and healthy system asset values. CINEMARK: Reports Early Settlement of Sr. Debt Cash Tender Offer ---------------------------------------------------------------- Cinemark USA, Inc.'s consummation of its previously announced recapitalization and that it has accepted for purchase and payment (Early Settlement), all of the approximately $94.1 million of the $105 million outstanding principal amount of the 8 1/2% Series B Senior Subordinated Notes due 2008 that were validly tendered prior to 5:00 p.m., New York time, on March 25, 2004, and not validly withdrawn pursuant to its previously announced tender offer and consent solicitation. Payment for the Notes pursuant to the Early Settlement has been made Friday, April 2. Holders of Notes who tendered their Notes on or prior to the Consent Date will receive the total consideration equal to 104.5% of the principal amount of the Notes validly tendered plus accrued and unpaid interest up through, but not including, the Early Settlement Date. The previously announced supplemental indenture, which became operative as of the date of the Early Settlement Date, which eliminates substantially all of the restrictive covenants, certain repurchase rights and certain events of default and related provisions contained in the indenture. The tender offer is scheduled to expire at 5:00 p.m., New York time, on April 13, 2004, unless extended. Holders of Notes who tender their Notes after the Consent Date but on or prior to the Expiration Date, will receive, promptly after acceptance by the Company, 101.5% of the principal amount of the Notes validly tendered plus accrued and unpaid interest up to, but not including, the Expiration Date. Lehman Brothers Inc. and Goldman, Sachs & Co. are the Dealer Managers and Solicitation Agents for the tender offer and consent solicitation. Questions regarding the tender offer should be directed to Lehman Brothers Inc. at 212-528-7581 or 800-438-3242 (Attention: The Liability Management Group at Lehman). Requests for assistance or additional sets of the offer materials may be directed to D.F. King & Co., Inc., the Information Agent and Tender Agent for the tender offer and solicitation, at 888-567- 1626. * * * As reported in the Troubled Company Reporter's March 29, 2004 edition, Standard & Poor's Ratings Services assigned a 'BB-' rating and a recovery rating of '1' to Cinemark USA Inc.'s proposed $370 million senior secured bank facility, indicating high expectations for a full recovery of principal in a default scenario. In addition, Standard & Poor's affirmed its 'B+' corporate credit rating on Cinemark USA. At the same time, Standard & Poor's assigned a 'B+' corporate credit rating to parent holding company, Cinemark Inc. Both companies are analyzed on a consolidated basis. Standard & Poor's also assigned a 'B-' rating to the proposed Rule 144A $360 million senior discount notes due 2014 to be issued by Cinemark Inc. The outlook is negative. COMM 2000-FL3: Fitch Downgrades & Places Ratings on Watch Negative ------------------------------------------------------------------ Fitch Ratings downgrades the following classes of COMM 2000-FL3: --$3.7 million class K-SR to 'B' from 'BBB'; --$1.9 million class L-SR to 'B-' from 'BBB-'. Fitch downgrades and places on Rating Watch Negative the following class: --$28.8 million class D to 'BB-' from 'BB'. Fitch places the following class on Rating Watch Negative: --$72.7 million class C 'A'. Fitch affirms the following classes: --$9.6 million class K-QA 'BB+'; --$3.4 million class L-QA 'BB'. Fitch does not rate the $2.3 million class K-WC. The downgrades on class K-SR and L-SR are due to Fitch's continuing concerns with the low occupancy and weak market conditions associated with Sunnyvale Research. The downgrade and Rating Watch Negative placement are due to the deteriorating performance and refinance risk of the Whitehall Conference Center and Sunnyvale Research loans. Ten Hanover Square, the largest loan in the transaction, with a balance of $126.5 million, paid off earlier this month. Although the repayment of the loan significantly increased the credit support level of class C, Fitch remains concerned with all three remaining loans. Whitehall Conference Center (29.6% of the pool) is a hotel and conference facility located in Northern Virginia. Occupancy continues to remain low, at approximately 31% as of Dec. 31, 2003. Whitehall Conference Center, now known as the National Conference Center, directly competes with a nearby conference center that features two golf courses and other upscale amenities. Sunnyvale Research (14.2%, $111 loan per square foot [psf]) is secured by a four-building office complex located in Sunnyvale, California, containing approximately 215,481 sf. Occupancy decreased to approximately 53% as of Dec. 31, 2003, from 100% at issuance. The vacancy rate in the San Jose office market was approximately 21% as of December 2003. Occupancy has remained low since Mitsubishi vacated its space upon lease expiration in July 2003. The borrower reports that it could take over a year to lease up the space. The Queens Atrium (32%) is a mixed-use property, totaling 1 million sf, and is located in the Long Island City section of Queens, New York. Occupancy has decreased to 67% as of Dec. 31, 2003, from 97% at issuance. According to the servicer, the borrower has signed a fifteen-year lease with the NYC School Construction Authority for 103,382 sf at a rate of $18 psf. In addition, there have reportedly been negotiations with another prospective tenant for two additional floors. The classes will remain on Rating Watch pending receipt of leasing and/or financial information on all loans. The transaction has a rake structure. The Queens Atrium and Whitehall Conference Center loans have C notes outside the trust. As of the March 2004 distribution date, the Trust Mortgage Asset's total principal balance has been reduced by 92% to $169 million from $1.2 billion at origination, primarily due to the paydown of seven loans. Fitch will continue to monitor this transaction, as surveillance is ongoing. COMMSCOPE INC: Redeeming 4% Convertible Sub. Notes on April 26 -------------------------------------------------------------- CommScope, Inc. (NYSE: CTV) has recently issued a notice of redemption for all of its outstanding 4% convertible subordinated notes due 2006. As of March 31, 2004, there was approximately $69.6 million aggregate principal amount of these notes outstanding. The notes will be redeemed on April 26, 2004, at a price of 101.7143% of the principal amount, plus accrued and unpaid interest to, but excluding, the redemption date. CommScope will use a portion of the proceeds of its recently completed private placement of $250 million aggregate principal amount of 1% convertible senior subordinated debentures due 2024 to redeem the 4% notes. The Company also used proceeds from the private placement to repurchase approximately $102.9 million aggregate principal amount of the 4% notes in privately negotiated transactions and to repay $25 million of outstanding revolving credit loans under our senior secured credit facility. Withdrawal of Avaya Demand Registration In addition, Avaya informed CommScope that it has sold approximately 1.8 million shares of CommScope common stock in a private transaction. Avaya acquired these shares from CommScope as part of the purchase price for the Connectivity Solutions business, which closed January 31, 2004. As a result of this sale, Avaya withdrew its demand for registration of those shares. About CommScope CommScope (NYSE: CTV) (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 (HFC) 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. COVANTA: Wants Court to Expunge Ex-Employees' Improper Claims ------------------------------------------------------------- James L. Bromley, Esq., at Cleary, Gottlieb, Steen & Hamilton, in New York, relates that Paul Weaver and Patrick J. Sullivan, former executives of the Covanta Energy Debtors, were parties to prepetition employment agreements that provided benefits to highly paid executives like them. After their termination, the Former Executives were offered the opportunity to participate in the Court-approved severance plan, but instead they chose to pursue their claims on the basis of the Employment Agreements that are not being assumed. The Former Executives filed these claims: Claimant Claim No. Amount -------- --------- ------ Paul Weaver 2155 $486,280 Paul Weaver 2157 486,280 Paul Weaver 2158 486,280 Paul Weaver 2160 486,280 Paul Weaver 3821 563,080 Paul Weaver 3822 563,080 Paul Weaver 3823 563,080 Paul Weaver 3824 563,080 Patrick J. Sullivan 2403 1,024,000 Courts have held that claims for termination payments for highly paid executives under prepetition agreements are not afforded administrative expense status under Section 503(b) of the Bankruptcy Code. Accordingly, the Debtors ask the Court to disallow and expunge in full each of the Improper Administrative Claims. Sullivan Responds Debtor Ogden Services Corporation employed Patrick Sullivan since 1975. On November 1, 1996, Mr. Sullivan served as Ogden's Vice President and entered into a prepetition employment agreement with the Debtors. Mr. Sullivan was terminated from his employment on July 18, 2003. Ogden and Mr. Sullivan had the right to terminate the Employment Agreement upon 60 days' written notice. If Ogden terminated the Employment Agreement, it was obligated to make a lump sum cash severance payment to Mr. Sullivan in an amount equal to Mr. Sullivan's annual salary for the year in which Mr. Sullivan was terminated, and annual bonus for the year prior to the termination, divided by 12, multiplied by 36. As of July 18, 2003, Mr. Sullivan's severance payment due amounted to $825,300. In August 2002, Mr. Sullivan filed a proof of claim seeking the $825,300 Severance Payment as well as amounts for unpaid profit sharing and pension plan contributions for $146,000 and an unpaid prepetition bonus for $68,000. The Debtors objected to the Sullivan Claim. Mr. Sullivan asserts that the Severance Payment is entitled to administrative status. As to the remaining amounts, Mr. Sullivan seeks a priority claim for $4,650 for his unpaid pension and profit sharing contributions pursuant to Section 507(a)(4) of the Bankruptcy Code. Mr. Sullivan agrees that the remaining $141,350 constitutes a general unsecured claim. The portion of the Sullivan Claim pertaining to the prepetition bonus is withdrawn. Bonnie L. Pollack, Esq., at Angel & Frankel, in New York, contends that by terminating Mr. Sullivan without cause, the Debtors are required to pay $825,300 in severance. Although Ogden established two Court-approved severance plans for its employees during the administration of its case, Mr. Sullivan was ineligible to participate in either plan. Mr. Pollack relates that In the Matter of Straus-Duparquet, Inc., 386 F.2D F.2d 649(2d Cir. 1967), a severance payment under an employment agreement for an employee who is terminated postpetition constitutes an administrative expense claim. Mr. Pollack also maintains that Mr. Sullivan is entitled to payment on a quantum meruit basis for the benefit that his postpetition services conferred on the Debtors. The Debtors employed Mr. Sullivan for 28 years as a long-term, valued employee. The Debtors required Mr. Sullivan's services, kept extending his termination of employment and Mr. Sullivan worked hard with the knowledge that upon termination, he would get the severance payment to which he was entitled under the Employment Agreement. Denying Mr. Sullivan the terms of his Employment Agreement, especially since he was not made a party to any of the Court- approved severance plans, would be patently inequitable. Mr. Pollack adds that administrative expense priority is available either if the Debtors assume the Employment Agreement or if the estate received benefit under the contract. Accordingly, Mr. Sullivan asks Judge Blackshear to: (a) overrule the Debtors' objection to his claim; (b) grant him an administrative expense claim for $825,300; and (c) require the Debtors to pay the Administrative Claim without delay. Debtors Insist Sullivan is Not Entitled to Claim James L. Bromley, Esq., at Cleary, Gottlieb, Steen & Hamilton in New York, argues that Mr. Sullivan's Claim is not entitled to administrative priority. Mr. Bromley points out that Mr. Sullivan relies on Second Circuit decisions under the Bankruptcy Act that are over 20 years old and do not apply to the facts of Ogden's case, as well as non-binding decisions by other courts in the Second Circuit that are factually and legally distinguishable. Mr. Sullivan has failed to carry his burden of demonstrating that he has conferred an "actual and necessary" benefit of $825,000 to Ogden's estate entitling him to such amount as an administrative expense or in quantum meruit. In the final analysis, Mr. Bromley says, Mr. Sullivan is unable to point to a single case that would permit the Court to require Ogden to pay him a three-times salary plus bonus liquidated damages payment as an administrative expense claim. "Clearly, the law and equities in this case demand that the Court deny Sullivan's request," Mr. Bromley asserts. Accordingly, the Debtors ask the Court to: (a) deny Mr. Sullivan's request; (b) determine that Mr. Sullivan's Claim constitutes non-priority unsecured prepetition claim except with respect to his $3,718 priority claim; and (c) deny Mr. Sullivan's Claim to the extent that it exceeds the limitation imposed by Section 502(b)(7). Headquartered in Fairfield, New Jersey, Covanta Energy Corporation -- http://www.covantaenergy.com/-- is a publicly traded holding company whose subsidiaries develop, own or operate power generation facilities and water and wastewater facilities in the United States and abroad. The Company filed for Chapter 11 protection on April 1, 2002 (Bankr. S.D.N.Y. Case No. 02-40826). Deborah M. Buell, Esq., and James L. Bromley, Esq., at Cleary, Gottlieb, Steen & Hamilton represent the Debtors in their restructuring efforts. When the Debtors filed for protection from its creditors, they listed $3,280,378,000 in assets and $3,031,462,000 in liabilities. (Covanta Bankruptcy News, Issue No. 52; Bankruptcy Creditors' Service, Inc., 215/945-7000) CVF TECH: Stockholders' Deficit Widens to $3.7M at December 2003 ---------------------------------------------------------------- CVF Technologies Corporation (Amex: CNV) a holding company with a portfolio of environmentally friendly technology companies with significant market potential, reported financial results for the fiscal year 2003. Sales for 2003 were $8,704,069 or an increase of 47% compared to sales of $5,923,513 for 2002. This increase was principally due to the sales increase at Biorem of 128%. The company reported an 18% reduction in its net loss from continuing operations (excluding expense related to stock options) to $1,790,916 ($0.20 per share) for the fiscal year 2003 compared to a net loss from continuing operations of $2,184,115 ($0.24 per share loss) in the fiscal year 2002. CVF's gross margins increased to 41.1% in 2003 from 34.9% in 2002 as a result of increased margins at SRE Controls. Biorem Technologies had record sales once again in 2003 of $6,189,488 and net profitability totaling $1,333,037. Currently Biorem has signed purchase orders and letters of intent for orders totaling approximately $9,000,000. Gemprint(TM) had record sales in 2003 which were up 16% and continued to operate on its own cash flow as it did in 2002. As previously indicated, over the past year and a half CVF management has adopted very aggressive cost and expenditure controls and monitoring policy both at its headquarters as well as its portfolio companies. These efforts continue to yield reduction in expenses as is evidenced by the continued decline in CVF's net operating loss from continuing operations. CVF's current financial statements are prepared on a going concern basis as they have been over the last three years, in particular as they relate to the Company's ability to continue to maintain the value of those holdings that are still not profitable. This applies principally to SRE Controls, which was the only one of CVF's companies to experience a significant loss ($965,000) in 2003 and is currently being funded by a third party investor. SRE is working to achieve profitability in 2004. In the past, CVF has addressed its cash flow requirements through the receipt of interest and dividend payments from its subsidiaries, as well as obtaining investments in the form of debt and or equity directly into CVF. It has also selectively sold a portion of its investments as they appreciated in value. CVF expects to continue to fund its operating needs in the future in the same way as it has in the past. CVF is also exploring ways to present its financial statements on a non- consolidated basis so that the market value of CVF's holdings can be reflected on its balance sheet. This would create a measurable net asset value per share for CVF, allowing an investor in CVF to compare that number to the current trading price. Draft non-consolidated statements indicate that CVF is currently trading at a significant discount to its net asset value. CVF will issue additional press releases on this topic in the coming weeks as it examines the legal and accounting options that will be required to be followed in order to achieve this result. RECENT ACHIEVEMENTS OF PORTFOLIO COMPANIES Biorem - (69% owned by CVF) sales revenues for 2003 were at a record $6,189,500 and net income of $1,333,000. This included the results of expansion of sales activities into the US Southwest with new sales in Texas and California. The installation of a $3 million biofilter in the food processing industry was completed in 2003 and contracts have been initiated for a second system of the same magnitude in 2004. Two new sales managers were hired in 2003 to continue concentrated efforts in new business development in the municipal market. The appointment of an industrial business manager in 2004 will provide concerted effort in continued growth in the agri-food and forest product industry as well as the hydrocarbon and surface coatings industries. Biorem has been working closely with leading municipal consulting engineers on pre-selection of large biofilter systems at three locations for inclusion in the construction of new municipal treatment facilities in Virginia and Georgia. Gemprint(TM) - (65% owned by CVF) continues to focus its efforts on establishing relationships with the major diamond wholesalers in New York City, where it has sold its custom designed diamond inventory control systems for prices ranging from $30-$40 thousand each. It also continues to build its relationships in Europe (DNA of Diamonds Program), and Canada (Canadian Certified Diamond Program). The need for diamond identification continues to be driven by (1) the need to protect the identity of branded stones, (2) the need to distinguish between synthetic diamond look a likes and genuine diamonds, (3) the need to identify "conflict" diamonds and (4) lost or stolen diamonds. Gemprint is also actively seeking a strategic partner from the diamond industry to help propel Gemprint(TM) as the world standard for diamond identification. SRE Controls - (37% owned by CVF) extended the range of OEM customers served in 2003 and expanded its dealer network as well as identifying a significant number of target aftermarket accounts. Also, SRE is developing working relationships with certain electric vehicle manufacturers to supply electrical subsystems to expand its product offering in the marketplace. At the end of 2003 SRE hired a stronger sales force, expanded marketing activities and expanded engineering staff, all intended to increase sales revenue, quality, new technology and customer appeal. All these activities are expected to have a positive impact on future financial results. Ecoval - (85% owned by CVF) expanded its product line with the addition of a moss cleaner. Patents have also been granted in North America on an improved herbicidal composition and insecticidal composition. Ecoval also developed an insecticide formulation that is exempt from US registration because it is composed of ingredients that the EPA has determined pose minimal risk to the public. In 2004, Ecoval will continue to generate sales revenues by establishing key distributor relationships in North America, establishing potential licensees to generate royalty income and by working to expand sales to its current customer base. Jeff Dreben, President and CEO of CVF stated that "CVF results in 2003 showed significant revenue growth and a continued reduction in our operating losses. In particular, Biorem's 128% increase in revenue to $6 million and $1.3 million profit was exceptional. We expect 2004 to be another record year for Biorem and that our other portfolio companies will continue to make progress." CVF Technologies Corporation is headquartered in Williamsville, New York. CVF is a technology development company, whose principal business is sourcing, funding and managing emerging pre-public technology companies with significant market potential focused principally in the environmental sector. Founded in 1989, CVF's holdings include five private companies involved in information technology and environmental products and services. * * * LIQUIDITY AND CAPITAL RESOURCES In its Form 10-KSB for the fiscal year ended December 31, 2003, CVF Technologies Corporation states: "Total Stockholders' equity as of December 31, 2003 was in a deficit position of $3,732,580 compared to a deficit of $966,775 as of December 31, 2002. The net decrease is primarily attributable to the net loss of $2,286,606 incurred in 2003. "The current ratio of CVF as at December 31, 2003 is .55 to 1, which has increased from .51 to 1 as at December 31, 2002. "CVF management anticipates that over the next twelve month period CVF should have sufficient cash from various sources to sustain itself. Between cash on hand, the issuance of new securities, and the sales of a portion of its holdings in certain investee companies, the Company expects to have enough cash to fund itself and certain of its investee companies that are currently not profitable. Additionally, CVF has limited outside debt and a line of credit could be sought. The Company has been successful in obtaining $ 1 million Canadian in financing through an investment in one of its holdings in September 2003, and in 2003 received $961,000 as repayment of back interest and dividends from one of its investee companies. "Over the past two and a half years CVF has undertaken many initiatives to lower the parent company's expenses. These initiatives have included lowering the head count of its office staff as well as the elimination of one executive position. The use of consultants has been significantly reduced except those consultants who have been satisfied to receive their fee in CVF common shares. Travel and entertainment has been significantly reduced over the last year and will continue at the reduced level going forward. CVF management has adopted a very aggressive cost and expenditure controls and monitoring policy. Subsequent to December 31, 2003, CVF and the holder of CVF's Series B Convertible Preferred Stock entered into a transaction whereby the holder exchanged its Series B Convertible Preferred Stock with a stated value of $3,385,000 and accrued dividends of approximately $673,600 for 1,000,000 shares of CVF's common stock and a new Series C 6% Convertible Preferred Stock with a stated value of $1,000,000, convertible into common stock at $1 per share. The Series C Preferred and all accrued dividends thereon will be subject to mandatory redemption on February 27, 2006; however, CVF's obligation to redeem will be limited to cash available to it at that time in excess of one year's prospective working capital. The Company also issued to the former Series B holder a three-year warrant to purchase 100,000 shares of CVF's common stock at an exercise price of $0.35 per share. "The Company no longer anticipates having to fund Gemprint or Biorem as both are currently operating on positive cash flow, although no assurances can be given that this trend will continue. "As at December 31, 2003, CVF's cash balance was $225,535 which is an increase of $7,532 compared to December 31, 2002. The primary source of cash for the Company is expected to be from sale of a portion of its investments in its subsidiaries or from CVF issuing additional securities. The company is pursuing opportunities to raise funds from potential investors in CVF. In addition, certain subsidiaries are producing a positive cash flow and will be able to supplement other cash requirements of the Company. If the above mentioned liquidity events do not occur, the Company estimates that it could run out of operating cash in the second quarter of 2004, if other sources of cash are not available. The Company will also continue to assist its investee companies in their efforts to obtain outside financing in order to fund their growth and development of their business plans. Certain of the Company's financial obligations included in current liabilities related to items that will not be paid in the near term. The Company will carefully manage its cash payments on such obligations." DELCO REMY: S&P Revises Outlook Citing Stable Credit Measures ------------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on Anderson, Indiana-based Delco Remy International Inc. to stable from negative. At the same time, Standard & Poor's affirmed its 'B' corporate credit rating on Delco Remy and its 'CCC+' subordinated debt ratings. "The outlook revision reflects the stabilization of Delco Remy's credit protection measures, which is the result of management's recent restructuring efforts, operating improvements, and proposed recapitalization that will improve financial flexibility," said Standard & Poor's credit analyst Nancy Messer. Standard & Poor's also affirmed its 'B+' rating on Delco Remy's secured credit facility, which will be sized at $120 million in the proposed transaction and which is proposed to expire in June 2007. Standard & Poor's assigned its 'B-' rating to Delco Remy's proposed $125 million floating rate second-priority secured notes due 2009 and its 'CCC+' rating to Delco Remy's proposed $150 million senior subordinated notes due 2012. In addition, Standard & Poor's lowered the rating on the company's $145 million senior unsecured notes to 'CCC+' from 'B-', because of the deterioration of recovery prospects for these debt holders as a result of the proposed revised capital structure and recent noncash charges. Proceeds from the proposed transaction, including the proposed second-lien notes and senior subordinated notes, will be used to repay the existing $60 million term loan, reduce revolving credit facility borrowings by $52 million, and repay $140 million senior subordinated notes due 2006. Delco Remy's pro forma debt will total about $650 million at closing of the transaction. Upside rating potential is limited by the company's high debt leverage in combination with challenging end-markets and significant near-term cash requirements. Downside rating action is limited by the company's improved financial flexibility and Standard & Poor's expectation that management's efforts to rationalize the company's operations will boost free cash flow and support debt reduction in the next two years. DII IND.: Court Clears Houlihan's Retention as Financial Adviser ---------------------------------------------------------------- DII Industries, LLC and its debtor-affiliates sought and obtained Court approval to employ Houlihan Lokey Howard & Zukin Financial Advisors, Inc. as their financial advisors in connection with their Chapter 11 cases consistent with the terms and conditions of a Retention Agreement, nunc pro tunc to the Petition Date. Houlihan Lokey is a nationally recognized investment banking and financial advisory firm with nine offices worldwide and with more than 300 professionals. Houlihan Lokey is widely recognized for its expertise in providing valuation, financial opinions and other financial advisory services to large and complex business entities operating in the engineering and construction business. On June 13, 2003, Houlihan Lokey was retained by Halliburton Company to assist the Debtors' management with their preparation of a liquidation analysis for use in connection with the confirmation of the Plan and generally in their Chapter 11 Cases. Since the Petition Date, all of Houlihan Lokey's services in connection with the preparation of a liquidation analysis are for the Debtors' benefit. Houlihan Lokey has received full payment from Halliburton for all prepetition fees and expenses in connection with the firm's services. Houlihan Lokey is not a prepetition creditor of the Debtors. Pursuant to the Retention Agreement, Houlihan Lokey will render these services to the Debtors throughout the course of their Chapter 11 cases: (a) preparation of a liquidation analysis to be used by the Debtors in connection with the confirmation of their Plan and generally in their Reorganization Cases; (b) attending, participating and rendering expert testimony as required by the Debtors before the Court and, possibly, at depositions taken during the Reorganization Cases, consistent with the scope of professional services set forth in the Retention Agreement; (c) rendering other services indirectly relating to the subject matter of the Retention Agreement, including the production of documents and responding to interrogatories; and (d) such other advisory services as may be requested by the Debtors from time to time. Houlihan Lokey will be compensated for its services on an hourly basis. Senior Managing Director $700 Managing Director 650 Director 500 Senior Vice President 450 Vice President 400 Associate 300 Financial Analyst 250 Houlihan Lokey will also bill the Debtors for reimbursement of all reasonable and necessary out-of-pocket expenses incurred in connection with its employment, including the reasonable legal fees and expenses of its counsel. Headquartered in Houston, Texas, Kellogg, Brown & Root is engaged in the engineering and construction business, providing a wide range of services to energy and industrial customers and government entities in over 100 countries. DII has no business operations. The Company filed for chapter 11 protection on December 16, 2003 (Bankr. W.D. Pa. Case No. 02-12152). Jeffrey N. Rich, Esq., Michael G. Zanic, Esq., and Eric T. Moser, Esq., at Kirkpatrick & Lockhart LLP, represent the Debtors in their restructuring efforts. (DII & KBR Bankruptcy News, Issue No. 9; Bankruptcy Creditors' Service, Inc., 215/945-7000) DOMAN INDUSTRIES: International Forest Nixes Acquisition Talks -------------------------------------------------------------- Doman Industries Limited has been advised by International Forest Products Limited that it has decided to withdraw from its discussions with Doman regarding the possible acquisition of Doman or the assets of certain Doman subsidiaries. Doman understands that Interfor concluded that it was not going to be able to reach an agreement on a transaction that meets its financial criteria and, at the same time, is acceptable to Doman's creditors. Although Interfor has withdrawn its interest, Doman received earlier on April 2, a new letter of intent from Ableco Finance LLC, an entity related to Cerberus Capital Management, L.P., which constitutes an alternate restructuring proposal for Doman's secured and unsecured indebtedness. Doman intends to review this proposal, together with other expressions of intent. Doman will at the same time seek to adjourn the application made on April 1, by certain of its unsecured noteholders to move forward with a plan of arrangement approved by those unsecured noteholders, pending a continuing review of all possible restructuring alternatives with its affected stakeholders. Doman also announces that KPMG Inc., the Monitor appointed by the Supreme Court of British Columbia under the Companies Creditors Arrangement Act has filed with the Court its report for the period from March 2, 2004, to March 31, 2004. The Monitor's report, a copy of which may be obtained by accessing the Company's Web site - http://www.domans.com/- or the Monitor's Web site - http://www.kpmg.ca/doman/ Doman is an integrated Canadian forest products company and the second largest coastal woodland operator in British Columbia. Principal activities include timber harvesting, reforestation, sawmilling logs into lumber and wood chips, value-added remanufacturing and producing dissolving sulphite pulp and NBSK pulp. All the Company's operations, employees and corporate facilities are located in the coastal region of British Columbia and its products are sold in 30 countries worldwide. DOW CORNING: Breast Implant Case Settlement Takes Effect June 1 --------------------------------------------------------------- U.S. District Court Judge Denise Page Hood set June 1st as the effective settlement date in the Dow Corning breast implant case, finally allowing injured people's claims to be processed. The court-appointed claims administrator says that thousands of letters will go out June 1st and that the first checks should be mailed June 15th. The case started in 1995 when the former breast implant manufacturer filed for bankruptcy in the face of thousands of claims. The details of the company's bankruptcy were confirmed in 1998, but it took several years for the appeals process to die down. There is currently $2.35 billion set aside in a court fund. Implant survivors may receive from $2,000 to $250,000. Details are available to the public at http://www.dcsettlement.com/or by calling 1-864-874-6099. DPL CAPITAL: S&P Cuts Ratings on 3 Related Synthetic Transactions ----------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on three synthetic transactions related to DPL Capital Trust II. The ratings remain on CreditWatch with negative implications, where they were placed March 19, 2004. The CreditWatch placements reflect the lowering of the rating on DPL Capital's $300 million 8.125% trust preferred capital securities. The rating on these securities also remains on CreditWatch with negative implications, where it was placed March 16, 2004. The DPL Capital-related transactions are swap-independent synthetic transactions that are weak-linked to the underlying collateral, DPL Capital's $300 million 8.125% trust preferred capital securities, which are guaranteed by DPL Inc. RATINGS LOWERED AND REMAINING ON CREDITWATCH NEGATIVE Structured Asset Trust Units Repackagings (SATURNS) DLP Capital Security Backed Series 2002-3 $54.55 million callable units series 2002-3 Rating Class To From A units B/Watch Neg B+/Watch Neg B units B/Watch Neg B+/Watch Neg Structured Asset Trust Units Repackagings (SATURNS) Trust 2002-4 $42.5 million DPL Capital security-backed series 2002-4 Rating Class To From A units B/Watch Neg B+/Watch Neg B units B/Watch Neg B+/Watch Neg Structured Asset Trust Unit Repackagings (SATURNS) DLP Capital Security Backed Series 2002-7 $25 million DPL Capital security-backed series 2002-7 Rating Class To From A units B/Watch Neg B+/Watch Neg B units B/Watch Neg B+/Watch Neg EASYLINK: Auditors Maintain Going Concern Qualification at 2003 --------------------------------------------------------------- EasyLink Services Corporation, (NASDAQ: EASY), a leading global provider of services that power the exchange of information between enterprises, their trading communities and their customers, announced that its financial statements for the year ended December 31, 2003, were filed on March 30, 2004 with the Securities and Exchange Commission in the Company's Annual Report on Form 10-K. Revenues for the year ended December 31, 2003 were $101.3 million, with net income for the year of $50.9 million, or $1.44 per share. Net income for the year ended 2003 included a gain of $54.1 million on debt restructuring and settlements. These transactions reflect the extinguishment of $63.0 million of debt principal, $6.5 million of capitalized interest, and $2.4 million of accrued interest, net of deferred debt issuance costs. EasyLink's 2003 debt reduction was a continuation of the Company's ongoing debt restructuring efforts commenced in 2001. These efforts have reduced the principal amount of the Company's debt and capitalized lease obligations from $125.4 million at the end of 2000 to $13.5 million at the end of 2003. The Company ended 2003 with $6.6 million in cash on hand. Importantly, EasyLink achieved its first two consecutive quarters of positive income from operations during the third and fourth quarters of 2003. Notwithstanding the significant improvements in EasyLink's financial condition, results of operations and business over the past three years, the Company has again received a going concern qualification from its auditors. The Company also received a going concern qualification from its auditors for the years ended December 31, 2000, 2001 and 2002. This announcement is made in compliance with the new Nasdaq Rule 4350(b), which requires disclosure of receipt of an audit opinion that contains a going concern qualification. Management is continuing the process of further reducing telecommunications and network-related operating costs while increasing its sales and marketing efforts in pursuit of its strategy to expand EasyLink's position in the information exchange segment of the electronic commerce market by automating more components of our customers' business processes. Thomas Murawski, President and Chief Executive Officer of EasyLink said: "2003 was a milestone year for the Company, achieving two consecutive profitable quarters and approaching breakeven from operations for the full year. Our improved financial condition has allowed us to focus more of our attention on improving the value we bring to our customers relative to our competitors. In addition to establishing what we believe is a measurable quality advantage over our competitors through our ongoing investment in Six-Sigma Quality, our Transaction Management Services distinguish us from companies who continue to offer only messaging services. Our company is stronger than ever and we look forward to helping our customers become more competitive in the years ahead." About EasyLink Services Corporation EasyLink Services Corporation (NASDAQ: EASY), headquartered in Piscataway, New Jersey is a leading global provider of services that power the exchange of information between enterprises, their trading communities, and their customers. EasyLink's networks facilitate transactions that are integral to the movement of money, materials, products, and people in the global economy, such as insurance claims, trade and travel confirmations, purchase orders, invoices, shipping notices and funds transfers, among many others. EasyLink helps more than 20,000 companies, including over 400 of the Global 500, become more competitive by providing the most secure, efficient, reliable, and flexible means of conducting business electronically. Visit http://www.EasyLink.com/for more information. EDISON INTERNATIONAL: Fitch Ups Various Credit Ratings ------------------------------------------------------ Fitch has raised the credit ratings of Edison International (EIX) and its wholly-owned utility operating subsidiary, Southern California Edison as follows: Edison International --Senior unsecured to 'BB' from 'B'; --Trust preferred securities 'B+' from 'CCC'. Southern California Edison --Senior secured debt to 'BBB+' from 'BBB-'; --Senior unsecured debt to 'BBB' from 'BB'; --Preferred securities to 'BBB-' from 'B+'. The notes of Edison Funding Co. have also been raised to 'BB' from 'B'. The Rating Outlook for all EIX, SCE and EF securities is Stable. The credit upgrades reflect sharply improved fundamentals at Southern California Edison and enhanced EIX parent-only holding company liquidity following a $1.17 billion dividend payment in 2003 from its utility and finance subsidiaries. Also, EIX's recently announced financial restructuring plan is consistent with past management statements that Mission Energy Holding Company (MEHC) group will have to work through its financial and operating challenges without further direct financial support from EIX. SCE's rapid financial recovery from the insolvency caused by the energy crisis of 2000-2001 was facilitated by a settlement agreement with the California Public Utilities Commission (CPUC) authorizing recovery of $3.6 billion of deferred power costs. The successful execution of the agreement and the support of the CPUC through unsuccessful court challenges to the settlement, along with the commission's recent settlement with Pacific Gas & Electric, underscore the improved regulatory/legislative environment in California. SCE's current and forecasted credit ratios are consistent with higher credit ratings, but its current ratings are constrained by weak parent/affiliate fundamentals. EF and Edison Capital are subsidiaries of EIX and are not regulated by the CPUC. Edison Capital is the sole shareholder in EF. EF and Edison Capital originate and fund financially oriented, and often tax-advantaged, investments. Together, they have investments worldwide in energy and infrastructure projects, including power generation, electric transmission and distribution, transportation, and telecommunications as well as investments in affordable housing projects located throughout the United States. At Dec. 31, 2003, Edison Capital's total investments were $3.4 billion. Edison Capital receives cash for federal and state tax benefits related to its investments utilized on EIX's tax return and as such its ratings are directly linked with the parent's. Edison Capital's rated debt was issued by EF. Although the EIX rating of 'BB' reflects exposure to ongoing financial stress at MEHC group (EIX's unregulated power generation subsidiary), the ongoing financial and fundamental operating problems at MEHC group are already fully reflected in EIX's credit rating. This view is supported by: 1) the non recourse status of MEHC group debt to EIX; 2) regulatory and corporate ring-fence provisions; 3) the absence of new investment in EIX's recently announced MEHC restructuring plan; and, 4) management focus on the core electric utility and its financial services business, Edison Capital (EC). Importantly, there are material inter-company guarantees or cross defaults among affiliates within the MEHC group, but none between EIX, SCE, and/or EC. Another exposure weighing upon the current ratings is EIX's potential tax liability for prior interest deductions relating to EC's leveraged lease portfolio. The IRS is reportedly reviewing prior years' EIX group tax returns, which may or may not lead to a significant tax assessment at the EIX level. The announcement of management's proposed financial restructuring plan for MEHC group is a constructive development that seeks to address the subsidiary's liquidity issues in 2004 and reduce debt. In December 2003, MEHC subsidiary Mission Energy Holdings International closed on a secured $800 million three-year loan as a bridge-to-asset-sales that is a central component of the MEHC group's restructuring plan. The credit facility is secured by a 65% equity interest in MEHI's assets, a pledge of two inter- company notes totaling $286 million (issued by MEHI to MEC Holdings and EME UK International, LLC), as well as a $499 million inter-company note (from EME Homer City Generation L.P. to Edison Mission Finance Co.) together with guarantees from certain MEHC subsidiaries. Proceeds from the loan were cross streamed to repay $781 million of debt issued by fellow MEHC subsidiary Edison Mission Midwest Holdings which matured in December 2003, allowing EMMH to avoid default, and to repay an MEHI coal and cap-ex facility guaranteed by Edison Mission Energy. In addition, cash on hand from asset sales and other sources were used to inject $550 million of equity into EMMH. Prospective elements of the restructuring plan that management hopes to complete this year are: 1) the potential sale of its international assets; and, 2) debt issuance to refinance maturities later this year at EMMH. Under management's restructuring plan, if successful, MEHC would emerge a much smaller company operating exclusively in the U.S. However, the financial restructuring is subject to substantial execution risk and the recurrence of severe liquidity/financial pressure and, ultimately, MEHC group insolvency, cannot be ruled out, at this juncture. Any meaningful incremental EIX investment to support MEHC's recovery would be a significant negative credit event in Fitch's view that would almost certainly result in a credit downgrade. Fitch's ratings of SCE already incorporate a reasonable worst case scenario in the outcome of its pending general rate case. Furthermore, SCE's ratings are currently constrained. ENCOMPASS: Disbursing Agent Wants Mitigation Claims Disallowed -------------------------------------------------------------- According to the Encompass Services Corp. Debtors' Disbursing Agent, Todd A. Matherne, 12 claims were filed for rent and maintenance charges under Section 502(b)(6) of the Bankruptcy Code resulting from the rejection of an unexpired lease. Under Section 502(b)(6), however, a landlord with a claim for damages resulting from a debtor's breach of a lease has an obligation to attempt to re-let the premises, and any resulting rents must be deducted from the claim. For this reason, Mr. Matherne objects to the 12 claims for failing to account for any mitigation of damages. The 12 Claims are: Claimant Claim No. Claim Amount -------- --------- ------------ Resource Center 2123 $260,338 TC Meridian Tower LLC 2377 674,960 Fullman International 2590 270,720 Jafar Yassai 3357 120,000 KC Company 4276 654,776 Plato Products, Inc. 3947 397,767 Vaughan Street, LLC 4572 909,862 3371 90,000 Calwest Industrial Holdings 4228 163,984 J.R. Sanders Limited 3454 663,383 3453 65,520 Enterprise Fleet Services 3722 41,148 Mr. Matherne asks the Court to: (a) disallow the 12 Claims as they are filed; (b) allow the Claimants 15 days to amend their claims; and (c) disallow the Claim if a Claimant does not establish any attempt at mitigation in its amended proof of claim. Mr. Matherne further asserts that the claim amounts for any Claim demonstrating mitigation should then be reduced to account for mitigation proceeds. Stipulation With Resource Center In full and final settlement of the disputes and claims between the Disbursing Agent and Resource Center, both agreed to these stipulation terms: (a) Claim No. 2123 is allowed as a general unsecured claim for $153,045, with the remainder of the claim disallowed in its entirety; (b) The Debtors and Resource Center exchange mutual releases; (c) The Debtors and Resource Center will not file any action based on any of the released claims; and (d) Resource Center does not have any surviving claim against the Debtors in the Chapter 11 cases. (Encompass Bankruptcy News, Issue No. 24; Bankruptcy Creditors' Service, Inc., 215/945-7000) ENRON CORP: Obtains Court Okay for Eight Settlement Agreements -------------------------------------------------------------- Pursuant to Rule 9019(a) of the Federal Rules of Bankruptcy Procedure, the Enron Corp. Debtors sought and obtained Court approval of eight settlement agreements they entered into separately with: -- CRST Logistics, Inc.; -- Go2Tel.Com; -- Emser Tile LLC; -- R.V.I. Guaranty Co., Ltd. and Continental Insurance Company; -- General Cable Corporation; -- GNS Express; -- Olympic Steel, Inc.; and -- Harte-Hanks Communication Edward A. Smith, Esq., at Cadwalader, Wickersham & Taft, in New York, relates that: (a) Enron Freight Markets Corporation and CRST were parties to one or more prepetition transactions to which certain invoices were issued and certain amounts remain outstanding; (b) Enron Broadband Services LP and Go2Tel.Com were parties to one or more prepetition transactions pursuant to which certain invoices were issued and certain amounts remain outstanding; (c) Enron Freight and Emser were parties to prepetition transactions pursuant to which certain invoices were issued by Enron Freight. Certain amounts of the invoices remain outstanding; (d) ENA is party to two structured credit default swaps with RVI and Continental. As credit support for the Contracts, Enron Corp. issued a warranty agreement. Each of the Contracts has been validly terminated by the Counterparty. According to ENA's books and records, there is a net balance owing to its estate on account of the Contracts; (e) the Debtors and General Cable were parties to various agreements pursuant to which the Debtors provided electric energy as well as, inter alia, management, billing and consulting services to General Cable. The parties have mutual obligations against each other; (f) Enron Freight and GNS were parties to one or more prepetition transactions pursuant to which certain invoices were issued by Enron Freight. According to the Debtors' books and records, there remain certain amounts outstanding with respect to the Contracts; (g) Enron Industrial Markets LLC and Olympic Steel were parties to one or more prepetition transactions pursuant to which certain invoices were issued by EIM. According to the Debtors' books and records, there remain certain amounts outstanding with respect to the Contracts; and (h) Enron Industrial Markets LLC and Harte-Hanks were parties to one or more prepetition transactions for the sale of pulp and paper products pursuant to which certain invoices were issued by EIM. According to the Debtors' books and records, there remain outstanding amounts with respect to the Contracts. After discussions between the Parties, they have agreed to enter into separate Settlement Agreements wherein: (a) CRST will pay to Enron Freight $17,634; (b) Go2Tel.Com will pay to EBS $11,690; (c) Emser will pay to Enron Freight $8,665; (d) RVI and Continental will pay to ENA $3,500,000; (e) all of R.V.I's and Continental's Claims will be irrevocably withdrawn with prejudice; (f) all of General Cable's proofs of claim filed against the Debtors, including Claim No. 9107 for $8,058,420 will be deemed irrevocably withdrawn with prejudice; (g) GNS will pay to Enron Freight $4,687; (h) Olympic Steel will pay to EIM $18,341; (i) Harte-Hanks will pay $865 to EIM; and (j) the Parties will exchange mutual releases of claims related to the Contracts. Mr. Smith contends that the Settlement Agreements are warranted because: (a) they will result in a substantial payment to the Debtors' estates; and (b) they will avoid future disputes and litigations concerning the Contracts as the parties will release one another from claims relating to the Contracts. (Enron Bankruptcy News, Issue No. 103; Bankruptcy Creditors' Service, Inc., 215/945-7000) ENRON CORP: Wooing Court to Expunge R. Harwood's $20 Mill. Claim ---------------------------------------------------------------- Enron Corporation and its debtor-affiliates object to Claim No. 11948 for at least $20,000,000 filed by a putative class represented by Robert I. Harwood, Esq., and ask the Court to disallow and expunge it in its entirety. Melanie Gray, Esq., at Weil, Gotshal & Manges LLP, in New York, relates that the Harwood Claim is premised on a purported class action initiated on October 6, 2000, entitled "In re Azurix Corp. Sec. Litig., Civ. Action No. H-00-3493." The plaintiffs in the Purported Class Action sued Azurix Corporation, Enron Corporation and six of Azurix's and Enron's present and former officers and directors. The plaintiffs allege generally that the defendants violated the Federal Securities Laws causing plaintiffs damage. Ms. Gray informs Judge Gonzalez that on March 21, 2002, the Purported Class Action was dismissed with prejudice against all Defendants, and dismissed without prejudice against Enron, for failure to state a claim upon which relief could be granted. The only reason the court did not dismiss the Purported Class Action against Enron with prejudice was because of Enron's pending Chapter 11 case. The Purported Class Action, and all claims and issues asserted therein have been disposed of by the trial court. The Debtors reviewed the Harwood Claims and determined that Enron is not liable under the allegations asserted in the Purported Class Action. The principles of res judicata preclude any finding of liability on the part of Enron. Res Judicata precludes re-litigation of claims that have been finally adjudicated. (Enron Bankruptcy News, Issue No. 103; Bankruptcy Creditors' Service, Inc., 215/945-7000) FEDERAL FORGE: Committee Hires McDonald Hopkins as Counsel ---------------------------------------------------------- The Official Committee of Unsecured Creditors for Federal Forge, Inc.'s chapter 11 cases, wants to hire McDonald Hopkins Co., LPA as its bankruptcy counsel, nunc pro tunc to March 1, 2004. The Committee tells the U.S. Bankruptcy Court of Western District of Michigan that McDonald Hopkins is highly qualified in many areas of law that could be relevant to its representation, including general corporate matters, mergers and acquisitions, litigation, labor, employee benefits, and intellectual property. The Committee expects McDonald Hopkins to: a) monitor the Debtor's chapter 11 case and legal activities, and advise the Committee on the legal ramifications of such actions; b) provide the Committee advice on its obligations and duties; c) execute Committee decisions by filing motions, objections or other documents with the Court; d) appear before the Court on all matters in these cases relevant to the interests of unsecured creditors; e) negotiate on behalf of the Committee the terms of any proposed plan of reorganization or liquidation; and f) take such other actions as are necessary to protect the rights of unsecured creditors. McDonald Hopkins' current hourly rates for its professionals and paraprofessionals are: Designation Billing Rate ----------- ------------ Shareholders $245 - $410 per hour Associates $140 - $240 per hour Legal Assistants $85 - $155 per hour Law Clerks $40 - $75 per hour The professionals who will be principally responsible in this engagement are: Professional Billing Rate ------------ ------------ Shawn M. Riley $375 per hour Sean D. Malloy $295 per hour Scott N. Opincar $240 per hour Headquartered in Lansing, Michigan, Federal Forge, Inc. -- http://www.durgam.com/-- is a supplier specializing in nonsymetrical forgings. The Company filed for chapter 11 protection on February 19, 2004 (Bankr. Mich. Case No. 04-01738). Lawrence A. Lichtman, Esq., at Carson Fischer, PLC represents the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed estimated debts and assets of over $10 million. FERRELLGAS PARTNERS: Commences Public Offering of Common Units -------------------------------------------------------------- Ferrellgas Partners, L.P. (NYSE: FGP), one of the nation's largest retail marketers of propane, announced that it plans to sell 7,000,000 common units in an underwritten offering pursuant to an effective registration statement on Form S-3 previously filed with the Securities and Exchange Commission. Ferrellgas will also grant the underwriters an option to purchase up to 1,050,000 additional units to cover over-allotments, if any. Ferrellgas Partners, L.P., through its operating partnership, Ferrellgas, L.P., currently serves more than one million customers in 45 states. Ferrellgas employees indirectly own more than 17 million common units of the partnership through an employee stock ownership plan. * * * As reported in the Troubled Company Reporter's February 27, 2004 edition, Ferrellgas Partners, L.P.'s outstanding $218 million senior notes were affirmed at 'BB+' by Fitch Ratings. In addition, Ferrellgas, L.P.'s outstanding $534 million senior notes and $308 million bank credit facility were affirmed at 'BBB'. The ratings were removed from Rating Watch Negative where they were placed on Feb. 10, 2004. The Rating Outlook is Negative. FGP, through its operating limited partnership FGLP, is the second largest domestic retail propane master limited partnership. The rating action follows Fitch's review of FGP's planned acquisition of all of the outstanding common stock of Blue Rhino Corp. in a cash transaction valued at approximately $340 million. The Negative Rating Outlook reflects Fitch's expectation that key consolidated credit measures will remain weak relative to FGP's rating in the near-term due to the initial leveraging impact of the RINO acquisition and the negative affect of recent warmer than normal weather on FGP's core propane distribution operations. In addition, there is some uncertainty over the future operating and financial performance at the merged company, including RINO's capacity to continue its robust historical growth rate and FGP's ability to extract expected synergies from the business combination. FIBERMARK INC: Obtains Interim Approval of DIP Credit Facility -------------------------------------------------------------- FiberMark, Inc. (Amex: FMK) announced that Judge Colleen A. Brown of the U.S. Bankruptcy Court for the District of Vermont has given interim approval for all of FiberMark's first-day motions in connection with its previously announced chapter 11 filing on March 30, 2004. The first-day orders issued by Judge Brown will enable FiberMark to continue normal operations during the reorganization process. Judge Brown's orders included interim approval, as requested, of the debtor-in-possession (DIP) credit facility being provided to the company by GE Commercial Finance. A hearing on final approval of the DIP facility and of FiberMark's other first-day motions has been scheduled for April 27, 2004. Alex Kwader, chairman and chief executive officer of FiberMark, said: "The granting of interim approval of our first-day motions by Judge Brown is an important early step toward the completion of our financial reorganization. The ability to continue providing our employees with pay and benefits, and to meet our post-petition vendor obligations-with cash on hand, cash flow from operations and, as necessary, by means of the DIP facility-will enable us to continue normal operations at all of our facilities. That, in turn, will allow us to continue to meet our customer commitments in a business-as-usual manner." The company also announced that it has signed an amended and restated $40 million revolving credit facility for its German subsidiaries. Both credit facilities are supplied by GE Commercial Finance, which was FiberMark's financial partner on the credit facility that closed in November 2003. Reflecting its recent voluntary filing for chapter 11 protection in order to pursue a financial reorganization and debt restructuring, the company has decided to voluntarily delist the company's common stock from the American Stock Exchange. FiberMark said it will seek listing on the OTC Bulletin Board and, to that end, is currently evaluating potential market makers for its stock. Since the filing, Amex has suspended trading. Trading is expected to resume once the company transitions to the OTC Bulletin Board, a process that is expected to take another week or so. FiberMark, headquartered in Brattleboro, Vt., is a leading producer of specialty fiber-based materials meeting industrial and consumer needs worldwide, operating 11 facilities in the eastern United States and Europe. Products include filter media for transportation and vacuum cleaner bags; base materials for specialty tapes, electrical and graphic arts applications; wallpaper, building materials and sandpaper; and cover/decorative materials for office and school supplies, publishing, printing and premium packaging. GENESCO: Completes Hat World Acquisition for $177.4 Million Cash ---------------------------------------------------------------- Genesco Inc. (NYSE: GCO) completed the acquisition of Hat World Corporation, a leading specialty retailer of licensed and branded headwear. The total purchase price for Hat World was $177.4 million in cash, including adjustments for $11.1 million of net cash acquired and for working capital and certain tax benefits, subject to further post-closing adjustments. Genesco funded the acquisition and associated expenses with debt of $100 million and the balance from cash on hand. In connection with the transaction, Genesco entered into new credit facilities totaling $175 million with 10 banks, led by Bank of America, N.A., as Administrative Agent, to fund a portion of the purchase price and to replace its existing revolving credit facility. The new credit facilities were arranged by Banc of America Securities, L.L.C. Hal N. Pennington, Genesco's president and chief executive officer, said, "We are excited about this acquisition and the opportunities it presents. Hat World brings an impressive track record of growth, a strong management team and a culture that is very similar to ours. We believe there is a tremendous strategic fit between Hat World and our other concepts and that, using the skills we have developed in growing our Journeys and Underground Station concepts, we can grow Hat World by 400 to 500 stores over time." Robert J. Dennis, Hat World's chief executive officer, stated, "Joining Genesco is a tremendous opportunity for Hat World. Together, we will focus our energy and resources as we seek to expand our business, increase our market share and enhance shareholder value." Headquartered in Indianapolis, Hat World operates 481 stores across the U.S. under the Hat World, Lids, Hat Zone and Cap Factory names. The company also operates e-commerce websites accessible through http://www.hatworld.com/, http://www.lids.com/ http://www.lidscyo.com/and http://www.capfactory.com/ Hat World's core products consist of a broad range of licensed college, professional teams and branded headwear in various styles including baseball hats, visors, knitwear and buckets. Genesco, based in Nashville, sells footwear and accessories in more than 1,040 retail stores in the U.S., principally under the names Journeys, Journeys Kidz, Johnston & Murphy and Underground Station, and on internet websites http://www.journeys.com/and http://www.johnstonmurphy.com/ The Company also sells footwear at wholesale under its Johnston & Murphy brand and under the licensed Dockers brand. Additional information on Genesco and its operating divisions may be accessed at its website http://www.genesco.com/ * * * As reported in the Troubled Company Reporter's March 15, 2004 edition, Standard & Poor's Ratings Services assigned its 'BB-' bank loan rating, along with a recovery rating of '3', to Genesco Inc.'s proposed $175 million senior secured credit facilities. The loan is rated at the same level as the corporate credit rating on the company; this and the '3' recovery rating indicate expectations for a meaningful (50%-80%) recovery of principal in the event of a default. At the same time, Standard & Poor's affirmed its outstanding ratings on Genesco, including the 'BB-' corporate credit rating. The affirmation follows the company's mostly debt-financed acquisition of Hat World. Although the acquisition of Hat World would somewhat diversify Genesco's sources of earnings, the business risk of the combined entity remains high due to the narrow product focus and aggressive growth of the headwear retailing business. However, the operating performance of Hat World has been positive and is expected to be accretive to Genesco's earnings in fiscal 2005. In addition, Hat World would provide additional growth opportunities to Genesco, given that the growth rate at the company's Journeys division is decelerating. GENTEK: Alleges John Spangler's Injury Claim Lacks Legal Support ---------------------------------------------------------------- On July 23, 2002, John Spangler filed a complaint against, among others, GenTek, Inc. and General Chemical Corporation before the Circuit Court of Cook County, Illinois. The Complaint states 20 causes of action for: (a) negligence; (b) breach of warranty; (c) strict liability for defective design and manufacture; and (d) strict liability for ultra-hazardous activity. Mr. Spangler alleges that on July 26, 2000, he was injured while transferring sulfuric acid from a tank car to another. The Reorganized Debtors owned or leased the tank car that was being emptied. Furthermore, it was determined that the tank car was leaking. At the time of injury, Mr. Spangler was an employee of LCM Corporation. The Reorganized Debtors had retained LCM to handle leaks from rail cars and trans-load operations, including high pressure and emergency de-inventory procedures. The Reorganized Debtors relied on the expertise of LCM and its personnel to conduct and supervise any transfer. On the Petition Date, the Illinois Action was automatically stayed. At present, the Illinois Action against the Reorganized Debtors has not advanced beyond the Complaint stage. Spangler Personal Injury Claims On March 25, 2002, Mr. Spangler filed Claim Nos. 2116 and 2117 as personal injury claims for $10,000,000 each against GenTek and General Chemical. The Debtors dispute the Claims. Neil B. Glassman, Esq., at The Bayard Firm, in Wilmington, Delaware, explains that the Claims are duplicative of each other. By virtue of the substantive consolidation provision of the Debtors' confirmed Plan, "all Claims against each Estate shall be deemed to be Claims against the consolidated Estates, any proof of claim[] filed against one or more of the Debtors shall be deemed to be a single claim filed against the consolidated Estates, and all duplicate proofs of claim for the same claim filed against more than one Debtor shall be deemed expunged." Mr. Glassman further argues that the Claims are not entitled to prima facie validity. The Claims are contingent in nature, and despite the purported face value, are unliquidated. The Claims are based on theories of strict liability and negligence and have no cognizable basis in law or fact as against General Chemical or GenTek. The Debtors are not liable for failing to warn LCM of alleged hazards, which LCM specialized in addressing. District Court Jurisdiction Mr. Glassman explains that under Section 157(b), the Bankruptcy Court may hear bankruptcy cases and "core proceedings arising under [the Bankruptcy Code]." Core proceeding include "allowance or disallowance of claims," but not "liquidation or estimation of contingent or unliquidated personal injury tort or wrongful death claims against the estate for purposes of distribution in a case under [the Bankruptcy Code]." Because Claim Nos. 2116 and 2117 assert unliquidated personal injury tort claims, the "liquidation or estimation" of the claims is not a core proceeding within the Bankruptcy Court's ability to finally determine. Furthermore, Del. Bankr. L.R. 3007-1(f)(iv) provides that, "the [Bankruptcy] Court will not consider any substantive objection to personal injury or wrongful death claims that would be in violation of Section 157(b)(2)(B) of the Judiciary Procedures Code." Therefore, the Bankruptcy Court cannot hear the Reorganized Debtors' objection. Thus, the Reorganized Debtors ask the U.S. District Court for the District of Delaware to withdraw the reference to the Bankruptcy Court with respect to: (a) objection to the claims; (b) any related proofs of claim; and (c) any responses or other papers related to the dispute. Claims Estimation and Disallowance Section 502(c) provides that a claim that is "contingent or unliquidated" may be "estimated," if the "fixing or liquidation of [the claim] . . . would unduly delay the closing of the case." In this regard, the Reorganized Debtors ask the District Court to: (a) estimate the Spangler Personal Injury Claims at $0; and (b) disallow the Spangler Personal Injury Claims. Mr. Glassman insists that the Spangler Personal Injury claims should be disallowed based on the lack of factual and legal support, as well as for purposes of distribution under the Debtors' confirmed Plan. (GenTek Bankruptcy News, Issue No. 30; Bankruptcy Creditors' Service, Inc., 215/945-7000) GEORGIA-PACIFIC: Elects to Redeem 9.125% Debentures on May 6, 2004 ------------------------------------------------------------------ Georgia-Pacific Corp. (NYSE: GP) elected to call $239.5 million of its 9.125 percent debentures due July 1, 2022. The debentures were issued in July 1992. The company anticipates that the debentures will be redeemed on or about May 6, 2004. Georgia-Pacific said it will use funds available under its revolving credit facility to redeem these debentures. The company expects to record a second quarter 2004 pretax charge of approximately $12 million for call premiums and to write off deferred debt issuance costs. Headquartered at Atlanta, Georgia-Pacific (S&P, BB+ Corporate Credit Rating, Negative) is one of the world's leading manufacturers and marketers of tissue, packaging, paper, building products, pulp and related chemicals. With 2003 annual sales of more than $20 billion, the company employs approximately 60,000 people at 400 locations in North America and Europe. Its familiar consumer tissue brands include Quilted Northern(R), Angel Soft(R), Brawny(R), Sparkle(R), Soft 'n Gentle(R), Mardi Gras(R), So- Dri(R), Green Forest(R) and Vanity Fair(R), as well as the Dixie(R) brand of disposable cups, plates and cutlery. Georgia- Pacific's building products business has long been among the nation's leading suppliers of building products to lumber and building materials dealers and large do-it-yourself warehouse retailers. For more information, visit http://www.gp.com/ GEORGIA-PACIFIC: Increasing Consumer Products Prices on July 1 -------------------------------------------------------------- Georgia-Pacific Corp. (NYSE: GP) informs customers that its North American consumer products business will increase prices for various retail products effective July 1, 2004. The increases are expected to average approximately 6 to 9 percent on towel, tissue, napkin and facial categories, and 4 to 6 percent on Dixie cup, plate and cutlery categories. The company said the increases are necessary to offset inflation in key cost areas. Headquartered at Atlanta, Georgia-Pacific (S&P, BB+ Corporate Credit Rating, Negative) is one of the world's leading manufacturers and marketers of tissue, packaging, paper, building products, pulp and related chemicals. With 2003 annual sales of more than $20 billion, the company employs approximately 60,000 people at 400 locations in North America and Europe. Its familiar consumer tissue brands include Quilted Northern(R), Angel Soft(R), Brawny(R), Sparkle(R), Soft 'n Gentle(R), Mardi Gras(R), So- Dri(R), Green Forest(R) and Vanity Fair(R), as well as the Dixie(R) brand of disposable cups, plates and cutlery. Georgia- Pacific's building products business has long been among the nation's leading suppliers of building products to lumber and building materials dealers and large do-it-yourself warehouse retailers. For more information, visit http://www.gp.com/ GLIMCHER REALTY: Looking for New CFO as Melinda A. Janik Resigns ---------------------------------------------------------------- Glimcher Realty Trust, (NYSE: GRT), announces that Melinda A. Janik has resigned as Chief Financial Officer to pursue other interests. The Company further announces that effective immediately William G. Cornely will fill the Chief Financial Officer and Chief Accounting Officer position while the Company conducts a search for a permanent Chief Financial Officer. Mr. Cornely, presently the Company's Executive Vice President and Chief Operating Officer, held the position of Chief Financial Officer from 1997 until 2001. Prior to that time, Mr. Cornely was a partner with Coopers & Lybrand, currently known as PricewaterhouseCoopers. "We would like to thank Melinda for her contributions to Glimcher during her tenure with us," said Michael P. Glimcher, President. "We wish her well in her future endeavors. We are extremely pleased to be able to call upon Bill Cornely's expertise and dedication in the accounting and financial aspects of our business." About the Company Glimcher Realty Trust, a real estate investment trust, is a recognized leader in the ownership, management, acquisition and development of enclosed regional and super-regional malls, and community shopping centers. Glimcher Realty Trust's common shares are listed on the New York Stock Exchange under the symbol "GRT." Glimcher Realty Trust's Series F and Series G preferred shares are listed on the New York Stock Exchange under the symbols "GRT-F" and "GRT-G," respectively. Glimcher Realty Trust is a component of both the Russell 2000(R) Index, representing small cap stocks, and the Russell 3000(R) Index, representing the broader market. * * * As reported in the January 27, 2004 edition of The Troubled Company Reporter, Standard & Poor's Ratings Services assigned its 'B' rating to Glimcher Realty Trust's $150 million 8.125% series G preferred stock issuance. At the same time, Standard & Poor's affirmed its 'BB' corporate credit rating on Glimcher and its 'B' preferred stock rating. The affirmation impacts $188 million of preferred stock outstanding. The outlook is stable. "The assigned rating acknowledges Glimcher 's below-average business position and its relatively aggressive financial profile," said credit analyst Elizabeth Campbell. "The ratings are supported by a relatively well-occupied and profitable (but comparatively smaller) portfolio, which generates stable, predictable cash flow from a diverse and moderately creditworthy tenant base. Glimcher management has been successful in buying out its joint venture partners' interests in seven mall properties, which helps leverage the company's existing operating platform and reduce complexity. The company now wholly-owns all of its 25 mall properties. However, these strengths are offset by generally higher leverage and historically high bank line usage, a mostly encumbered portfolio and weak coverage of total obligations (including the common dividend), and vacancy issues in its non- core community center portfolio." GLOBAL ENVIRONMENTAL: Case Summary & 20 Largest Creditors --------------------------------------------------------- Debtor: Global Environmental Services Group, LLC P.O. Box 2254 Honolulu, Hawaii 96804 Bankruptcy Case No.: 04-00748 Type of Business: The Debtor operates an environmental clean-up service in Hawaii and a manufacturing facility in California. Chapter 11 Petition Date: March 24, 2004 Court: District of Hawaii (Honolulu) Judge: Robert J. Faris Debtor's Counsel: Jerrold K. Guben, Esq. Reinwald O'Connor & Playdon 733 Bishop Street, Floor 24 Honolulu, HI 96813 Tel: 808-524-8350 Fax: 808-531-8628 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ First Hawaiian Bank $1,800,591 1590 Kapiolani Boulevard Honolulu, HI 96814 Hawaiian State Tax Collector $81,936 Alfred I. Castillo, LLC $75,000 JP Leake $57,000 Allied Machinery Corp. $41,209 Pigs Unlimited, Inc. $31,768 Earl M. Ching, Esq. $20,495 Stanton Clay Chapman Crumpton & Iwamura $20,112 Perma-Fix Government Services $18,556 Fastenal Company $18,042 Chemical Waste Management $12,315 Larsen's Tool Repair $10,788 Crosby & Overton, Inc. $9,074 US Ecology $8,950 Eagle Global Logistics $8,519 Controlled Motion Solutions $8,473 Flint Hydrostatics, Inc. $8,449 Safety Systems Hawaii, Inc. $8,372 Paychex $7,504 HEMIC $6,415 GOLDEN SAND ECO-PROTECTION: Installs Traci Anderson as New Auditor ------------------------------------------------------------------ On February 15, 2003, Golden Sand Eco-Protection Inc. engaged Traci Anderson, C.P.A. as its independent auditor. The decision to appoint the new independent accountant was recommended and approved by the Company's Board of Directors. A previously filed statement with the SEC discussed the dismissal of Bongiovanni & Associates, P.A. as independent accountants. The reports of Bongiovanni & Associates, P.A. on the financial statements of the Company for the past fiscal year contained an opinion of a going concern uncertainty. The Company incurred net losses of $5,285 for the six months ended June 30, 2003, and has an accumulated deficit of $105,777. As a result, the Company has a negative working capital and a deficiency in assets. The ability of the Company to continue as a going concern is dependent upon its ability to obtain financing and achieve profitable operations. The Company anticipates meeting its cash requirements through the financial support of its management until such time as it begins operations. The financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern. Golden Sand Eco-Protection, Inc. , a development stage company, is a Florida corporation formed in December 1999, primarily to provide memorial products and services through the Internet. GS MORTGAGE: Fitch Takes Rating Actions on 3 Securitizations ------------------------------------------------------------ Fitch has taken rating actions on the following GS Mortgage Securities Corp. mortgage pass-through certificates as follows: Series 2002-3F, Group 1 --Class IA affirmed 'AAA'; --Class IB-1 upgraded to 'AAA' from 'AA'; --Class IB-2 upgraded to 'AA' from 'A'; --Class IB-3 affirmed 'BBB'; --Class IB-4 affirmed 'BB'; --Class IB-5 affirmed 'B'. Series 2002-3F, Group 2 --Class IIA affirmed 'AAA'; --Class IIB-1 upgraded to 'AAA' from 'AA'; --Class IIB-2 upgraded to 'AAA' from 'A'; --Class IIB-3 upgraded to 'AA' from 'BBB'; --Class IIB-4 upgraded to 'BBB+' from 'BB'; --Class IIB-5 affirmed 'B'. Series 2002-6F --Class A affirmed 'AAA'; --Class B-1 upgraded to 'AAA' from 'AA; --Class B-2 upgraded to 'AAA' from 'A'; --Class B-3 upgraded to 'AA+' from 'BBB'; --Class B-4 upgraded to 'A' from 'BB'; --Class B-5 upgraded to 'BBB' from 'B'. Series 2002-11F --Class A affirmed 'AAA'; --Class B-1 upgraded to 'AAA' from 'AA'; --Class B-2 upgraded to 'AA' from 'A'; --Class B-3 upgraded to 'A' from 'BBB'; --Class B-4 upgraded to 'BBB-' from 'BB'; --Class B-5 affirmed at 'B'. The upgrades are being taken as a result of low delinquencies and losses, as well as increased credit support levels. The affirmations are due to credit enhancement consistent with future loss expectations. HALE-HALSELL: Signs-Up Conner & Winters as Special Counsel ---------------------------------------------------------- Hale-Halsell Company asks permission from the U.S. Bankruptcy Court for the Northern District of Oklahoma to employ Conner & Winters as its special counsel. The Debtor reports that it needs the assistance of special counsel to represent and assist it with respect to the following matters: a. investigation into the financial affairs of United Supermarkets and negotiation of a sale of the United Supermarkets stock; b. the negotiation and assertion of any damage claims or corporate governance claims related to the Hale-Halsell's ownership of United Supermarkets stock, including but not limited to any litigation concerning United Supermarkets involving causes of action not founded in or based on the Bankruptcy Code; c. the business operations concerning, and negotiation and sale of, any of Hale-Halsell's real estate, including but not limited to the warehouse in Durant, the warehouse/office complex at 9111 E. Pine in Tulsa, the two Grand Lake cabins, and any other parcels of real estate owned by Hale-Halsell; d. the negotiation and resolution of any claims regarding life insurance loans upon any life insurance policies owned by the Debtor on any present or former executives of the Debtor; e. completion of any matters pertaining to the sale of the assets of Petty's Fine Foods, Inc and negotiation and sale of the stock thereof; f. the negotiation and sale of any assets or stock of Fadler, Inc.; g. the negotiation and sale of any assets or stock of Gro- Mor, Inc.; h. the negotiation and sale of any assets or stock of Plaza Redbud, Inc.; i. the negotiation and sale of any assets or stock of Star Entertainment, Inc.; j. the negotiations and sale of any assets or stock of Foodland, Inc.; k. the negotiation and sale of substantially all of the assets or stock of Git-n-Go, Inc.; l. negotiations with F&M Bank & Trust Co. with regard to the matters set forth herein; m. corporate governance matters pertaining to Hale-Halsell and/or any of its subsidiaries; and n. background information to be provided to the Debtor's general bankruptcy counsel or to the Debtor's management with regard to matters upon which Conner & Winters worked prepetition. Andrew R. Turner, Esq., reports that the Debtor paid Conner & Winters $10,000 as retainer. The Firm's customary hourly rates were not disclosed. Headquartered in Tulsa, Oklahoma, Hale-Halsell Company -- http://www.hale-halsell.com/-- is into Grocery Wholesale business which operates 115 Git-N-Go convenience stores and about 10 Super H Foods supermarkets, primarily in small Oklahoma towns. The Company filed for chapter 11 protection on March 22, 2004 (Bankr. N.D. Okla. Case No. 04-11677). Scott P. Kirtley, Esq., at Riggs, Abney, Neal, Turpen, Orbison represents the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed $19,721,000 in total assets and $9,394,124 in total debts. HEALTHSOUTH CORPORATION: Board Member Larry Striplin Resigns ------------------------------------------------------------ HealthSouth Corporation (OTC Pink Sheets: HLSH) announced that Larry Striplin, Jr. has voluntarily resigned from the HealthSouth Board of Directors effective April 2 as part of the previously announced board transition plan. Joel C. Gordon, Interim Chairman of the Board of HealthSouth said, "I want to thank Larry for his dedicated service and his efforts on behalf of the Company and its shareholders." "It has been an honor to be part of this remarkable company," said Striplin. "I wish my fellow directors and the enormously dedicated employees of HealthSouth every success as they move forward." About HEALTHSOUTH HealthSouth is the nation's largest provider of outpatient surgery, diagnostic imaging and rehabilitative healthcare services, with nearly 1,700 locations nationwide and abroad. HealthSouth can be found on the Web at http://www.healthsouth.com/ HIDDEN POINTE: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Hidden Pointe Properties, L.P. 3811 Turtle Creek Boulevard, Suite 1850 Dallas, Texas 75219 Bankruptcy Case No.: 04-65132 Type of Business: The Debtor is the owner of an apartment project including 440 separate units located in Stone Mountain, Georgia. Chapter 11 Petition Date: March 29, 2004 Court: Northern District of Georgia (Atlanta) Judge: James Massey Debtor's Counsels: Carole Thompson Hord, Esq. John A. Christy, Esq. Schreeder, Wheeler & Flint, LLP 1600 Candler Building 127 Peachtree Street, North East Atlanta, GA 30303-1845 Tel: 404-954-9858 Estimated Assets: $10 Million to $50 Million Estimated Debts: $10 Million to $50 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Alexander Properties Group, Trade debt $60,000 Inc. Maintenance Warehouse Trade debt $55,184 Creative Carpet Care Trade debt $33,000 DeKalb County Sanitation Trade debt $20,305 Century Maintenance Supply Trade debt $15,920 Borders N Blooms Landscaping Trade debt $15,300 Shaw's Painting & Cleaning Trade debt $14,900 Trans-Atlantic Ind. Trade debt $14,588 Perry's Professional Trade debt $12,815 Services, Inc. Hughes MRO/Chad Atlanta Trade debt $12,058 Mejia Painting Trade debt $11,675 Elite Door Design Trade debt $11,122 For Rent Magazine Trade debt $10,035 Culpepper & Associates Trade debt $9,016 Security BFI Of Georgia Trade debt $8,237 Combined Tech Partners Trade debt $7,795 T&T Team Landscape Trade debt $6,237 Management Parham, J.N. Trade debt $6,000 Mikes Carpet & Oakton Trade debt $5,857 Hardwood Handytrac Systems Trade debt $5,095 HIGH VOLTAGE: Brings-In Grant Thornton as Tax Consultants --------------------------------------------------------- High Voltage Engineering Corporation and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of Massachusetts, Eastern Division, to employ Grant Thornton LLP as their independent accountants and tax consultants. Grant Thornton had been the Debtors' independent auditors, accountants and tax consultants since December 1991. By reason of its standing relationship, Grant Thornton has acquired invaluable knowledge of the Debtors' affairs. In this retention, Grant Thornton will: a) perform audit services and limited quarterly review; b) assist in the preparation of income tax returns through tax return review services and render other tax compliance and consulting services; c) render accounting assistance in connection with schedules required by the Court; d) confer with the Debtors on the preparation of submissions to the Court; e) consult with the Debtors in preparation of testimony required of Grant Thornton, as may be required; and f) assist with such other matters as management or counsel to the Debtors may request from time to time. James J. Rita, Jr., reports that Grant Thornton will bill the Debtors at a discount rate of 15% from its standard hourly rate: Designation Standard Rates Billing Rates ----------- -------------- ------------- Audit & Tax Partner $504 per hour $428 per hour Audit Concurring Partner $504 per hour $428 per hour Regional Reviewing Partner $684 per hour $581 per hour Tax Partner $570 per hour $485 per hour Audit Experienced Manager $300 per hour $255 per hour Tax Manager $306 per hour $260 per hour Audit Experiences Senior $168 per hour $143 per hour Audit Staff $150 per hour $128 per hour Administrative Staff $150 per hour $128 per hour Headquartered in Wakefield, Massachusetts, High Voltage Engineering Corp., designs and manufactures technology-based products in three segments: power conversion technology and automation, advanced surface analysis instruments and services, and monitoring instrumentation and control systems for heavy machinery and vehicles. The Company filed for chapter 11 protection on March 1, 2004 (Bankr. Mass. Case No. 04-11586). Christian T. Haugsby, Esq., and Douglas B. Rosner, Esq., at Goulston and Storrs, PC represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed estimated debts and assets of more than $100 million. ICEWEB INC: Says Sherb & Co. as New Auditor is More Cost-Effective ------------------------------------------------------------------ Daszkal Bolton LLP, Certified Public Accountants, by letter dated February 17, 2004, was dismissed as the independent accountant for IceWeb, Inc. Daszkal Bolton had been the independent accountant for, and audited the financial statements of, the Company for the fiscal years ended September 30, 2002 and 2001. The reports of Daszkal Bolton on the financial statements of the Company for the past two fiscal years expressed that the financial statements were prepared assuming that the Company would continue as a going concern. This qualification was attributable to the circumstance that the Company had suffered recurring losses from operations and had a net capital deficiency. The Company's Board of Directors unanimously approved the dismissal of Daszkal Bolton. The Company engaged Sherb & Co., LLP as its new independent accountants as of February 13, 2004 as the Company's Board of Directors determined that it would be more cost effective and efficient using the services of Sherb. IceWEB offers a comprehensive branded network of Online Training, CMS, and Integration products and services to consumers and businesses worldwide. INSITE VISION: Recurring Losses Trigger Going Concern Doubt ----------------------------------------------------------- As required by a recently adopted rule of the American Stock Exchange, InSite Vision Incorporated (Amex: ISV) announced that the Company's Annual Report on Form 10-K included an explanatory paragraph by its independent auditors in their audit report referring to the Company's recurring operating losses and a substantial doubt about the Company's ability to continue as a going concern. This audit report, which was dated March 12, 2004 and filed with the Securities & Exchange Commission on March 30, 2004, related to the Company's financial statements for fiscal year ended December 31, 2003. As previously announced on March 26, 2004, InSite Vision received approximately $1.8 million, net of placement fees, from the initial closing of a total private placement that will yield aggregate gross proceeds of $16.5 million if the final closing occurs. The Company's ability to receive the remainder of the funds will be subject to receipt of stockholder approval to increase the authorized number of outstanding shares of InSite Vision common stock and to approve the terms and other standard conditions of the transaction under American Stock Exchange rules. InSite Vision will be seeking the necessary stockholder approval at its annual meeting of stockholders, which is scheduled for June 1, 2004. If stockholder approval is received and the final closing of the March private placement occurs, InSite Vision expects that it will have sufficient funds to continue its operations until approximately the third quarter of 2005. InSite Vision is an ophthalmic products company focused on ocular infections, glaucoma and retinal diseases. In the area of glaucoma, the Company conducts genomic research using TIGR and other genes. A portion of this research has been incorporated into the Company's OcuGene(R) glaucoma genetic test for disease management, as well as ISV-205, its novel glaucoma therapeutic. ISV-205 uses InSite Vision's proprietary DuraSite(R) drug-delivery technology, which also is incorporated into the ocular infection product ISV-401, and InSite Vision's retinal disease program. Additional information is at http://www.insitevision.com/ INTEGRATED HEALTH: Rotech Wants Until July 8 to File Final Report ----------------------------------------------------------------- The Reorganized Rotech Debtors ask the Court to further: (a) delay the automatic entry of a final decree closing these cases until August 5, 2004; and (b) extend the date for filing a final report and accounting to the earlier of July 8, 2004 or 15 days before the hearing on any motion to close the Reorganized Rotech Debtors' cases. According to Edmon L. Morton, Esq., at Young Conaway Stargatt & Taylor, in Wilmington, Delaware, there are still disputed claims that have not been resolved or litigated. The Reorganized Rotech Debtors want to have a full opportunity to continue to prosecute or resolve pending claim objections and other matters. In fact, the Reorganized Rotech Debtors are preparing to present evidence to the Court in connection with certain adjourned claim objections. As for filing the final report and accounting, Mr. Morton explains, the Reorganized Rotech Debtors seek an extension because the jurisdiction of the Court may still be necessary while the claims administration process is ongoing. The Court will convene a hearing on April 22, 2004 to consider the Reorganized Rotech Debtors' request. By application of Del.Bankr.LR 9006-2, the deadline for Rotech to file a final report and the deadline to enter a final closing decree is automatically extended through the conclusion of that hearing. Headquartered in Owings Mills, Maryland, Integrated Health Services, Inc. -- http://www.ihs-inc.com/-- IHS operates local and regional networks that provide post-acute care from 1,500 locations in 47 states. The Company filed for chapter 11 protection on February 2, 2000 (Bankr. Del. Case No. 00-00389). Michael J. Crames, Esq., Arthur Steinberg, Esq., and Mark D. Rosenberg, Esq., at Kaye, Scholer, Fierman, Hays & Handler, LLP, represent the Debtors in their restructuring efforts. On September 30, 1999, the Debtors listed $3,595,614,000 in consolidated assets and $4,123,876,000 in consolidated debts. (Integrated Health Bankruptcy News, Issue No. 73; Bankruptcy Creditors' Service, Inc., 215/945-7000) INTERNATIONAL PAPER: Releasing 1st Quarter Earnings on April 23 --------------------------------------------------------------- International Paper (NYSE: IP) will release first-quarter 2004 earnings on Friday, April 23, 2004, before the opening of the New York Stock Exchange. The company will host a webcast to discuss earnings and current market conditions at 11 a.m. EST that day. All interested parties are invited to listen to the webcast via the company's Internet site at http://www.internationalpaper.com/ by clicking on the Investor Information button. Registration is required at the Web site in advance of the webcast and will be available beginning at 3 p.m. EST, on Thursday, April 22. A replay of the webcast will also be on the Web site beginning At approximately 1 p.m. EST on Friday, April 23. International Paper -- http://www.internationalpaper.com/-- is the world's largest paper and forest products company. Businesses include paper, packaging, and forest products. As one of the largest private forest landowners in the world, the company manages its forests under the principles of the Sustainable Forestry Initiative(R) program, a system that ensures the perpetual planting, growing and harvesting of trees while protecting wildlife, plants, soil, air and water quality. Headquartered in the United States, International Paper has operations in over 40 countries and sells its products in more than 120 nations. As previously reported, Standard & Poor's Ratings Services assigned its 'BB+' preferred stock ratings to International Paper Co.'s $6 billion mixed shelf registration. INT'L STEEL: S&P Rates Proposed $600MM Sr. Unsec. Notes at BB ------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BB' rating to Richfield, Ohio-based steel manufacturer International Steel Group Inc.'s (ISG) proposed $600 million senior unsecured notes due 2014. Standard & Poor's at the same time affirmed its 'BB' corporate credit rating and 'BB+' senior secured bank loan rating on the company. The outlook is positive. "The company's total debt was about $625 million at Dec. 31, 2003. Proceeds from the proposed notes offering will be used to refinance ISG's term loan B and for general corporate purposes," said Standard & Poor's credit analyst Paul Vastola. Among other potential uses, the transaction will provide cash liquidity to allow ISG to fund its proposed $255 million acquisition of bankrupt Weirton Steel Corp., which remains subject to approval by the U.S. Bankruptcy Court and satisfaction of other customary conditions. The ratings on ISG reflect its leading market position in the highly cyclical and competitive North American steel industry, its competitive cost position, and moderate financial policies. ISG was formed through the acquisitions of bankrupt steel companies LTV, Acme, and Bethlehem Steel. Unlike some other unionized steel producers, ISG does not have burdensome legacy costs, or the high number of employees it had before these acquisitions. ISG is expected to fully realize its estimated annual cost savings of $250 million in 2004, because it has reduced headcount at Bethlehem by 3,100. These combined savings provide a meaningful cost advantage compared with competing unionized steel companies in the U.S. that are facing rising labor and legacy costs. ISG's management uses a mini-mill strategy, such as establishing flexible work rules and profit sharing. ISG plans to implement a similar strategy with Weirton, and already has an agreement for a new contract with Weirton's unions similar to its existing contracts, including reducing labor by about one-third, and establishing more flexible work rules and benefits. Nevertheless, although some of its costs have become more variable, this remains a business with a high degree of operating leverage, and requires the company to operate at high levels of capacity utilization to remain profitable. INTERNATIONAL WIRE: Pays $1.2 Million Critical Vendors' Claims -------------------------------------------------------------- International Wire Group, Inc., and its debtor-affiliates sought and obtained approval from the U.S. Bankruptcy Court for the Southern District of New York to pay the prepetition claims of their critical vendors to preserve prepetition trade relationships. The Debtors purchase goods and services from certain domestic and foreign vendors, who are generally the Debtors' long-standing, preferred, limited-source suppliers without whose goods and services the Debtors could not operate effectively. Unlike other vendors who may be replaceable without disruption to the business, preferred, limited-source suppliers are virtually irreplaceable absent extraordinary expense, significant delay, quality issues, or other detrimental effects. Support from its Critical Vendors on an ongoing basis is vital to their reorganization process, the Debtors point out. The goods and services provided by the Critical Vendors need to continue in these chapter 11 cases if substantial harm and loss of enterprise value is to be avoided. Based upon historical performance, the Debtors estimate that Critical Vendors are owed prepetition amounts aggregating approximately $1,200,000. The Debtors' Critical Vendors fall into 7 general categories, each a preferred limited-source supplier: i) the Durango Facility Partners, ii) Copper Vendors, iii) Replacement Equipment Suppliers, iv) Insulating Compound Suppliers, v) Copper Strand Suppliers, vi) Tin, Alloys, and Specialty Metals Vendors, and vii) Shipping Supply Vendors. Headquartered in Saint Louis, Missouri, International Wire Group, Inc., designs, manufactures and markets bare and tin-plated copper wire and insulated copper wire products for other wire suppliers and original equipment manufacturers. The Company filed for chapter 11 protection on March 24, 2004 (Bankr. S.D.N.Y. Case No. 04-11991). Alan B. Miller, Esq., at Weil, Gotshal & Manges, LLP represent the Debtors in their restructuring efforts. When the Company filed for protection from their creditors, they listed $393,000,000 in total assets and $488,000,000 in total debts. INTERPUBLIC GROUP: Fitch Revises Outlook to Stable from Negative ---------------------------------------------------------------- Fitch Ratings has affirmed the ratings on The Interpublic Group of Companies, Inc.'s (IPG) senior unsecured debt at 'BB+', multi- currency bank credit facility at 'BB+' and convertible subordinated notes at 'BB-'. The Rating Outlook has been revised to Stable from Negative. Approximately $2.3 billion of debt is affected. The ratings on IPG's debt consider the progress made with its cost structure and strengthened balance sheet as well as the company's position as a leading global advertising holding company and its diverse client base with long term relationships with key accounts. Of concern remains the resolution of the operation of the Silverstone racetrack and the sizeable related liabilities and negative organic revenue growth. The Stable Outlook reflects Fitch's expectation that IPG's turnaround efforts have begun to steady operating earnings and cash flow generation. Also acknowledged are the improvements to IPG's balance sheet and its success in resolving certain non- operating issues that have been a distraction for the company's management, including the shareholder lawsuits and asset dispositions. IPG has executed a restructuring program and system infrastructure improvements as part of its efforts to stabilize the operating performance of the company. As a result, there has been improvement in year-over-year quarterly EBITDA margins in the third and fourth quarters of 2003. EBITDA margin in the third and fourth quarters of 2003 was 12% and 19.4%, respectively, compared to 9.1% and 12.4%, respectively in 2002. Fitch expects moderate operating improvement in 2004. Nonetheless, IPG's operating results remain weak compared to historical levels and its principal competitors. Organic revenue growth continues to be negative and IPG has experienced client losses at Lowe & Partners Worldwide and Foote, Cone & Belding Worldwide, lead agencies at two of its three large global operating groups. IPG has strengthened its balance sheet through the extension of the effective maturities on its debt, resulting from the March 2003 debt issuance, as well as lower balances, resulting from asset sales and the December 2003 equity issuance. As a result, IPG has sufficient liquidity to meet future obligations as it continues to execute its turnaround plan. Pro forma for the January 2004 redemption of the approximately $245 million 1.8% convertible subordinated notes, IPG had about $1.75 billion of cash and $2.3 billion of debt at December 31, 2003. KB HOME: Leslie Moonves & Melissa Lora Join Board of Directors -------------------------------------------------------------- KB Home (NYSE: KBH), one of the nation's premier homebuilders, has elected two new directors at its annual meeting of shareholders. Leslie Moonves, chairman and chief executive officer of CBS, and Melissa Lora, chief financial officer of Taco Bell, will be joining the board of directors of the company. The elections bring the total number of KB Home directors to 11, of which 10 are non-employee directors of the company. "I am thrilled to have these two talented and accomplished executives join the KB Home board of directors, and welcome their insight and contributions in the years ahead," said Bruce Karatz, KB Home's chairman and chief executive officer. "Leslie has an exceptional track record as an industry leader making him an outstanding addition to our board," continued Karatz. "His marketing savvy and intimate knowledge of trends in our target demographic will be invaluable as we continue to expand our leadership positions in markets from coast-to-coast. At the same time, I look forward to drawing upon Melissa's financial prowess and extensive experience in a fast-paced, consumer- oriented business." About Leslie Moonves Moonves joined CBS, Viacom's broadcast television group, in July 1995 as president of CBS Entertainment, and was elevated to his current position in April 2003. Under his leadership, CBS has become America's most watched network. He currently oversees all of CBS's programming, sales and marketing operations. His vast responsibilities include oversight of CBS Entertainment, CBS News, CBS Sports, the Viacom Television Stations Group, UPN, CBS Enterprises, and CBS Broadcast International. Before coming to CBS, Moonves had been president of Warner Bros. Television since July 1993, when Warner Bros. and Lorimar Television combined operations. From 1989 to 1993, he was president of Lorimar Television. Moonves is a member of the NCAA Advisory Board, the board of directors of the Los Angeles Free Clinic, the board of trustees of the Entertainment Industries Council, a trustee of the National Council for Families and Television and the American Film Institute and is past president of the Hollywood Radio and Television Society (HRTS). He is also co-chair of the Los Angeles Board of Governors of the Museum of Television and Radio. In March 2003, Moonves was honored by the International Radio and Television Society as the recipient of the Gold Medal Award, the most prestigious honor in media and entertainment. He is a graduate of Bucknell University. About Melissa Lora Lora has served as chief financial officer of Taco Bell, Corp., a subsidiary of Yum! Brands, Inc., since 2001. In this role, she is responsible for the strategic planning and financial reporting of the nation's leading Mexican-style quick service restaurant chain with more than $5 billion in annual system sales. In her 17-year career with the company, Lora has played a significant role in the company's mergers and acquisitions efforts and has led Taco Bell's focus on building financial capability for its franchise community. Prior to being named CFO, Lora ran Taco Bell's Northeast operations, where she laid the foundation for excellent long term brand growth. A licensed real estate broker in California, Lora has also managed Taco Bell's national real estate assets. Lora serves on the Taco Bell National Purchasing Co-Op board of directors and is a member of the Unified Foodservice Purchasing Co-Op as well as the Discovery Science Center in Santa Ana, California. She holds a Bachelor of Arts degree in finance and real estate from California State University, Long Beach, and an MBA in corporate finance from the University of Southern California. About KB Home Building homes for nearly half a century, KB Home is one of America's premier homebuilders with domestic operating divisions in the following regions and states: West Coast -- California; Southwest -- Arizona, Nevada and New Mexico; Central -- Colorado, Illinois and Texas; and Southeast -- Florida, Georgia, North Carolina and South Carolina. Kaufman & Broad S.A., the Company's majority-owned subsidiary, is one of the largest homebuilders in France. In fiscal 2003, the Company delivered 27,331 homes in the United States and France. It also operates KB Home Mortgage Company, a full-service mortgage company for the convenience of its buyers. Founded in 1957, KB Home is a Fortune 500 company listed on the New York Stock Exchange under the ticker symbol "KBH." For more information about any of KB Home's new home communities, call 1-888-KB-HOMES or visit the Company's Web site at http://www.kbhome.com/ * * * As reported in the Troubled Company Reporter's January 23, 2004 edition, Fitch Ratings has assigned a 'BB+' rating to KB Home's (NYSE: KBH) $250 million, 5.75% senior unsecured notes due February 1, 2014. The Rating Outlook is Positive. The current ratings and Outlook reflect KB Home's solid, consistent profit performance in recent years and the expectation that the company's credit profile will continue to improve as it executes its business model and embarks on a new period of growth. The ratings also take into account the company's primary focus on entry-level and first-step trade-up housing (the deepest segments of the market), its conservative building practices, and effective utilization of return on invested capital criteria as a key element of its operating model. Over recent years the company has improved its capital structure and increased its geographic diversity and has better positioned itself to withstand a meaningful housing downturn. Fitch also has taken note of KB Home's role as an active consolidator within the industry. Risk factors also include the cyclical nature of the homebuilding industry. Fitch expects leverage (excluding financial services) to remain comfortably within KB Home's stated debt to capital target of 45%-55%. LENNAR CORPORATION: Moody's Raises Ratings Outlook to Positive -------------------------------------------------------------- Lennar Corporation (NYSE: LEN and LEN.B), one of the nation's largest homebuilders, announced that Moody's Investors Service has raised Lennar's ratings outlook to positive from stable. At the same time, Moody's confirmed all of the company's existing ratings, including the senior implied rating, issuer rating, and the ratings on the company's senior notes at Baa3 and on its senior subordinated debt at Ba2. Moody's said, "The change in Lennar's ratings outlook reflects the company's improving financial results and profile and strengthening liquidity as well as Moody's expectation that the company will continue to execute its growth strategy in a disciplined manner." Moody's also commented, "The ratings reflect Lennar's long and consistent history of revenue and earnings growth, successful track record in integrating acquisitions, diversification, large equity base, and significant management ownership. At the same time, the ratings consider the financial and integration risks that accompany an active acquisition policy, ongoing share repurchase program, substantial off-balance sheet joint venture and partnership debt, and larger-than-industry-average lot position." Lennar Corporation, founded in 1954, is headquartered in Miami, Florida and is one of the nation's leading builders of quality homes for all generations, building affordable, move-up and retirement homes. Under the Lennar Family of Builders banner, the Company includes the following brand names: Lennar Homes, U.S. Home, Greystone Homes, Village Builders, Renaissance Homes, Orrin Thompson Homes, Lundgren Bros., Winncrest Homes, Patriot Homes, NuHome, Barry Andrews Homes, Concord Homes, Cambridge Homes, Coleman Homes and Rutenberg Homes. The Company's active adult communities are primarily marketed under the Heritage and Greenbriar brand names. Lennar's Financial Services Division provides mortgage financing, title insurance, closing services and insurance agency services for both buyers of the Company's homes and others. Its Strategic Technologies Division provides high- speed Internet access, cable television and alarm installation and monitoring services to residents of the Company's communities and others. For more information, go to http://www.lennar.com/ LEVEL 3 COMMS: First Quarter Conference Call Set for April 29 ------------------------------------------------------------- Level 3 Communications, Inc. (Nasdaq: LVLT) will release its first quarter 2004 results on Thursday April 29, 2004, and will host a conference call at 11 a.m. Eastern time. The first quarter conference call will be broadcast live on Level 3's website at http://www.Level3.com/ If you are unable to join the call via the web, you may access the call at 612-326-1011. You may also email questions to Investor.Relations@Level3.com. The call will be archived and available on our website at http://www.Level3.com/or you may access an audio replay until 11:59 PM Eastern time on April 30, 2004 by dialing 320-365-3844 access code 724885. For additional information please call 720- 888-2502. About Level 3 Communications Level 3 (Nasdaq: LVLT) is an international communications and information services company. The company operates one of the largest Internet backbones in the world, is one of the largest providers of wholesale dial-up service to ISPs in North America and is the primary provider of Internet connectivity for millions of broadband subscribers, through its cable and DSL partners. The company offers a wide range of communications services over its 22,500-mile broadband fiber optic network including Internet Protocol (IP) services, broadband transport, colocation services, and patented Softswitch-based managed modem and voice services. Its Web address is http://www.Level3.com/ * * * As previously reported in Troubled Company Reporter, Standard & Poor's Ratings Services assigned its 'CC' rating to Level 3 Communications Inc.'s shelf drawdown of $250 million convertible senior notes due 2010. The outlook is negative. Although cash proceeds improve Level 3's liquidity, Standard & Poor's is still concerned about the company's ability to withstand prolonged industry weakness, and risk from its acquisition strategy. MADISON SQUARE: S&P Assigns Low-B Ratings to 6 Series 2004-1 Notes ------------------------------------------------------------------ Standard & Poor's Ratings Services assigned its ratings to Madison Square 2004-1 Ltd./Madison Square 2004-1 Corp.'s $1.056 billion CMBS-backed notes series 2004-1. The ratings reflect the credit support provided by the subordinate certificates and the property type and geographic diversification of the underlying loans. Classes A through L will be offered in a Rule 144A transaction. The remaining classes will be distributed to members of the seller or retained by a seller subsidiary. The collateral will include all or a portion of 33 classes of subordinated fixed-rate CMBS, three classes of subordinated floating-rate CMBS, and all or a portion of four classes of subordinated fixed-rate certificates issued in connection with a resecuritization of previously issued CMBS. RATINGS ASSIGNED Madison Square 2004-1 Ltd./Madison Square 2004-1 Corp. Class Rating Amount ($) A AAA 95,003,000 B AA+ 34,307,000 C AA 34,306,000 D AA- 21,112,000 E A+ 21,112,000 F A 21,112,000 G A- 21,112,000 H BBB+ 31,667,000 J BBB 23,751,000 K BBB- 97,642,000 L BBB- 122,713,000 M BB+ 18,473,000 N BB 29,029,000 O BB- 29,028,000 P B+ 22,432,000 Q B 11,875,000 S B- 9,237,000 T N.R. 411,680,864 IO* N.R. 600,367,000 * Interest only. MANSOUR'S INC: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Mansour's, Inc. 26 West Lafayette Square LaGrange, Georgia 30240 Bankruptcy Case No.: 04-10979 Type of Business: The Debtor is engaged in the retail sale of merchandise from a store located in LaGrange, Georgia, including, ladies and children's wear, accessories, gifts and shoes. Chapter 11 Petition Date: March 30, 2004 Court: Northern District of Georgia (Newnan) Judge: W. Homer Drake Debtor's Counsel: J. Robert Williamson, Esq. Scroggins and Williamson 1500 Candler Building 127 Peachtree Street, North East Atlanta, GA 30303 Tel: 404-893-3880 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 ------ --------------- ------------ Kellwood $138,619 Leegin $136,876 Wolf Shoe $128,689 Estee Lauder/Clinique $98,846 Josephine Chause $66,682 SWAB $63,604 Susan Bristol $52,960 Marisa Christina $43,986 Pierre Dumas/Olem Shoe $40,689 Studio Direct $40,577 Telluride $40,422 Karen Kane $39,014 LIZ $36,596 Consolidated Shoes $34,813 Nautica $31,980 Polo Men $28,072 Hickey Freeman $27,647 Duckhead Shoes $25,936 Brown Shoes $25,302 Jones Apparel $24,376 MEGAN GROUP INC: Case Summary & 40 Largest Unsecured Creditors -------------------------------------------------------------- Lead Debtor: The Megan Group, Inc. 6 Throckmorton Street Freehold, NJ 07728 Bankruptcy Case No.: 04-21291 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Megan South, Inc. 04-21293 Type of Business: The Debtors offer comprehensive construction services in design build, construction management, hard bid, governmental plans, constructibility review and value engineering. The company specializes in Retail Construction, office interiors and common areas, educational, religious medical and government buildings, and corporate-owned properties. Chapter 11 Petition Date: April 2, 2004 Court: District of New Jersey (Trenton) Debtors' Counsels: Allison M. Berger, Esq. Hal L. Baume, Esq. Fox Rothschild LLP 997 Lenox Drive, Building 3 Lawrenceville, NJ 08648 Tel: 609-896-3600 Fax: 609-896-1469 Estimated Assets Estimated Debts ---------------- --------------- The Megan Group, Inc. $100,000 to $500,000 $1 M to $10 M Megan South, Inc. $50,000 to $100,000 $1 M to $10 M A. Megan Group, Inc.'s 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Brite-Way Electrical Cont. Subcontractor $522,743 Inc. 16 Elm Street South Bound Brook, NJ 08880 Gabe Sganga, Inc. Subcontractor $420,702 90 Main Street Farmingdale, NJ 07727 A-Tech Concrete, Inc. Subcontractor $263,883 11 Taylor Road Edison, NJ 08817 P & P Excavating, Inc. Subcontractor $231,323 A & C Masonry Co., Inc. Subcontractor $207,243 Architectural Window Mfg. Subcontractor $191,142 Corp. The Gillespie Group, Inc. Subcontractor $181,391 CL Corp./ta Lyons Acoustical Subcontractor $160,471 J. Strober & Sons, LLC Subcontractor $157,225 Vincent Guarino Tile & Subcontractor $156,528 Terrazzo ESR Mechanical Contractors, Subcontractor $153,062 Inc. Classic Floor Finishing Subcontractor $140,705 PJ Smith Electrical Subcontractor $134,708 Springfield Const. & Mgmt. Subcontractor $131,370 Services Building Services Subcontractor $129,585 Installation J.G. Schmidt Steel Subcontractor $125,069 Allglass Systems Inc. Subcontractor $115,212 Reed Associates, Inc. Subcontractor $98,962 Longo Associates, Inc. Subcontractor $97,210 Sponzilli Landscape Group Subcontractor $92,500 B. Megan South, Inc.'s 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Fisk Electric $457,358 10125 NW 116th Way #14 Miami, FL 33178 Butterfly Landscaping $218,497 Ferguson Enterprises, Inc. $189,124 The Signal Group $188,227 Community Asphalt Corp. $171,413 Hartford, The Insurance Premiums $153,546 Vezina Lawrence & Piscitelli $140,425 Ansel Smith Concrete, Inc. $95,331 Edwin M. Green Pools $85,555 Hardrives, Inc. $79,621 Continental Florida Materials $78,822 Leading Edge Land Services $74,365 A-1 Duran Roofing, Inc. $73,915 Atlantis Air Conditioning $71,816 Corp. Steadfast Bridges $70,873 Hanson Pipe & Products $59,716 All Phase Environmental, Inc. $56,453 Construction Specialities, $55,652 Inc. Net Construction, Inc. $52,835 Tri County Concrete Products $52,221 METALDYNE CORP: Lenders Agree to Forgive Form 10-K Filing Delay --------------------------------------------------------------- Metaldyne Corporation has received waivers from the required lenders under its senior secured credit facilities and from the required parties under its accounts receivable securitization facility with respect to certain provisions requiring the Company to deliver financial statements and certain related matters. The Company is also obligated to provide financial statements under other debt agreements and under certain of its operating lease agreements within prescribed periods. As previously announced, the Company is delayed in filing an Annual Report on Form 10-K containing audited financial statements for its 2003 fiscal year ended December 28, 2003 due to an independent inquiry into certain accounting allegations. In general, the waivers under the senior credit and accounts receivable securitization facilities waive the delivery of financial statements for a period of time ending on the earlier of June 1, 2004 or the occurrence of certain adverse events, including a delivery of a notice of default under certain other agreements. During the waiver period, the Company expects to have access to its revolving credit facility and to its accounts receivable securitization, as typically required, subject to compliance with covenants and other applicable limitations. Copies of these waivers will be filed with the Securities and Exchange Commission as Exhibits to a Form 8-K. In addition, the Company has obtained waivers under its relevant sale- leaseback documents that are generally no less favorable to the Company than the waivers received from the Company's senior lenders. In the event that certain waivers expire or are not obtained or notices of default are delivered in respect of the Company's debt securities, the Company could be materially and adversely affected and lose access to its revolving credit and accounts receivable securitization facilities. There can be no assurance that the matters delaying completion of any audit will be resolved prior to the expiration of any waivers. About Metaldyne Metaldyne is a leading global designer and supplier of metal-based components, assemblies and modules for the automotive industry. Through its Chassis, Driveline and Engine groups, the Company supplies a wide range of products for powertrain and chassis applications for engines, transmission/transfer cases, wheel-ends and suspension systems, axles and driveline systems. Metaldyne is also a globally recognized leader in noise and vibration control products. MIDWEST GENERATION: Plans to Refinance Parent's $693 Million Debt ----------------------------------------------------------------- Midwest Generation, LLC, a subsidiary of Edison Mission Energy, announced that it plans to commence new financings of $1.7 billion, consisting of $700 million of first priority secured institutional term loans and a private placement of $1 billion of second priority senior secured notes. The final aggregate principal amount of notes and loans and other terms of the notes will be determined by market conditions. Midwest Generation intends to use the proceeds of the offerings to refinance $693 million of indebtedness (plus interest) owed by its direct parent, Edison Mission Midwest Holdings Co., which is guaranteed by Midwest Generation and is due in December of this year, and to make termination payments under the Collins Station lease in the amount of approximately $970 million. Of this amount, $774 million will be used to repay debt associated with the Collins Station lease which also is due in December of this year. A new $200 million working capital facility is also being arranged to replace and extend an existing working capital facility under which nothing is currently drawn. This new working capital facility will share the first lien priority with the term loans. The term loans, working capital facility and senior notes will be secured by, among other things, liens on substantially all of the coal fired generating plants owned by Midwest Generation. The secured institutional term loans will be placed in the institutional term loan market. The notes have not been registered under the Securities Act of 1933, as amended and may not be offered or sold in the United States without registration or an applicable exemption from registration requirements. * * * As reported in the Troubled Company Reporter's December 16, 2003 edition, Standard & Poor's Ratings Services affirmed its 'B' ratings on Midwest Generation LLC's $333.5 million pass through certificates due 2009 and $813.5 million pass through certificates due 2016, and removed the ratings from CreditWatch with negative implications where they were placed Oct. 16, 2003. The outlook is negative. The rating action follows Standard & Poor's affirmation of its ratings on Edison Mission Energy (EME; B/Negative/--) and Edison Mission Midwest Holdings Co. (EMM Holdings; B/ Negative/--). EMM Holdings is a wholly owned subsidiary of EME. The affirmations followed from EMM Holdings' retirement of its $781 million credit facility on Dec. 11, 2003 with a $550 million equity infusion from EME and cash on hand. "The negative outlook reflects the negative outlook on EME and EMM Holdings. If the ratings on EME or EMM Holdings falls, the rating on Midwest Generation will likely fall," said Standard & Poor's credit analyst Terry Pratt. MIKOHN GAMING: S&P Affirms B- Ratings & Revises Outlook to Neg. --------------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on Las Vegas, Nevada-based slot-machine manufacturer Mikohn Gaming Corp. to negative from stable. At the same time, Standard & Poor's affirmed its ratings on the company, including its 'B-' corporate credit and senior secured debt ratings. Total debt outstanding at Dec. 31, 2003, was about $64 million. The outlook revision follows Mikohn's earnings announcement, in which the company reported a 16% decline in revenues and a 48% decline in EBITDA, adjusted for various non-recurring charges, for the fiscal year ended Dec. 31, 2003. "These results were well below Standard & Poor's previous expectations, due to lower license fees from slot and table games, and product sales," said Standard & Poor's credit analyst Peggy Hwan. In 2003, Mikohn changed its business strategy to focus on game content development. The company now seeks to sell its technology and game concepts to other gaming equipment manufacturers rather than to casino operators. It will take several quarters to determine if it will be successful in this transition. EBITDA, adjusted for various non-recurring charges, declined from $18.4 million at Dec. 31, 2002 to $9.7 million at Dec. 31, 2003. Although Standard & Poor's expects that Mikohn will see near-term benefits from its business model transition, significant revenue growth is not expected given its small position in the gaming equipment sector and the high degree of competition. MILLBROOK PRESS: Agrees to Sell Roaring Brook Press to Holtzbrinck ------------------------------------------------------------------ The Millbrook Press, Inc. has reached an agreement to sell its Roaring Brook Press imprint. The proposed purchaser is Holtzbrinck Publishers, a group of companies that includes Henry Holt and Company, Farrar, Straus and Giroux, and St. Martin's Press. As a chapter 11 debtor in bankruptcy, The Millbrook Press must obtain approval of the proposed sale from a bankruptcy court. In addition, other companies that may wish to purchase Roaring Brook will be given an opportunity to participate in an auction. If no other potential purchaser emerges at auction and the agreement with Holtzbrinck is approved, the company anticipates that the sale will be made final in late April. It is Holtzbrinck's intention to establish Roaring Brook as a division of Holtzbrinck Publishers and to retain Roaring Brook's existing publishing, editorial and marketing staff and organization. As such, Roaring Brook will continue to operate from offices in Connecticut. Roaring Brook management will report to the President and Publisher of Henry Holt and Company, and the division will be closely affiliated with Holt. For production, sales, distribution, and other support services, Roaring Brook will draw on the resources of Henry Holt in particular and Holtzbrinck more generally. MIRANT: Inks Stipulation Prepaying Rent Due Under 2 Lease Deals --------------------------------------------------------------- On December 18 and 19, 2000, two complex leveraged lease transactions were consummated, whereby Mirant Mid-Atlantic LLC executed 11 Facility Lease Agreements. Each Lease has a distinct "Owner Lessor." Four of the Leases relate to an electric generating facility referred to as the Dickerson Base-Load Units 1, 2 and 3 located in Montgomery County, Maryland. Seven of the Leases relate to an electric generating facility referred to as the Morgantown Base-Load Units 1 and 2 located in Charles County, Maryland. The Lease Documents are the documents executed concurrently with or pursuant to the Facility Lease Agreements, including, without limitation, certain Participation Agreements, Lease Indentures and Pass Through Trust Agreements. Under certain of the Lease Documents, U.S. Bank National Association, as successor by purchase to State Street Bank and Trust Company of Connecticut, National Association acts as both the Lease Indenture Trustee and the Pass Through Trustee in connection with certain promissory notes that were issued by the various Owner Lessors under the Lease Indentures to three Pass Through Trusts which then issued pass through certificates to the "Pass Through Certificate Holders." Under the Lease Documents, MIRMA is required, among other obligations, to make semi-annual payments in June and December of each year. The amount of the Rent fluctuates from payment to payment in accordance with the terms of the Lease Documents. Under the Participation Agreements, MIRMA is required to provide the Trustee with "Qualifying Credit Support" in an amount essentially equal to the greater of (a) the Rent to be paid in the next six months or (b) the average of the next two Rent payments. The amount of the Qualifying Credit Support required under the Lease Documents for the prior period ending as of December 30, 2003, was approximately $61,286,920 for all 11 Leases in the aggregate, and was provided by MIRMA pursuant to existing irrevocable letters of credit, which irrevocable letters of credit presently expire on June 30, 2004. Per the terms of the Lease Documents, the level of Qualifying Credit Support that MIRMA is required to provide to the Trustee through June 30, 2004 increased to approximately $74,558,064 for all 11 Leases in the aggregate due to increased rent obligations on four of the 11 leases, leaving a shortfall between the existing Qualifying Credit Support and the Rent due to be paid by June 30, 2004 of approximately $13,271,144 in the aggregate. As of December 30, 2003, MIRMA had no authority to obtain uncollateralized letters of credit or surety bonds because, among other things, its access to letters of credit was limited to the letters of credit available under the DIP Financing that was obtained by the Debtors postpetition, and those letters of credit were secured by certain assets of the Debtors, including MIRMA, making the letters of credit available under the DIP Financing arguably ineligible to serve as "Qualifying Credit Support." Rather than increase the amount of Qualifying Credit Support over the existing uncollateralized letters of credit currently outstanding in the aggregate amount of approximately $61,286,920, MIRMA determined that nothing in the Lease Documents prevented it from reducing the amount of Rent due to be paid on June 30, 2004 -- and thereby reducing the amount of Qualifying Credit Support required -- by pre-paying the Rent in an amount sufficient that the remaining Rent payable on June 30, 2004 after application of such prepayment, would equal the amount of the existing Qualifying Credit Support of $61,286,920. Therefore, on December 30, 2003, MIRMA unilaterally paid to the Trustee $13,271,144 in cash as a partial pre-payment of Rent. Accordingly, MIRMA and U.S. Bank stipulate and agree that: (1) The $13,271,144 Prepayment MIRMA paid to the Trustee is a partial prepayment of its rental obligations under the Lease Documents, and was made voluntarily by MIRMA and at its sole initiative and request; (2) The $13,271,144 Prepayment is approved as an irrevocable and absolute prepayment of Rent and cannot be later challenged, reversed, recouped, set-off or recovered; (3) The Trustee is entitled to retain and apply the $13,271,144 Prepayment to the Rent owing under the Lease Documents and thereafter disburse these funds and the automatic stay imposed pursuant to Section 362 of the Bankruptcy Code does not prohibit, apply to, or limit same; (4) Notwithstanding the $13,271,144 Prepayment, all terms and provisions of the Lease Documents, including, without limitation: (a) the amounts of rental payments set forth in the Lease Documents and the last day on which an amount of rent can be paid under the Lease Documents without interest, penalty and without giving rise to remedies for nonpayment; (b) the allocation of rental payments to calendar years pursuant to the terms of the Lease Documents; and (c) the Debtors' ongoing obligation to provide Qualifying Credit Support in relation to all future rental payments, in the amounts, and as per the terms, provided by the Lease Documents, remain in full force and effect to the same extent as the same were enforceable prior to the making of the $13,271,144 Prepayment and are not waived, modified or amended by it; (5) At the Debtors' direction, the $13,271,144 Prepayment is to be allocated as: (a) $6,279,769 as a partial prepayment of the Rent payable on June 30, 2004, in relation to that Facility Lease Agreement dated as of December 19, 2000 entered into by Morgantown OL1 LLC and MIRMA, consistent with the terms of the Lease Documents; (b) $5,083,622 as a partial prepayment of the Rent payable on June 30, 2004, in relation to that Facility Lease Agreement dated as of December 19, 2000 entered into by Morgantown OL2 LLC and MIRMA, consistent with the terms of the Lease Documents; (c) $953,877 as a partial prepayment of the Rent payable on June 30, 2004, in relation to that Facility Lease Agreement dated as of December 19, 2000 entered into by Morgantown OL3 LLC and MIRMA consistent with the terms of the Lease Documents; and (d) $953,877 as a partial prepayment of the Rent payable on June 30, 2004, in relation to that Facility Lease Agreement dated as of December 19, 2000 entered into by Morgantown OL4 LLC and MIRMA, consistent with the terms of the Lease Documents; and (6) The act of the Debtors entering into and performing the Stipulation does not in and of itself constitute a default or defined "Event of Default" under the Lease Documents. The Trustee reserves its rights and remedies under the Lease Documents, excepting only that the Trustee is not reserving the right to assert any right, remedy or claim based on a contention inconsistent with the Stipulation. 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. 27; Bankruptcy Creditors' Service, Inc., 215/945-7000) M-WAVE INC: Completes First Step in Silicon Valley Financing Deal ----------------------------------------------------------------- M-Wave, Inc. (Nasdaq:MWAV), a domestic and international value- added service provider, and supply-chain manager of high performance circuit boards, is reporting a further update to the prior announcement this week of its intent to complete a receivables purchase facility through Silicon Valley Bank noted in its SEC filing of Form 12(b)-25 on March 30, 2004. On March 31, 2004, Silicon Valley Bank, N.A. (Bank) and the company completed the first of a two-step financing known as "Mini ABL" that will commence with an accounts receivable purchase facility. Under the facility, the company can sell to the bank, up to 85% of the face value of approved invoices, a maximum aggregate of $3.125 million. The cost of the facility includes a 1/2% one- time discount, plus the bank's prime rate plus 2.5 percent of interest periodically. The company and the bank signed the Mini ABL agreement March 31, 2004. The estimated initial proceeds to the company were $1.7 million. A second financing is proposed to replace concurrently the Mini ABL, but it is subject first to both bank and M-Wave approval. It is estimated that any funding under the second facility will be possible on or about June 2004. The proposed financing is expected to range between $3 and $3.5 million. The revolving credit facility is based upon advances up to 85% of eligible accounts receivable with a $500,000 sub-limit on pre-sold inventory that does not exceed 33% of the total funding at any time. "We are extremely pleased to report this important step in re- establishing credibility both in our industry and with our stakeholders," commented Jim Mayer, M-Wave's Chief Restructuring Advisor. Mayer went on to say, "Silicon Valley Bank really pushed hard to meet our demanding timetable, and it should prove to be a good financial partner both now and up the road ahead." About M-Wave, Inc. Established in 1988 and headquartered in the Chicago suburb of West Chicago, Illinois, M-Wave is a value-added service provider of high performance circuit boards. The company's products are used in a variety of telecommunications and industrial electronics applications. M-Wave services customers like Federal Signal on digital products and Celestica -- Nortel and Remec with its patented bonding technology, Flexlink II(TM),and its supply chain management services including Virtual Manufacturing (VM) and the Virtual Agent Procurement Program (VAP) whereby customers are represented in Asia either on an exclusive or occasional basis in sourcing and fulfilling high volume and technology circuit board production in Asia through the Company's Singapore office. The company trades on the Nasdaq Small Cap market under the symbol "MWAV." Visit the Company on its web site at http://www.mwav.com/ * * * LIQUIDITY AND CAPITAL RESOURCES In its latest Form 10-Q filed with the Securities and Exchange Commission, M-Wave Inc. reports: "Net cash provided by operations was $1,532,000 for the first nine months of 2003 compared to $1,876,000 for the first nine months of 2002. Accounts receivable increased $625,000. Inventories decreased $922,000. The Company received approximately $4,510,000 in income tax refunds. Accounts payable increased $871,000. Depreciation and amortization was $507,000. "Capital expenditures were $54,000 in the first nine months of 2003 compared to $2,902,000 in the first nine months of 2002. The Company has limited plans for capital expenditures in 2003. "The Company completed financing of $8,100,000 from the Illinois Development Finance Authority's 2001 maximum limit on tax-exempt private activity bonds to finance its facility in West Chicago, Illinois on July 26, 2001. The bond replaced approximately $2,865,000 of credit line debt, which had an interest rate of 6% at the time. The term of the loan is 20 years. The Company has been making quarterly sinking fund payments of $325,000, except that the December 2002 quarterly payment was not made until February 2003. The Company deposited $325,000 in the first quarter of 2003 and an additional $1,500,000 in April 2003 into the sinking fund for the Company's outstanding industrial bond debt account per the terms of its Forbearance Agreement with Bank One. "On October 1, 2003, M-Wave entered into a new $2,413,533 loan with Bank One, NA that will mature on December 31, 2003, and will require monthly payments of interest at the bank's prime rate. This loan replaces the unpaid portion of the Industrial Revenue Bonds (IRB) that were used to fund the acquisition of the land and construction of the Company's manufacturing plant located in West Chicago, Illinois, and a related forbearance agreement with the bank. Upon signing the new loan, the Company is no longer in default of its obligations to the bank arising pursuant to the IRB. However, the Company will need to repay or negotiate the loan, or seek alternative financing, prior to the loans' maturity on December 31, 2003. Concurrent with the new loan, M-Wave paid $350,000 toward then-outstanding principal obligations, and Bank One released liens covering the Company's accounts receivable and inventory. Additional terms of the loan include assigning Bank One a lien on the Company's real estate and improvements located in Bensenville, IL, site of its former operations. Bank One is to receive a payment of $650,000 upon sale of the Bensenville assets, to be applied to the loan's principal. The Company's cash balance was approximately $791,000 as of September 30, 2003. "There can be no assurances that the forgoing matters will not adversely impact the Company's relationship with its suppliers and customers. The terms of the Company's long-term bank debt represent the borrowing rates currently available to the Company; accordingly, the fair value of this debt approximates its carrying amount. "The Company had a line of credit agreement, which expired on May 15, 2002. "The Company's ability to make scheduled principal and interest payments on, or to fund working capital and anticipated capital expenditures, will depend on the Company's future performance, which is subject to general economic, financial, competitive and other factors that are beyond its control. The Company's ability to fund operating activities is also dependent upon (a) proceeds of anticipated sales of fixed assets no longer required at the Company's Bensenville facility, (b) the Company's ability to effectively manage its expenses in relation to revenues and (c) the Company's ability to access external sources of financing. The Company has been unable to date to secure additional financing. "There can be no assurances that the steps being taken by the Company, even if successfully completed, will enable the Company to comply with the terms of the Promissory Note and/or fund the Company's working capital requirements. Moreover, even if the Company is able to comply with the terms of the Promissory Note, there can be no assurance that the Company will be able to fund its working capital needs." NATIONAL CENTURY: Reaches Pact Allowing Individual Balloting ------------------------------------------------------------ Credit Suisse First Boston, Cayman Islands Branch is the record holder of the Series 2000-4 Variable Funding Note, in the principal amount of $222,549,020 that was issued by Debtor NPF XII, Inc. CSFB sold certain participation interests in the Note to third parties. The agreements governing the participations do not contemplate voting on a plan of liquidation by the Note Participants. Furthermore, the Disclosure Statement Order does not expressly establish a method for the Note Participants to vote their interests in the Note to accept or reject the Plan. Thus, the parties ask the Court to amend the Disclosure Statement Order to establish a procedure to allow the Note Participants to separately vote their interests in the Note to accept or reject the Plan. With the Court's consent, the Debtors and CSFB stipulate and agree that CSFB will provide the Debtors with a list identifying each Note Participant and the amount of the Note participation held by each Note Participant. Each Note Participant will be entitled to cast an NPF XII Individual Noteholder Ballot in the applicable Participant Amount to vote to accept or reject the Plan pursuant to the procedures set forth in the Disclosure Statement Order. A Note Participant may transmit the ballot to the Debtors by facsimile. If CSFB will have submitted a Noteholder Ballot covering the full amount of the Note, the amount of the CSFB ballot will be deemed reduced by the Participation Amounts for which Noteholder Ballots are duly and timely received from the Note Participants. Headquartered in Dublin, Ohio, National Century Financial Enterprises, Inc. -- http://www.ncfe.com/-- is the market leader in healthcare finance focused on providing medical accounts receivable financing to middle market healthcare providers. The Company filed for Chapter 11 protection on November 18, 2002 (Bankr. D. Ohio Case No. 02-65235). Paul E. Harner, Esq., Jones, Day, Reavis & Pogue represents the Debtors in their restructuring efforts. (National Century Bankruptcy News, Issue No. 36; Bankruptcy Creditors' Service, Inc., 215/945-7000) NET PERCEPTIONS: Obsidian Gives Up Offer Following Patent Sale -------------------------------------------------------------- Obsidian Enterprises, Inc. (OTC Bulletin Board: OBDE), a holding company headquartered in Indianapolis, will withdraw its offer to provide shareholders of Net Perceptions, Inc. (Nasdaq: NETP) the opportunity to receive twenty five cents ($0.25) per share in cash and three one-hundredths (3/100) share of Obsidian common stock for each share of Net Perceptions common stock. On March 31, 2004, Net Perceptions announced that it had closed the previously announced sale of its patent portfolio. The closing of the sale caused the failure of one of the conditions to Obsidian's exchange offer, that Net Perceptions not effect the disposition of any assets other than in the ordinary course of business. Obsidian filed a Registration Statement on Form S-4 and a Tender Offer Statement related to the current offer with the Securities and Exchange Commission on December 15, 2003 and filed its most recent amendments to each on March 29, 2004. Obsidian will promptly request that the Registration Statement be withdrawn. The amended offer was scheduled to expire at 5:00 PM, New York City time, on April 14, 2004. Obsidian is a holding company headquartered in Indianapolis, Indiana. It conducts business through its subsidiaries: Pyramid Coach, Inc., a leading provider of corporate and celebrity entertainer coach leases; United Trailers, Inc., and its division, Southwest Trailers, manufacturers of steel-framed cargo, racing ATV and specialty trailers; U.S. Rubber Reclaiming, Inc., a butyl- rubber reclaiming operation; and Danzer Industries, Inc., a manufacturer of service and utility truck bodies and steel-framed cargo trailers. NEW WORLD: S&P Hatchets Ratings Citing Declining Performance ------------------------------------------------------------ Standard & Poor's Ratings Services lowered its ratings on New World Restaurant Group Inc. to 'CCC+' from 'B-'. The outlook is negative. The rating action is based on declining operating performance and very limited liquidity. An intensely competitive restaurant environment and changing consumer preferences to low-carbohydrate diets have pressured performance. New World is especially vulnerable to changing consumer preferences because it is dependent on a single primary product -- bagels. Same-store sales fell 3.5% in 2003, with the trend worsening in the fourth quarter. Operating margins dropped to 13.6%, from 15.5% the year before. The decrease was attributed to a decline in sales leverage and higher food and labor costs associated with changes in menu mix. As a result, EBITDA dropped 25% to $34.7 million in 2003. Standard & Poor's does not expect that New World will be able to reverse this trend in the near term. Moreover, liquidity is very limited, with only $6.5 million in available cash and $14 million of availability on the company's revolving credit facility. More than $21 million in interest payments are due by July 2004, and $2.1 million of maturities are due in 2004. "The ratings on New World reflect the risks associated with the company's relatively small size in the highly competitive restaurant industry, its reliance on a single primary product and day part, weak cash flow protection measures, and a highly leveraged capital structure," said Standard & Poor's credit analyst Robert Lichtenstein. The restaurant industry is highly competitive, with many larger and well-established restaurants that have substantially greater financial and marketing resources than New World. In addition, the company is vulnerable to changing consumer preferences to low-carbohydrate diets because it is more dependent on a single primary product (bagels) and day part (breakfast) than its competitors. Barriers to entry are low, because start-up costs associated with retail bagel and similar foodservice establishments are not significant. Moreover, local bagel shops provide effective competition. NOVA BIOGENETICS: Sherb Resigns After 10-QSB Filing Without Review ------------------------------------------------------------------ By way of letter dated December 16, 2003, the auditors of Nova Biogenetics Inc., Sherb & Co., LLP resigned, indicating, in part, that "Effective immediately, we will cease our services as your auditors. We have reached this decision because it has come to our attention that you have filed your Form 10-QSB for the quarter ended September 30, 2003, without our review or consent." Sherb audited the Company's balance sheet as of fiscal year ended June 30, 2003 as well as the related statement of operations, stockholders' deficit and cash flows for the fiscal year ended June 30, 2003. The report of Sherb (dated November 14, 2003), on the Company's aforesaid financial statements expressed substantial doubt about the Company's ability to continue as a going concern. The Company has not, as yet, engaged new independent auditors. Nova Biogenetics (formerly Healthcare Network Solutions) researches and develops therapeutic agents which are designed to increase the effectiveness of antibiotic compounds. Nova Biogenetics' therapeutic agents utilize patented technology which works with a wide range antibiotic formulas in the areas of bio- pharmaceuticals, biocides, antimicrobials, and specialty chemicals. OCCUPATIONAL HEALTH: Plans Full Promissory Notes Payment this Year ------------------------------------------------------------------ Occupational Health + Rehabilitation Inc (OTCBB:OHRI) reported financial results for the fourth quarter and calendar year ended December 31, 2003. Year 2003 Highlights -- Revenue of $53,538,000 versus $56,949,000 in 2002. -- Center operating profits of $7,229,000 versus $7,146,000 in 2002. -- Income from operations of $1,127,000 versus $1,251,000 in 2002. -- Net loss of $231,000 versus net income of $143,000 in 2002. -- EBITDA of $1,717,000 versus $1,767,000 in 2002. Quarter Highlights -- Revenue of $13,486,000 versus $14,090,000 in 2002. -- Center operating profits of $1,901,000 versus $1,638,000 in 2002. -- Income from operations of $519,000 versus $202,000 in 2002. -- EBITDA of $667,000 versus $385,000 in 2002. -- Net income of $43,000 versus net loss of $47,000 in 2002. John C. Garbarino, OH+R's President and Chief Executive Officer, said "2003 was a difficult year, one in which the anticipated positive effects on our business of a gradually expanding economy took longer to materialize than we had expected. Nevertheless, it was a year of considerable achievement. We acquired nine occupational health centers we had previously managed and, late in the year, opened a new center in Augusta, Maine. We also improved our operating margins and strengthened our balance sheet. "In January 2003, we acquired four occupational health centers in Connecticut which we had previously managed and simultaneously terminated a long-term management contract for seven mixed use, low margin, centers. In Tennessee, we exited the unprofitable urgent care market in March, and in May acquired five of the centers we had previously managed. During the latter half of the year, we increased prices on various medical services and procedures. The effect of these actions is reflected in our fourth quarter operating margins of 14.1%, as compared to 11.6% in 2002, and an increase of $317,000 in income from operations for the quarter versus the prior year. As a result, we were able to report a small profit for the quarter in contrast to a small loss in the prior year. "The improved operating performance has yet to translate into a substantial increase in net income largely because of an increase in interest expense as a result of the repurchase in March 2003 of our outstanding Series A preferred stock. The arrangement included a cash payment of $2.7 million, issuance of $2.7 million of subordinated promissory notes payable in three equal installments between March 24 and September 24, 2004, and issuance of 1.6 million shares of common stock. In the short term, this transaction will utilize a large portion of our cash flow while also negatively impacting our bottom line. Longer term, we believe it will significantly enhance shareholder value. "On March 24, 2004, we elected to repay half of the $900,000 due on the promissory notes in order to conserve cash resources for operating purposes. Under the terms of the notes, the interest rate on the remaining unpaid principal and interest of $2,286,000 increases to 15% from 8% until the default is cured. The waivers we obtained from the affected parties cover this and any similar default that may occur through March 31, 2005 in the event we make additional partial payments. We do, however, expect to repay the notes in full this calendar year. "We are encouraged that the improving underlying trends evident in our business during the last quarter of 2003 have continued into 2004. Same center revenue for the first two months of this year for occupational health services was up 14% over the prior year. While much of the increase was price driven, we are seeing a pick up in new injury visits, a key business indicator. If we continue to focus on aggressively increasing our market share, adhering to our clinical model, and maintaining a tight control on our costs, we believe we shall produce much improved financial results for the year." OH+R is a leading occupational healthcare provider specializing in the prevention, treatment, and management of work-related injuries and illnesses, as well as regulatory compliance services. The company operates 36 occupational health centers, and also delivers workplace health services at employer locations throughout the United States. OH+R's mission is to reduce the cost of work- related injuries and illnesses, and other healthcare costs for employers while improving the health status of employees through high quality care and extraordinary service. OH+R is expanding its network of service delivery sites, principally through joint ventures with hospitals and development of its workplace health programs. OWENS CORNING: Acquires Outstanding Shares of Mexican Venture ------------------------------------------------------------- Owens Corning acquired from Vitro S.A. de C.V., a Mexican corporation, the outstanding shares of the holding company that owns Vitro Fibras, a Mexican- based joint venture of the companies for $71.5 million. Owens Corning previously held a 40 percent ownership position in the joint venture, which was formed in 1957. "This move opens numerous growth opportunities for Owens Corning in the United States, Mexico and Latin America," said Owens Corning CEO Dave Brown. "We are excited to be in a position to serve new customers in these regions, and further support our current customers by leveraging this new, manufacturing capacity." The production facilities manufacture a wide range of light- density, fiber glass products as well as molded pipe, board and composite reinforcements. The acquisition adds manufacturing operations in Mexico City and three OEM fabrication facilities located in Mexicali, Monterrey and San Luis Potosi, Mexico to Owens Corning's extensive operations in North America. "The addition of this capacity to our manufacturing network means we will be able to grow in many of our most-important reinforcement and insulation markets," said George Kiemle, president of Owens Corning's Insulating Systems Business. "The move will have an immediate impact on our ability to provide more, high-quality products into these markets." Owens Corning's financial advisor for this transaction was Lazard Freres & Co. LLC. Headquartered in Toledo, Ohio, Owens Corning -- http://www.owenscorning.com/-- manufactures fiberglass insulation, roofing materials, vinyl windows and siding, patio doors, rain gutters and downspouts. The Company filed for chapter 11 protection on October 5, 2000 (Bankr. Del. Case. No. 00-03837). Mark S. Chehi, Esq., at Skadden, Arps, Slate, Meagher & Flom represents the Debtors in their restructuring efforts. On Jun 30, 2001, the Debtors listed $6,875,000,000 in assets and $8,281,000,000 in debts. OWENS CORNING: Wants Go-Signal for OC Korea Stock Redemption ------------------------------------------------------------ In addition to its common stock, Owens Corning Korea, a Korean corporation and a non-debtor subsidiary of IPM, Inc., has 1,390,000 shares of issued and outstanding preferred stock. IPM, a wholly owned, non-debtor subsidiary of Owens Corning, owns 70% of the OC Korea common stock. LG Chemical, Ltd., a Korean corporation and third party, owns 29.2% of the common stock of OC Korea and 100% of the preferred stock of OC Korea. J. Kate Stickles, Esq., at Saul Ewing LLP, in Wilmington, Delaware, tells Judge Fitzgerald that the Preferred Stock was issued as of March 12, 1999 pursuant to: (1) the Sixth Amendment dated as of March 8, 1999 to the parties' Joint Venture Agreement dated December 19, 1989; and (2) the related Share Subscription Agreement dated January 21, 1999. Under the terms of the agreements, the Preferred Stock is subject to mandatory redemption in March 2004. Due to the Korean Commercial Code limitations, OC Korea may redeem only 1,150,000 shares of the Preferred Stock in 2004 and will likely redeem the remaining 240,000 shares of the Preferred Stock in 2005. Pursuant to the JV Agreement and the Subscription Agreement, Ms. Stickles reports that the total cost to redeem 1,150,000 shares of the Preferred Stock is around $11,000,000, consisting of: (a) about $9,800,000 at a per share price of $8.55; and (b) $1,100,000 for the annual dividend due on all of the shares of the Preferred Stock, at the rate of 9.5%. The funds required to redeem 1,150,000 shares of the Preferred Stock will be obtained from these sources: -- $9,200,000 in cash from OC Korea; and -- $1,700,000 in cash from a short term loan to OC Korea from Shin Han Bank, a third party. The total cost to redeem 240,000 shares of the Preferred Stock will be $2,000,000. The funds required to redeem the 240,000 shares of the Preferred Stock will be obtained from OC Korea's cash, or borrowing if required, in 2005. Although OC Korea is a non-debtor, certain of its actions are governed by a Standstill and Waiver Agreement dated June 19, 2001, among Owens Corning and certain of its affiliates, Credit Suisse First Boston, as Agent, and certain other lenders under a prepetition Credit Agreement dated June 26, 1997. As a "Covered Non-Debtor" under the Standstill Agreement, OC Korea's actions may be governed by Section 6(j)(2) of the Standstill Agreement, which provides that: ". . . [W]ith respect to any action outside of the ordinary course of business proposed to be taken by the Covered Non-Debtors, the Debtors shall seek Court approval for such non-ordinary course action to the extent that Court approval would be required before such action could be taken if and to the extent the Non-Debtor Guarantors were operating under Chapter 11 of the Bankruptcy Code, unless such action is approved by the Agent, which approval shall not be unreasonably withheld." Although it is not entirely clear whether Section 6(j)(2) applies to the transaction, out of an excess of caution, the Debtors ask the Court to approve the redemption of the Preferred Stock owned by LG Chemical. Ms. Stickles explains that the Preferred Stock redemption will permit OC Korea to avoid what likely would be difficult and costly arbitration or litigation over the consequences of its failure to redeem the Preferred Stock, and over what LG Chemical would no doubt assert would be a failure to comply with the terms of the JV Agreement and the Subscription Agreement. In addition, a failure to redeem the Preferred Stock likely would severely damage OC Korea's relationship with LG Chemical, which is an important purchaser of OC Korea's products, as well as for Owens Corning's composite business throughout Asia. Furthermore, although OC Korea will pay interest at a 5.8% rate on about $1,700,000, it will no longer have to pay dividends on 1,150,000 shares of the Preferred Stock at a 9.5% rate. Without question, the failure to redeem the Preferred Stock would jeopardize the entire OC Korea enterprise, which is an important and valuable asset. CSFB has not yet completed the process of considering the Debtors' request for approval of the redemption of the Preferred Stock. The Debtors reserve the right to withdraw this request in the event CSFB's approval is obtained. Apparently CSFB approved the request. Owens Corning delivered a notice to the bankruptcy court on March 30, 2004, withdrawing its Motion. Headquartered in Toledo, Ohio, Owens Corning -- http://www.owenscorning.com/-- manufactures fiberglass insulation, roofing materials, vinyl windows and siding, patio doors, rain gutters and downspouts. The Company filed for chapter 11 protection on October 5, 2000 (Bankr. Del. Case. No. 00-03837). Mark S. Chehi, Esq., at Skadden, Arps, Slate, Meagher & Flom represents the Debtors in their restructuring efforts. On Jun 30, 2001, the Debtors listed $6,875,000,000 in assets and $8,281,000,000 in debts. (Owens Corning Bankruptcy News, Issue No. 71; Bankruptcy Creditors' Service, Inc., 215/945-7000) PARMALAT GROUP: Hungary Court Okays Parmalat Hungaria Liquidation ----------------------------------------------------------------- The Fejer County Court in Hungary granted The Dairy Product Council's request to liquidate Parmalat Hungaria, according to Budapest Business Journal. The Court appointed TM-Line Kft. as liquidator. According to Court spokesperson Orsolya Boda, the decision was brought down after Parmalat Hungaria failed to answer questions related to its debts to suppliers by a given deadline. Parmalat Hungaria has debts totaling HUF270 million overdue for more than 60 days. The company has 15 days to appeal the decision. Parmalat Hungaria had previously sought liquidation after an attempt to find a buyer for the company failed. 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. 11; Bankruptcy Creditors' Service, Inc., 215/945-7000) PG&E NAT'L: Pushing Nod for Proposed Cost Allocation Methodology ---------------------------------------------------------------- National Energy and Gas Transmission, Inc. and its direct and indirect subsidiaries, including USGen New England, Inc., have developed a cost allocation methodology to align corporate expenses with the entities that benefit from the services in an equitable and efficient manner. The corporate expenses are primarily related to labor expenses and general business costs incurred at the Debtors' corporate headquarters for services, which are requested by the operating divisions, including accounting, external relations, finance/treasury, human resources, IT, legal and tax. The corporate expenses also include certain indirect corporate general and administrative expenses. Pursuant to the Cost Allocation Methodology, the corporate expenses are allocated to four distinct business segments, which are comprised of the three operating divisions and general restructuring. The Operating Divisions include: (a) the gas transmission pipeline division; (b) the independent power plant division; and (c) the USGen division. General restructuring includes the business units that will be eliminated pursuant to the Debtors' global restructuring plan: (a) the energy trading business, which is in the process of winding down its operations; and (b) certain merchant energy projects, which will be transferred to various lender groups. Labor Expenses Employees who provide services for the benefit of a single Operating Division are employed and paid by that Operating Division. As examples, the IPP employees are paid by Power Services Company, the GTN employees are paid by PG&E Gas Transmission Service Company, LLC, and the USGen employees are paid by USG Services Company, LLC. In addition, there are certain employees who provide services that benefit multiple Operating Divisions. If an employee is utilized by more than one Operating Division, the employee cost is charged to the Operating Divisions based on each Operating Division's utilization of that employee. Employees who spend some or all of their time providing services to business units that will be eliminated have their costs charged as restructuring expenses. Direct Corporate General & Administrative Expenses Direct corporate general and administrative expenses are those corporate costs, which directly benefit an individual Operating Division or multiple Operating Divisions. The Direct Corporate G&A Expenses that relate to a single Operating Division are specifically requested by the Operating Division and directly charged to that particular Operating Division. These costs include ordinary G&A expenses, such as training, subscriptions and other expenses. Certain Direct Corporate G&A Expenses benefit multiple Operating Divisions, such as the costs of shared services provided by human resources, IT and the corporate services departments. Moreover, these costs are allocated to the Operating Divisions based on the number of employees at each Operating Division that benefits from the services. Restructuring Expenses Restructuring expenses include all corporate expenses that relate to business units being eliminated pursuant to the Debtors Plan. Employee costs and corporate G&A costs are paid by NEG unless it is determined that the costs relate solely to a specific Debtor or subsidiary. To the extent that the restructuring expenses relate to a specific Debtor or subsidiary, those expenses will be directly charged to that the Debtor-entity. In addition, all G&A costs that relate to the energy trading businesses are directly charged to the ET Debtors. Bankruptcy-Related Professional Fees Bankruptcy-related fees are charged to a Debtor-entity that benefits from the services. In most cases, the bankruptcy- related professional has been retained by an individual Debtor and is reimbursed directly by that Debtor. There are several firms that provide services for the benefit of multiple Debtor- entities. These firms submit a single invoice, which specifically identifies the fees and expenses incurred for particular Debtors. NEG pays the fees and then charges each Debtor-entity based on the fees that are related to the Division. In the case of fees and expenses associated with the services provided by Alvarez & Marsal, LLC, the firm was retained to provide individuals to serve as officers and personnel to assist the officers, and these officers have provided services at NEG's direction that have benefited more than one Debtor. When the cost has benefited specific Debtors, the cost has been allocated among those Debtors. For the period from July 8, 2003 through February 29, 2004, the Debtors allocated fees for the services to each Debtor-entity as: NEG 48.9% USGen 34.2% ET Debtors 16.9% When the services provided are for the benefit of all the Debtors, as in the case of the services of the Chief Executive Officer/Chief Restructuring Officer and the Chief Financial Officer, the fees and expenses are allocated based on a "Distrigas cost allocation." The fee allocation for the CEO/CRO and the CFO is consistent with the Debtors' methodology to allocate the cost of Indirect Corporate G&A Expenses, including those employees who serve as officers or department leaders. Indirect Corporate G&A Expenses While 80% of the Debtors' corporate expenses -- excluding bankruptcy-related professional fees -- are allocated to the Divisions, 20% of the Debtors' corporate expenses cannot be directly attributed to the Divisions. The majority of the Expenses relate to NEGT Services Company, LLC employees who work at the Debtors' corporate headquarters and who provide shared services functions that benefit the Debtors as a whole, instead of a particular Division. The costs, which are primarily related to the executive, finance/treasury, accounting and human resource departments, include the labor expense of the Company's officers who lead the departments. The Indirect Corporate G&A Expenses also include shared service G&A expenses that benefit the Debtors as a whole and cannot be directly attributed to a particular Division. The Indirect Corporate G&A Expenses are allocated to the Divisions pursuant to a cost allocation methodology, which was first proposed by Distrigas, a natural gas merchant company, and approved by the Federal Energy Regulatory Commission. The Distrigas Methodology was designed to allocate parent company costs among its subsidiaries when the costs cannot be directly assigned to specific subsidiaries. This methodology assigns equal weighting to each Division's revenue, assets and headcount to determine each Division's pro-rata share of Indirect Corporate G&A Expenses. To ensure fairness and efficiency, the costs must be directly assigned to a Division, instead of allocated through the Distrigas Methodology, whenever it is possible to do so. Moreover, the Distrigas Methodology may only be applied to Divisions that receive the benefits associated with the shared service costs being allocated. The Senior Management of the Divisions has approved the Distrigas Methodology, and is required to review the monthly allocation charges to ensure compliance with the process. Furthermore, the financial advisors to the Official Committee of Unsecured Creditors for NEG and USGen have reviewed the Distrigas Methodology. Pursuant to the Distrigas Methodology, the Debtors have allocated these expenses to the Divisions during the period from July 8, 2003 through December 31, 2003: Division Allocation Percentage Invoice Amount -------- --------------------- -------------- GTN 23% $2,652,084 IPPs 31% 3,555,245 USGen 28% 3,168,180 ET Debtors 1% 123,462 Other Restructuring 17% 1,933,169 --------------------- -------------- TOTAL 100% $11,432,140 ===================== ============== To ensure that the Indirect Corporate G&A Expenses continue to be allocated properly, the Debtors intend to review and update the allocation percentages periodically and in the event of a significant change to their operating structure, such as the disposition of a Division or subsidiary. The Debtors tell the Court that the Cost Allocation Methodology ensures that the costs will not become unnecessarily passed on to the Divisions. The Cost Allocation Methodology allows the Debtors the flexibility to adjust procedures on a regular basis and in the event of a significant change within. Accordingly, the Debtors jointly ask the Court to approve the Cost Allocation Methodology. 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. 18; Bankruptcy Creditors' Service, Inc., 215/945-7000) PHARMACEUTICAL FORMULATION: 2003 Net Sales Climbs 21.6% to $72MM ---------------------------------------------------------------- Pharmaceutical Formulations, Inc. (OTC Bulletin Board: PHFR) had net sales of $72.5 million for fiscal year 2003 compared with net sales of $59.6 million for the comparable period of the prior year, an increase of 21.6%. Of the increase, $6.3 million reflected Konsyl's net sales for the period May 16, 2003 to January 3, 2004. The balance of the sales increase, totaling $6.6 million or 11.1%, is attributable to organic growth from established private label customers. The company incurred a net loss of $1.8 million for fiscal year 2003 compared to a net loss of $1.4 million for the comparable period in the prior year. For the quarter ended January 3, 2004, PFI had net sales of $20.1 million compared with net sales of $17.3 million in the prior year quarter, an increase of 16.2%. Konsyl's net sales for the quarter were $2.4 million. The Company incurred a net loss of $546,000 in the current quarter compared with a net profit of $483,000 in the prior year quarter. During December 2002, PFI changed its fiscal year-end from the 52- 53 week period which ends on the Saturday closest to June 30 to the 52-53 week period which ends on the Saturday closes to December 31. The just-ended fiscal period consists of the 53 weeks ended January 3, 2004. While the company's net sales have continued to grow steadily throughout 2003 and net sales each quarter of 2003 exceeded the net sales of the comparable prior year quarter, competitive situations have resulted in declining margins in the private label sector of our business. During the year we have continued our efforts to expand our contract manufacturing activities and in the fourth quarter reached agreement with a major pharmaceutical company for the contract manufacture of a new fiber supplement product line which will be launched early in 2004. During 2003 we also completed our acquisition of Konsyl Pharmaceuticals, Inc. of Forth Worth, Texas. Konsyl is a manufacturer and distributor of powdered, dietary natural fiber supplements which has been in business for over 35 years. This acquisition provides an opportunity for PFI to increase its presence in the branded pharmaceutical market and affords PFI the opportunity to introduce new products under the Konsyl brand. The first of such newly developed products, SennaPrompt(TM), has been introduced to the trade with broad acceptance and will be launched in April/May 2004 supported by a national advertising campaign. During the quarter ended September 27, 2003, PFI entered into an agreement with a major supplier of APIS (active pharmaceutical ingredients) for the jointly funded development of Abbreviated New Drug Applications (ANDAs) for generic prescription strength dosages of certain of its products. PFI will develop the formulations and be responsible for applying for and obtaining the necessary regulatory approvals for the ANDAs from the Food and Drug Administration. ICC Industries Inc. has demonstrated its continued confidence in the company's management and business plan by providing loans to increase the company's working capital. ICC, the holder of approximately 74.5 million shares (approximately 87%) of the common stock of PFI, is a major international manufacturer and marketer of chemical, plastic, and pharmaceutical products with 2003 sales of approximately $1.1 billion. The company will file a form 12b-25 extending the deadline for filing its form 10-K for fiscal year 2003, due April 2, 2004. The extension is necessitated by a delay in obtaining and compiling information required to be included in the 10-K. The company fully expects to file its 2003 10-K report prior to the extended deadline of April 17, 2004. As previously reported, at September 27, 2003, the Company's balance sheet showed a total shareholders' equity deficit of about $18 million. PH OF SAVANNAH: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: PH of Savannah, LLC fka Portfolio Homes of Savannah, LLC Building 6, Suite 375 7000 Peachtree Dunwoody Road Atlanta, Georgia 30328 Bankruptcy Case No.: 04-65629 Type of Business: The Debtor is one of the premier designers and builders of luxury homes in the United States. See http://www.portfoliohomes.com/ Chapter 11 Petition Date: April 4, 2004 Court: Northern District of Georgia (Atlanta) Debtor's Counsel: Scott B. Riddle, Esq. Suite 2150, 100 Colony Square 1175 Peachtree Street, North East Atlanta, GA 30361 Tel: 404-815-0164 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 ------ --------------- ------------ Ackerman Technology Group Trade Debt $12,072 Marcia Webber Gardens to Trade Debt $12,000 Love Sunbelt Rentals Trade Debt $11,714 General Shale Brick Trade Debt $8,960 Old Savannah Flooring, Inc. Trade Debt $8,430 Bryan County Tax Property Taxes $8,370 Commissioner Joe Hubbard Plumbing Trade Debt $7,332 AAA World Floors Trade Debt $7,161 Labor Finders Trade Debt $6,507 Platt River Insurance Co. Bond for Trade Debt $6,340 Contractors Unlimited, Inc. Trade Debt $5,946 Stonehenge Marble & Granite Trade Debt $5,505 Galbreath & Sons, Inc. Trade Debt $5,439 J&L Shutters, Inc. Trade Debt $5,059 LT Masonry Inc. Trade Debt $4,600 Joe A. Gayle & Associates Trade Debt $4,438 Waste Management of Savannah Trade Debt $4,224 East Coast Electric Trade Debt $4,202 Ken-Brick Trade Debt $4,006 TR Digital Production Trade Debt $3,300 PLYMOUTH RUBBER: Reports Improved Results for First Quarter 2004 ---------------------------------------------------------------- Plymouth Rubber Company, Inc. (Amex: PLR.A - News, PLR.B - News) announced financial results for the first quarter ended February 27, 2004. Plymouth's first quarter 2004 sales increased 9% to $14,822,000, from $13,543,000 in 2003. Net loss for the first quarter decreased to a loss of $797,000, or a loss of $0.39 diluted earnings per share, compared to a loss of $1,380,000, or a loss of $0.67 diluted earnings per share in 2003. "We were pleased by our continued improvement in the quarter, as our sales strengthened significantly from the previous year and our seasonally normal first quarter loss was reduced by 42%," stated Maurice J. Hamilburg, Plymouth's President and Co-CEO. "We continue to plan higher sales for the remainder of 2004 which should produce considerable further improvement. Our goal is to return Plymouth to profitability in 2004." Plymouth Rubber Company, Inc. manufactures and distributes plastic and rubber products, including automotive tapes, insulating tapes, and other industrial tapes and films. The Company's tape products are used by the electrical supply industry, electric utilities, and automotive and other original equipment manufacturers. Through its Brite-Line Technologies subsidiary, Plymouth manufactures and supplies highway marking products. * * * In its Form 10-K for the fiscal year ended November 28, 2003, Plymouth Rubber Company states: Debt Arrangements "Prior to December, 2002, the Company's term debt agreements had contained various covenants specifying certain financial requirements, including minimum tangible net worth, fixed charge and EBITDA coverage ratios, working capital and maximum ratio of total liabilities to net worth. In addition, the revolving working capital credit facility and the real estate term loan contain an acceleration provision, which can be triggered if the lender determines that an event of default has occurred. "As of each quarter end from September 1, 2000 through August 30, 2002, the Company had been in violation of certain covenants of its term debt facility and therefore, due to a cross default provision, the Company had not been in compliance with a covenant under its revolving working capital credit facility and real estate term loan. As a result, all of the Company's term loans (except for that of its Spanish subsidiary) had been classified as current liabilities on the Company's Consolidated Balance Sheet at the end of each fiscal quarter end. In addition, during July 2002, the Company received a demand from its primary term debt lender for the payment of their outstanding loan balances in the amount of $8,658,000, which represented the total of all future payments and accumulated late fees, and a demand letter from a smaller equipment lender for approximately $69,000 of payments due. "During 2002, the Company negotiated with these lenders and, in November 2002, reached formal agreement to obtain relief from their demands and to restructure existing term debt facilities. Under the new arrangements, the term debt lenders accepted significantly reduced principal payments over the next three years, eliminated financial covenants, waived existing defaults and rescinded demands for accelerated payment, in return for enhanced collateral positions." Overall Cash Position "The consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company's limited liquidity under existing debt arrangements, its working capital deficit, the recent history of losses, the pension payment due August 2004, and the overall risks associated with achieving the 2004 plan may indicate that the Company will be unable to continue as a going concern for a reasonable period of time. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. "As of November 28, 2003, the Company had no unused borrowing capacity under its revolving line of credit with its primary working capital lender, after consideration of collateral limitations. "For fiscal 2004, management's plan is to increase sales and control expenses to improve profitability and provide additional cash from operating activities. The plan also calls for working with a variety of potential lending sources to acquire additional financing, as well as discussions with existing lenders and others to restructure various obligations. "It is management's belief that cash flows generated from operations, and/or additional financing, and/or a restructuring of existing debt and pension obligations will be sufficient to meet the Company's liquidity needs during fiscal 2004. Management also implemented a number of expense reductions during the fourth quarter of 2003, including wage and salary reductions and the deferral of certain personnel replacements or additions. Although management expects to be able to accomplish its business and financing plans, there is no assurance that it will be able to do so. The Company's plans depend upon many factors. Failure to accomplish these plans could have an adverse impact on the Company's liquidity, financial position, and ability to continue operating as a going concern." PRIMUS INTERNATIONAL: S&P Assigns B+ Corporate Credit Rating ------------------------------------------------------------ Standard & Poor's Ratings Services assigned its 'B+' corporate credit rating to aerospace supplier Primus International Inc. At the same time, Standard & Poor's assigned its 'B+' rating to the company's proposed $65 million senior secured second-lien notes due 2009, which are to be sold under SEC Rule 144A with registration rights. The outlook is stable. "The ratings on Primus reflect a small revenue base (around $60 million), the weak commercial aerospace market, and high customer concentration, offset somewhat by efficient operations and leading positions in niche markets," said Standard & Poor's credit analyst Christopher DeNicolo. Bellevue, Wash-based Primus is a Tier II supplier to the commercial, including regional and business jets, and military aircraft original equipment manufacturers (OEM) providing kits, assemblies, and components for aircraft structures, controls, landing gear, passenger doors, and engine mounts. Around 75% of Primus' business is related to Boeing jetliners. The commercial aircraft market has been weak since the events of Sept. 11, 2001, which forced Boeing to reduce production significantly. Primus is attempting to diversify its revenue base by increasing its work on business and regional aircraft, as well as military programs. In addition, the company has been successful in increasing its content on each type of aircraft and expanding relationships with existing customers. Primus' strategy of producing more assemblies and kits should enable the company to capitalize on the trend toward increased outsourcing by OEMs and Tier I suppliers. Production of large jetliners is not expected to improve significantly until 2006, although the markets for regional and military aircraft have better near-term prospects. Operating efficiency is good, as evidenced by solid operating margins. A new facility being built in China, with its lower operating costs, should enable the company to maintain these high margins. The reduction in production of Boeing aircraft has caused revenues to decline to $61 million in 2003, 35% below 2001. Earnings and cash flow have also deteriorated. Funds from operations to debt declined to around 15% in 2003 compared to 20% in 2001. The company has been able to use free cash flow to reduce debt, although leverage remains high. Debt to capital is now below 70% from around 80% in 2001 and debt to EBITDA has deteriorated to almost 5x from 3x in 2001 due to lower earnings. The firm is in the process of refinancing its bank debt with $65 million second-lien notes, but overall leverage is not expected to change. Credit protection measures are likely to improve modestly as a result of new business initiatives and a gradual recovery in the commercial aerospace market. Primus' efforts to generate new business and efficient operations should enable the company to maintain a credit profile consistent with current ratings. REDDI BRAKE SUPPLY: Accepts Change of Auditor After Sellers Merger ------------------------------------------------------------------ Sellers & Andersen, LLC, Certified Public Accountants located in Salt Lake City, Utah prepared the audited financial statements of Reddi Brake Supply Corporation for the years ended June 30, 2003 and 2002. Effective January 30, 2004, Sellers & Andersen, LLC merged with Madsen & Associates, CPA's, Inc. located in Murray, Utah. The decision to accept the change was approved by Reddi Brake Supply's Board of Directors. The Reports of Sellers & Andersen, LLC for the year ending 2003 noted as to uncertainty as follows: Note 7 of the audited financial statements of Reddi Brake Supply Corporation for the Year Ended June 30, 2003, addressed "Going Concern", which stated, in part, "Continuation of the Company as a going concern is dependent on obtaining additional working capital and the management of the Company has developed a strategy, which it believes will accomplish this objective through settlement of its debt, additional loans from related parties, and equity funding, which will enable the Company to conduct operations for the coming year." The principal business activity of the corporation through its subsidiary, Reddi Brake Supply Company, Inc., has been the sale of auto parts, mainly to professional installers, through several warehouses located throughout the United States. The company's Dec. 31, 2003, total stockholders' deficiency tops $69,482. On March 17, 1997 an involuntary petition in bankruptcy was filed against the subsidiary, which resulted in the loss of the business and the warehouses and as a result of the bankruptcy the Company sustained substantial losses. After July 1, 1997 the Company had no operations and is considered to be a development stage company since that date. RENAL CARE: S&P Assigns Low-B Corporate Credit & Sub. Debt Ratings ------------------------------------------------------------------ Standard & Poor's Ratings Services assigned its 'BB-' corporate credit and 'B' subordinated debt ratings to the Nashville, Tennessee-based dialysis provider Renal Care Group Inc., following the company's $345 million acquisition of National Nephrology Associates Inc., another Nashville-based dialysis provider. At the same time, Standard & Poor's withdrew its corporate credit rating on National Nephrology and raised its rating on National Nephrology's existing $160 million 9% subordinated notes due in 2011 to 'B' from 'B-'. Renal Care is expected to initiate an exchange offer that will subsequently change the obligor name on the notes from National Nephrology to Renal Care. National Nephrology's ratings have also been removed from CreditWatch, where they were placed Feb. 2, 2004, when Renal Care announced it would acquire the firm. Pro forma for the acquisition, Renal Care has approximately $485 million of debt outstanding. The rating outlook is positive, reflecting that Standard & Poor's could raise Renal Care's ratings within a couple of years if the company strengthens its financial profile to build additional insulation against competitive risks. Standard & Poor's will also monitor how aggressively Renal Care pursues new investments and share repurchases, actions that could create operating pressures and strain financial resources. "Renal Care's speculative-grade ratings reflect the company's dependence on the treatment of a single disease state (end-stage renal disease, or ESRD), the competitive nature of its industry, its vulnerability to cuts or insufficient increases in third-party reimbursement rates, cost-management pressures, and moderate financial policies," said Standard & Poor's credit analyst Jill Unferth. These factors are partly offset by the stabilizing effects of a diversified recurring revenue stream, a large clinic network with the No. 4 U.S. market position, relatively low technology risks, and attractive growth prospects. Renal Care's acquisition of National Nephrology, by far its largest to date, materially expands its operating scale and coverage within existing and new territories. However, the transaction will be funded solely with debt, and the cost as a multiple of cash flow could prove high. After the National Nephrology acquisition, Renal Care will operate 384 outpatient dialysis centers and provide acute dialysis to 184 hospitals in 30 states. Renal Care also manages or co-manages dialysis programs at several university medical centers, including Vanderbilt University. Unlike some larger providers, Renal Care does not manufacture dialysis equipment, but it does operate its own laboratory. Major competitors include Fresenius Medical Care AG, DaVita Inc., and Gambro AB. REVLON: Stockholders Okay Issuance of 265MM More Class A Shares --------------------------------------------------------------- Revlon, Inc. has given written notice to its stockholders of an action by written consent of the majority stockholders of Revlon, Inc., a Delaware corporation , taken on March [1], 2004 which will be effective on March [22], 2004. The matters upon which action was taken are: (1) The issuance of a minimum of approximately 265 million and a maximum of approximately 486 million shares of Revlon's Class A common stock, par value $0.01 per share, in connection with a series of transactions to reduce debt and strengthen the Company's balance sheet and capital structure. (2) An amendment to the Certificate of Incorporation to increase the number of authorized shares of Revlon Class A common stock from 350 million to 900 million. (3) An amendment to the Certificate of Incorporation to eliminate Revlon's Series A preferred stock, par value $0.01 per share, subject to, and following, Revlon's consummation of all of the components of the series of transactions referenced above. Upon the consummation of such transactions, no shares of Series A preferred stock will be outstanding. Revlon -- whose December 31, 2003 balance sheet shows a total shareholders' equity deficit of about $1.725 billion -- is a worldwide cosmetics, skin care, fragrance and personal care products company. The Company's vision is to become the world's most dynamic leader in global beauty and skin care. The Company's brands, which are sold worldwide, include Revlon(R), Almay(R), Ultima(R), Charlie(R), Flex(R) and Mitchum(R). Websites featuring current product and promotional information can be reached at http://www.revlon.com/and http://www.almay.com/ Corporate investor relations information can be accessed at http://www.revloninc.com/ R.G. BARRY: KPMG LLP Uncertain About Going Concern Viability ------------------------------------------------------------ R.G. Barry Corporation (NYSE: RGB) reported operating results for the fourth quarter and full year ended January 3, 2004. For the year, the Company reported: -- net sales from continuing operations of $123.1 million, up 3.5 percent from the $119.0 million reported in 2002; and -- a net loss of $21.7 million, or $2.21 per share, comprised of a $19.4 million, or $1.97 per share, loss from continuing operations, and $2.3 million, or $0.24 per share, loss from discontinued operations. This compares to a net loss of $11.9 million, or $1.23 per share, in 2002 comprised of an $8.2 million, or $0.84 cents per share, loss from continuing operations and a $3.7 million, or $0.39 per share, loss from discontinued operations. In the fourth quarter, the Company reported: -- net sales of $43.7 million versus $45.2 million in the final quarter of 2002; -- a net loss of $16.5 million, or $1.68 per share, comprised of a $15.5 million, or $1.58 per share, loss from continuing operations, and a $1.0 million, or $0.10 per share, loss from discontinued operations. This compares to a fourth quarter 2002 net loss of $4.0 million, or $0.41 per share, comprised of a loss of $2.0 million, or $0.20 cents per share, from continuing operations and a loss of $2.0 million, or $0.21 per share, from discontinued operations. Significant non-cash charges totaling $19.6 million are reflected in our net loss from continuing operations for both the quarter and full year. These are: -- the establishment of a reserve against deferred tax assets of $13.8 million; -- restructuring and asset impairment charges of $2.6 million primarily related to the write-down of goodwill associated with our French subsidiary; -- the write-down of $1.2 million in excess finished goods inventory; and -- the write-down of $2.0 million in raw materials inventory associated with restructuring actions planned for 2004. "The $19.6 million in non-cash charges masks the improvement of our 2003 financial performance over our 2002 results. However even without the impact of these charges, R.G. Barry's 2003 results reflect the need for significant changes in our business," said Thomas M. Von Lehman, President and Chief Executive Officer. "We have developed a new business model, which focuses on our core customer base and simplifies our product offerings. We expect to recognize significant infrastructure and operating cost savings through the phase-out of our manufacturing facilities in Mexico by the end of 2004, the eventual sourcing of all of our product requirements from third party manufacturers in Asia, and the reduction of selling, general and administrative costs associated with internal manufacturing and our current business model. We also expect to reduce our inventory by year-end 2004, which should help provide additional cash flow to fund our restructuring. We already have begun making these changes. In mid-March 2004, we eliminated approximately 30 positions at our offices in San Antonio and Columbus. Going forward, we anticipate that R.G. Barry will be leaner, our expenses will be lower, and we will benefit from the lower cost of goods that we believe can be obtained through sourcing all of our product requirements from third party contract manufacturers outside North America. "In addition, we believe we have addressed our anticipated funding requirements for 2004. On March 29, 2004, we entered into a three- year, $35 million factoring and financing agreement with The CIT Group/Commercial Services, and have retired all indebtedness to our former lending bank and an institutional lender. CIT has an excellent reputation of providing financial services for the apparel and footwear industries, and we believe that our arrangement provides us with financing that is well suited to our comfort footwear business. "As a result of our cumulative losses, our failure to meet a number of covenants in our prior revolving credit agreement and the discretionary nature of our new factoring and finance agreement with CIT, our independent auditors, KPMG LLP, have modified their report on our 2003 financial statements with a going concern uncertainty paragraph. "The Company recognizes that the implementation of its new business plan this year presents business risks. While we can give no assurance of the plan's success, we believe that these risks should be manageable and that once implemented, the new business model with its resulting lower infrastructure and operating costs and a more efficient supply chain, should give the Company the opportunity to return to profitability in 2005. We will incur significant restructuring costs in 2004, including severance payments and asset write- downs, and therefore do not expect to report an operating profit in 2004. We expect to recognize approximately $1 million in severance payments and an impairment charge of approximately $6 million in the first quarter of 2004 to reflect the closing of our manufacturing operations," Mr. Von Lehman said. ROYSTER-CLARK: S&P Lowers & Removes Ratings from CreditWatch ------------------------------------------------------------ Standard & Poor's Ratings Services lowered its corporate credit rating on Royster Clark Inc. to 'B' from 'B+' and its senior secured debt rating on the company's $200 million first mortgage bonds due 2009 to 'B-' from 'B'. The mortgage bonds are rated one notch below the corporate credit rating because of the amount of priority obligations (the senior secured bank facility) ahead of it and the collateral securing the credit facility. The ratings are removed from CreditWatch. The rating on the senior secured credit facility is withdrawn because it has been refinanced with a new $225 million borrowing-based, senior secured credit facility due 2006 that is unrated. The outlook is stable. "The downgrade reflects the challenging operating environment for agricultural inputs, which has resulted in weak operating performance, and the related impact on Royster-Clark's financial measures. Although the management team has taken steps to improve operating performance by continually looking for operating improvements and better working capital management, Standard & Poor's does not expect that credit protection measures will improve to their previous levels in the near term," said Standard & Poor's credit analyst Jayne M. Ross. The ratings reflect Royster-Clark's highly leveraged financial profile and its participation in a highly cyclical and seasonal, commodity-based industry, offset by a defendable market share in its operating region. STOLT NIELSEN: Delays Planned 5-Year Senior Unsecured Bond Issue ---------------------------------------------------------------- Stolt-Nielsen S.A. (Nasdaq: SNSA; Oslo Stock Exchange: SNI) said it has delayed its previously announced plan to issue a new five- year senior unsecured bond loan. The Company said it intends to resume marketing efforts after the Norwegian Easter holidays and following the release of the Company's first-quarter earnings. Commenting on a recent media report on the Company's potential liabilities relating to the ongoing antitrust investigations and litigation, the Company said that estimates published were not developed or authorized by SNSA. The Company added that it has not provided any such analysis or quantification to the managers of the proposed bond loan, nor has it authorized anyone else to do so. Regarding the published report of possible asset sales and valuations, the Company acknowledges that as part of its recent financial restructuring process it considered the sale of various assets. The Company however cautions that there may not be any such asset sales and furthermore if there are any, the valuations suggested in recent published reports may not serve as a reliable guide to valuations that can be achieved in any such asset sales. Any bonds that are offered will be offered outside the United States pursuant to Regulation S under the Securities Act of 1933. The bonds will not be registered under the Securities Act of 1933 and may not be offered or sold in the United States absent registration under, or an applicable exemption from, the registration requirements of the Securities Act of 1933. About Stolt-Nielsen S.A. Stolt-Nielsen S.A. is one of the world's leading providers of transportation services for bulk liquid chemicals, edible oils, acids, and other specialty liquids. The Company, through its parcel tanker, tank container, terminal, rail and barge services, provides integrated transportation for its customers. The Company also owns 41 percent of Stolt Offshore S.A. (Nasdaq: SOSA; Oslo Stock Exchange: STO), which is a leading offshore contractor to the oil and gas industry. Stolt Offshore specializes in providing technologically sophisticated offshore and subsea engineering, flowline and pipeline lay, construction, inspection, and maintenance services. Stolt Sea Farm, wholly-owned by the Company, produces and markets high quality Atlantic salmon, salmon trout, turbot, halibut, sturgeon, caviar, bluefin tuna, and tilapia. * * * As reported in the December 30, 2003 edition of the Troubled Company Reporter, Stolt-Nielsen S.A. (Nasdaq: SNSA; Oslo Stock Exchange: SNI) announced that its primary lenders agreed to extend the waivers of covenant defaults granted by the lenders until May 21, 2004. SNSA also reported that it will pay down its $160 million revolving credit facility by $20 million on February 29, 2004, and that the Company has received an extension on repayment of the remaining $140 million until May 21, 2004. The waiver extensions provide SNSA with increased flexibility on the debt-to-tangible-net-worth covenant during the waiver period, setting the ratio at 2.75-to-1 at November 30, 2003, and 2.65-to-1 at February 29, 2004. SNSA must also maintain a specified minimum tangible net worth level. Pursuant to the waiver terms, SNSA will develop a financial restructuring plan with its lenders by March 31, 2004. Additionally, the waivers call for improvements in SNSA's liquidity during the waiver period through dispositions or capital-raising initiatives, and oblige SNSA to work with its lenders to provide available collateral to unsecured or under-secured lenders during the waiver period. SUN MICRO: Agrees to Settle Outstanding Litigation with Microsoft ----------------------------------------------------------------- Microsoft Corporation (Nasdaq: MSFT) and Sun Microsystems, Inc., (Nasdaq: SUNW) entered into a broad technology collaboration arrangement to enable their products to work better together and to settle all pending litigation between the two companies. The companies have also entered into agreements on patents and other issues. "This agreement launches a new relationship between Sun and Microsoft -- a significant step forward that allows for cooperation while preserving customer choice," said Scott McNealy, chairman and chief executive officer, Sun Microsystems, Inc. "This agreement will be of significant benefit to both Sun and Microsoft customers. It will stimulate new products, delivering great new choices for customers who want to combine server products from multiple vendors and achieve seamless computing in a heterogeneous computing environment. We look forward to this opportunity -- it provides a framework for cooperation between Sun and Microsoft going forward." "Our companies will continue to compete hard, but this agreement creates a new basis for cooperation that will benefit the customers of both companies," said Steve Ballmer, chief executive officer, Microsoft. "This agreement recognizes that cutting edge R&D and intellectual property protection are the foundation for the growth and success of our industry. This is a positive step forward for both Sun and Microsoft, but the real winners are the customers and developers who rely on our products and innovations." The agreements involve payments of $700 million to Sun by Microsoft to resolve pending antitrust issues and $900 million to resolve patent issues. In addition, Sun and Microsoft have agreed to pay royalties for use of each other's technology, with Microsoft making an up-front payment of $350 million and Sun making payments when this technology is incorporated into its server products. The agreements signed April 2 include the following elements: -- Technical Collaboration: The Technical Collaboration Agreement will provide both companies with access to aspects of each other's server-based technology and will enable them to use this information to develop new server software products that will work better together. The cooperation will initially center on Windows Server and Windows Client, but will eventually include other important areas, including email and database software. For example, one of the important elements of large scale computing environments is software to manage user identities, authentication and authorization. As a result of this agreement, Sun and Microsoft engineers will cooperate to allow identity information to be easily shared between Microsoft Active Directory and the Sun Java System Identity Server, resulting in less complex and more secure computing environments. -- Microsoft Communications Protocol Program: Sun has agreed to sign a license for the Windows desktop operating system communications protocols under Microsoft's Communications Protocol Program, established pursuant to Microsoft's consent decree and final judgment with the U.S. Department of Justice and 18 state attorneys general. -- Microsoft Support for Java: The companies have agreed that Microsoft may continue to provide product support for the Microsoft Java Virtual Machine that customers have deployed in Microsoft's products -- Windows Certification for Sun Server: Sun and Microsoft are announcing Windows certification for Sun's Xeon servers. In addition, the Windows certification process for Sun's Opteron-based servers is moving forward. -- Future Collaboration for Java and .NET: Sun and Microsoft have agreed that they will work together to improve technical collaboration between their Java and .NET technologies. -- Patents and Intellectual Property: The parties have agreed to a broad covenant not to sue with respect to all past patent infringement claims they may have against each other. The agreement also provides for potential future extensions of this type of covenant. The two companies have also agreed to embark on negotiations for a patent cross-license agreement between them. -- Legal Settlements: The two companies are settling and terminating their lawsuit in the United States. Sun is also satisfied that the agreements announced today satisfy the objectives it was pursuing in the EU actions pending against Microsoft. About Microsoft Founded in 1975, Microsoft is the worldwide leader in software, services and solutions that help people and businesses realize their full potential. About Sun Microsystems, Inc. Since its inception in 1982, a singular vision -- "The Network Is The Computer" -- has propelled Sun Microsystems, Inc. to its position as a leading provider of industrial-strength hardware, software and services that make the Net work. Sun can be found in more than 100 countries and on the World Wide Web at http://sun.com/ As reported in the Troubled Company Reporter's March 9, 2004 edition, Standard & Poor's Ratings Services lowered its corporate credit rating on Sun Microsystems Inc. to 'BB+' from 'BBB'. The ratings were removed from CreditWatch, where they were placed on Oct. 17,2003. "The downgrade reflects weak and inconsistent profitability, and our expectation that Sun will be challenged to profitably expand its market presence," said Standard & Poor's credit analyst Martha Toll-Reed. The outlook is stable. As of Dec. 28, 2003, Sun had total debt outstanding of about $1.3 billion. SUN MICROSYSTEMS: Reducing Workforce by 3,300 to Save Costs ----------------------------------------------------------- Sun Microsystems, Inc. (Nasdaq: SUNW), a leader in systems and solutions that make the Net work, will be taking actions to further reduce its cost structure by reducing headcount and restructuring its global property portfolio. Additionally, the company announced it will be incurring a non-cash charge to increase the valuation allowance for its net deferred tax assets. Sun also announced that based on preliminary financial results, it expects revenue for its third quarter ended March 28, 2004 to be approximately $2.65 billion. Net loss on a GAAP basis will be in the range of $750 million and $810 million, or a net loss per share range of $0.23 to $0.25. This GAAP loss includes charges of approximately $350 million for an increase in the valuation allowance for deferred tax assets, and approximately $200 million for workforce and real estate restructuring. Excluding these charges, on a non-GAAP basis, net loss for the quarter would range between $200 million and $260 million, or a net loss per share range of $0.06 to $0.08. Positive cash flow from operations for the quarter is expected to exceed $300 million, and the balance of cash and marketable debt securities is estimated to increase to approximately $5.5 billion. As part of the restructuring program, Sun's workforce will be reduced by approximately 3,300 people. As a result of both the headcount and property portfolio capacity reductions, the Company expects to record a total charge of approximately $475 million spread over the next several quarters, inclusive of the approximate $200 million charge in the third quarter preliminary results. "Over the past three years we have made substantial progress in reducing cost and capacity. We completely revamped our product line, leveraging open source and industry economics while improving product quality and availability. And, we have re- energized our channels and developer communities. Now is the appropriate time to take cost out and drive productivity improvements in anticipation of returning Sun to sustained profitability," said McNealy. "We experienced year-on-year increases in server unit volumes and will work to monetize this momentum going forward with innovations such as Solaris(TM) 10 Operating System, UltraSPARC(R) IV processor-based systems with Sun(TM) Throughput Computing capabilities, our first AMD Opteron- processor based systems and the Sun Java(TM) Enterprise System and the Sun Java(TM) Desktop System." McNealy added, "We are resizing the company to better align our cost structure. Network Computing solutions that solve our customers complex computing problems remains our focus. Continued execution of our strategies will pay-off in revenue generation over the long-run. We are well positioned with the strongest product portfolio in years, a substantial cash and market position, strong channels and partners, and a growing pipeline of customers who are demanding more Sun products and solutions." Steve McGowan, Sun's Chief Financial Officer and Executive Vice President, Corporate Resources, said, "These actions are confirmation of our commitment to continue reducing our cost structure, and with execution on our technology and sales strategy, position the company to achieve our financial goals in fiscal year 2005. We have financial strength as evidenced by our cash generation this quarter and our cash and marketable debt securities balance of approximately $5.5 billion." About Sun Microsystems, Inc. Since its inception in 1982, a singular vision -- "The Network Is The Computer" -- has propelled Sun Microsystems, Inc. to its position as a leading provider of industrial-strength hardware, software and services that make the Net work. Sun can be found in more than 100 countries and on the World Wide Web at http://sun.com/ As reported in the Troubled Company Reporter's March 9, 2004 edition, Standard & Poor's Ratings Services lowered its corporate credit rating on Sun Microsystems Inc. to 'BB+' from 'BBB'. The ratings were removed from CreditWatch, where they were placed on Oct. 17,2003. "The downgrade reflects weak and inconsistent profitability, and our expectation that Sun will be challenged to profitably expand its market presence," said Standard & Poor's credit analyst Martha Toll-Reed. The outlook is stable. As of Dec. 28, 2003, Sun had total debt outstanding of about $1.3 billion. SUN MICROSYSTEMS: Appoints Jonathan Schwartz as President and COO ----------------------------------------------------------------- Sun Microsystems, Inc. (Nasdaq: SUNW), announced, effective immediately, Jonathan Schwartz, 38, has been promoted to president and chief operating officer. Schwartz will report to Scott McNealy, chairman and chief executive officer. All functions, except HR, corporate resources and finance, and the office of the chief technology officer, will report to Schwartz. Most recently, Schwartz served as Sun's executive vice president of Software. A successor will be named shortly. "I'm excited to announce Jonathan's appointment to president and chief operating officer," said McNealy. "Jonathan has demonstrated a passion for disruptive innovations that unleash new customer value, creating new opportunities for Sun and altering the IT landscape. He brings strategic and operating experience, and inspirational leadership to this role that will drive Sun to growth and profitability. This announcement demonstrates the depth of the bench at Sun and our continued succession planning." "Sun Microsystems has consistently demonstrated itself to be one of the most important technology companies on the planet," said Schwartz. "I'm looking forward to continuing a long history of disruptive innovation as we start a new beginning. It's an honor and a privilege to be associated with the talent, commitment and passion here at Sun. I look forward to working with the entire organization as we continue our role as the driving force in Network Computing." Schwartz joined Sun Microsystems in 1996 and has since held positions ranging from software operations and Java technology product marketing, to serving as chief strategy officer responsible for long-range planning, mergers and acquisitions and major strategic investments and initiatives, including the Liberty Alliance Project. Most recently, Schwartz is credited with the development and delivery of Solaris 10 operating system and Sun's Java Systems strategy, which dramatically reduces the cost and complexity of buying and deploying enterprise software on devices, desktops and in data centers. Before joining Sun, Schwartz was chief executive officer of Lighthouse Design, Ltd., which Sun acquired in 1996. He began his career as a consultant with McKinsey & Co., Inc., serving financial services companies. Schwartz is on the board of directors of Dorado Corporation. He holds degrees in economics and mathematics from Wesleyan University. About Sun Microsystems, Inc. Since its inception in 1982, a singular vision -- "The Network Is The Computer" -- has propelled Sun Microsystems, Inc. to its position as a leading provider of industrial-strength hardware, software and services that make the Net work. Sun can be found in more than 100 countries and on the World Wide Web at http://sun.com/ As reported in the Troubled Company Reporter's March 9, 2004 edition, Standard & Poor's Ratings Services lowered its corporate credit rating on Sun Microsystems Inc. to 'BB+' from 'BBB'. The ratings were removed from CreditWatch, where they were placed on Oct. 17,2003. "The downgrade reflects weak and inconsistent profitability, and our expectation that Sun will be challenged to profitably expand its market presence," said Standard & Poor's credit analyst Martha Toll-Reed. The outlook is stable. As of Dec. 28, 2003, Sun had total debt outstanding of about $1.3 billion. UNITEDGLOBALCOM: Selling Euro 500M 1-3/4% Convertible Senior Notes ------------------------------------------------------------------ UnitedGlobalCom, Inc. (UGC) (Nasdaq: UCOMA) agreed to sell euro 500 million aggregate principal amount of its 1-3/4% Convertible Senior Notes due April 15, 2024, for gross proceeds of euro 500 million (approximately $615 million). The Notes will be convertible into shares of UGC's Class A common stock at an initial conversion price of euro 9.7561 per share, which is equivalent to a conversion price of $12.00 per share. The Company has agreed to grant the initial purchaser of the Notes the option to acquire an additional euro 125 million of Notes. UGC plans to use the net proceeds of the Notes offering for working capital and other corporate purposes, which may include the repayment of indebtedness. The Notes and the underlying shares of UGC's Class A common stock have not been registered under the Securities Act of 1933 and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. 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). UNITED STATES SHIPPING: S&P Rates New $225M Bank Facility at BB --------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'BB' corporate credit rating on United States Shipping LLC and assigned its 'BB' senior secured rating to the company's proposed $225 million senior secured bank facility, with a recovery rating of '2', indicating expectations of a substantial (80% to 100%) recovery of principal in a default scenario. The long-term rating outlook was revised to negative from stable. The bank facility will replace the company's existing facility and will be used to purchase a chemical tanker from Exxon Mobil Corp. for $33 million; refinance a chemical tanker purchased from the Dow Chemical Co. in May 2003, which was owned by a company with the same financial sponsor as U.S. Shipping; retire a $29 million subordinated seller's note from Amerada Hess Corp.; pay a $12.5 million dividend to the current equity holders; and partially fund the construction of an articulated tug barge. "The outlook revision to negative from stable reflects the company's recently announced fleet expansion and the potential for future vessel additions, indicating a somewhat more aggressive growth and financial policy," said Standard & Poor's credit analyst Kenneth L. Farer. The ratings reflect U.S. Shipping LLC's high financial leverage and postcharter employment risk in the capital-intensive shipping industry. Mitigating these credit issues are the company's high- quality vessels, support agreement by Hess, which expires in 2007, and competitive barriers provided under the Jones Act. In September 2002, U.S. Shipping was created through the acquisition of six vessels and ancillary assets from Hess. Sterling Investment Partners L.P., a private equity firm, led the acquisition. Standard & Poor's Ratings Services believes the Hess agreement (details of which are confidential) provides structural support to the transaction. In 2004, the company expanded its fleet through the acquisition of two chemical tankers. Edison, N.J.-based U.S. Shipping operates six product tankers and two chemical tankers under the Jones Act, transporting clean petroleum products and chemicals between U.S. ports. Historically, Hess used the product tankers for its own needs and chartered them to other major oil companies. Exxon Mobil and Dow Chemical used the chemical tankers for similar needs. Hess decided to exit the transportation segment of its businesses to focus on core operations. The vessels purchased from Exxon Mobil and Dow were surplus to their internal transportation needs. Each of the product tankers has redundant systems including engine rooms, rudders, and electrical systems, reducing the risk of mechanical failure and unscheduled downtime. In addition, the duplicated systems allow for maintenance work to be performed at sea. The chemical tankers operate under long-term, take-or-pay contracts with major chemical companies and have stainless steel or coated tanks to allow for the transportation of specialized chemicals. Ratings could be lowered if the company's current growth strategy results in lower than anticipated improvements in credit measures. US AIRWAYS: Launches Regional Jet Division -- MidAtlantic Airways ----------------------------------------------------------------- MidAtlantic Airways, US Airways' new regional jet division, took flight April 4, with initial routes from both Philadelphia and Pittsburgh. MidAtlantic operates using US Airways' newest 72-seat Embraer 170 regional jets. MidAtlantic, currently based in Pittsburgh, will have three Embraer 170 regional jets operating on eight routes in April, increasing to 13 in May, and with 24 routes expected by June, as MidAtlantic continues to take delivery of the Embraer 170 aircraft. MIDATLANTIC ROUTE NETWORK Initial Nonstop Roundtrip Service Beginning April 4, 2004 Pittsburgh Philadelphia Albany, N.Y. Kansas City, Mo. Atlanta Syracuse, N.Y. Boston Nashville Newark, N.J. Syracuse, N.Y. Additional Nonstop Roundtrip Markets Starting May 2, 2004 Pittsburgh Philadelphia Buffalo, N.Y.* Buffalo, N.Y.* Kansas City, Mo. Nashville Philadelphia Pittsburgh * MidAtlantic will operate flights from Buffalo to Pittsburgh and Philadelphia, but not outbound from the hubs. "We are very excited to welcome MidAtlantic and its brand-new fleet of 72-seat regional aircraft to the US Airways Express network," said US Airways Express President Bruce Ashby. "These larger regional jets bring us a range of fleet planning opportunities, as they fill the gap between 50-seat and 120- seat fleet types, allowing us to better match supply in existing markets. They also will enable us to add flights in markets US Airways currently does not serve." MidAtlantic is the U.S. launch customer of the Embraer 170 regional jet. By year-end, the airline expects to take delivery of 39 aircraft, manufactured by Empresa Brasileira de Aeronautica of Brazil, as part of US Airways' regional jet order announced in May 2003. To maximize cabin spaciousness without compromising storage area, the Embraer 170 features an elliptical, or 'double-bubble,' cross- section instead of the traditional circular fuselage. The double- bubble geometry uses intersecting circles, tied together by the fuselage floor, providing superior passenger comfort in the form of a larger passenger cabin with maximized cabin width at shoulder level, which offers more room around the passengers' shoulders and feet, eliminates the middle seats and facilitates access to overhead baggage bins. Under a "Jets for Jobs" agreement with US Airways' pilots, 100 percent of MidAtlantic's flying will be done by furloughed US Airways pilots. MidAtlantic flight attendant positions are also filled by furloughed US Airways flight attendants. MidAtlantic currently has 244 employees, 229 of which had been previously furloughed by US Airways. MidAtlantic Airways, a division of US Airways Group, Inc., currently operates 16 flights daily, serving nine destinations in the eastern U.S. The airline, based in Pittsburgh, has a total of 244 employees. VALCOM: Losses & Chapter 11 Bankruptcy Spurs Going Concern Doubt ---------------------------------------------------------------- Valcom Inc. had a net loss of $2,430,159 and a negative cash flow from operations of $300,582 for the year ended September 30, 2003, a working capital deficiency of $8,962,906 and an accumulated deficit of $10,556,350 at September 30, 2003. The Company had a net loss of $4,827,818 and a negative cash flow from operations of 2,005,392 for the year ended September 30, 2002. Valencia Entertainment International, LLC, a California limited liability company and Valcom's subsidiary filed on April 7, 2003, a voluntary petition in bankruptcy for reorganization under Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the Southern District of California. The main income of Valcom is from the operations of Valencia Entertainment International. These conditions raise doubt about the Company's ability to continue as a going concern. During the twelve months ended September 30, 2003, the Company raised $42,000 from private placements of common stock. The Company will need to continue to raise funds through various financings to maintain its operations until such time as cash generated by operations is sufficient to meet its operating and capital requirements. There can be no assurance that the Company will be able to raise such capital on terms acceptable to the Company, if at all. Total shareholders' equity decreased to $2,701,561 in fiscal year 2003. Additional paid in capital increased to $13,242,200 in fiscal year ended September 30, 2003. During the last fiscal year, the Company financed its operations with cash from its operating activities and through sales of equipment and private offerings of its securities to a director of the Company. The Company anticipates that its stock issuances and projected positive cash flow from operations collectively will generate sufficient funds for the Company's operations for the next 12 months. If the Company's existing cash combined with cash from operating activities is not adequate to finance the Company's operations during the next 12 months, the Company will consider one or more of the following options: (1) issuing equity securities in exchange for services, (2) selling additional equity or debt securities or (3) reducing the number of its employees. VERESTAR: SES AMERICOM Acquires Bankrupt Company for $18.5 Million ------------------------------------------------------------------ SES AMERICOM, an SES GLOBAL Company (Luxembourg and Frankfurt Stock Exchanges: SESG) has received U.S. Bankruptcy Court approval to acquire the assets of Verestar Inc., for a total cash consideration of $18.5 million. The Fairfax, VA-based company focuses on managed solutions for satellite communications in government, broadcast, enterprise, and international services markets with strategically located teleport facilities in the U.S. and abroad. Since December 2003 Verestar has been operating under the protection of the bankruptcy court. In an auction conducted in New York on Tuesday, March 30th, SES AMERICOM offered a successful bid to acquire substantially all of Verestar's business and operations, which was approved today by the U.S. Bankruptcy Court for the Southern District of New York in Manhattan. In the near term, SES AMERICOM will seek appropriate government authorizations, including FCC approval to transfer Verestar's communications licenses. Upon receipt of these authorizations, a process anticipated to take a number of months, the transaction will be finalized. Dean Olmstead, President and CEO of SES AMERICOM, said, "We look forward to combining the expertise and resources of Verestar with AMERICOM; this will result in a stronger, bigger and better AMERICOM operating company. The benefit of this transaction will be reflected in AMERICOM's financial performance and in the value we are creating for SES shareholders. The two companies are complementary, and we especially look forward to integrating Verestar's strong and growing government sector business into our government services subsidiary, AMERICOM Government Services (AGS)." David Helfgott, President of AGS, added, "The acquisition of Verestar will provide AGS with complementary lines of business in the government satellite communications services market. Key new assets, strategic contract vehicles, and a talented team of government satcom professionals will improve our ability to serve this important market, expand our service offerings and grow our revenues substantially." Ray O'Brien, President and Chief Operating Officer of Verestar, said, "I am very enthusiastic about the acquisition of Verestar by SES AMERICOM, a proven leader in the satellite industry. When the talented people, intellectual capital, customer relationships and technical assets of Verestar are integrated into AMERICOM, I am confident the business will set even higher standards in quality and customer satisfaction." AMERICOM is committed to expanding its range and depth of customer services, both in government and commercial business. Verestar's expertise in managed networks, will facilitate that growth by adding value to and strengthening customer relationships. Specifically, Verestar's infrastructure and processes that support occasional and news gathering services regularly used by dozens of broadcasters and special event producers will be enhanced by AMERICOM's bandwidth inventory management system and team. In the developing market of fixed and mobile broadband services, the two companies currently have customers in common and a complementary technical direction. In aggregate, this transaction contributes directly to the achievement of AMERICOM's near term and long-term strategic objectives. The Verestar Company/Assets -- 225 employees with headquarters, sales, marketing, finance, and operations based in Fairfax, Virginia and numerous sales offices and technical operations staff in the field and located at teleports. -- Four U.S. teleports in Holmdel, NJ, Alexandria, VA, Brewster, WA, and Cedar Hill, TX. -- Verestar, A.G., a Swiss Corporation, including a full-service teleport business based in Leuk, Switzerland serving Europe, Africa and the Middle East regions. -- Government contracts providing international telecommunications services to several U.S. government agencies. -- Occasional services contracts with most television networks for news backhaul and distribution. -- Commercial contracts with Connexion by Boeing for European and Atlantic Ocean services, various maritime mobile and fixed broadband service companies, and domestic and international telecommunications companies and ISPs. About SES AMERICOM The largest supplier of satellite services in the U.S., SES AMERICOM, Inc. is recognized as a pioneer of global satellite communications services. Established in 1973 with its first satellite circuit for the U.S. Department of Defense, the company currently operates a fleet of 16 spacecraft in orbital positions predominantly providing service throughout the Americas. As a member of the SES GLOBAL family (Luxembourg and Frankfurt Stock Exchanges: SESG), AMERICOM is able to provide end-to-end telecommunications solutions to any region in the world. In 2001, the company established AMERICOM Government Services, a wholly owned subsidiary dedicated to providing satellite-based communications solutions to both civilian and defense agencies of the U.S. government. In 2003, SES AMERICOM formed WORLDSAT, a wholly owned subsidiary that markets capacity on five satellites covering Asia, and the Atlantic and Pacific Ocean regions, and connecting premier regional satellite fleets. With its combined operations, SES AMERICOM serves broadcasters, cable programmers, aeronautical and maritime communications integrators, Internet service providers, mobile communications networks, government agencies, educational institutions, carriers and secure global data networks with efficient communication and content distribution solutions. SES AMERICOM key customers include ABC Radio Networks, Antrix Corporation Ltd., AT&T Alascom, British Telecom, Connexion by Boeing, Deutsche Welle, Discovery, EchoStar, Fox, Gannett, TV Guide/Gemstar, Globecomm Systems, HBO, Hughes Network Systems, JSAT, Korea Telecom, MCI, NBC, The New York Times, NHK, PaxNet, PBS, PCCW, SCC, TELE Greenland, TV Europa, TimeWarner, Unitel Hellas, Viacom, and various agencies of the U.S. government. WATERMAN INDUSTRIES: Employs Aegis Bancorp as Investment Banker --------------------------------------------------------------- Waterman Industries, Inc., seeks approval from the U.S. Bankruptcy Court for the Eastern District of California, Fresno Division, to employ Aegis Bancorp as its investment banker. The Debtor reports that Aegis Bancorp will: a. obtain information from client and its advisors and conducting a review to identify all of the elements which could possibly contribute to the company's value; generate a corporate memorandum describing the different components of client's business to be marketed to potential buyers; b. research, identify and qualify one or more potential suitors; review and update with client the list of potential buyers, and document contacts and levels of interest and/or offers; c. negotiate with potential buyers for the highest and best offers for the client's stock or all or part of the client's assets, and advising client with regard to the optimum alternatives; d. assist with the due diligence process; e. coordinate Debtor's legal, accounting and other advisors to assist with a timely closing of the transaction of the operation to a selected suitor. A $12,000 retainer will be paid to Aegis Bancorp upon court approval. At the closing of a transaction including any acquisition, merger, stock purchase, asset purchase or similar transaction, the Debtor will pay Aegis Bancorp a success fee of 4.0% of the total consideration for amounts up to $3,000,000 plus 3.0% of amounts between $3,000,000 and $5,000,000, plus 2.0% of amounts greater than $5,000,000. Headquartered in Exeter, California, Waterman Industries, Inc. -- http://www.watermanusa.com/-- provides water control and irrigation control. The Company filed for chapter 11 protection on February 10, 2004 (Bankr. E.D. Calif. Case No. 04-11065). Riley C. Walter, Esq., at Walter Law Group, A Professional Corporation represent the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed over $10 million in both estimated debts and assets. WESTPOINT STEVENS: Obtains Approval for $100K Atkins Break-Up Fee ----------------------------------------------------------------- WestPoint Stevens Inc. and its debtor-affiliates sought and obtained the Court's authority to pay a $100,000 break-up fee to Atkins Machinery Inc. in the event that the final accepted bid for the 395 Sulzer projectile looms is from a qualified bidder other than Atkins. The Break-Up Fee will be payable to Atkins in cash, by wire transfer of immediately available funds or proceeds to an account designated in writing by Atkins, on the business day following the date of consummation of the Alternative Transaction. Upon payment of the Break-Up Fee, the Debtors will be fully released and discharged from any liability or obligation arising under or relating to the Purchase Agreement with Atkins. The Debtors believe that the Break-Up Fee provides incentive for Atkins to agree to a higher purchase price. To the extent the purchase price for the Looms has been improved prior to the receipt of competing offers at the Auction, a higher floor has been established for further competing offers. Thus, even if Atkins ultimately is not the successful bidder, the Debtors and their estates will have benefited from the higher floor established by Atkins' improved bid. (WestPoint Bankruptcy News, Issue No. 19; Bankruptcy Creditors' Service, Inc., 215/945-7000) WHX CORP: Handy & Harman Unit Enters Into $163MM Financing Deal --------------------------------------------------------------- April 2 /PRNewswire-FirstCall/ WHX Corporation (NYSE: WHX) announced that its wholly-owned subsidiary, Handy & Harman, successfully entered into new financing arrangements with each of Congress Financial Corporation, as agent, and Ableco Finance LLC, as agent, with aggregate commitments of $163.15 million. Congress' facility consisted of a revolving credit facility of up to $70 million and a term loan of $22.15 million. Ableco's facility consisted of a Tranche B term loan of $71 million. In connection with the transaction, WHX also made a subordinated loan to Handy & Harman in the amount of $43.5 million. The proceeds of the loans from Congress, Ableco and WHX were primarily used to refinance Handy & Harman's previous credit facility with Citibank, N.A., and for working capital purposes. WHX (S&P, B- Corporate Credit Rating, Negative Outlook) is a holding company that has been structured to invest in and/or acquire a diverse group of businesses on a decentralized basis. WHX's primary business is Handy & Harman, a diversified manufacturing company with activities in precious metals fabrication, specialty wire and tubing and engineered materials. WOMEN FIRST: Fails to Comply with Nasdaq's Listing Standards ------------------------------------------------------------ Women First HealthCare, Inc. (Nasdaq:WFHC), a specialty pharmaceutical company, announced that based on notices the Company has received from The Nasdaq Stock Market, the Company expects that its shares will be delisted from the Nasdaq Stock Market at the opening of business on April 12, 2004 because the Company has failed to remain in compliance with listing requirements. Once the Company's common stock is delisted, the Company expects that its shares will continue to trade on the over-the-counter bulletin board. The Company also announced that Richard Rubin has resigned as a director of the Company for personal reasons. About Women First HealthCare, Inc. Women First HealthCare Inc. (Nasdaq: WFHC) is a San Diego-based specialty pharmaceutical company. Founded in 1996, its mission is to help midlife women make informed choices regarding their health care and to provide pharmaceutical products -- the company's primary emphasis -- and lifestyle products to meet their needs. Women First HealthCare is specifically targeted to women age 40+ and their clinicians. Further information about Women First HealthCare can be found online at http://www.womenfirst.com/ * * * Liquidity and Capital Resources In its Form 10-K for the fiscal year ended December 31, 2003, Women First HealthCare, Inc. states: "Our operating results during the fourth quarter of 2002 and the first half of 2003 caused us to fall out of compliance with certain financial covenants applicable to our senior secured notes. In 2003, we amended and restructured the senior secured notes and convertible redeemable preferred stock agreements, among other things, to: (i) waive these past defaults, (ii) institute new financial covenants, (iii) pledge additional security interests in certain assets, (iv) grant new warrants to replace canceled warrants, (v) provide for an apportionment of net proceeds from future asset sales and/or the license and sale of international rights to Vaniqa Cream, if any, based on a pre- determined formula, and (vi) exchange shares of a new series of convertible redeemable preferred stock for the same number of shares of the series of convertible redeemable preferred stock previously issued. The new series of convertible redeemable preferred stock has the same terms as the prior series, except that it requires proceeds of specified asset sales to be used to redeem the shares of convertible redeemable preferred stock and granted us the right to redeem the convertible redeemable preferred stock at our option at a premium equal to 108% of the accreted stated value of the convertible redeemable preferred stock through November 30, 2003, at which time the redemption premium increased based on a formula that took into account the number of shares redeemed before December 19, 2003. "Any future default under the senior secured or other notes payable would allow the respective note holders to accelerate our indebtedness. There is no provision for acceleration of the convertible redeemable preferred stock, and the convertible redeemable preferred stock does not contain financial covenants. However, if we fail to make a purchase, redemption, liquidation or other payment due under the terms of the convertible redeemable preferred stock, the holders, voting as a separate class, will be entitled to elect two directors to our board of directors until such purchase, redemption, liquidation or other payment is made. Also, if we fail to make a purchase, redemption, liquidation or other payment due under the terms of the convertible redeemable preferred stock, or breach or violate any other provision of the convertible redeemable preferred stock, the accretion rate will be increased to 18% per annum until such breach is cured. We currently anticipate breaching at least one of our debt covenants during the first quarter of 2004. "We currently do not have adequate liquidity or available sources of financing to meet our contractual obligations and settle our operating liabilities. Without an infusion of cash, we estimate that we may not have adequate cash to meet our working capital and debt service needs beyond mid-April 2004. If we are unable to raise sufficient capital and generate sufficient cash flow from future operations, there is a substantial prospect that we would be required to seek protection under the U.S. Bankruptcy Code. These factors raise substantial doubt about our ability to continue as a going concern. Should we fail to comply with the covenants governing our indebtedness, the lenders may elect to accelerate our indebtedness and foreclose on the collateral pledged to secure the indebtedness. All of our assets (other than our license rights interest in the EsclimTM patch) have been pledged to secure our obligations under our various debt agreements. "In order to address our current debt service requirements and working capital needs, our strategic priorities are to: (i) identify an acquisition or merger partner with interest in acquiring the Company or all or a significant portion of our assets; (ii) identify and implement measures to conserve cash resources and implement stricter controls over our operating costs (including the layoff and discontinuance of the As We ChangeTM mail order and internet catalog operations by March 29, 2004), (iii) restructure our existing indebtedness and (iv) raise sufficient capital to satisfy our working capital and debt service requirements for the foreseeable future. Specifically, we are considering the sale of any and all products. "We retained Miller Buckfire Lewis Ying & Co., LLC (MBLY) to assist in exploring opportunities to sell our Company or some or all of our pharmaceutical products or license rights, to restructure our significant outstanding indebtedness and to obtain new sources of financing. We and MBLY have begun discussions with the holders of our $28.0 original principal amount of senior secured notes to obtain a forbearance agreement to defer near-term interest payments, address likely future covenant violations and additional financing needs, but there can be no assurance that the senior lenders will grant such forbearance or that such additional financing will be available. If we are unsuccessful in promptly implementing a transaction to sell our Company or some or all of our assets or in obtaining additional financing, we may be forced to withhold payment to suppliers, debt holders and others. In such a case, we could be required to file for bankruptcy protection. Although we have received indications of interest from potential acquirers of one or more of our pharmaceutical products and potential sources of financing, we do not have any definitive agreements in place. There can be no assurance that a sale of assets or a financing on terms acceptable to us or our creditors can be agreed to and implemented. Achievement of these priorities is essential to the continuation of our Company. If we are unsuccessful in promptly implementing a transaction to sell the Company or some or all of its assets or in obtaining additional financing, we may be forced to withhold payments to suppliers, debt holders and others. If we were required to file for bankruptcy protection, there can be no assurance that the Company's stockholders would retain any value." WORLD AIRWAYS: Hollis Harris Discloses 10.2% Equity Stake --------------------------------------------------------- Yvonne Hollis L. Harris, of Peachtree City, Georgia, beneficially owns 10.2% of the outstanding common stock of World Airways, Inc., represented in his holding of 1,282,398 common stock shares of the Company. Mr. Harris holds sole voting and dispositive powers over the stock. Utilizing a well-maintained fleet of international range, widebody aircraft, World Airways has an enviable record of safety, reliability and customer service spanning more than 55 years. The Company is a U.S. certificated air carrier providing customized transportation services for major international passenger and cargo carriers, the United States military and international leisure tour operators. Recognized for its modern aircraft, flexibility and ability to provide superior service, World Airways meets the needs of businesses and governments around the globe. For more information, visit the Company's Web site at http://www.worldairways.com/ At December 31, 2003, the company's balance sheet is upside down by $6,673,000. WORLDCOM INC: Proposes Modifications to Global Services Pact ------------------------------------------------------------ On December 3, 2002, the Worldcom Inc. Debtors assumed a modified version of a Global Services Agreement with BP International Limited. The GSA provided for the management of BP's worldwide telecommunications and related services needs through an outsourcing of BP's worldwide telecommunications to the Debtors on an exclusive basis. A Second Amended and Restated Global Services Agreement further modified the GSA on January 1, 2003. Since the assumption, BP and the Debtors continued to perform under the Second Amended GSA. Absent termination for other reasons, the Second Amended GSA expires by its own terms on May 31, 2005. The Second Amended GSA also provides that BP may terminate, without the necessity of seeking modification of the automatic stay, upon the occurrence of certain events. When the Second Amended GSA was executed, the parties anticipated that the Agreement would allow for much needed flexibility during the GSA's remaining term. The Second Amended GSA relaxed certain requirements of the original GSA in the procurement of Telecom Services. Moreover, under the Assumption Order, BP and the Debtors were permitted to immaterially modify, amend or supplement the Second Amended GSA, without further Court order, upon prior written notice to the Official Committee of Unsecured Creditors. Over time, the Debtors and BP made non-material modifications to the GSA. Recently the parties began to discuss their long-term business relationship. Although the Second Amended GSA will soon expire by its own terms, the Debtors want to develop a long-term business relationship with BP well beyond May 31, 2005. Accordingly, the parties entered into extensive negotiations regarding a contract structure consistent with both parties' operational needs, intended to foster a long-term business relationship between them. As a result, the Debtors and BP agreed to once again modify the Second Amended GSA. According to Sylvia Mayer Baker, Esq., at Weil Gotshal & Manges, LLP, in Houston, Texas, the Second Amended GSA will be modified to provide that: -- The exclusivity provisions contained in the Second Amended GSA will be eliminated. As a result, the Debtors will not continue to be the exclusive telecommunications provider for BP and its affiliates. Although BP will be allowed to seek services from other providers, certain minimum commitments to the Debtors are preserved; -- The Professional Services Organisation established by the Second Amended GSA will be phased out and eliminated. The Debtors will no longer have any obligation to provide the services. BP will reimburse the Debtors for the costs and liabilities, thereby reducing the costs and liabilities associated with the elimination of the PSO. The Debtors will remain responsible for certain employee related claims and will indemnify and hold harmless BP and its affiliates for certain items; -- With the elimination of the PSO, the secondments of certain BP employees to the Debtors will end. BP will be entitled to make offers of employment to WorldCom employees affected by the elimination of the PSO. The offers will be on similar terms and for similar duties and responsibilities as the employees currently have with the Debtors; -- The $1,200,000 due and owing credit and $1,800,000 anticipated credit due to BP under the Second Amended GSA will be eliminated. As a result, the Debtors are no longer liable for these credits; -- The Debtors entered into a guaranty of certain financial obligations under the Second Amended GSA. The Parent Company Guaranty is terminated; -- The Second Amended GSA required the Debtors to review services at regular intervals and provide BP with a benchmark based on current market conditions. The modification limits the benchmarking and, thereby, reduces the Debtors' economic risk in significant respects; -- The modification does not affect the term of the Second Amended GSA; and -- The termination provisions of the Second Amended GSA are modified to include certain fixed liabilities in the event that BP terminates, other than for the Debtors' material breach, or in the event that the Debtors terminate due to BP's material breach. By this motion, the Debtors ask the Court to approve the proposed modification to the Second Amended GSA. Headquarterd in Clinton, Mississippi, WorldCom, Inc., -- http://www.worldcom.com/-- is a pre-eminent global communications provider, operating in more than 65 countries and maintaining one of the most expansive IP networks in the world. The Company filed for chapter 11 protection on July 21, 2002 (Bankr. S.D.N.Y. Case No. 02-13532). On March 31, 2002, the Debtors listed $103,803,000,000 in assets and $45,897,000,000 in debts. (Worldcom Bankruptcy News, Issue No. 50; Bankruptcy Creditors' Service, Inc., 215/945-7000) WORLDGATE: 2003 Audit Report Contains Going Concern Qualification ----------------------------------------------------------------- WorldGate Communications, Inc. (Nasdaq: WGAT) announced that, in compliance with the new NASDAQ Rule 4350(b) requiring a public announcement of the receipt of an audit opinion that contains a going-concern qualification, the Company's 2003 financial statements included in its March 26, 2004, Form 10-K filing with the Securities and Exchange Commission, contained a going-concern qualification from its auditors. This announcement does not reflect any change or amendment to the financial statements as filed. The Company's independent certified public accountant, Grant Thornton LLP, issued such a going-concern qualification on the financial statements of the Company for the fiscal year ending December 2003, based on the significant operating losses and accumulated deficiency reported for the fiscal year ended December 31, 2003. PricewaterhouseCoopers LLP, the Company's previous auditors, had also issued a going-concern qualification for the 2002 fiscal year. About WorldGate Communications, Inc. WorldGate is in the business of developing, manufacturing and distributing video phones for personal and business use, to be marketed with the Ojo brand name. The Ojo video phone is designed to conform with industry standard protocols, and utilizes proprietary enhancements to the latest technology for voice and video compression. Ojo video phones are designed to operate on the high speed data infrastructures provided by cable and DSL providers. WorldGate has applied for patent protection for its unique technology and techno-futuristic design that contribute to the functionality and consumer appeal offered by the Ojo video phone. WorldGate believes that this unique combination of design, technology and availability of broadband networks allow for real life video communication experiences that were not economically or technically viable a short time ago. W.R. GRACE: Pursuing Court Nod for 2004-2006 Key Employee Plan -------------------------------------------------------------- W.R. Grace & Co. and its debtor-affiliates seek Judge Fitzgerald's authority to implement the Grace 2004-2006 Long-Term Incentive Program for certain key employees as part of a continuing, long- term, performance-based incentive compensation program. At the onset of their Chapter 11 cases, the Debtors received authority to continue certain interim compensation programs for key employees, including the 2001-2003 Long-Term Incentive Plan. In August 2002, and again in March, 2003, the Court granted the Debtors' requests seeking to implement a revised compensation and severance program as part of these incentive programs. The ongoing Long-Term Incentive Program contemplates the implementation of a specific, long-term incentive plan each year, with payouts based on the performance of the Debtors' businesses, measured on a three-year performance period beginning with the year in which the specific plan is implemented. To date, the ongoing Long-Term Incentive Program consists of the 2002-2004 LTIP and the 2003-2005 LTIP. In accordance with its design and goals regarding motivating key employees, and the expectations of key employees, the ordinary administration and implementation of the ongoing LTIP requires that the annual long-term incentive awards be made to key employees in the ordinary course of the Debtors' business in the form of an "LTIP." The 2004-2006 LTIP continues the implementation of that overall strategy. Adoption of the 2004- 2006 LTIP is consistent with the ongoing LTIP with respect to its design, and with the 2002-2004 and 2003-2005 LTIPs previously adopted. Similarity of 2004-2006 LTIP With Prior LTIPs In all material respects, the provisions of the 2004-2006 LTIP are identical to the provisions of the two previous LTIPs, which were authorized and approved by the Court under the revised compensation orders. Specifically, the 2004-2006 LTIP provisions are the same as the provisions of the two previous LTIPs in that: -- The payments under the 2004-2006 LTIP will consist of 100% cash. -- Business performance is measured on a 3-year performance period, beginning with 2004. -- The applicable compound annual 3-year growth rate in core earnings before interest and taxes to achieve an award of 100% of the 2004- 2006 LTIP target payment will be 6% per annum. -- Partial payouts for EBIT growth rates between 0% and 6% will be implemented on a straight-line basis. -- The amount of the 2004-2006 LTIP target payment will be increased at EBIT compound annual growth rates in excess of the 6%, up to a maximum of 200% of the Base Target Payment at an annual compound growth EBIT rate of 25%. -- Payouts, if earned, will occur in one-third and two-thirds installments, in March following years 2 and 3 of the Plan. -- The total target payout for the 2004-2006 LTIP will be no more than $11.8 million, which is the same total target payout in the 2002-2004 LTIP and the 2003-2005 LTIP. The sole difference between the two previous LTIPs and the 2004- 2006 LTIP is the 3-year period during which performance is measured. Implementation of the ongoing LTIP necessitates a renewed LTIP be initiated each year, with no more than three LTIPs in effect in any year. Thus, upon Court approval, in 2004, the 2002-2004 LTIP, the 2003-2005 LTIP, and the 2004-2006 LTIP will be active. Importance of 2004-2006 LTIP The Debtors relate that the ongoing LTIP was developed in conjunction with Deloitte & Touche's Human Capital Advisor Services Group at the time the Debtors sought approval of the 2002-2004 LTIP. The 2004-2006 LTIP will have the effect of continuing the ongoing LTIP developed at that time. Permitting the Debtors to continue the ongoing LTIP by implementing the 2004-2006 LTIP will aid the maximization of the value of the Debtors' estates and further the Debtors' efforts to successfully reorganize. The Key Employees are experienced and talented individuals who are intimately familiar with the Debtors' businesses and can easily obtain employment elsewhere. A loss of Key Employees would adversely affect the Debtors' operations by lowering the morale of the remaining employees because of the appearance of disarray and disruption generated by such departures. It would also burden the Debtors' remaining employees with additional responsibilities. All of these factors would make it more likely that the remaining Key Employees, too, would explore other employment opportunities. Without continuing the ongoing LTIP, it would also be difficult and expensive to attract and hire qualified replacements for any Key Employee who leaves the Debtors' employ. The Debtors also note that the loss of even a few Key Employees could potentially lead to more losses. Such a scenario would negatively impact the Debtors' operations. The Debtors, therefore, must protect a critical mass of their high-performing employees in sufficient numbers to profitably operate their businesses during the pendency of their Chapter 11 cases and maximize the likelihood of a successful restructuring. Given the current status of these Chapter 11 cases, the Debtors' management believes that it will be unable to maintain employee morale and loyalty if it does not continue the ongoing LTIP by implementing the 2004-2006 LTIP. The employees' morale, continued loyalty to the Debtors, and faith in the Debtors' management will be furthered by the 2004-2006 LTIP because the ongoing LTIP clearly signals the Debtors' commitment to continuing to profitably grow their businesses for the benefit of the Debtors' stakeholders, including their employees. (W.R. Grace Bankruptcy News, Issue No. 58; Bankruptcy Creditors' Service, Inc., 215/945-7000) * The Garden City Group Names M. Linda Mazzitti Vice President -------------------------------------------------------------- David A. Isaac, president of The Garden City Group, Inc. (GCG), recently announced the appointment of M. Linda Mazzitti as vice president. Mazzitti will be responsible for managing the company's Midwest regional headquarters in Columbus, Ohio, and brings more than 20 years of management and law experience to her new position. "Clients will benefit from Linda's experience not only as an accomplished attorney, but also for her class action management skills. We look forward to the contributions that her talents will make throughout our organization," said Isaac. "Having been a GCG client before joining our company, Linda has the advantage of bringing this unique perspective to the firm," added Isaac. "The deciding factors for my decision to join GCG were the firm's personal responsiveness and superior customer service that impressed me as a client," said Mazzitti. "I am looking forward to the challenges of this new role and to contributing to the future growth and success of GCG." Before joining GCG, Mazzitti was the assistant general counsel and manager of the Class Action Unit at Nationwide Mutual Insurance Company. During her tenure at the company, she was responsible for all Property and Casualty class actions throughout Nationwide, including its affiliates and subsidiaries. In addition, Mazzitti handled and supervised corporate litigation. Mazzitti is a graduate of Western Kentucky University and received her Juris Doctor from the University of Akron School of Law. The Garden City Group, a subsidiary of Crawford & Company, administers class action settlements, manages Chapter 11 claims administration, designs legal notice programs, offers inspection services, manages warranty and product recall services, and provides expert consultation services. Its web address is http://www.gardencitygroup.com/ Based in Atlanta, Georgia, Crawford & Company -- http://www.crawfordandcompany.com/-- is the world's largest independent provider of claims management solutions to insurance companies and self-insured entities, with a global network of more than 700 offices in 67 countries. Major service lines include workers' compensation claims administration and healthcare management services, property and casualty claims management, class action services, and risk management information services. The Company's shares are traded on the NYSE under the symbols CRDA and CRDB. * Large Companies with Insolvent Balance Sheets ----------------------------------------------- Total Shareholders Total Working Equity Assets Capital Company Ticker ($MM) ($MM) ($MM) ------- ------ ------------ ------- -------- Alliance Imaging AIQ N.A. N.A. N.A. Akamai Technologies AKAM (175) 280 140 AK Steel Holdings AKS (53) 5,025 579 Amazon.com AMZN (1,036) 2,162 568 Aphton Corp APHT N.A. N.A. N.A. Arbitron Inc. ARB (18) 184 (25) Alliance Resource ARLP N.A. N.A. N.A. Atari Inc. ATAR (97) 232 (92) Actuant Corp ATU (7) 361 31 Blount International BLT N.A. N.A. N.A. Cincinnati Bell CBB (640) 2,073 (47) Columbia Laboratories CBRX N.A. N.A. N.A. Cubist Pharmaceuticals CBST N.A. N.A. N.A. Cedara Software CDE (2) 20 (12) Choice Hotels CHH (118) 265 (43) Cherokee International CHRK (120) 64 15 Compass Minerals CMP N.A. N.A. N.A. Caraco Pharm Labs CPD N.A. N.A. N.A. Centennial Comm CYCL (579) 1,447 (98) Delta Air Lines DAL (384) 26,356 (1,657) Diagnostic Imag DIAM 0 20 (3) Echostar Comm DISH (1,206) 6,210 1,674 Deluxe Corp DLX (298) 563 (309) Education Lending Group EDLG (2) 3,583 N.A. WR Grace & Co. GRA N.A. N.A. N.A. Graftech International GTI (97) 967 94 Integrated Alarm IASG N.A. N.A. N.A. Imax Corporation IMAX N.A. N.A. N.A. Imclone Systems IMCL (270) 382 (3) Kinetic Concepts KCI (80) 618 244 KCS Energy KCS N.A. N.A. N.A. Lodgenet Entertainment LNET N.A. N.A. N.A. Lucent Technologies LU (3,371) 15,765 2,818 Memberworks Inc. MBRS (20) 248 (89) Millennium Chem. MCH (46) 2,398 637 Moody's Corp. MCO (32) 941 137 McDermott International MDR (363) 1,249 (24) McMoRan Exploration MMR N.A. N.A. N.A. Maxxam Inc. MXM N.A. N.A. N.A. Niku Corp. NIKU N.A. N.A. N.A. Nuvelo Inc. NUVO N.A. N.A. N.A. Northwest Airlines NWAC (1,775) 14,154 (297) Nextel Partner NXTP (13) 1,889 277 ON Semiconductor ONNN (498) 1,144 201 Airgate PCS Inc. PCSAD N.A. N.A. N.A. Petco Animal PETC N.A. N.A. N.A. Pinnacle Airline PNCL (48) 128 13 Primus Telecomm PRTL (96) 751 (26) Per-Se Tech Inc. PSTI (21) 171 (1) Qwest Communications Q (1,106) 26,216 (1,132) Quality Distribution QLTY N.A. N.A. N.A. Rite Aid Corp RAD (93) 6,133 1,676 Sepracor Inc SEPR (619) 1,020 728 St. John Knits Int'l SJKI (65) 234 69 I-Stat Corporation STAT 0 64 33 Syntroleum Corp. SYNM N.A. N.A. N.A. Town and Country Trust TCT (2) 504 N.A. Thermadyne Holdings THMD (665) 297 139 TiVo Inc. TIVO N.A. N.A. N.A. Triton PCS Holdings TPC (180) 1,519 52 Tessera Technologies TSRA N.A. N.A. N.A. Ultimate Software ULTI N.A. N.A. N.A. US Home & Garden USHG (2) 96 (5) UST Inc. UST (115) 1,726 727 Universal Technical UTI (36) 84 29 Valence Tech VLNC (17) 36 4 Western Wireless WWCA (224) 2,521 15 Expressjet Holdings XJT (10) 510 15 Xoma Ltd. XOMA N.A. N.A. N.A. ********* 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, Rizande B. Delos Santos, Paulo Jose A. Solana, 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. 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