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/raid1/www/Hosts/bankrupt/TCR_Public/040519.mbx T R O U B L E D C O M P A N Y R E P O R T E R Wednesday, May 19, 2004, Vol. 8, No. 98 Headlines AFFINITY TECHNOLOGY: Equity Deficit Widens to $1.5M at March 31 AFFORDABLE EQUIPMENT: Case Summary & Largest Unsecured Creditors AFTON FOOD: December 31 Balance sheet Upside Down by CDN$19 Mil. AIR CANADA: Jetsgo Says Monopoly On Domestic Market Won't Last ALLEGHENY: Selling 9% Stake in Ohio Valley Electric to Buckeye ALLEGIANCE TELECOM: Debtor's Equity Deficit Tops $373M at March 31 AMERICAN COMPUTER: Section 341(a) Meeting Slated for May 24 AMES DEPARTMENT: Inks Stipulation Resolving 170 Employee Claims APPLIED EXTRUSION: S&P Cuts Corporate Credit Rating to CCC from B- ARLINGTON HOSPITALITY: Reports Declining Revenues & Losses for Q1 ASPECT COMMS: Improved Fin'l Profile Spurs S&P's B+ Rating Upgrade ATLANTIS SYSTEMS: Unable to File FY 2003 & Q1 Reports on Time BALDWIN PIANO: QRS Music Filing Motion to Vacate Default Judgment BOYD GAMING: Offering $325MM of Coast Hotels' 9.50% Senior Notes BUDGET GROUP: Administrative Claims Bar Date is June 7, 2004 C-GATE CONSTRUCTION: Case Summary & 4 Largest Unsecured Creditors COVAD COMMS: Net Capital Deficit Doubles to $10M at March 31, 2004 COVANTA TAMPA: Financial Projections Underpinning Recovery Plan CROWN CASTLE: S&P Affirms Ratings & Revises Outlook to Positive DESA HOLDINGS: Court Sets May 27 Administrative Claims Bar Date DEX MEDIA: S&P Affirms Low-B Ratings & Revises Outlook to Stable DIGITAL LIGHTWAVE: Balance Sheet Insolvent by $23.6MM at March 31 DOANE PET CARE: Records First Quarter Net Loss of $7.8 Million DOMAN INDUSTRIES: Court Establishes May 25 as New Claims Bar Date DPL INC: Fitch Maintains Negative Watch on Low-B Ratings DT INDUSTRIES: Nasdaq to Delist Shares on May 24 ENERSYS: Files Registration Statement for Initial Public Offering ENRON: Caribe Wants Court Nod To Distribute And Use Sale Proceeds ERN LLC: Look for Schedules & Statements by May 24, 2004 FANSTEEL: Reorganized Company's March 31 Equity Pegged at $965K FEDERAL-MOGUL: Creditors Wants Rothschild To Produce Documents FIBERMARK: Balance Sheet Insolvency Tops $88MM at March 31, 2004 FIBERMARK: Asks to Pay Vendors' $2.9 Million Prepetition Claims FLINTKOTE COMPANY: Employs Pachulski Stang as Bankruptcy Counsel FLOWSERVE CORPORATION: First Quarter 2004 10-Q Not Yet Ready FURNAS COUNTY: U.S. Trustee to Meet with Creditors on June 4 GADZOOKS INC: Fourth Quarter Net Loss Balloons to $27.9 Million GALILEE HOTEL: Voluntary Chapter 11 Case Summary GENTEK HOLDING: Agrees To Settle Remaining Honeywell Disputes GENTEK INC: Delivers First Quarter Financial Results GLOBAL CROSSING: Court Disallows Nine Big Lessor Claims GREENBRIAR CORP: First Quarter 2004 Net Loss Decreases to $175K INTEGRATED HEALTH: Wants Until Sept. 6 to Object to Claims INTERACTIVE MOTORSPORTS: Perfect Line Posts First Positive Results KAISER: Selling Alumina Refining & Related Mining Asset for $23M KAISER: Stockholders' Deficit Widens to $1.8 Billion at March 31 KMART HOLDING: Posts $93 Million Net Income for First Quarter 2004 LEAP WIRELESS: Stockholders' Deficit Tops $922 Million at March 31 LMI AEROSPACE: First Quarter 2004 Net Loss Climbs to $1.5 Million MERDIAN & COMPANY: Case Summary & 20 Largest Unsecured Creditors MIRANT TEXAS: Asks Court to Approve Bosque County Settlement Pact MORTGAGE CAPITAL: S&P Affirms Low-B Ratings on 4 1998-MC-1 Classes NEW ERA DIE CO: Case Summary & 20 Largest Unsecured Creditors NEW WORLD PASTA: Has Until July 9 to Complete & File Schedules NORTEL: Ontario Securities Commission Issues Cease Trade Order NRG ENERGY: Agrees To Resolve Societe Generale's $35MM+ Claim O'SULLIVAN IND: Appoints Robert Parker as New President & CEO OXFORD AUTOMOTIVE: Sells Mexican Plant & Amends Credit Agreement PARMALAT: Chilean Unit Creditors Approve Sale to Bethea SA PER TE CORPORATION: Case Summary & 7 Largest Unsecured Creditors PG&E NAT'L: ET Debtors Enter Into Morgan Stanley Settlement Pact PHILLIPS INDUSTRIAL: Case Summary & Largest Unsecured Creditors PLEJ'S LINEN: Looks to Finley Group for Financial Advice RCN CORP: Lenders Agree to Extend Forbearance Pact Until June 1 REPTRON ELECTRONICS: Reorganized Company Publishes Q1 2004 Results REPTRON: Expects to File Delayed Form 10-Q No Later than Monday REVLON CONSUMER: S&P Affirms B- Rating with Developing Outlook R.G. BARRY: First Quarter Net Loss Shoots Up to $14.2 Million ROYAL D ENTERPRISES: Case Summary & 3 Largest Unsecured Creditors SEQUOIA MORTGAGE: Fitch Takes Rating Actions on Securitizations SOLUTIA INC: Shutting Down Chlorobenzene Business SPIEGEL INC: Agrees To Terminate Newport Centre Lease STEAKHOUSE: Reorganized Restaurant Operator Posts Q1 Losses TRICO MARINE: Missed Interest Payment Prompts S&P's D Ratings UNUMPROVIDENT CORP: S&P Rates $300MM 8.25% Senior Debt at BB+ VITAL BASICS: Gets Nod to Retain Marcus Clegg as Attorneys VISTA GOLD: May Require More Capital to Meet Bond Obligation WOMEN FIRST: Taps Latham & Watkins as Lead Bankruptcy Counsel * Elliott Management Commends 3rd Circuit's Recusal Decision * Upcoming Meetings, Conferences and Seminars ********* AFFINITY TECHNOLOGY: Equity Deficit Widens to $1.5M at March 31 --------------------------------------------------------------- Affinity Technology Group, Inc. (OTCBB: AFFI) announced that revenues for the first quarter of 2004 were $254 thousand, with a net loss of $123 thousand, or $0.00 per share. For the comparable period of 2003, revenues were $4 thousand and the Company reported a net loss of $236 thousand, or $0.01 per share. The weighted average number of shares outstanding during the three months ended March 31, 2004 was 41.9 million, compared to 41.3 million for the same period in 2003. Joe Boyle, Chairman, President and Chief Executive Officer of Affinity, stated, "Our first quarter was highlighted by several significant events. First, we entered into a settlement agreement with an institution that formerly maintained a system that allowed consumers to apply for credit cards over the Internet. The settlement agreement related to our financial account patent and provided additional working capital to support near-term operations. During the quarter we also retried the Temple Ligon case and intend to continue to contest the verdict of $386,000. "Our general and administrative expenses increased from $222,567 to $291,081 during the quarter, primarily as a result of the legal expenses associated with the Ligon trial. In March we were also informed that a request for reexamination had been filed on our patent covering financial and credit accounts (U.S. Patent No. 6,105,007) by Ameritrade and Federated Department Stores. Our pending lawsuits with them have been stayed, pending the decision by the U.S. Patent and Trademark Office as to whether their request will be granted." At March 31, 2004, Affinity Technology Group's balance sheet shows a stockholders' deficit of $1,452,569 compared to a deficit of $1,095,939 at March 31, 2003. About Affinity Technology Group, Inc. Through its subsidiary, decisioning.com, Inc., Affinity Technology Group, Inc. owns a portfolio of patents that cover the automated processing and establishment of loans, financial accounts and credit accounts through an applicant-directed remote interface, such as a personal computer or terminal touch screen. Affinity's patent portfolio includes U. S. Patent No. 5,870,721 C1, No. 5,940,811, and No. 6,105,007. AFFORDABLE EQUIPMENT: Case Summary & Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Affordable Equipment, Inc. 128 B Grace Drive Easley, South Carolina 29640 Bankruptcy Case No.: 04-05635 Type of Business: The Debtor is a lawn mower retailer. See http://www.affordableequipment.com/ Chapter 11 Petition Date: May 13, 2004 Court: District of South Carolina (Spartanburg) Judge: Thurmond Bishop Debtor's Counsel: Robert H. Cooper, Esq. The Cooper Law Firm 2320 East North Street, Suite B Greenville, SC 29607 Tel: 864-271-9911 Estimated Assets: $500,000 to $1 Million Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Transamerica Commercial $212,884 Case $176,424 Eugene Brown Jr. $175,000 Bush Hog $161,390 Textron Financial $138,930 Carolina First Bank $75,439 David H. Paul $50,000 SC Dept. Of Revenue & Taxation $43,735 Case $37,778 GMAC $25,214 Apalachain Development Corp. $24,303 IRS MDP 38 $22,579 Ford Motor Credit Co. $12,000 Capital One $9,449 First USA Bank $8,107 Jim Hockaday $7,500 Rotary Products $7,375 Grace Office Park LLC $5,350 Leinbach Machinery $4,806 Rochelle Attorneys at Law $3,690 AFTON FOOD: December 31 Balance sheet Upside Down by CDN$19 Mil. ---------------------------------------------------------------- Afton Food Group Ltd. (TSXV: AFF) announced their annual results for the fiscal period ending December 31, 2003. Revenue for the year ended December 31, 2003 declined 35% from the same period in 2002, to $19.6 million. The decline results from the closure of unprofitable operations, including the North Bay call centre and corporate restaurants. A reduction in the number of franchise operations contributed to a reduction to royalty and lease revenues. Sales, re-sales and renewals declined in the current year due mainly to a loss of momentum associated with the uncertainties revolving around the restructuring efforts in 2003. Operating earnings increased from $312,000 in fiscal 2002 to $1.3 million for the year ended December 31, 2003. Although revenues declined, the revenues retained generated an improved contribution to operating income. The Company was also successful in reducing "selling, general and administrative expenses" by $769,000, which is a direct result of cost saving initiatives implemented as part of the restructuring process. Franchise rights were written down during the year to $15 million resulting in a non-cash, pre-tax charge to earnings of $31.6 million (after tax $20.1million). The write down recognizes the valuation requirements for an indefinite life intangible asset in accordance with GAAP. The net loss for the year totaled $25.8 million, which included the non-cash write down of franchise rights. Bruce Smith, President and Chief Financial Officer commented, "2003 was a year of significant change to the organization. Some of these changes are highlighted by extremely large numbers such as the write down of franchise rights. There is a tendency for readers to focus attention on changes of this magnitude and lose site of positive initiatives that have taken place in the organization. The positive initiatives will generate forward momentum for Afton in the future. "The changes address the past. For the most part, the store closures that reduced revenues improved earnings by eliminating under performing operations. The very significant write down of intangible assets is a non-cash charge against earnings that does not impact the resources we have available to execute our plans. The restructuring initiatives, including store closures and the write down of franchise rights, streamline the organization. "Positive initiatives implemented in 2003 include the new management team, the 20 point plan and its strategic initiatives, and the benefits resulting from the restructuring process. We acknowledge that there are challenges to be addressed in the year ahead and management's plans are designed to address these challenges." At December 31, 2003, Afton Foods' balance sheet shows a total stockholders' equity deficit of CDN$19,070,106. Afton, through its subsidiaries, is a leading franchisor in the Quick Service Restaurant industry with locations throughout Canada operating under two principal brands, 241 Pizza(R) and Robin's Donuts(R). AIR CANADA: Jetsgo Says Monopoly On Domestic Market Won't Last -------------------------------------------------------------- Discount carriers will control Canadian skies in 2005. This is the bold prediction of Michel Leblanc, president of Jetsgo, one of Air Canada's domestic rival. In a report by the Canadian Press, Mr. Leblanc said that three discount airlines will carry more domestic passengers than Air Canada next year. According to Mr. Leblanc, the troubled national airline does not have the cost structure to compete. On May 11, 2004, Jetsgo announced another strong month of traffic numbers, with an April 2004 load factor of 79.1%. Since April 2003, Revenue Passenger Miles have more than doubled to 204,828,301 from 80,475,459, or a 155% increase. Available Seat Miles are 259,085,760 compared to 110,886,120, representing 134% growth. The April 2003 load factor was 72.6%. "Jetsgo continues to make discount air travel the leading choice for travelers by adding new cities to our flight schedule and expanding the fleet," Mr. Leblanc said. "Our customer response indicates that this model is working." Air Canada also competes with WestJet Airlines and CanJet Airlines. The April 19 rollout of Jetsgo's new shuttle service between Toronto and Montreal was a major initiative for the airline. With weekday flights leaving every hour on the hour, from 7 a.m. to 7 p.m., Jetsgo combined convenience and low prices to offer an attractive service on Canada's busiest route. A total of 28 daily Jetsgo flights now operate each weekday between both cities. Jetsgo recently added Quebec City and Los Angeles to its year- round destinations, further expanding the carrier's network. This week, Jetsgo also introduced the first of its 18 Fokker 100s into service. These 108-seat jets will provide more scheduling flexibility as they are fully incorporated into Jetsgo's active fleet by the end of 2005. Jetsgo is headquartered in Montreal with 950 employees. Jetsgo offers scheduled discount air service to 17 Canadian and seven U.S. destinations, including Victoria, Vancouver, Abbotsford, Edmonton, Calgary, Winnipeg, Toronto, Ottawa, Montreal, Quebec City, Fredericton, Saint John, N.B., Charlottetown, Halifax, Sydney, Stephenville, St. John's, Newfoundland, Los Angeles, New York (Newark), Las Vegas, and St. Petersburg, Fort Lauderdale, Orlando, and Fort Myers in Florida. 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. 35; Bankruptcy Creditors' Service, Inc., 215/945-7000) ALLEGHENY: Selling 9% Stake in Ohio Valley Electric to Buckeye -------------------------------------------------------------- Allegheny Energy, Inc. (NYSE:AYE) announced that it and its subsidiary Allegheny Energy Supply Company, LLC, have signed an agreement to sell their nine percent equity interest and power rights in the Ohio Valley Electric Corporation (OVEC) for an undisclosed amount of cash and other consideration to Buckeye Power Generating, LLC, an affiliate of Buckeye Power, Inc., of Columbus, Ohio. "This sale is another step in strengthening our financial condition and refocusing on our owned and operated generation assets in PJM," stated Paul J. Evanson, Chairman and CEO. OVEC is owned by several investor-owned electric utilities in the Ohio Valley region. OVEC owns two coal-fired power plants with the following year-round, net generating capability: the Kyger Creek Plant (1,028 megawatts) at Cheshire, Ohio, and the Clifty Creek Plant (1,228 megawatts) at Madison, Indiana. Allegheny Energy and another subsidiary, Monongahela Power Company, also own a 3.5- percent equity interest and power rights in OVEC, which are not included in the Buckeye transaction. The OVEC Inter-Company Power Agreement obligates Allegheny Energy Supply to first offer its nine percent power rights to the other owners before selling to Buckeye. The response date for these owners is June 6. If the offer is not accepted by any of the OVEC owners, Allegheny Energy Supply has the right to proceed with the Buckeye transaction. The financial terms of the transaction will not be disclosed while this process is ongoing. Buckeye has 90 days from the execution of the agreement to obtain a commitment for financing the transaction and receive an investment grade credit rating. The agreement has been approved by the Board of Directors of each company and is subject to certain closing conditions, including third party consents, and state and federal regulatory approvals. Buckeye Power, Inc., based in Columbus, is a member-owned generation and transmission cooperative supplying power and energy to the electric distribution cooperatives in Ohio. The cooperatives' certified service territory covers nearly 40 percent of the land area in the state and encompasses 77 of Ohio's 88 counties. They serve more than 335,000 homes, farms, businesses and industries. Headquartered in Greensburg, Pa., Allegheny Energy is an integrated energy company with a portfolio of businesses, including Allegheny Energy Supply, which owns and operates electric generating facilities, and Allegheny Power, which delivers low-cost, reliable electric and natural gas service to about four million people in Pennsylvania, West Virginia, Maryland, Virginia and Ohio. More information about Allegheny Energy is available at http://www.alleghenyenergy.com/ * * * As reported in the Troubled Company Reporter's March 18, 2004 edition, Fitch Ratings affirmed and removed from Rating Watch Negative the ratings of Allegheny Energy, Inc. and the utility subsidiaries: Allegheny Energy, Inc. -- Senior unsecured debt 'BB-'; -- 11-7/8% notes due 2008 'B+'. Allegheny Capital Trust I -- Trust preferred stock 'B+'. West Penn Power Company -- Medium-term notes and senior unsecured 'BBB-'. Potomac Edison Company -- First mortgage bonds 'BBB'; -- Senior unsecured notes 'BBB-'. Monongahela Power Company -- First mortgage bonds 'BBB'; -- Medium-term notes 'BBB-'; -- Pollution control revenue bonds (unsecured) 'BBB-'; -- Preferred stock 'BB+'. The Rating Outlook is Stable. The 'BB-' rating of Allegheny Energy, Inc.'s former bank credit facility maturing in January 2005 is withdrawn as that bank credit facility has been terminated and replaced. ALLEGIANCE TELECOM: Debtor's Equity Deficit Tops $373M at March 31 ------------------------------------------------------------------ Allegiance Telecom, Inc. (OTC Bulletin Board: ALGXQ), a facilities-based national local exchange carrier (NLEC), announced results for the first quarter of 2004. Allegiance reported first quarter revenues of $180.0 million, a decrease of 4.0 percent compared with 4Q03 of $187.5 million and a decrease of 12.0 percent compared with 1Q03 of $204.6 million. The largest components of the year over year quarterly revenue decline were $10.7 million in federally and state mandated reductions in intercarrier compensation and a $7.3 million decrease in revenue from Allegiance's Shared Technologies subsidiary. The Company's loss from operations was $32.0 million in 1Q04. Adjusted EBITDA(1) (see footnote) margin (Adjusted EBITDA as a percentage of total revenues) for the quarter was 13.7 percent, with Adjusted EBITDA of $24.7 million in 1Q04. Allegiance also reported Free Cash Flow from Operations of $22.1 million. Reorganization expenses of $19.5 million included a break up fee and expense reimbursements to Qwest Communications International, Inc. of $13.0 million and $6.5 million in professional fees and other restructuring losses. At March 31, 2004, Allegiance Telecom Inc.'s balance sheet shows a $372,825,000 stockholders' deficit as compared to the $313,471,000 deficit at December 31, 2003. On February 13, 2004, Allegiance selected XO Communications, Inc. (OTC Bulletin Board: XOCM) as the winning bidder for substantially all of the assets of Allegiance Telecom, which had filed for financial restructuring under Chapter 11 of the U.S. Bankruptcy Code on May 14, 2003. Under the terms of the purchase agreement, XO will purchase, for approximately $311 million in cash and approximately 45.38 million shares of XO common stock, substantially all of the assets of Allegiance Telecom and its subsidiaries, except for Allegiance's customer premises equipment sales and maintenance business (operated under the name of Shared Technologies), its dedicated dial-up access services business operated under an agreement with Level 3 Communications LLC, its shared hosting business and certain other Allegiance assets and operations. Consolidated revenues for the quarter totaled $180.0 million. The revenue mix consisted of $72.1 million in local voice services (compared to $85.2 million in the same period for 2003); carrier access and interconnection revenues of $12.6 million are included in the local voice revenues for 1Q04, compared to $23.3 million included in local voice services in 1Q03. Long distance service revenues totaled $13.1 million in 1Q04 and $11.5 million in 1Q03. Data revenues totaled $66.9 million, compared to $72.7 million in the same period for 2003. Included in Allegiance's data revenues are results from its long-term integrated network services contract with Level 3 Communications which was sold to Level 3 in April 2004. Revenue from the Level 3 contract totaled $27.7 million in the first quarter of 2004 and $30.0 million in the first quarter of 2003. Subsequent to the end of the first quarter, in April 2004, Allegiance received $54 million in cash from Level 3 to terminate its long-term contract. Revenues from Allegiance's Shared Technologies operation totaled $27.9 million in the first quarter of 2004, compared to $35.2 million in the first quarter of 2003. Shared Technologies' operations will not be acquired by XO Communications. Allegiance Telecom headcount totaled approximately 2,840 at the end of the first quarter of 2004, down from 3,620 at the end of the first quarter 2003. Shared Technologies ended the quarter with approximately 580 employees. On February 20, 2004, the U.S. Bankruptcy Court for the Southern District of New York approved the proposed purchase of substantially all of Allegiance's assets by XO, and XO expects to close on the sale by the end of the second quarter, 2004. On April 22, 2004, Allegiance issued its second amended and restated joint plan of reorganization and second amended and restated disclosure statement. Ballots for accepting or rejecting the plan of reorganization have been distributed to claim holders of record on April 23, 2004. The voting deadline is 5:00 p.m. Eastern time on June 1, 2004, the confirmation objection deadline is 4:00 p.m. Eastern on June 1, 2004 and the confirmation hearing date is scheduled at 10:00 a.m. Eastern on June 7, 2004. On April 16, 2004, Allegiance announced that XO Communications has entered into an operating agreement allowing XO to operate the Allegiance assets it is acquiring, subject to Allegiance's consent and in accordance with applicable law, regulations, and tariffs. The operating agreement is in place until the final closing of the purchase agreement. About Allegiance Telecom Allegiance Telecom is a facilities-based national integrated communications provider headquartered in Dallas, Texas. As the leader in competitive local service for medium and small businesses, Allegiance offers "One source for business telecom(TM)" -- a complete package of telecommunications services, including local, long distance, international calling, high-speed data transmission and Internet services and a full suite of customer premise communications equipment and service offerings. Allegiance serves major metropolitan areas in the U.S. with its single source provider approach. AMERICAN COMPUTER: Section 341(a) Meeting Slated for May 24 ----------------------------------------------------------- The United States Trustee will convene a meeting of American Computer 7 Digital Co.'s creditors at 11:00 a.m., on May 24, 2004 in Room 2610 at 725 South Figueroa St., Los Angeles, California 90017. This is the first meeting of creditors required under 11 U.S.C. Sec. 341(a) in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Headquartered in Baldwin Park, California, American Computer & Digital Co., filed for chapter 11 protection on April 22, 2004 (Bankr. C.D. Calif. Case No. 04-19259). Robert P. Goe, Esq., at Goe & Forsythe LLP represents the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed both estimated debts and assets of over $10 million. AMES DEPARTMENT: Inks Stipulation Resolving 170 Employee Claims --------------------------------------------------------------- The Ames Department Stores, Inc. Debtors have ceased all retail operations, conducted going out of business sales at each of their retail locations, closed their corporate headquarters, and dismissed 170 employees at various times during the course of their Chapter 11 cases. Upon severance, each Employee received an initial severance payment equal to 40% -- 25% for officers -- of the amount the Debtors believed to be the Employee's severance entitlement. The Employees have a claim for the balance of the severance. The Debtors recently offered to settle the Wage Claims for a cash payment equal to 40% of the Wage Claims. The Employees also asserted they are entitled to payment under the Workers Adjustment Retraining Notification Act and, through their counsel, Lankenau & Miller, LLP, have filed individual, timely requests for payment of administrative expenses against the Debtors' estates. The Employees seek to recover their wages and other benefits for 60 days following the termination of their employment, which wages have not been paid. The Debtors assert that they did not violate the WARN Act and dispute the Employees' entitlement to the WARN Claims. Subsequently, to settle the WARN Claims, the Debtors offered each Employee 35% of the difference between each Employee's WARN Claim and the sum of the Initial Payment and the Settlement Offer. The Debtors provided Lankenau & Miller with a spreadsheet setting forth the amounts the Debtors have agreed to pay each individual Employee on account of each Employee's Claim. In turn, Lankenau & Miller forwarded the individual settlement calculations to the Employees for their approval. After corresponding with the Employees, Lankenau & Miller informed the Debtors that: (a) the Employees have accepted the Settlement; and (b) four individuals who have asserted claims against the Debtors declined to accept the Settlement: -- Wendy Ewing, -- Francis A. Kobbs, -- Mary Lapenta, and -- Michael Mazzarella Each of the Employees also agreed to pay 1/3 of the WARN Settlement Offer to Lankenau & Miller as attorneys' fees. Accordingly, the parties stipulate and agree that: (a) In full and final satisfaction of the Claims, the Debtors will pay each Employee, without admitting liability, the sum of the Settlement Offer, plus the WARN Settlement Offer; (b) As part of the Settlement, and by accepting the Debtors' checks, each Employee and Lankenau & Miller: (i) releases the Debtors, the Debtors' estates, and all the Debtors' officers, directors, employees, and professionals, the statutory creditors' committee appointed in these Chapter 11 cases and all its members and professionals, and Kimco Realty Corporation, Kimco Funding, LLC, and all of their professionals from any and all liability should the ultimate recovery to the holders of administrative expense claims exceed the amount paid by the Debtors for the settled Claims; and (ii) forfeits the right to assert any additional administrative expense claims incurred prior to April 16, 2004 in the Debtors' Chapter 11 cases; (c) All attorneys' fees and costs due to Lankenau & Miller will be borne by the Employees. Fees and costs due to Lankenau & Miller are to be deducted only from the amounts attributable to the WARN Settlement Offer and will be paid directly to Lankenau & Miller by the Debtors; (d) The Debtors will provide Lankenau & Miller with: (i) individual checks, payable to the individual Employees, representing the Settlement Amount for Each Employee -- less one-third of the amount of the WARN Settlement Offer for legal fees and costs; and (ii) a $72,984 check, payable to Lankenau & Miller, representing the legal fees and costs deducted from the Settlement Amount. Lankenau & Miller will be responsible for sending the checks to the Employees; (e) Lankenau & Miller is authorized to settle the Claims and provide the Releases on the Employees' behalf; and (f) The Debtors do not acknowledge any liability for WARN Act violations and reserve their rights to object to any subsequently filed claims alleging WARN Act violations. Judge Gerber approves the Stipulation. Headquartered in Rocky Hill, Connecticut, Ames Department Stores, Inc., is a regional discount retailer that, through its subsidiaries, currently operates 452 stores in nineteen states and the District of Columbia. The Company filed for chapter 11 protection on August 20, 2001 (Bankr. S.D.N.Y. Case No. 01-42217). Albert Togut, Esq., Frank A. Oswald, Esq. at Togut, Segal & Segal LLP and Martin J. Bienenstock, Esq., and Warren T. Buhle, Esq., at Weil, Gotshal & Manges LLP represent the Debtors in their restructuring efforts. When the Company filed for protection from their creditors, they listed $1,901,573,000 in assets and $1,558,410,000 in liabilities. (AMES Bankruptcy News, Issue No. 54; Bankruptcy Creditors' Service, Inc., 215/945-7000) APPLIED EXTRUSION: S&P Cuts Corporate Credit Rating to CCC from B- ------------------------------------------------------------------ Standard & Poor's Ratings Services lowered its corporate credit rating on New Castle, Delaware-based Applied Extrusion Technologies Inc. to 'CCC' from 'B-'. At the same time, Standard & Poor's lowered its ratings on the company's senior unsecured notes to 'CC' from 'CCC'. The outlook remains negative. Applied Extrusion had outstanding debt of approximately $362 million at March 31, 2004. "The downgrade reflects Applied Extrusion's extended poor operating and financial performance, weakened liquidity position, very aggressive debt leverage, and negative cash flows," said Standard & Poor's credit analyst Paul Blake. The company may be challenged to remain in compliance with minimum EBITDA levels required in its bank credit agreement, should operating profitability fail to improve. Additionally, the company's ability to make a $14.8 million semi-annual coupon payment in July 2004 appears uncertain based on current operating trends. The ratings reflect Applied Extrusion's well-below-average financial profile, subpar operating performance, and vulnerability to raw material cost volatility, which more than outweigh its position as the largest oriented polypropylene (OPP) films producer in North America. With annual revenues of about $250 million, the company holds an estimated 25% share of the OPP market. The OPP market is highly competitive and subject to swings in raw material prices, namely polypropylene resins. Applied Extrusion benefits from its position as a low-cost supplier to converters (packaging companies that print and laminate films for further sale to end users) and end users of OPP film. Although end markets usually include relatively recession-resistant applications such as labels for beverage bottles and containers, and food packaging, the major consumer products companies have been experiencing reduced volumes. Customer concentration is high with the largest converter customer accounting for about 16% of revenues. Applied Extrusion's operating performance has been weakened by volume declines, resulting from loss of market share, and by capacity utilization below expectations at about 90%. Volumes increased, however, in the quarter ending March 31, 2004, due to the company's decision to sell lower-priced inventory near cost. This strategy may help to decrease inventory levels; however, profitability has suffered as a result. Operating margins have declined to the mid-teens percent area from approximately 20% previously. In addition, higher resin prices, partially because of elevated oil and natural gas prices, and lower OPP film utilization rates have also weakened results. Increased raw material costs and soft demand have been partially offset by restructuring measures, including headcount reductions, and some price increases, the most recent of which was announced in March 2004. Further, Applied Extrusion has implemented sales initiatives, which it hopes will help to regain lost market share. ARLINGTON HOSPITALITY: Reports Declining Revenues & Losses for Q1 ----------------------------------------------------------------- Arlington Hospitality, Inc. (Nasdaq/NM: HOST), a hotel development and management company, announced results for the first quarter ended March 31, 2004. Revenues in the 2004 first quarter were down slightly to $17.4 million, compared to $17.8 million in the same 2003 period, primarily reflecting the sale of hotels during the past year, resulting in fewer hotels owned and operated by the company. Against the backdrop of what is generally regarded as the industry's seasonally weakest demand period, the company reported a net loss for the 2004 first quarter of approximately $(1,575,000), or $(0.31) per share, compared to a net loss of approximately $(1,483,000), or $(0.30) per share in the previous year. These results include non-cash hotel impairment charges of $320,000 pre-tax $(192,000 after tax) and $100,000 pre-tax $(60,000 after tax) in the 2004 and 2003 first quarters, respectively. The first quarter 2004 and 2003 results also include net losses from discontinued operations of $(379,000) and $(462,000), respectively, including additional impairment charges of $411,000 pre-tax $(246,000 after tax) in the first quarter of 2004, related to the non-AmeriHost hotels classified as discontinued operations. The above-mentioned non-cash hotel impairment charges have been recorded primarily in connection with the company's previously announced plan for hotel disposition. Discontinued operations relates to the operations of the non-AmeriHost Inn hotels sold, or expected to be sold within the next 12 months, which have been reclassified from continuing operations. Exclusive of the impairment charges, the company's results from discontinued operations improved from a pretax loss of approximately $(769,000) in the first quarter of 2003, to a pretax loss of approximately $(219,000) in 2004. "The $550,000 pretax, pre-impairment improvement in discontinued operations reflects the disposition of three non-strategic hotels in 2003 and strongly supports our divestment strategy for our non-AmeriHost Inn hotels," said Jerry H. Herman, president and chief executive officer. "When taking into account this improvement in discontinued operations, together with the effect of additional non-cash impairment charges on certain AmeriHost Inn hotels, our results improved considerably in the 2004 first quarter, compared to the same period last year." Corporate general and administrative expense increased to approximately $867,000 during the three months ended March 31, 2004, from approximately $448,000 during the three months ended March 31, 2003. This increase was comprised primarily of professional fees incurred in connection with special corporate level strategic projects, including the PMC lease restructuring as discussed below, expenses incurred in connection with the company's previously announced plan to add depth to the accounting and finance area, and an adjustment for director restricted stock compensation. During the quarter, Arlington reduced its long-term mortgage debt from $65.2 million, as of December 31, 2003, to $60.7 million, as of March 31, 2004. The reduction was primarily the result of 2004 first quarter hotel sales and application of the proceeds to pay off the debt. The company has mortgage debt of approximately $33.3 million related to hotels held for sale. The company expects to pay off this debt as the hotels are sold. Arlington's 2004 first quarter incentive and royalty-sharing revenues improved 38 percent to approximately $283,000, compared to the same period in 2003. This improvement was a result of the amortization of a greater number of development incentive fees received from Cendant in connection with the sale of AmeriHost hotels, and the growing stream of royalty-sharing fees received from Cendant as the brand expands. During 2004, the company also amended (i) the partnership agreement for a non-AmeriHost Inn hotel, and (ii) a lease agreement for another non-AmeriHost Inn hotel. In the first transaction, the company renegotiated its hotel joint-venture arrangement, under which the joint-venture partner agreed to fund all future cash-flow needs of the hotel property, without any funding obligation to Arlington, and without any dilution of ownership to Arlington. In addition, as part of this transaction, management responsibilities were transferred from an affiliate of Arlington to an affiliate of the joint-venture partner. In the second transaction, in which the company is a lessee, the term on such hotel lease was shortened from six years to a maximum of 18 months, and the annual lease payments were significantly reduced through the end of the lease. The company estimates that the transactions affecting these two joint ventures will save over $250,000 in cash flow annually. AmeriHost Inn Room Revenue During the first quarter of 2004, same-room revenue per available room (RevPAR) for the company's AmeriHost Inn hotels improved 2.3 percent to $26.95, compared to the same period last year. The comparable midscale without food and beverage segment, according to Smith Travel Research, rose 6.3 percent for the 2004 first quarter. "Many of our hotels are located in the Midwest, an area which is recovering more slowly than the economy as a whole," Herman said. "For example in the first quarter the hotel industry in the aggregate in Illinois, Michigan and Ohio had significantly lower improvements in RevPAR , compared to a 6.3 percent improvement for the mid-market without food and beverage segment nationwide. We are encouraged to see a positive increase in both average rate and occupancy across our system, and are beginning to reap the benefits from a number of our newly enacted sales initiatives." Last week, the company reported a significant increase in same room RevPAR comparisons for the month of April. Herman said that the revenue results from April point to it being a "breakthrough" month for the company. "For the first time in more than three years, we saw a noticeable increase in mid-week business travel," he said. "It is encouraging to see RevPAR increase 6.8 percent in April. "Equally as important is that we are increasing our share of the market over our competitors. We gained market share in the 2003 fourth quarter, finishing the year with a market share of 97.3, according to Smith Travel Research. That trend continued in the first quarter, partially as a result of our new sales and marketing initiatives, as our share rose to 99.2, compared to the competition." Line of Credit Renewed In late April, the company completed a one-year renewal of its line of credit with LaSalle Bank NA through April 30, 2005. The line has a maximum availability of $4.0 million at a 10 percent annual interest rate. The maximum availability will step down to $3.5 million on February 28, 2005. "We now are moving into a development mode focus, and will seek longer-term financing that will better align with the development and sales cycle," Herman said. "We are in discussions with an investment advisor, whom we expect to engage shortly, to determine how to best structure our future financing needs." PMC Lease Restructuring Update As previously announced, the company entered into a temporary letter agreement with PMC Commercial Trust (PMC) (AMEX: PCC), which recently was extended through May 2004. The temporary letter agreement deferred a portion of the March, April and May base rent, providing for reduced payments, from approximately $445,000 to approximately $360,000, per month. In addition, the company was able to use $200,000 of the security deposit to partially fund the payments. The deferred portion of the March, April and May 2004 rent payments of approximately $264,000, plus the $200,000 required to restore the security deposit to its March 12, 2004 balance, will be payable to PMC in four equal monthly payments, beginning June 1, 2004. "Our objective is to restructure the leases in order to reduce our monthly base rent payments, improve cash flow, and to provide for the orderly sale of all 21 of the leased hotels over a period of time," Herman said. "The temporary letter agreement also provides for the gathering and sharing of certain hotel and financial information about the company's operations. Our discussions are progressing in a timely fashion; however, there still are a number of issues that need to be resolved." While the objective of the current discussions is to reach an agreement prior to the expiration of the temporary letter agreement, as extended, there can be no assurances that the leases will be restructured on terms and conditions acceptable to the company and its subsidiary, if at all, or that a restructuring will improve operations and cash flow, or provide for the sale of the hotels to third-party operators. Disposition Program Update The company sold two AmeriHost Inn hotels in the 2004 first quarter, bringing to eight the number of hotels sold as part of the company's previously announced plan to dispose of 25 to 30 hotels over a two-year period. The hotels, located in Upper Sandusky, Ohio and Redding, Calif., were sold for $7.1 million in gross proceeds. Since the program's inception, the company has generated gross proceeds of approximately $23.3 million and paid down a total of approximately $14.1 million in debt. The company's hotel assets designated for sale within the next 12 months have been classified as "held for sale" on the accompanying balance sheet as of March 31, 2004. The operations of the non- AmeriHost Inn hotels to be sold have been reclassified from the company's continuing operations and presented as "discontinued operations" in the consolidated statements of operations. "Our pipeline is quite active, and we currently have six hotels under contract and are well along on negotiations on a number of other hotels," Herman said. "We are currently seeing considerably more interest in our hotels, as the potential buyers seek to take advantage of the seasonally stronger summer months, as well as the improving economy and hotel industry fundamentals." It should be noted that when the company has hotels under contract for sale, even with nonrefundable cash deposits in certain cases, certain conditions to closing remain, and there can be no assurance that these sales will be consummated as anticipated. Any forecasted amounts from closed or pending sales could differ from the final amounts included in the company's applicable quarterly and annual financial statements when issued. Furthermore, such forecasted amounts do not represent guidance on, or forecasts of, the results of the company's entire consolidated operations, which are reported on a quarterly basis. Information on Arlington's hotels being brokered for sale can be obtained by calling Steve Miller, senior vice-president of real estate and business development, at 847-228-5400, extension 312, or e-mailing stevem@arlingtonhospitality.com . Development Program Update Shortly after the close of the 2004 first quarter, Arlington opened a new, 79-room hotel in Weirton, W. Va. The company also is evaluating several properties in the Midwest and California for use of its new 80- to 90-room hotel prototype design, which was created for larger markets. About Arlington Hospitality Arlington Hospitality, Inc. is a hotel development and management company that builds, operates and sells mid-market hotels. Arlington is the nation's largest owner and franchisee of AmeriHost Inn hotels, a 104-property mid-market, limited-service hotel brand owned and presently franchised in 22 states and Canada by Cendant Corporation (NYSE:CD). Currently, Arlington Hospitality, Inc. owns or manages 63 properties in 15 states, including 56 AmeriHost Inn hotels, for a total of 4,590 rooms, with additional AmeriHost Inn & Suites hotels under development. * * * In its Form 10-K for the fiscal year ended December 31, 2003 filed with the Securities and Exchange Commission, Arlington Hospitality, Inc. reports: LIQUIDITY AND CAPITAL RESOURCES "During 2003, the cash flow from hotel operations continued to decline, due to many factors such as downturn in the hotel industry for most of 2003 and its effect on hotel room demand, increased competition in our markets, and increasing operating costs such as labor, maintenance, utilities and insurance. The net cash flow from the operations of many of our hotels has been insufficient to support their related mortgage debt payments, or lease payments, primarily to PMC, as well as necessary and ongoing capital expenditures. There can be no assurance that these costs will not increase further at rates greater than our revenues. In addition, our hotel development activity for joint ventures has also decreased over the past two years, with only one joint venture project completed in 2003. As a result, the cash flow from all of our business segments, with the largest amount funded by the sale of hotel properties, has been utilized to maintain liquidity and meet the line-of-credit availability reductions. A smaller amount has been used for investment in new hotel development. The factors impacting us in 2003, as well as the reduction in the availability of our corporate line of credit, have at times created liquidity issues. We have been able to maintain our liquidity primarily through the sale of hotels. "We believe that during the next twelve months, in order to maintain our liquidity, it is critical for us to continue to sell hotel properties. In addition, we seek to increase income from our existing hotel properties by focusing on new revenue enhancement opportunities, and aggressive cost controls. We believe that an upturn in the economy will result in increased demand for hotel rooms, including ours, and such upturn could result in significantly improved hotel operating results. However, historically we have seen that lodging demand trends will typically lag six to nine months behind any such economic trends. We have also been in discussions with PMC requesting a reduction in our subsidiary's monthly lease payment and other modifications. "Our principal liquidity needs for periods beyond twelve months are for the cost of new developments, property acquisitions, scheduled debt maturities, major renovations, expansions and other non-recurring capital improvements. "In addition to our normal operational and growth oriented liquidity needs, other contingencies may also have a significant impact on us, including the impact of seasonality on our hotel operations and hotels sales, and the inability to pay off mortgage loans when maturing. "We believe our revenues, together with proceeds from financing activities will continue to provide the necessary funds for our short-term liquidity needs. However, material changes in these factors, including factors that could inhibit our ability to sell hotels under acceptable terms and within certain time frames, may adversely affect net cash flows. Such changes, in turn, would adversely affect our ability to fund debt service, lease obligations, capital expenditures, and other liquidity needs. In addition, a material adverse change in our cash provided by operations may affect the financial performance covenants under our unsecured line of credit and certain mortgage notes." ASPECT COMMS: Improved Fin'l Profile Spurs S&P's B+ Rating Upgrade ------------------------------------------------------------------ Standard & Poor's Ratings Services raised its corporate credit rating on San Jose, California-based Aspect Communications Corp to 'B+' from 'B'. The outlook is stable. "The rating action is based on a strengthened financial profile following several quarters of improved profitability and free operating cash flow generation resulting from cost cutting actions. The company has also recently refinanced its funded debt, pushing maturities out until 2007," said Standard & Poor's credit analyst Ben Bubeck. The ratings on Aspect Communications Corp reflect a limited revenue base and an inconsistent earnings record, combined with a difficult IT spending environment. These factors are partially offset by improved cost controls that have restored profitability and adequate financial flexibility. Aspect Communications is a provider of software-based call center and customer relationship management solutions. The company had approximately $95 million of operating lease-adjusted debt as of March 2004. During the 12 months ended March 2004, revenues of $371 million were slightly down compared to the year-earlier period, as capital spending within the IT environment remained depressed from historical levels. New license revenues as a component of total revenues during this period were 20%, compared to 21%, 24%, and 36%, continuing the declining trend of the prior three fiscal years, respectively. Standard & Poor's Ratings Services does not expect significant, sustainable growth for Aspect until a general recovery in information technology investment occurs. Although revenues were slightly lower during the 12 months ended March 2004 compared to the year-earlier period, EBITDA (adjusted for capitalized operating leases) increased over the same period to approximately $100 million from about $55 million. The improvements in operating efficiency resulted mostly from cost- reduction actions, including headcount reductions. Aspect's financial position also benefited from retiring the remainder of its convertible subordinated notes during 2003. As of March 2004, operating lease-adjusted total debt-to-EBITDA was under 1.5x. Growth initiatives could increase this level over the intermediate term. Standard & Poor's expects that the company will generate sufficient cash flow to meet operating and capital expenditures despite a lack of near term growth prospects. The current rating also incorporates the potential for Aspect to use cash on the balance sheet, and possibly draw debt under its revolver, to grow the business over the intermediate term. ATLANTIS SYSTEMS: Unable to File FY 2003 & Q1 Reports on Time ------------------------------------------------------------- Atlantis Systems Corp. announced it will be unable to file its consolidated financial statements for the fiscal year ended December 31, 2003 and related documentation such as management discussion and analysis and the annual information form by May 19, 2004, being 140 days following the end of Atlantis' last fiscal year, as required by the securities legislation applicable in the provinces in which Atlantis is a reporting issuer. Atlantis was also unable to file its interim financial statements for the three month period ended March 31, 2004 and related documentation by May 15, 2004, being 45 days following the end of Atlantis' first fiscal quarter of 2004, as required by the securities legislation applicable in the provinces in which Atlantis is a reporting issuer. The preparation and filing of the Annual Financial Statements and the First Quarter Financial Statements have been delayed because of an ongoing financing transaction that was deliberated by shareholders on April 30 and May 10, 2004 and rejected. As previously reported on May 12, 2004, the Board of Directors of Atlantis accepted an alternative offer of financing which has been conditionally approved by the Toronto Stock Exchange and is subject to satisfaction of a number of conditions, including shareholder approval, which may be obtained in writing. In an effort to accelerate the shareholder approval process, Atlantis will seek to obtain written consent from the holders of a majority of the outstanding shares, failing which, a meeting will be held to seek approval for this offer. This financing offer consists of $6 million in equity units and a $2 million 10% term debt facility. The $0.40 equity units consist of one common share and one half of a common share purchase warrant. Each full common share purchase warrant is exercisable for two years following the closing of the financing and the exercise price is $0.50 per share for the first twelve months following the closing and $0.60 per share for the second twelve months following the closing. This financing also required the conversion of $3.75 million of outstanding liabilities into equity as described in the Management Information Circular dated March 25, 2004. The shareholders approved this debt conversion at a Special Meeting of Shareholders held on May 10, 2004. The year-end financial statement audit has now commenced and it is anticipated that Atlantis will be able to file the Annual Financial Statements and the First Quarter Financial Statements by June 30, 2004. In accordance with Ontario Securities Commission Policy 57-603, Atlantis intends to satisfy the provisions of the alternate information guidelines, including the disclosure of any material change to information disseminated to the marketplace to date, until such time as it has complied with its financial statement filing requirements. Atlantis expects Management and Directors will receive a cease trade order on Atlantis' shares until these defaults are remedied. If Atlantis has not filed the Annual Financial Statements and the First Quarter Financial Statements by July 19, 2003 and July 15, 2003 respectively, Atlantis shall have been in default of each of its financial statement filing requirements for a period of two months. The Ontario Securities Commission may impose a cease trade order against Atlantis if such defaults are not remedied prior to such dates. Andrew Day has been appointed as a Special Advisor to the Board of Directors of Atlantis Systems Corp. effective immediately. After a lengthy career in Canadian banking, Mr. Day held senior executive positions in a number of successful Canadian entrepreneurial enterprises. Atlantis is a globally recognised developer of simulation-based aircraft training systems, with a client base that spans defence forces and government agencies throughout the world, as well as major commercial airlines and aircrew training centres. Atlantis trades on the Toronto Stock Exchange under the symbol AIQ. BALDWIN PIANO: QRS Music Filing Motion to Vacate Default Judgment ----------------------------------------------------------------- QRS Music Technologies, Inc. (OTCBB:QRSM) announced, in a Form 8-K filing to the Securities and Exchange Commission, that it intends to promptly file a motion seeking vacation of a judgment relating to the bankruptcy of Baldwin Piano & Organ Company several years ago. The United States Bankruptcy Court, Southern District of Ohio, Western Division, granted a default judgment to Dwight's Piano Co. (formerly known as Baldwin) for approximately $478,000 plus interest. The text of the 8-K filing is as follows: In the third quarter of fiscal year ending June 30, 2004, the Company discovered that a default judgment in the amount of approximately $478,000 plus interest had been entered against it in United States Bankruptcy Court, Southern District of Ohio, Western Division. The default judgment was granted to Dwight's Piano Co, fka Baldwin Piano & Organ Company and subsidiaries and was based upon Plaintiff's claims that preferential transfers were made during the 90 period prior to Baldwin's bankruptcy filing on May 31, 2001. The Company intends to promptly file a motion seeking vacation of the judgment under Fed.R.Bankr.P. 9024 and 7055. It also intends to raise various defenses under 11 USC 547c of the Bankruptcy Code. The Company has not previously accounted for the default judgment in its financial statements. The Company expects that will not be able to timely file its Form 10-QSB for the quarter ended March 31, 2004 in order that it may address necessary amendments to its previously filed financial statements. Based on the terms of the default judgment as it currently stands, the Company expects that it will file amendments to the financial statements in its Forms 10-QSB for the quarters ended September 30, 2003 and December 31, 2003 and its Form 10-KSB for the fiscal year ended June 30, 2003. The effect of the amendments on the income statement in the Form 10-KSB dated June 30, 2003 will be to increase bad debt expense by $477,601, decrease income tax expense by $181,000 and decrease net income by approximately $297,000 or $.03 per share. QRS Music Technologies, Inc.'s stock is traded Over-The-Counter on the OTCBB:QRSM. About Baldwin Piano Baldwin Piano & Organ Company is the largest US manufacturer of keyboard instruments. Founded in 1862, the company is best known for making concert and upright pianos under the Baldwin, Chickering, and Wurlitzer names. It also makes ConcertMaster computerized player pianos and Baldwin Pianovelle digital keyboards. Baldwin has manufcturing facilities in Arkansas and Juarez, Mexico. It has sold 11 of its retail stores and plans to sell the rest. It also sold its retail finance business and plans to file for Chapter 11 bankruptcy protection. Seven different investment groups, led by Heartland Advisors, own about 65% of the company. BOYD GAMING: Offering $325MM of Coast Hotels' 9.50% Senior Notes ---------------------------------------------------------------- Boyd Gaming Corporation announced that, in connection with its proposed acquisition of Coast Casinos, Inc. (CCI), it has commenced a cash tender offer and consent solicitation for any and all of the $325 million outstanding aggregate principal amount of the 9.50% Senior Subordinated Notes due 2009 (CUSIP # 19035CAF9) of Coast Hotels and Casinos, Inc. Pursuant to the Merger, CCI will be merged with and into, and will become, a wholly owned subsidiary of Boyd Gaming. The Merger is expected to close in mid- 2004, subject to the receipt of various regulatory and other approvals. Holders who validly tender their Notes by 5:00 p.m., New York City time, on Thursday, May 27, 2004, will receive total consideration of $1,051.25, consisting of (i) a purchase price of $1,031.25 per $1,000 principal amount of Notes and (ii) a consent payment of $20.00 per $1,000 principal amount of Notes accepted for purchase. All holders whose Notes are accepted for payment will also receive accrued and unpaid interest up to, but not including, the applicable date of payment for the Notes pursuant to the Tender Offer. The Tender Offer is scheduled to expire at 9:00 a.m., New York City time, on Wednesday, June 16, 2004, unless extended or earlier terminated (the "Expiration Date"). Holders who validly tender their Notes after the Consent Date and on or prior to the Expiration Date will not be entitled to receive the consent payment. The settlement date for Notes accepted for purchase in the Tender Offer will be promptly after the Expiration Date. In connection with the Tender Offer, Boyd Gaming is soliciting consents to certain proposed amendments to amend or eliminate substantially all of the restrictive covenants, certain events of default and certain other related provisions contained in the indenture governing the Notes. Holders may not tender their Notes without delivering Consents or deliver Consents without tendering their Notes. Tenders of Notes pursuant to the Tender Offer may be validly withdrawn and Consents delivered pursuant to the Consent Solicitation may be validly revoked at any time on or prior to the Consent Date. Holders may not validly revoke a Consent unless they validly withdraw their previously tendered Notes. Notes tendered after the Consent Date may not be withdrawn. The Tender Offer and Boyd Gaming's obligation to accept Notes tendered and to pay the purchase price is subject to the satisfaction of certain conditions, including the satisfaction of certain conditions to consummate the Merger, the receipt of tenders of Notes representing at least a majority in aggregate principal amount of the outstanding Notes, receipt of financing for the Tender Offer, the execution of the supplemental indenture and other general conditions. The complete terms and conditions of the Tender Offer and the Consent Solicitation are described in the Offer to Purchase and Consent Solicitation Statement dated May 14, 2004, copies of which may be obtained from D.F. King & Co., Inc., the information agent for the Tender Offer; banks and brokers call (212) 269-5550 (collect), all others call (800) 758-5378 (US toll- free). Holders of Notes are urged to read the Offer to Purchase and Consent Solicitation Statement carefully because it contains important information. Boyd Gaming has engaged Banc of America Securities LLC and Deutsche Bank Securities Inc. to act as joint dealer managers and solicitation agents in connection with the Tender Offer and the Consent Solicitation. Questions regarding the Tender Offer and the Consent Solicitation may be directed to Banc of America Securities LLC, High Yield Special Products, at 888-292-0070 (US toll-free) and 704-388-4813 (collect) or Deutsche Bank Securities Inc., High Yield Capital Markets, at 800-553-2826 (US toll-free) and 212-250- 4270 (collect). About Coast Hotels and Casinos Coast Hotels and Casinos, Inc. owns and operates four Las Vegas hotel- casinos, The Orleans, the Gold Coast, the Suncoast and the Barbary Coast. The Company's objective is to use its development and operating experience to successfully develop, own and operate hotel-casinos in strategic locations with strong surrounding demographics. The Company's growth strategy includes expanding its existing facilities, as well as identifying and developing new gaming opportunities, primarily in Las Vegas. About Boyd Gaming Headquartered in Las Vegas, Boyd Gaming Corporation (NYSE: BYD) is a leading diversified owner and operator of 13 gaming entertainment properties located in Nevada, New Jersey, Mississippi, Illinois, Indiana and Louisiana. Boyd Gaming recently opened Borgata Hotel, Casino and Spa at Renaissance Pointe (AOL keyword: borgata or www.theborgata.com), a $1.1 billion entertainment destination hotel in Atlantic City, through a joint venture with MGM MIRAGE. In February, the Company reached a definitive agreement to merge with Coast Casinos, Inc. The $1.3 billion merger is expected to be completed in mid-2004, subject to regulatory approvals. Boyd Gaming is also awaiting regulatory approval of its acquisition of Harrah's Shreveport, and that is expected in the second quarter 2004. Boyd Gaming press releases are available at www.prnewswire.com . Additional news and information on Boyd Gaming can be found at www.boydgaming.com . As reported in the Troubled Company Reporter's April 15, 2004 edition, Standard & Poor's Ratings Services lowered its senior secured debt rating on casino operator Boyd Gaming Corp. to 'BB' from 'BB+'. Concurrently, the 'BB-' senior unsecured debt rating on Boyd was affirmed. Both ratings were removed from CreditWatch where they were placed on Feb. 10, 2004. "The lower rating on the senior secured debt reflects Standard & Poor's expectation that these creditors would not be in a position to fully recover principal in the event of default, given the significant amount of secured debt that will exist in the capital structure," said Standard & Poor's credit analyst Michael Scerbo. BUDGET GROUP: Administrative Claims Bar Date is June 7, 2004 ------------------------------------------------------------ Counsel for the Plan Administrator, William Bowden, Esq., at Ashby & Geddes, in Wilmington, Delaware, informs parties-in- interest that the confirmed Second Amended Joint Chapter 11 Liquidating Plan of BRAC Group, Inc., and its Debtor Subsidiaries became effective on May 3, 2004. Administrative Claims Bar Date Requests for payment of administrative costs and expenses incurred prior to the Confirmation Date should be filed with the Bankruptcy Court and served so as to be received no later than June 7, 2004 at 4:00 p.m. Rejection Claims Bar Date Pursuant to the Plan and Confirmation Order, each prepetition executory contract and unexpired lease will be rejected. All proofs of claim with respect to claims arising from the rejection of any executory contract or unexpired lease must sent, so as to be received on or before June 4, 2004 at 4:00 p.m., to: Clerk of the Bankruptcy Court District of Delaware 824 Market Street, 3rd Floor Wilmington, Delaware 19801 The proof of claim should also be served on: (1) counsel to Reorganized BGI Brown Rudnick Berlack Israels, LLP One Financial Center Boston, Massachusetts, 02111 Attn: Peter Antoszyk (2) counsel to Reorganized BRACII Richards, Layton & Finger, PA One Rodney Square P.O. Box 551 Wilmington, Delaware 19899 Attn: Mark Collins Professional Fees All professionals or other persons requesting compensation or reimbursement pursuant to Sections 327, 328, 330, 331, 503(b) and 1103 of the Bankruptcy Code for services rendered on or prior to the Effective Date should file an application for final allowance of the compensation and reimbursement with: United States Bankruptcy Court District of Delaware 824 Market Street, 3rd Floor Wilmington, Delaware 19801 The application should also be served on: (1) counsel to Reorganized BGI, and (2) counsel to Reorganized BRACII Headquartered in Daytona Beach, Florida, Budget Group, Inc., operates under the Budget Rent a Car and Ryder names -- is the world's third largest car and truck rental company. The Company filed for chapter 11 protection on July 29, 2002 (Bankr. Del. Case No. 02-12152). Lawrence J. Nyhan, Esq., and James F. Conlan, Esq., at Sidley Austin Brown & Wood and Robert S. Brady, Esq., and Edward J. Kosmowski, Esq., at Young, Conaway, Stargatt & Taylor, LLP, represent the Debtors in their restructuring efforts. When the Company filed for protection from their creditors, they listed $4,047,207,133 in assets and $4,333,611,997 in liabilities. On April 20, 2004, Judge Case confirmed the Debtors' Joint Liquidation Plan, as modified, in accordance with Sections 1129(a) and (b) of the Bankruptcy Code. (Budget Group Bankruptcy News, Issue No. 41; Bankruptcy Creditors' Service, Inc., 215/945-7000) C-GATE CONSTRUCTION: Case Summary & 4 Largest Unsecured Creditors ----------------------------------------------------------------- Debtor: C-Gate Construction, Inc. 17300 North Dallas Parkway, Suite 2040 Dallas, Texas 75248 Bankruptcy Case No.: 04-42126 Chapter 11 Petition Date: May 3, 2004 Court: Eastern District of Texas (Sherman) Judge: Brenda T. Rhoades Debtor's Counsel: T. Craig Sheils, Esq. Sheils Winnubst Sanford & Bethune 1100 Atrium II 1701 North Collins Boulevard Richardson, TX 75080 Tel: 972-644-8181 Fax: 972-644-8180 Total Assets: $4,676,962 Total Debts: $3,086,434 Debtor's 4 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Integrated Performance $35,000 J.T. Walker $12,000 Arthur Greenstein $5,000 Brusniac McCarl & Blackwell, P.C. $2,500 COVAD COMMS: Net Capital Deficit Doubles to $10M at March 31, 2004 ------------------------------------------------------------------ Covad Communications Group, Inc. (OTCBB:COVD), a leading national broadband service provider of high-speed Internet and network access, reported revenue for the first quarter of 2004 of $108.5 million, a 19 percent increase over the $90.9 million reported in the first quarter of 2003, and an increase of $3.4 million, or 3.3 percent, from the fourth quarter 2003. The company reported net loss for the first quarter of 2004 of $13.5 million, or $0.06 per share, as compared to a net loss of $34.7 million, or $0.16 per share in the first quarter of 2003, and a net loss of $16.9 million, or $0.07 per share for the fourth quarter of 2003. Loss from operations for the first quarter of 2004 was $12.9 million, compared to $21.9 million in the fourth quarter of 2003 and $34.3 million for the first quarter of 2003. Earnings before interest, taxes, depreciation and amortization (EBITDA) for the first quarter of 2004 were $6.3 million as compared to a loss of $15.7 million in the first quarter of 2003 and a loss of $2.2 million from the fourth quarter of 2003. Refer to the Selected Financial Data, including note 2, for a reconciliation of this non-GAAP financial performance measure to the most comparable GAAP measure and other information. Digital subscriber lines increased 24 percent year-over-year, from 417,000 in the first quarter of 2003 to 516,000 in the first quarter of 2004, and decreased by 1,200 from the fourth quarter 2003. "We are pleased with our financial performance in the first quarter of 2004," said Charles Hoffman, president and chief executive officer of Covad. "Our strategy has always been to grow profitability and we continue to execute against it. Shifting partner sales strategies resulted in a line count that did not meet our expectations. However, we are taking steps with our partners to make improvements in this area and to diversify our revenue." "This transition is made possible by our planned acquisition of Voice over IP provider GoBeam," Hoffman added. "Adding GoBeam and completing our $125 million financing made the first quarter of 2004 one of the most significant in Covad's history. These actions allowed us to secure the future of Covad as an integrated voice and data company that can truly compete for voice customers and offer a diversified product portfolio of broadband communications services to our customers and partners." The company's wholesale subscribers contributed $79.1 million of revenue, or 73 percent, while direct subscribers contributed $29.4 million of revenue, or 27 percent. On March 31, 2004, Covad had approximately 445,000 wholesale and 71,000 direct lines in service, as compared to 362,000 wholesale and 55,000 direct lines in service reported in the first quarter of 2003 and 445,000 wholesale and 72,000 direct lines in service at the end of 2003. For the first quarter of 2004, broadband subscription billings increased 26 percent to $89.3 million from $70.9 million reported in the first quarter of 2003, and increased three percent from $86.5 million reported in the fourth quarter of 2003. Management uses broadband subscription billings to evaluate the performance of its business and believes broadband subscription billings are a useful measure for investors as they represent a key indicator of the growth of the company's core business. Refer to the Selected Financial Data, including Note 3, for additional information, including a reconciliation of this non-GAAP financial performance measure to the most comparable GAAP measure. For the first quarter of 2004, gross margin was $40.2 million or 37 percent of revenue, as compared to 24 percent of revenue in the year-ago quarter, and 30 percent of revenue for the fourth quarter of 2003. Sales, marketing, general and administrative (SG&A) expenses were $33.3 million for the first quarter of 2004, as compared to $37.1 million in the year-ago quarter and $33.8 million for the fourth quarter of 2003. As of March 31, 2004, cash, cash equivalent and short-term investment balances, including restricted cash and investments, were $169.6 million compared to $117.2 million as of December 31, 2003. First quarter cash flow included approximately $14.4 million of capital expenditures. Covad's net cash usage for the first quarter also reflects the proceeds from the Convertible Senior Debentures offering of $120.2M and a payment of $56.6M to pay off a loan, including accrued interest, which SBC previously made to Covad. Mark Richman, chief financial officer of Covad, said: "The improved financial results over the past year provided Covad the opportunity to raise capital and pay off higher-cost debt in the first quarter of 2004. Covad is now financially positioned to aggressively pursue new marketing and product opportunities, such as the deployment of the GoBeam VoIP product to Covad's 100 markets." As of March 31, 2004, Covad Communications Group, Inc., reports a stockholders' deficit of $10,102,000 compared to a $5,553,000 deficit at December 31, 2003. Restatement During the review of the first quarter financial statements Covad determined that certain employee stock options granted under the 2003 Employee Stock Purchase Plan were subject to variable accounting and that the consolidated financial statements for the year ended December 31, 2003 must be restated to account for this compensation. The restatement involves a non-cash charge, which reflects the stock-based compensation expense for those options that were granted in 2003 that are subject to variable accounting. The restatement had the following effects on the consolidated financial statements for the year ended December 31, 2003: -- Net loss, as restated, was $112.3 million, in comparison with the $99.9 million that was originally reported. -- Loss from operations, as restated, was $114.6 million, in comparison with the $102.2 that was originally reported. -- Net loss per share, as restated, was $0.50, in comparison with the $0.44 that was originally reported. Operating Statistics -- At the end of the first quarter, Covad had approximately 295,000 consumer and 221,000 business lines in service, representing approximately 57 percent and 43 percent of total lines respectively. -- Weighted Average Revenue per User (ARPU) was approximately $58 during the first quarter of 2004, an increase from $57 in the fourth quarter of 2003. The increase in ARPU is due to the progress in providing services to the small business market. -- Net customer disconnections, or churn, averaged approximately 4.1 percent in the first quarter of 2004, an increase from 3.9 percent in the fourth quarter of 2003. Disconnections from our consumer stand-alone data products continued to put upward pressure on the churn rates in the first quarter of 2004. Business Outlook Covad currently expects revenue for the second quarter of 2004 to be in the range of $104-108 million with subscriber line growth of up to 10,000 lines. Broadband subscription billings for the second quarter of 2004 are expected to be in the range of $87-90 million. For the second quarter of 2004, Covad expects its net loss to be in the range of $10-14 million, and EBITDA profit to be in the range of $5-8 million. Net change in cash, cash equivalents and short-term investments, including restricted cash and investments, in the second quarter of 2004 is expected to be in the range of negative $3 million to positive $2 million. The outlook above does not reflect the impact on expected revenue, net loss, EBITDA or usage of cash, cash equivalents and short term investments resulting from the company's proposed GoBeam acquisition, which has not been completed. Recent Business Highlights -- Signed an agreement and plan of merger to acquire GoBeam, Inc., a privately owned provider of Voice over Internet Protocol (VoIP) services. The acquisition is expected to close in June. -- Completed an offering of $125 million in convertible senior debentures. -- Announced the completion of a three-year commercial line sharing agreement with Qwest Communications International. The agreement enables Covad to continue to offer high-speed digital subscriber line (DSL) services to thousands of small and medium businesses and home users in the seven states within the Qwest region where Covad offers service. This marks the first time a competitive communications carrier and a regional Bell operating company have negotiated commercial terms for access to line sharing since the Federal Communications Commission's (FCC) Triennial Review decision. -- Launched Covad's DSL service in AT&T's voice communication bundle for residential users in six additional states, bringing the total deployment to 26 states. -- Launched Covad DSL broadband connectivity as part of ACN's Advantage calling plan for consumers. -- Announced a new agreement to offer the next generation of broadband connectivity options to AOL for Broadband members. Covad's Broadband Connect product is a new class of high-speed DSL connection without any accompanying content or applications. About Covad Communications Covad Communications is a leading national broadband service provider of high-speed Internet and network access utilizing Digital Subscriber Line (DSL) technology. It offers DSL, T1, hosting, managed security, IP and dial-up, and bundled voice and data services directly through Covad's network and through Internet Service Providers, value-added resellers, telecommunications carriers and affinity groups to small and medium-sized businesses and home users. Covad services are currently available across the nation in 44 states and 235 Metropolitan Statistical Areas (MSAs) and can be purchased by more than 57 million homes and businesses, which represent over 50 percent of all US homes and businesses. Corporate headquarters is located at 110 Rio Robles San Jose, CA 95134. Web site is at http://www.covad.com/ COVANTA TAMPA: Financial Projections Underpinning Recovery Plan --------------------------------------------------------------- Debtors Covanta Tampa Construction, Inc., and Covanta Tampa Bay, Inc., filed with the Court financial projections for the period from August 1, 2004 through December 31, 2004 to demonstrate the feasibility of their recovery plan. The Projections indicate that the Covanta Tampa Debtors will have sufficient cash flow and liquidity to service their debt obligations, and fund their operations. Therefore, the Covanta Tampa Debtors believe that the Covanta Tampa Reorganization Plan satisfies the feasibility requirement of Section 1129(a)(11) of the Bankruptcy Code. The Covanta Tampa Debtors, however, cautions that no representations can be made as to the accuracy of the Projections or their ability to achieve the projected results. The Covanta Tampa Debtors anticipate that the Effective Date of the Covanta Tampa Plan will be July 31, 2004. Under the Covanta Tampa Plan, the TBW Settlement Agreement will be consummated pursuant to which the Covanta Tampa Debtors will receive a cash payment from Tampa Bay Water of up to $4,950,000. Of this amount, up to $550,000 will be, or will have been, used to pay subcontractors with claims against the desalination-to-drinking water facility in Florida, and the balance will be used to fund post-Effective Date operations and payments under the Covanta Tampa Plan. The Projections assume that the Covanta Tampa Debtors will operate the Facility on behalf of Tampa Bay Water until approximately October 31, 2004, after which time the Covanta Tampa Debtors will turn over the operation of the Facility to Tampa Bay Water, pay any remaining operating expenses, and make final distributions under the Covanta Tampa Plan. The Projections assume that the Covanta Tampa Debtors will be reimbursed for 100% of all actual costs incurred in the operation of the Facility, plus $75,000 per month for indirect costs, corporate overhead and profit. It is possible that the Covanta Tampa Debtors will continue to operate the Facility or have other business operations beyond October 31, 2004. Total Receipts for August 2004 consist of the payment of up to $4,950,000 due from Tampa Bay Water pursuant to the TBW Settlement Agreement, plus $390,000 for Tampa Bay Water's July 2004 payment for operations, plus $380,000 for Tampa Bay Water's August 2004 payment for operations, less up to $550,000 payable to subcontractors with claims against the Facility. Since the Covanta Tampa Debtors do not have any employees, amounts for wages and benefits are payable by the Covanta Tampa Debtors to Covanta Projects, Inc., for employment support services pursuant to the Court-approved Support Services and Cost Reimbursement Agreements. On the other hand, amounts for corporate overhead are payable by the Covanta Tampa Debtors to Covanta Energy Corporation for corporate support services pursuant to the Court-approved Support Services and Cost Reimbursement Agreements. The Covanta Tampa Debtors anticipate that there would be sufficient cash available to pay all Allowed Unsecured Claims as of the Initial Distribution Date, which will be the Effective Date of the Plan. To the extent that there is insufficient cash to pay Allowed Unsecured Claims in full on the Initial Distribution Date, the balance of the Claims will be paid on the Final Distribution Date or December 31, 2004. The Covanta Tampa Debtors anticipate that no distribution will be made on account of Allowed Intercompany Claims until the Final Distribution Date or December 31, 2004. Holders of Allowed Third Party Claims will not receive distributions of cash under the Covanta Tampa Plan, but rather the Claims will be satisfied in full pursuant to the Judgment Reduction Protection provisions of the Covanta Tampa Plan. If and to the extent that the Covanta Tampa Debtors suffer a cash deficiency, Covanta Energy may advance funds to the Covanta Tampa Debtors to cover any deficiency. The advances will be repaid on or before the Final Distribution Date. 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. 56; Bankruptcy Creditors' Service, Inc., 215/945-7000) CROWN CASTLE: S&P Affirms Ratings & Revises Outlook to Positive --------------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on Houston, Texas-based wireless tower operator Crown Castle International Corp. to positive from stable. Ratings on the company, including the 'B-' corporate credit rating, were affirmed. Total debt was about $3.2 billion at March 31, 2004 ($4.2 billion after adjusting for operating leases). "The outlook revision is due to Crown Castle's improved EBITDA growth and free cash flow prospects given that tower-related spending by wireless carriers is expected to be robust in the next few years," said Standard & Poor's credit analyst Michael Tsao. Wireless carriers are expected to continue making sizable investments in their networks due to two factors. First, there is still significant room for growth in the wireless sector. This is particularly true in Crown Castle's largest market, the U.S., where national wireless penetration was only around 55% at the end of first-quarter 2004. Other drivers of growth include still increasing minutes of use and new applications. Second, with network quality having become ever more important, especially with the advent of number portability, carriers are under pressure to further strengthen their networks. These factors should enable Crown Castle to achieve annual revenue growth exceeding 6% in the next three to five years by way of good organic growth from additional lease-up activities on existing towers and another layer of growth from new towers. Given the strong operating leverage inherent in the tower leasing business, Crown Castle is expected to expand its EBITDA margin to the 60% area in the next three to five years, from about 47% in first-quarter 2004, and grow its free cash flow to a level notably above the approximately $140 million achieved in 2003. While financial parameters should materially improve, ratings nevertheless remain dominated by significant financial risk associated with the company's aggressive debt leverage. Crown Castle is among the largest wireless tower operators in the industry, with about 13,000 sites mostly in the U.S. and U.K. Through Crown Atlantic Joint Venture (Crown Atlantic), a joint venture between Crown Castle (62.8% stake) and Verizon Communications Inc. (37.2% stake), the company operates approximately another 2,000 towers. Crown Castle predominantly derives its revenues from the tower leasing business and the remainder from network services. The tower industry enjoys significant competitive barriers (e.g., real estate zoning, high customer switching costs, and long-term leasing contracts with provisions for annual rent escalation), strong operating leverage (given that towers have mostly fixed costs), and little risk of technology substitution. DESA HOLDINGS: Court Sets May 27 Administrative Claims Bar Date --------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware fixes May 27, 2004 at 4:00 p.m. as the last day to file proofs of claim which constitutes an Administrative Claim against Desa Holdings and its debtor-affiliates, that arose on or after June 8, 2002 through and including May 27, 2004. Administrative Claims are exempted from the Bar Date if the claims are: (i) from retained professionals; (ii) expenses of members of the Official Committee of Unsecured Creditors; (iii) fees payable and unpaid under 28. U.S.C.; and (iv) already filed and allowed by the Court Proofs of Claim must be served to: If by US Mail: If by Hand or Courier: Bankruptcy Management Corp. Bankruptcy Management Corp. Attn: DESA Claims Agent Attn: DESA Claims Agent P.O. Box 926 P.O. Box 926 El Segundo 1330 East Franklin Avenue CA 90245-0926 El Segundo CA 90245 DESA International, Inc. manufactures and markets high-quality zone heating products, hearth products, security lighting and specialty tools for use in homes and commercial buildings. The Company filed for chapter 11 protection (Bankr. Del. Case No.: 02- 11672) on June 8, 2002. The debtor's counsel is Laura Davis Jones, Esq. of Pachulski, Stang, Ziehl Young & Jones DEX MEDIA: S&P Affirms Low-B Ratings & Revises Outlook to Stable ---------------------------------------------------------------- Standard & Poor's Ratings Services revised its outlooks on Dex Media Inc. and its subsidiaries Dex Media East LLC and Dex Media West LLC to stable from negative. In addition, Standard & Poor's affirmed its outstanding ratings on the three entities, including their 'BB-' corporate credit ratings. Through its operating subsidiaries Dex East and Dex West, the Denver, Colorado-headquartered Dex Media is the nation's fourth largest telephone directory publisher. Pro forma for the IPO, the company would have had about $5.8 billion of consolidated debt outstanding at March 2004. "The outlook revisions reflect the planned debt reduction as a result of a proposed $1.5 billion IPO of Dex Media's common stock, offered both on a primary basis by the company and on a secondary basis by selling stockholders," said Standard & Poor's credit analyst Donald Wong. Net primary proceeds will be used to repay nearly $460 million of debt, consisting of portions of Dex East's 12.125% senior subordinated notes due 2012 ($183.6 million principal amount) and Dex West's 9.875% senior subordinated notes due 2013 ($273 million). In addition, Dex Media plans to redeem all of its outstanding 5% series A preferred stock ($125.7 million). Pro forma consolidated debt to EBITDA improves to the mid-6x area from the high-6x area. Despite the planned IPO, Dex Media's consolidated financial profile is not indicative of the 'BB-' corporate credit rating. However, it is expected to get there in the intermediate term. Aided by EBITDA margins in the mid- to high-50% range and low capital spending needs, the company should continue to produce significant levels of free operating cash flow. Following the IPO, the company is planning to institute a quarterly common dividend, the amount of which has not yet been determined. Nevertheless, Standard & Poor's expects Dex Media will still have meaningful discretionary cash flow that will be used for debt reduction at the operating companies in the foreseeable future. DIGITAL LIGHTWAVE: Balance Sheet Insolvent by $23.6MM at March 31 ----------------------------------------------------------------- Digital Lightwave, Inc. (Nasdaq:DIGL), a pioneering leader in the field of lightwave management, reported its first quarter results for the three-month period ending March 31, 2004. Net sales for the first quarter of 2004 were $4.4 million compared to $1.6 million for the first quarter of 2003, an increase of 172%. Gross profit for the first quarter of 2004 was $2.1 million and gross profit percentage was approximately 49% compared to $.3 million and approximately 21% over the same period in 2003. Operating expenses for the first quarter of 2004 were $4.2 million compared to $12.9 million for the first quarter of 2003. The Company's net loss for the first quarter of 2004 was $2.5 million or ($0.08) per diluted share, compared with a net loss of $13.2 million or ($0.42) per diluted share for the first quarter of 2003. "We are pleased to report our first quarter 2004 sales are in line with our projections. Our increase in sales for the first quarter of 2004 as compared to the first quarter of 2003 has been a result of the economic changes in the telecommunications industry, new customers and an increase in purchasing activity from our existing customers. I am also pleased with the results of our restructuring efforts and management is now in a position to shift its focus to the Company's strategic plan and its return to profitability," said Jim Green, President and CEO. At March 31, 2004, Digital Lightwave's balance sheet shows a stockholders' deficit of $23,557,000 compared to a deficit of $21,140,000 at December 31, 2003. About Digital Lightwave, Inc. Digital Lightwave, Inc. provides the global communications networking industry with products, technology and services that enable the efficient development, deployment and management of high-performance networks. Digital Lightwave's customers -- companies that deploy networks, develop networking equipment, and manage networks -- rely on its offerings to optimize network performance and ensure service reliability. DOANE PET CARE: Records First Quarter Net Loss of $7.8 Million -------------------------------------------------------------- Doane Pet Care Company reported results for its first quarter ended April 3, 2004. Quarterly Results For the first quarter of fiscal 2004, the Company's net sales increased 4.2% to $270.9 million from $259.9 million in the first quarter of fiscal 2003. Excluding the impact of foreign currency exchange fluctuations in the first quarter of 2004, the Company's net sales increased by 0.3%. The favorable impact of the Company's first quarter domestic price increase, as well as solid European volume growth, was largely offset by lower domestic sales volume, including reduced shipments related to the closure of the Mexican border to pet food products exported from the United States. The Company reported a net loss of $7.8 million for its 2004 first quarter compared to a net loss of $7.9 million for the 2003 first quarter. The benefit of the first quarter price increase was offset by substantially higher year- over-year global commodity costs and lower domestic sales volume. The current quarter net loss also reflected an increase of $4.0 million in net interest expense, principally due to the reclassification of the Company's mandatorily redeemable preferred stock as long-term debt in accordance with the Company's adoption of SFAS 150 in the first quarter of 2004. Net cash used in operating activities was $2.1 million for the 2004 first quarter compared to net cash provided by operating activities of $0.1 million for the 2003 first quarter. Adjusted EBITDA was $23.8 million in the 2004 first quarter compared to $25.8 million recorded in the 2003 first quarter. Adjusted EBITDA performance was favorably impacted by the price increase, as well as solid manufacturing efficiency, but was offset by higher global commodity costs and lower domestic sales volume. The Company believes cash flows from operating activities is the most directly comparable GAAP financial measure to the non-GAAP Adjusted EBITDA liquidity measure typically reported in its earnings releases. Doug Cahill, the Company's President and CEO, said, "Top-line performance reflected the first quarter price increase moderated by lower domestic volume, partially a result of significantly reduced shipments to Mexico. The Mexican trade border was closed during most of the quarter as a result of the announcement of the first domestic BSE case in the fourth quarter of last year. I am particularly pleased with the sequential bottom-line performance improvement from the 2003 fourth quarter due to the benefit of the price increase, as well as excellent manufacturing performance. Nevertheless, commodity costs continued to increase during the quarter and, as a result, we have implemented additional price increases in an effort to manage the resulting impact on the bottom-line." 2004 Outlook Cahill said, "The challenges for 2004 are the uncertainties surrounding commodity costs and the impact on our volume as a result of our price increases. Nonetheless, we will continue to closely monitor commodity prices and will respond decisively to any further escalation in prices. However, because of these uncertainties, we remain cautious in our outlook for both top and bottom-line performance." About the Company Doane Pet Care Company, based in Brentwood, Tennessee, is the largest manufacturer of private label pet food and the second largest manufacturer of dry pet food overall in the United States. The Company sells to approximately 600 customers around the world and serves many of the top pet food retailers in the United States, Europe and Japan. The Company offers its customers a full range of pet food products for both dogs and cats, including dry, semi- moist, wet, treats and dog biscuits. For more information about the Company, including its SEC filings and past press releases, please visit http://www.doanepetcare.com/ * * * As reported in the Troubled Company Reporter's November 6, 2003 edition, Standard & Poor's Ratings Services lowered its corporate creditand senior secured debt ratings on pet food manufacturer Doane Pet Care Co. to 'B-' from 'B'. Standard & Poor's also lowered the senior unsecured and subordinated debt ratings on Doane to 'CCC' from 'CCC+'. The outlook is negative. DOMAN INDUSTRIES: Court Establishes May 25 as New Claims Bar Date ----------------------------------------------------------------- On April 6, 2004, the Supreme Court of British Columbia ordered Doman Industries and its debtor-affiliates to solicit additional claims from all its creditors (other than those whose claims have been or will be established pursuant to the Claims Process Order of the Court dated February 21, 2003) to determine which creditors are entitled to vote in the Plan of Arrangement filed by the Debtors under the CCAA (Action Num L023489). All parties not named in the Creditor's list and who did not submit a proof of claim must submit a completed Proof of Claim on or before May 25, 2004 at 5:00 p.m. (Vancouver time). Claim forms and a copy of the Creditors List may be obtained by sending a request to: KPMG Inc. P.O. Box 10426 Pacific Centre Vancouver, B.C. V7Y 1K3 Fax No. (604) 488-3809 Attention: Anthony Tillman Questions regarding the claims process, a representative of the Monitor can be contacted at (604) 646-6332. 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. DPL INC: Fitch Maintains Negative Watch on Low-B Ratings -------------------------------------------------------- Fitch Ratings maintains the Rating Watch Negative status of the long-term ratings of DPL Inc., and utility subsidiary The Dayton Power and Light Company, following the announcement by the Board of Directors of DPL that the President and Chief Executive Officer, Stephen Koziar, Jr., has retired, effective immediately and the Chairman of the Board, Peter Forster, and the interim Chief Financial Officer, Caroline E. Muhlencamp, have resigned, also effective immediately. The Board of Directors of DPL announced that it has elected current directors Robert Biggs as non-executive Chairman and W August Hillenbrand as non executive Vice-Chairman, and appointed DPL Energy President, James V. Mahoney, as Chief Executive Officer; and current Treasurer, Pamela Holdren, as Interim Chief Financial Officer. The Rating Watch Negative reflects Fitch's concerns over constraints on liquidity that could occur if capital calls were made on DPL's private equity investment portfolio or there are other unforeseen capital needs, concerns over corporate governance, and, to a lesser extent, technical defaults that may result from the company's failure to file financial statements prior to the expiry of grace periods. DPL and DP&L have not filed an annual report on Form 10-K for the year ending December 31, 2003 or Form 10-Q for the quarter ending March 31, 2003 which prevents issuance of any public securities. In addition, as disclosed in a Form 8-K filed on March 25, 2004, the $175 million private placement notes issued by DPL on March 25, 2004 contain covenants including; limitations on the incurrence of additional debt by DPL or any subsidiary excluding DP&L, and limitations on the incurrence of liens, which limit DPL's capacity to raise additional debt. The delay in filing financial statements could result in events of defaults and accelerations of various securities if any declarations of defaults are made by the holders or trustees. However, to date, no such declarations have been made. Favorably, DPL has announced that its Audit Committee has completed its review of the previously disclosed matters raised by a company employee and the company expects to become current on financial reporting 'shortly'. Filing of current financial reports remains subject to DPL's outside auditor's sign-off of 2003 and first quarter 2004 financial statements. The Company will immediately begin the process of strengthening its disclosures, communication, access to information, internal control and the culture of the company in certain areas. Ratings on Rating Watch Negative by Fitch are as follows: DPL Inc. --Senior unsecured debt 'BB'; --Trust preferred stock 'B+'; --Short-term 'B'. Dayton Power & Light --First mortgage bonds 'BBB'; --Collateralized PCRBs 'BBB'; --Preferred stock 'BB+'; --Short-term 'B' . DT INDUSTRIES: Nasdaq to Delist Shares on May 24 ------------------------------------------------ DT Industries, Inc. (Nasdaq: DTII), an engineering-driven designer, manufacturer and integrator of automation systems and related equipment used to manufacture, assemble, test or package industrial and consumer products, announced that The Nasdaq Stock Market, Inc. has issued a notice to the Company that its common stock will be delisted from the NASDAQ National Market on May 24, 2004. NASDAQ's determination was based on the Company's previously announced Chapter 11 bankruptcy petition, its failure to comply with continuing listing requirements and related matters. The Company does not intend to appeal this determination. Headquartered in Dayton, Ohio, DT Industries, Inc. -- http://www.dtindustries.com/-- is an engineering-driven designer, manufacturer and integrator of automated systems and related equipment used to manufacture, assemble, test or package industrial and consumer products. The Company, along with its affiliates, filed for chapter 11 protection (Bankr. S.D. Ohio Lead Case No. 04-34091) on May 12, 2004. Ronald S. Pretekin, Esq., at Coolidge Wall Womsley & Lombard, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $150,593,000 in assets and $142,913,000 in liabilities. ENERSYS: Files Registration Statement for Initial Public Offering ----------------------------------------------------------------- EnerSys announced that it has filed a Registration Statement with the Securities and Exchange Commission for a proposed initial public offering of shares of its common stock. The Company will receive all of the proceeds of the offering. The joint bookrunning lead managers will be Morgan Stanley & Company Incorporated and Lehman Brothers Inc. Banc of America Securities LLC will be co-lead manager. The number of shares to be offered on behalf of the Company and the price range for the offering have not yet been determined. When available, a preliminary prospectus relating to these securities may be obtained from Morgan Stanley, Lehman Brothers or Banc of America Securities at the addresses set forth below. A registration statement relating to these securities has been filed with the Securities and Exchange Commission but has not yet become effective. These securities may not be sold nor may offers to buy these securities be accepted prior to the time the registration statement becomes effective. This release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any state in which such offer, solicitation, or sale would be unlawful prior to registration or qualification under the securities laws of any such state. EnerSys' products include reserve power batteries which are used to provide backup power for the continuous operation of critical systems, such as telecommunications and computer systems, including process control and database systems; and motive power batteries which are used to power mobile manufacturing, warehousing and other ground handling equipment, primarily electric industrial forklift trucks. * * * As reported in the Troubled Company Reporter's February 26, 2004 edition, Standard & Poor's Ratings Services assigned its 'BB-' corporate credit ratings to EnerSys Holdings Inc. and EnerSys Capital Inc., a unit of EnerSys Holdings. At the same time, Standard & Poor's assigned its 'BB-' senior secured bank loan rating and its recovery rating of '4' to EnerSys Capital's proposed $460 million senior secured first-lien credit facility, consisting of a $100 million revolving credit facility due 2009 and a $360 million term loan due 2011. The '4' recovery rating indicates the expectation of a marginal recovery (25% to 50%) of principal under a bankruptcy scenario. At the same time, Standard & Poor's assigned its 'B' senior secured bank loan rating and a recovery rating of '5' to EnerSys Capital's proposed $120 million senior secured second-lien loan due 2012. The '5' recovery rating indicates the expectation of a negligible recovery (25% or less) of principal. The bulk of the proceeds from the debt offering will be used to fund a $250 million distribution to shareholders. The outlook on the Reading, Pennsylvania-based industrial battery manufacturer is stable. "EnerSys should continue to generate positive cash flow and improved credit protection measures over time. Upside ratings potential is limited by the company's high debt leverage, rising raw material cost exposure, and, longer term, a more aggressive financial policy with respect to shareholder distributions," said Standard & Poor's credit analyst Linli Chee. ENRON: Caribe Wants Court Nod To Distribute And Use Sale Proceeds ----------------------------------------------------------------- Caribe Verde (SJG), Inc., formerly known as San Juan Gas Company, and a debtor-affiliate of Enron Corporation, asks the Court to approve the final use and distribution of proceeds for the sale of certain assets to SJG Acquisition Corporation. Martin A. Sosland, Esq., at Weil, Gotshal & Manges, LLP, in New York, relates that on January 30, 2004, Caribe received approximately $2,522,369 as the net proceeds at the closing of the Sale. According to Mr. Sosland, Caribe has about $55,000 in unrestricted cash. This amount is insufficient to satisfy estimated postpetition payables and pay other anticipated expenses, which is around $854,000, without using a portion of the net sales proceeds: Sale of Assets Cash Flow through Wind Down Proceeds Amount -------- ------ Purchase Price $4,650,000 Environmental Escrow Account (2,000,000) Less: Purchase Price Adjustments Manhole Covers (100,800) Property Tax (20,729) Deed of Purchase and Sale (3,602) Environmental Escrow Fee (2,500) ----------- Received from Buyer 2,056,202 Escrow Account Balance 466,334 ----------- Net Cash Proceeds from sale 2,522,536 2,522,369 ----------- ----------- Amounts Paid at Closing: Repayment of DIP Financing - principal (495,000) Repayment of DIP Financing - interest (6,997) ----------- Total expenditures required at closing (501,997) ----------- Interest earned on Restricted Cash 1,451 Total San Juan Gas Restricted Cash 2,021,823 Unrestricted Cash at San Juan Gas 1,800 ----------- Total Cash Available 2,023,623 Estimated Cash Refunds 97,000 Estimated Expenditures Remaining: Pension Plan funding (367,000) Protane (212,000) Legal fees (100,000) Statutory Audit (30,000) Wind down expenditures (20,000) Postpetition Payables (80,000) ----------- Total Expenditures required after closing (809,000) ----------- CASH AVAILABLE TO CREDITORS (estimated) $1,311,623 =========== In consultation with its advisors, Caribe had determined that the distribution and use of the Sale Proceeds is a just and reasonable distribution of the proceeds. (Enron Bankruptcy News, Issue No. 107; Bankruptcy Creditors' Service, Inc., 215/945-7000) ERN LLC: Look for Schedules & Statements by May 24, 2004 -------------------------------------------------------- The U.S. Bankruptcy Court for the District of Maryland, Baltimore Division, gave ERN, LLC an extension to file its schedules of assets and liabilities, statements of financial affairs and lists of executory contracts and unexpired leases required under 11 U.S.C. Sec. 521(1). The Debtor has until May 24, 2004 to file their Schedules of Assets and Liabilities and Statement of Financial Affairs. Headquartered in Baltimore, Maryland, ERN, LLC -- http://www.ern-llc.com/-- provides point of sale check guaranty and credit card servicing to merchants. The Company filed for chapter 11 protection on April 28, 2004 (Bankr. Md. Case No. 04-20521). Carrie Weinfeld, Esq., James A. Vidmar, Jr., Esq., and Rebecca S. Beste, Esq., at Linowes and Blocher, LLP represent the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed $1,159,361 in total assets and $12,878,478 in total debts. FANSTEEL: Reorganized Company's March 31 Equity Pegged at $965K --------------------------------------------------------------- Fansteel Inc. (Pinksheets: FELI) announced net sales of $15,526,000 for the quarter ended March 31, 2004 with $12,263,000 attributable to the Company after emergence from Chapter 11 bankruptcy and $3,263,000 attributable to the Company pre- emergence. Net sales for the predecessor Company for the quarter ended March 31, 2003 were $15,021,000. The 3.4% sales increase for 2004 compared with 2003 related primarily to improved sales to aerospace customers partially offset by reduced sales to its largest lawn and garden customer. Net income of $58,472,000 was reported for the first quarter 2004 with net income of $640,000 for the successor Company and a net income of $57,831,000 for the predecessor Company. The net loss for the first quarter 2003 was $2,006,000. The 2004 results for the successor Company included losses from discontinued operations of $561,000 while the result for the predecessor Company in 2004 included bankruptcy reorganization costs of $340,000 and a gain from discharge of debt of $15,576,000 and Fresh-start accounting adjustments of $42,927,000. The 2003 results included bankruptcy reorganization costs of $1,155,000 and losses from discontinued operations of $439,000. Income from continuing operations before reorganization costs, gains from debt discharge, and fresh start accounting adjustments for the first quarter 2004 was $871,000 with income of $1,202,000 for the successor Company and a loss of $331,000 for the predecessor Company. For the first quarter 2003, loss from continuing operations was $412,000. The improved income performance is primarily the result of higher sales and cost reductions. At March 31, 2004, Fansteel Inc.'s balance sheet shows a recovery of stockholders' equity at $964,729. As of December 31, 2003, the company reported a stockholders' equity deficit of $57,508,542. The Company's amended joint reorganization plan became effective on January 23, 2004, at which time Fansteel emerged from its Chapter 11 bankruptcy. Fansteel is a manufacturer of aerospace castings and engineered metal components used in a variety of markets including automotive, energy, military and commercial aerospace, agricultural and construction machinery, lawn and garden equipment, marine, and plumbing and electrical hardware industries. FEDERAL-MOGUL: Creditors Wants Rothschild To Produce Documents -------------------------------------------------------------- Eric M. Sutty, Esq., at The Bayard Firm, in Wilmington, Delaware, reports that despite the filing of the Federal-Mogul Debtors' Plan of Reorganization, its Board of Directors, misguided and acting through Rothschild, Inc., secretly explored deals with third parties to undermine the Joint Plan and, instead, sponsor an alternative plan of reorganization. This covert scheme not only undermined the Joint Plan, but also delayed the bankruptcy proceeding and caused the Debtors to incur enormous additional expenses. The Official Committee of Unsecured Creditors only discovered the scheme when the Debtors filed a request based on Citigroup Venture Capital Equity Partners, L.P.'s offer to provide equity capital to the reorganized Debtors. The proposal promised a radically different allocation of equity than under the Joint Plan, effectively wiping out bondholders and destroying the compromises contained in the Joint Plan. In the face of unanimous outrage and opposition by the Creditor Representatives, the Court summarily denied the Citigroup Venture Motion within days of its service and filing. Shortly thereafter, the Debtors terminated Rothschild's engagement. Mr. Sutty tells Judge Lyons that the Creditors Committee transmitted informal requests for depositions and documents on Rothschild, Citigroup Venture and the Board. Rothschild refuses to produce deponents and documents without a subpoena. By this motion, the Creditors Committee seeks the Court's authority to issue subpoenas to Rothschild to compel attendance for depositions and production of certain documents. The request will facilitate the Creditors Committee's investigation into Rothschild's activities in the Spring and Summer of 2003, its involvement with the Citigroup Venture Motion, and its apparent attempt to disrupt an alliance formed as a result of long and difficult negotiations between the various Creditor Representatives. The information the Creditors Committee seeks will likely reside on Rothschild's computer systems and removable electronic media including e-mail and other electronic communications, word processing documents, spreadsheets, databases, calendars, contact manager information and network access information. Accordingly, the Creditors Committee seeks: (a) the production of all documents: (1) in written or electronic form, pertaining to these subjects: -- Use of computer systems and networks, including policies referring or relating to use of laptops, desktops, e-mail, instant messenger, file storage and naming conventions, document management systems and databases; -- Data storage and archival, including system backups, and data and disaster recovery; -- Data retention and destruction, including any policies referring to or referencing any automatic purge of e-mails or electronic documents; -- Use of PDAs, smart phones, 2-way pagers, blackberries, and installation and use of home computers, virtual firewalls or other technologies employed to enable remote access or telecommuting; and -- Any and all policies related to the use of computer systems and networks, and PDAs. (2) reflecting, depicting, or describing system architecture or topology, including any system or network footprint created by Rothschild or by any third parties on its behalf and all policies related thereto; (b) to examine the Rothschild professionals most knowledgeable about the location of these materials to determine where relevant information can be found, so it can be requested with the appropriate specificity; and (c) to issue narrowly tailored follow-up subpoenas to compel the production of the relevant information using the information found in the examinations. Mr. Sutty explains that the Creditors Committee's investigation focuses on the proper administration of the Debtors' estate. On the other hand, the anticipated Follow-up Subpoenas will seek information and communications to make a determination as to the propriety of Rothschild's conduct, and to prove that Rothschild breached its fiduciary duties. Subject to the result of the investigation, the Committee intends to object to Rothschild's fees in whole or in part, or commence an action against Rothschild seeking recovery of damages to the Debtors' estates. Rothschild Objects Much of the information sought by the Creditors Committee relates to proprietary software and systems, Bradford J. Sandler, Esq., at Adelman Lavine Gold and Levin, P.C, in Wilmington, Delaware, says. Rothschild considers that information highly confidential. Other information sought by the Creditors Committee relates to technology products. Since Rothschild licenses these products from software and other vendors, Mr. Sandler notes, it may not be at liberty to produce the information. The scope of discovery demand also raises serious security concerns for Rothschild. Rothschild fears that the production of the materials may inadvertently compromise its systems or expose systems vulnerabilities. In addition, the Creditors Committee indicated that the proposed discovery was to investigate potential future objections to the allowance of fees earned by Rothschild during its engagement in the Debtors' cases. However, the Creditors Committee did not specify any particular documents or testimony that it desired on any underlying substantive issues that might be of concern to the Creditors Committee. By a letter dated March 26, 2004, Rothschild declined the Creditors Committee's demand for informal discovery. Rothschild also indicated that it would take steps to preserve materials relevant to the Creditors Committee's demand. Rothschild asked the Creditors Committee, the Debtors, High River Limited Partnership and Carl Icahn to do the same. Mr. Sandler contends that the proper way to obtain discovery is not through Rule 2004 of the Federal Rules of Bankruptcy Procedure, but through the actual filing of a specific objection and through the use of mutual discovery devices pursuant to Bankruptcy Rule 9014. Headquartered in Southfield, Michigan, Federal-Mogul Corporation -- http://www.federal-mogul.com/-- is one of the world's largest automotive parts companies with worldwide revenue of some $6 billion. The Company filed for chapter 11 protection on Oct. 1, 2001 (Bankr. Del. Case No. 01-10582). Lawrence J. Nyhan, Esq., James F. Conlan, Esq., and Kevin T. Lantry, Esq., at Sidley Austin Brown & Wood and Laura Davis Jones, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from its creditors, they listed $10.15 billion in assets and $8.86 billion in liabilities. (Federal-Mogul Bankruptcy News, Issue No. 55; Bankruptcy Creditors' Service, Inc., 215/945-7000) FIBERMARK: Balance Sheet Insolvency Tops $88MM at March 31, 2004 ---------------------------------------------------------------- FiberMark, Inc., (OTC Bulletin Board: FMKIQ) reported a net loss of $16.9 million, or $2.38 per share, for the first quarter ended March 31, 2004, compared with a net loss of $5.4 million, or $.76 per share, for the same 2003 quarter. First- quarter results included $12.0 million, or $1.70 per share, in restructuring expenses, of which $2.0 million were cash expenditures, related to the company's voluntary chapter 11 filing on March 30, 2004. Net sales in the first quarter of 2004 were $112.4 million compared with $105.3 million for the same quarter in 2003, an increase of $7.1 million or 6.7%. Sales from German operations in the first quarter of 2004 were $55.6 million compared with $48.3 million in the prior-year quarter, an increase of $7.3 million or 15.1%. Excluding the translation effects of a stronger euro, which accounted for $8.1 million in sales for the first quarter compared with the prior-year quarter, sales from German operations declined by $0.8 million or 1.7%. First-quarter 2004 sales from North American operations were in line with the prior-year quarter at $56.9 million. As of March 31, 2004, FiberMark's cash position was $14.0 million worldwide, and revolving credit borrowings totaled $24.0 million. The $85 million revolving credit facility with GE Commercial Finance established in 2003 was replaced on April 1, 2004, with a $30 million debtor-in-possession (DIP) facility covering the FiberMark North American entities that filed for chapter 11 protection, plus a revised facility based on the earnings of our German operations. These two facilities have borrowing bases that are substantially similar to the former credit facility. The DIP facility was approved by the Bankruptcy Court on April 27, 2004, and is available as needed during the chapter 11 process to help finance North American operations. The German facility had $24.0 million of outstanding borrowings at March 31, 2004. FiberMark's pro-forma unused borrowing capacity as of the end of the first quarter was $27.8 million. "First-quarter 2004 sales improved overall versus the first- quarter of 2003 largely due to foreign exchange translation gains," said Alex Kwader, chairman and chief executive officer. "On a euro basis, German operations sales were slightly below the strong 2003 quarter, but delivered gains in automotive filter media and nonwoven wallcovering base. Sales in North America were essentially unchanged, stemming five-years of top-line declines for North American operations, excluding acquisitions. While a significant portion of the sales decline was related to business divestitures, we are hopeful that the improving first- quarter revenues reflect economic strengthening, improving markets for our customers, market development projects and the bottoming of sales losses in North America. Within North American operations, only our technical specialties business experienced modest declines. "A weaker product mix and pricing pressure in selected markets also hurt earnings, accounting for approximately $3.5 million of the earnings decline. Higher energy, and to a lesser degree, higher pulp costs negatively impacted results by approximately $0.4 million compared with the prior-year quarter," Kwader said. "Pulp pricing is likely to have a greater negative effect going forward, as we realize the full effect of significant escalations in pulp pricing. On the positive side, lower product trial costs and lower fixed overhead, net of initial inefficiencies in transferring production, totaled $3.1 million. These gains are an important continuation of operational improvements." Commenting on cost savings initiatives first discussed last August, Kwader said that FiberMark realized $4.0 million in cost savings in 2003. In 2004 the company expects incremental savings of $10 million, as it realizes full- year benefits from its 2003 initiatives. The company also expects further savings of $1-2 million from cost-saving steps to be taken this year. Kwader expects these initiatives to generate aggregate savings of $15-16 million on an annualized basis by mid-year 2004. The company continues to pursue cost reduction opportunities across all of its operations. In the first quarter of 2004, earnings before interest, taxes, depreciation, amortization and restructuring (EBITDAR), excluding 2004 restructuring charges related to the company's March 30, 2004, chapter 11 filing, improved to $13.4 million compared with $12.2 million in the prior- year quarter, largely reflecting fixed cost reductions, operational productivity improvements and foreign exchange benefits. FiberMark believes that non-GAAP financial information assists investors and others by providing financial information in a format that presents comparable financial trends of ongoing business activities. At March 31, 2004, FiberMark Inc. reported a stockholders' deficit of $88,205,000 compared to a deficit of $68,852,000 at December 31, 2003. About FiberMark Headquartered in Brattleboro, Vermont, FiberMark, Inc. -- http://www.fibermark.com/-- produces filter media for transportation applications and vacuum cleaning; cover stocks and cover materials for books, graphic design, and office supplies and base materials for specialty tapes, wallcoverings and sandpaper. The Company filed for chapter 11 protection on March 30, 2004 (Bankr. D. Vt. Case No. 04-10463). Adam S. Ravin, Esq., D. J. Baker, Esq., David M. Turetsky, Esq., Rosalie Walker Gray, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP represent the Debtors in their restructuring efforts. When the Debtors filed for protection from its creditors, they listed $329,600,000 in total assets and $405,700,000 in total debts. FIBERMARK: Asks to Pay Vendors' $2.9 Million Prepetition Claims --------------------------------------------------------------- FiberMark, Inc., and its debtor-affiliates ask for authority from the U.S. Bankruptcy Court for the District of Vermont to pay, in the ordinary course of business, the prepetition fixed, liquidated and undisputed claims of certain critical suppliers of materials, goods and services with whom they continue to do business and whose materials, goods and services are essential to their operations. The Debtors believe payment of the Critical Vendor Claims is necessary to continue their operations, minimize disruption to the supply of goods from the Debtors to their customers, preserve enterprise value and emerge successfully from chapter 11. The Debtors estimate that the maximum aggregate amount of Critical Vendor Claims that they may need to pay is $2,900,000. By this Motion, the Debtors do not seek authority to pay all Critical Vendors' claims. While the Debtors believe that they must continue to receive the materials, goods and services provided by all of the Critical Vendors in order to achieve a successful reorganization, the Debtors recognize that in many cases payment of a Critical Vendor's prepetition claims will not be necessary to facilitate the continued delivery of such materials, goods and services. In some cases, however, the Debtors anticipate that, among other things, Critical Vendors: (a) may refuse to deliver materials, goods and services without payment of their prepetition claims; (b) may refuse to deliver materials, goods and services on reasonable credit terms absent payment of prepetition claims, thereby effectively refusing to do business with the Debtors; or (c) may suffer significant financial hardship, such that the Debtors' non-payment of prepetition claims would destroy a Critical Vendor's business and, therefore, its ability to supply the Debtors with materials, goods and services. It is in cases like these, where nonpayment would lead to the interruption of the delivery of necessary materials, goods and services -- that the Debtors seek to exercise their discretion to pay Critical Vendor Claims. Headquartered in Brattleboro, Vermont, FiberMark, Inc. -- http://www.fibermark.com/-- produces filter media for transportation applications and vacuum cleaning; cover stocks and cover materials for books, graphic design, and office supplies and base materials for specialty tapes, wallcoverings and sandpaper. The Company filed for chapter 11 protection on March 30, 2004 (Bankr. D. Vt. Case No. 04-10463). Adam S. Ravin, Esq., D. J. Baker, Esq., David M. Turetsky, Esq., Rosalie Walker Gray, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP represent the Debtors in their restructuring efforts. When the Debtors filed for protection from its creditors, they listed $329,600,000 in total assets and $405,700,000 in total debts. FLINTKOTE COMPANY: Employs Pachulski Stang as Bankruptcy Counsel ---------------------------------------------------------------- The Flintkote Company asks the U.S. Bankruptcy Court for the District of Delaware for permission to employ Pachulski, Stang, Ziehl, Young, Junes & Wientraub, PC as its counsel in its chapter 11 proceeding. The principal attorneys and paralegals presently designated to represent the Debtor and their current standard hourly rates are: Professionals Billing Rate ------------- ------------ Laura Davis Jones $595 per hour David M. Bertenthal $445 per hour James E. O'Neill $415 per hour Sandra G. McLamb $255 per hour Kathe Finlayson $155 per hour Camille Ennis $135 per hour In its capacity as the Debtor's counsel, Pachulski Stang will: a. provide legal advice with respect to its powers and duties as debtor in possession in the continued management of its assets and properties; b. prepare and pursue confirmation of Debtor's plan(s) and approval of the Debtor's disclosure statement(s); c. prepare necessary applications, motions, answers, orders, reports and other legal papers on behalf of the Debtor; d. appear in Court and to protect the interests of the Debtor before the Court; and e. perform all other legal services for the Debtor which may be necessary and proper in this proceeding. Headquartered in San Francisco, California, The Flintkote Company is engaged in the business of manufacturing, processing and distributing building materials. The Company filed for chapter 11 protection on April 30, 2004 (Bankr. Del. Case No. 04-11300). James E. O'Neill, Esq., Laura Davis Jones, Esq., and Sandra G. McLamb, Esq., at Pachulski, Stang, Ziehl, Young & Jones represent the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed both estimated debts and assets of more than $100 million. FLOWSERVE CORPORATION: First Quarter 2004 10-Q Not Yet Ready ------------------------------------------------------------ Flowserve Corp. (NYSE:FLS) said it is still preparing its Form 10- Q for the first quarter of 2004 to file with the Securities and Exchange Commission. This delay is due to the time necessary to complete its amended 2002 Form 10-K/A and its 2003 Form 10-K, which were filed on April 27, 2004. The company expects to announce next week its financial results for the first quarter of 2004 and estimates it will file its Form 10-Q for that period in mid-June. Flowserve Corp. (S&P, BB- Corporate Credit Rating, Stable) is one of the world's leading providers of fluid motion and control products and services. Operating in 56 countries, the company produces engineered and industrial pumps, seals and valves as well as a range of related flow management services. FURNAS COUNTY: U.S. Trustee to Meet with Creditors on June 4 ------------------------------------------------------------ The United States Trustee will convene a meeting of Furnas County Farms' creditors at 9:30 a.m., on June 4, 2004 in the U.S. Trustee Meeting Room at Roman L. Hruska Courthouse, 111 South 18th Plaza, Omaha, Nebraska 68102. This is the first meeting of creditors required under 11 U.S.C. Sec. 341(a) in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Headquartered in Columbus, Nebraska, Furnas County Farms is engaged in owning, leasing, operating and managing swine operations. The Company, along with 4 of its debtor-affiliates filed for chapter 11 protection on May 3, 2004 (Bankr. D. Nebr. Case No. 04-81489). James Overcash, Esq., and Joseph H. Badami, Esq., at Woods & Aitken, LLP represent the Debtors in their restructuring efforts. When the Company filed for protection from their creditors, they listed both estimated debts and assets of over $50 million. GADZOOKS INC: Fourth Quarter Net Loss Balloons to $27.9 Million --------------------------------------------------------------- Gadzooks, Inc. (OTC Pink Sheets: GADZQ) reported a net loss of $27.9 million for the fourth quarter ended January 31, 2004. The Company recorded a net loss of $2.3 million for the prior year fourth quarter. The Company reported a net loss per share of $3.05 for the quarter compared to a net loss per share of $0.25 for the corresponding period a year ago. Net sales for the fourth quarter decreased 27.6 percent to $70.1 million from $96.8 million for the corresponding period of the prior year. Same store sales for the quarter declined 24.8 percent compared to a 3.1 percent decrease for the fourth quarter of last year. The Company's results for the fourth quarter were significantly impacted by the following factors: -- A $9.0 million charge for long-lived asset impairments, -- A $3.0 million write-down of inventory to estimated net realizable value in closing stores, -- The significant comparable store sales decline, -- Promotional activity initiated to stimulate sales and accelerate market share growth and -- The fact that the Company did not record an income tax benefit for operating losses incurred. The Company reported a net loss of $62.0 million, or $6.78 per share, for fiscal 2003 compared to a net loss of $1.3 million, or $0.14 per share, for the prior year. Net sales for fiscal 2003 decreased 20.6 percent to $258.5 million from $325.5 million for the prior year. Same store sales decreased 19.3 percent for the year versus a 3.4 percent decline for fiscal 2002. For more detail, please see the Company's Annual Report on Form 10-K filed on May 17, 2004. "We are making good progress in the reorganization of our Company, said Jerry Szczepanski, Chairman and Chief Executive Officer. "We have solidified our merchandising organization, implemented significant cost reductions and closed 158 under performing stores since January 31, 2004. Our primary focus in fiscal 2004 has been on building a successful all-female business around a core group of approximately 250 stores. While there is much work left to do, we are encouraged by the results of our restructuring process thus far." About Gadzooks Headquartered in Carrollton, Texas, Gadzooks, Inc. -- http://www.gadzooks.com/-- is a specialty retailer of casual clothing, accessories and shoes for 16-22 year-old females. The Company filed for chapter 11 protection on February 3, 2004 (Bankr. N.D. Tex. Case No. 04-31486). Charles R. Gibbs, Esq., and Keith Miles Aurzada, Esq., at Akin Gump Strauss Hauer & Feld, LLP represent the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed $84,570,641 in total assets and $42,519,551 in total debts. GALILEE HOTEL: Voluntary Chapter 11 Case Summary ------------------------------------------------ Lead Debtor: Galilee Hotel Associates, LLC aka The Lighthouse Inn P.O. Box 5863 Wakefield, Rhode Island 02880 Bankruptcy Case No.: 04-11456 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- M & Z Hotel Associates, LLC 04-11460 Type of Business: The Debtor owns and operates the Lighthouse restaurant and hotel in Narragansett, Rhode Island. Chapter 11 Petition Date: April 30, 2004 Court: District of Rhode Island (Providence) Judge: Arthur N. Votolato Debtors' Counsel: Christopher Lefebvre, Esq. Claude Lefebvre & Sons P.O. Box 479 Pawtucket, RI 02862 Tel: 401-728-6060 Estimated Assets Estimated Debts ---------------- --------------- Galilee Hotel Associates, LLC $1 M to $10 M $1 M to $10 M M & Z Hotel Associates, LLC $100,000-$500,000 $100,000-$500,000 The Debtor did not file a list of its 20-largest creditors. GENTEK HOLDING: Agrees To Settle Remaining Honeywell Disputes ------------------------------------------------------------- Reorganized Debtors GenTek Holding Corporation and General Chemical, LLC, seek the Court's permission to: (a) enter into a master settlement agreement with Honeywell International, Inc., to settle remaining disputes with Honeywell; (b) assume an Environmental Matters Agreement and a Restated Environmental Matters Agreement, as amended; and (c) sell and convey a real and personal property to Honeywell under the Master Settlement Agreement, free and clear of liens and security interests. According to Mark S. Chehi, Esq., at Skadden, Arps, Slate, Meagher & Flom, LLP, in Wilmington, Delaware, the Master Settlement Agreement will resolve all of Honeywell's remaining claims and will result in closings entitled to protection under Section 1146(c) of the Bankruptcy Code at which time, inter alia, General Chemical will convey title of the north plant of the Delaware Valley Works in Claymont, Delaware, and a work site in Front Royal, Virginia, as set forth in the Master Settlement Agreement, thereby making effective that portion of the confirmed Reorganization Plan. DVW Matters Pursuant to the Master Settlement Agreement, the Debtors will transfer to Honeywell the DVW North Plant, in consideration for Honeywell's assumption of, and agreement to indemnify GenTek Holding, General Chemical, and their affiliates for: (i) all claims relating to substantially all environmental matters associated with the DVW North Plant; and (ii) all claims relating to groundwater contamination associated with the DVW North Plant and the DVW South Plant. The transfer will occur within nine months, upon General Chemical's removal of certain equipment and completion of certain decontamination activities. General Chemical will remain responsible for, and indemnify Honeywell and its affiliates for, all claims relating to the investigation and remediation of on- site soil contamination at the DVW South Plant. If Honeywell demonstrates by a preponderance of the evidence that its costs to treat groundwater contamination at the DVW South Plant are increased as the result of its having to address contaminants migrating from soil sources and free product associated with five specified points, then General Chemical will elect either to pay Honeywell's increased costs, or remove or remediate the contamination associated with the applicable points. The parties will use their best efforts to jointly approach the applicable agencies to amend a Facility Lead Agreement to include the investigation and remediation of the entirety of the DVW North Plant and DVW South Plant groundwater. Section 3008(h) of the Resource Conservation and Recovery Act authorizes the U.S. Environmental Protection Agency to issue corrective action administrative orders and initiate civil actions for facilities currently under interim status, facilities that once had interim status, or facilities that should have had interim status. A Section 3008(h) order may be issued whether the facilities operating -- prior to receiving a permit -- is closing, or is closed. The parties agree to use their best efforts to seek amendment of the Section 3008(h) Order to exclude from the scope of General Chemical's obligations the investigation and remediation of the entirety of the DVW North Plant and groundwater at the DVW South Plant. The parties will work cooperatively to implement the Facility Lead Agreement and the Section 3008(h) Order in a manner that most closely carries out the intent of the parties, if they are not entirely successful in amending them. General Chemical will wind down its Specialty Fines Business on the DVW North Plant and will remove certain equipment associated with that business from the DVW North Plant within nine months. General Chemical will perform certain prescribed decontamination work in the equipment and facilities that will remain on the DVW North Plant. Honeywell will be granted an easement or discharge authorization, permitting: -- Honeywell's continued discharge into the existing Storm Water Conveyance for at least two years; and -- permitting Honeywell to install, at its expense, an enclosed conveyance in or along the Storm Water Conveyance. The parties will share the costs of certain repairs necessary to continue utilizing the storm water discharge conveyance across the DVW South Plant. Front Royal Matters General Chemical will transfer to Honeywell the Front Royal Facility in consideration for Honeywell's assumption of, and agreement to indemnify GenTek Holding, General Chemical, and their affiliates for all claims relating to substantially all environmental matters associated with the Front Royal Facility. The conveyance of the Front Royal Facility will occur as promptly as practicable. The parties will ask the EPA to remove General Chemical as a party to the CERCLA 106 Order affecting the Front Royal Facility and place sole responsibility under that Order on Honeywell. The parties will work cooperatively to implement the 106 Order in a manner that most closely carries out the intent of the parties, if they are not entirely successful in having General Chemical removed. Bay Point and Atlanta Matters Honeywell will be responsible for a percentage of the costs incurred in connection with: -- the investigation, treatment or closure of a sedimentation lagoon in Bay Point, California, and the Hi Clay Aluminum ponds in Atlanta, Georgia; and -- the investigation, treatment and remediation of groundwater contamination at the Bay Point Facility. Honeywell's contribution percentage of these liabilities will be 75% through December 31, 2010, reducing to: * 50% through December 31, 2015; * 25% through December 31, 2020; and * 0% thereafter. Honeywell's total liability for these costs is capped at $6 million, and is subject to reduction based on GenTek Holding's environmental expenditures through December 31, 2006 on its former Allied Signal properties, and subject to further reduction in other events. Other Provisions The Master Settlement Agreement provides for these additional terms: (a) The Reorganized Debtors will withdraw the EMA and REMA from their request to reject the Honeywell Executory Contracts. The Master Settlement Agreement amends these Agreements as they relate to the Delaware Valley Works, Front Royal, Bay Point and Atlanta. Pursuant to the Master Settlement Agreement, the EMA and the REMA will be assumed, as amended, pursuant to Sections 365 and 1123(b)(2) of the Bankruptcy Code and the Plan. Honeywell will assert no claim for any cure costs in connection with the assumption. The parties ratify and confirm the EMA and the REMA, and General Chemical confirms that it has assumed certain rights and responsibilities under the EMA and the REMA with respect to the properties; (b) The parties agree that the Master Settlement Agreement is not relevant to, and will not be offered as evidence for, the issue of whether the release in the REMA may be rejected in any future bankruptcy proceeding; (c) Honeywell will withdraw all of the remaining Honeywell Claims not yet withdrawn pursuant to other Orders and Stipulations in the Reorganized Debtors' Chapter 11 case; (d) The Master Settlement Agreement does not impair any rights or claims of the parties under the Honeywell Contracts, or under applicable law against any person or entity other than the parties and their subsidiaries. Honeywell reserves its rights against California Coastal Communities, Inc., Wheelabrator Technologies, Inc., Fisher Scientific International, Inc., General Chemical Industrial Products, Inc., and their predecessors, successors and assigns under the EMA, the REMA, and any of the other Honeywell Contracts to which any of these entities is a party, or by which any of the entities is bound; (e) The provisions of the Master Settlement Agreement, which amend the EMA and the REMA, form an integral part of, and are intended to be read in conjunction with, the EMA and REMA. For purposes of any future assumption or rejection by either party or their subsidiaries pursuant to Section 365 of the Bankruptcy Code, the Master Settlement Agreement, the EMA and the REMA will be deemed to constitute one and the same agreement, and neither party may separately assume or reject the Master Settlement Agreement, and the EMA and REMA, without performing the same action with respect to the others; (f) The Master Settlement Agreement provides for expedited expert arbitration of disputes relating to its provisions addressing the Delaware Valley Works, Front Royal, Bay Point and Atlanta; and (g) GenTek Holding agrees to spend not less than $6 million in calendar years 2004, 2005 and 2006 for environmental investigation and remediation at former Honeywell sites, including General Chemical's expenditures at the Delaware Valley Works, Front Royal, Bay Point and Atlanta. This Commitment, however, is not a condition precedent to Honeywell's obligations to bear a portion of the environmental costs at Bay Point and Atlanta, as provided in the Master Settlement Agreement. Mr. Chehi tells the Court that the terms of the Master Settlement Agreement, taken as a whole, including the conveyances of the DVW North Plant and the Front Royal Facility, provide the most efficient, cost-effective and beneficial means of resolving Honeywell's Remaining Claims. The Reorganized Debtors have made an assessment of the value and marketability of the DVW North Plant and the Front Royal Facility. From the assessment, the Reorganized Debtors concluded that Honeywell's assumption of all environmental liabilities for these properties, coupled with the additional consideration to be delivered by Honeywell pursuant to the Master Settlement Agreement -- including Honeywell's contribution of up to $6,000,000 toward the BA Liabilities -- is fair consideration for the conveyance of the DVW North Plant and the Front Royal Facility and the other consideration to be delivered to Honeywell pursuant to the Master Settlement Agreement, including General Chemical's assumption of the EMA and the REMA. The BA Liabilities, Mr. Chehi explains, pertain to liabilities, costs and expenses associated with the Bay Point Lagoon, the Atlanta HCA ponds, and the groundwater contamination associated with the Bay Point Facility site-wide-contamination, not limited to the groundwater impacted by the Bay Point Lagoon. The Reorganized Debtors also determined that the intermingling of the General Chemical operations at the DVW North Plant with Honeywell's operations on interweaving parcels, together with the historic relationship between GenTek Holding and Honeywell, which includes contentious environmental issues, render the sale of the DVW North Plant to a party other than Honeywell unlikely. The environmental condition of the Front Royal Facility, including its encumbrance by a Conservation and Environmental Protection Easement and Declaration of Restrictive Covenants, impair General Chemical's ability to market the Front Royal Facility and limit the pool of potential purchasers, Mr. Chehi says. Encumbrances on the DVW North Plant The various mortgages and security interests that encumber the DVW North Plant are: * A Mortgage in favor of The First National Bank of Boston securing $350,000,000 in principal amount dated as of November 15, 1989, and recorded in the Office of the Recorder of Deeds for New Castle County, Delaware; * A Mortgage in favor of The First National Bank of Boston securing $230,000,000 in principal amount dated as of September 15, 1993, and recorded in New Castle County, Delaware on September 21, 1993; * A First Supplement to the 1993 Delaware Mortgage dated as of October 31, 1994, and recorded in New Castle, Delaware on November 23, 1994; * A Mortgage in favor of The Chase Manhattan Bank securing $798,500,000 in principal amount dated as of October 30, 2001, and recorded in New Castle, Delaware on November 19, 2001 as instrument number 20011119-0095641; * A UCC Financing Statement in favor of The Chase Manhattan Bank securing certain collateral recorded in the New Castle Recorder of Deeds on November 19, 2001 as instrument number 20011119-0095642; * A Mortgage in favor of The First National Bank of Boston securing $350,000,000 in principal amount dated as of November 15, 1989, and recorded in the Office of the Recorder of Deeds for Delaware County, Pennsylvania on November 27, 1989; * A Mortgage in favor of The First National Bank of Boston securing $230,000,000 in principal amount dated as of September 15, 1993, and recorded in the Delaware County Recorder of Deeds on September 17, 1993; * A First Supplement to the 1993 Pennsylvania Mortgage dated as of October 31, 1994, and recorded in the Delaware County Recorder of Deeds on November 23, 1994; * A Mortgage in favor of The Chase Manhattan Bank securing $798,500,000 in principal amount dated as of October 30, 2001, and recorded in the Delaware County Recorder of Deeds on November 16, 2001; and * A UCC Financing Statement granted in favor of The Chase Manhattan Bank securing certain collateral recorded in the Delaware County Recorder of Deeds on November 16, 2001. Mr. Chehi maintains that the indebtedness secured by the Mortgages and Security Interests has been paid in full, and, therefore, the Reorganized Debtors are entitled to have the Fleet and Chase Instruments satisfied or terminated. Good Faith Purchaser The Reorganized Debtors also ask the Court to designate Honeywell a good faith purchaser as such term is used in Section 363(m). The transaction is for fair value and is the result of arm's- length negotiations between the parties. Mr. Chehi assures the Court that the consideration for the DVW North Plant and the Front Royal Facility constitutes "fair value" for those properties. (GenTek Bankruptcy News, Issue No. 32; Bankruptcy Creditors' Service, Inc., 215/945-7000) GENTEK INC: Delivers First Quarter Financial Results ---------------------------------------------------- GenTek Inc. (OTC Bulletin Board: GETI) announced results for the first quarter ended March 31, 2004. GenTek's results reflect the classification of its KRONE communications operating unit as a discontinued operation due to the pending sale of that business to ADC Telecommunications, Inc., which is expected to close within one week. In addition, GenTek has applied fresh-start accounting in conjunction with its emergence from bankruptcy protection on Nov. 10, 2003, causing the results from the prior-year period to not be comparable to current period results. For the first quarter of 2004, GenTek had revenues totaling $192.9 million and operating profit of $22.1 million. Also for the quarter, including earnings from discontinued operations, net income totaled $14.8 million and earnings per diluted share were $1.48. Pro Forma Results To facilitate the comparison of 2004 results against prior periods, GenTek has presented prior-period results on a pro forma basis, as if the company had emerged from bankruptcy at the beginning of such period. These pro forma results are based upon certain important assumptions that are material to the presentation of such results. In particular, the pro forma results assume a normalized effective tax rate, which may ultimately be materially different from GenTek's future effective tax rate. While management believes that this presentation of pro forma results may be useful, we caution investors not to rely solely on such results in making investment decisions. Pro forma results for the first quarter of 2004, as well as for the comparable prior-year period, are summarized in the attached Schedule 2 and all pro forma adjustments are detailed in Schedules 3 and 4. For the first quarter of 2004, GenTek posted revenues of $192.9 million compared with $197 million in the corresponding quarter of 2003. For the first quarter of 2004, GenTek recorded operating profit of $22.1 million versus a pro forma operating loss of $19.4 million in the first quarter of 2003. The company recorded first-quarter net income, including results from discontinued operations, of $14.8 million, or $1.48 per diluted share, compared with a pro forma net loss of $12.5 million, or $1.25 per diluted share, for the same period last year. The company's first-quarter 2004 operating profit was favorably impacted by a pension curtailment gain of $14.8 million. "Our first-quarter results reflect improved top-line performance in our manufacturing segment, primarily due to stronger automotive and diesel business, as well as some success in passing through higher raw material costs," said Richard R. Russell, GenTek's president and chief executive officer. "Revenue for the performance-products segment decreased versus prior year due to the closure of the company's Delaware Valley South facility in the fourth quarter of 2003." Adjusted Pro Forma Results For further comparison against prior and future periods, GenTek has also presented 2004 first-quarter results, as well as results for the comparable prior-year period, on an adjusted pro forma basis. The adjusted pro forma results reflect removing the impact of any restructuring, impairment, reorganization and certain one- time items. These adjustments are detailed on Schedule 5. In addition, the company has presented adjusted earnings before interest, taxes, depreciation and amortization (adjusted EBITDA) as a measure of operating results. Adjusted EBITDA reflects removing the impact of any restructuring, impairment, reorganization, income from discontinued operations and certain one-time items. GenTek has presented adjusted EBITDA to enhance the reader's understanding of operating results, as it is a measure commonly used to value businesses by investors and lenders. During the first quarter of 2004, adjusted EBITDA was $16.8 million compared with $17.2 million in the first quarter of 2003. On an adjusted pro forma basis, including results from discontinued operations, the company posted first-quarter net income of $5.2 million, or 52 cents per diluted share, compared with $1.5 million, or 15 cents per diluted share, for the same period in 2003. On an adjusted pro forma basis, the company's first-quarter income from continuing operations totaled $1.4 million, or 14 cents per diluted share, compared with $1.7 million, or 17 cents per diluted share, for the same period in 2003. The adjusted pro forma income from continuing operations, net income and earnings per share figures above include full interest expense pertaining to the company's senior term notes, which are expected to be repaid upon consummation of the KRONE transaction. Excluding senior term loan interest, first quarter 2004 adjusted pro forma income from continuing operations totaled $3.5 million, or 35 cents per diluted share. "In spite of experiencing historically high costs for fuel and key raw materials during the first quarter, including increases in excess of 60 percent in both copper and steel pricing, we managed to achieve an adjusted EBITDA margin of almost 9 percent, consistent with prior-year levels," Russell noted. "With the sale of our KRONE communications business nearly complete, we will continue to sharpen our focus on growing the core businesses within the manufacturing and performance-products segments. As always, we will also seek opportunities to rationalize our cost structure further to ensure that it is in line with our portfolio," Russell said. About GenTek Inc. GenTek Inc. is a manufacturer of industrial components, performance chemicals and telecommunications products. Additional information about the company is available on GenTek's Web site at http://www.gentek-global.com/ GLOBAL CROSSING: Court Disallows Nine Big Lessor Claims ------------------------------------------------------- The Global Crossing Estate Representative objects to claims asserted by lessors of certain non-residential real property leases against the Debtors based on any of these grounds: (a) Certain Lessor Claims have not been properly calculated in accordance with Section 502(b)(6) of the Bankruptcy Code, including the assertion of incorrect amounts based on alleged pre-rejection arrearages, or have not been supported with adequate information demonstrating proper calculation; (b) Certain Lessor Claims reflect claim amounts that were calculated without applying Section 502(b)(6) to limit these claims, thus the amount are significantly overstated; (c) Holders to certain Lessor Claims have failed to provide any documentation proving that the holder has mitigated or has attempted to mitigate its damages, or the holder has not already relet or sold the premises covered by the rejected lease; (d) Certain Lessor Claimholders have failed to reduce the amount of claim by the amount of any related security deposits; or (e) Certain holders failed to provide sufficient supporting documentation. At the GX Representative's request, the Court disallows nine Lessor Claims: Lessor Claim No. Claim Amount ------ --------- ------------ Acquiport Unicorn, Inc. 5295 $308,290 Alameda Main, LLC 349 4,046,555 ASF Keystone, Inc. 1323 310,200 Atria East Associates 5413 171,278 Berrueta Family, LLC 5777 1,778,268 Bivona and Cohen, PC 1256 443,173 FDS Management Services, L.P. 315 1,215,163 Realty Associates Iowa Corp. 9769 141,659 Ross Akard Acquisition, LP 348 2,671,078 Headquartered in Florham Park, New Jersey, Global Crossing Ltd. -- http://www.globalcrossing.com/-- provides telecommunications solutions over the world's first integrated global IP-based network, which reaches 27 countries and more than 200 major cities around the globe. Global Crossing serves many of the world's largest corporations, providing a full range of managed data and voice products and services. The Company filed for chapter 11 protection on January 28, 2002 (Bankr. S.D.N.Y. Case No. 02-40188). When the Debtors filed for protection from their creditors, they listed $25,511,000,000 in total assets and $15,467,000,000 in total debts. Global Crossing emerged from chapter 11 on Dec. 9, 2003. (Global Crossing Bankruptcy News, Issue No. 60; Bankruptcy Creditors' Service, Inc., 215/945-7000) GREENBRIAR CORP: First Quarter 2004 Net Loss Decreases to $175K --------------------------------------------------------------- Greenbriar Corporation (AMEX:GBR) announced operating results for the quarter ending March 31, 2004. Operating revenues were $1,806,000 compared to $745,000 for the same period in 2003. The Company's operating income was $97,000 for the period ending March 31, 2004, compared to a loss of $175,000 for the period ending March 31, 2003. The net loss for the first quarter of 2004 was $175,000 compared to a loss of $262,000 for the first quarter of 2003. The net loss per share for the quarter was $0.18 compared to a loss of $0.38 per share for the same quarter in 2003. * * * As reported in the Troubled Company Reporter's April 16, 2004 edition, on January 8, 2004 the Company was notified by the Internal Revenue Service (IRS) in the form of a Section 6700 Pre- Assessment Letter that the IRS was considering assessing penalties under Section 6700 of the Internal Revenue Code as a result of the Company's organization or assistance in connection with the issuance and sale of Series A and Series C bonds. The Company and the IRS are engaged in negotiations regarding settling this matter. However, there is no assurance that any settlement will be achieved. In the absence of a settlement, the Company intends to contest the IRS's position in court. Any litigation may be expensive and time consuming. However, if this matter is litigated the Company believes that it will prevail on the merits. Should it not prevail in this matter the Company intends to pursue actions against the professionals who advised the Company regarding the sale of the bonds. In light of the uncertainties regarding the ultimate outcome of this matter the auditors have included a going concern uncertainty paragraph in their Report of Independent Certified Public Accountants for the Financial Statements for the Year Ended December 31, 2003. INTEGRATED HEALTH: Wants Until Sept. 6 to Object to Claims ---------------------------------------------------------- IHS Liquidating, LLC, asks the Court to extend its Claims Objection Deadline to September 6, 2004. While IHS Liquidating has used its best efforts to advance the claims reconciliation process, Alfred Villoch, III, Esq., at Young Conaway Stargatt & Taylor, in Wilmington, Delaware, contends that the completion of the reconciliation process will require substantial additional time and effort beyond the current Claims Objection Deadline. Mr. Villoch relates that on March 22, 2004, IHS Liquidating filed objections to certain Premiere Unsecured Claims and one claim against Integrated Health Services, Inc., pursuant to Sections 105, 502(b) and 502(e) of the Bankruptcy Code and Rules 3001 and 3007 of the Federal Rules of Bankruptcy Procedure. IHS Liquidating also filed objections and counterclaims to the claims asserted by Don G. Angell, Don G. Angell Revocable Trust and Angell Care Incorporated. IHS Liquidating will be filing another omnibus objection to claims. IHS Liquidating believes that the extension will allow a conclusive determination as to the existence of any remaining late or otherwise objectionable claims. Additionally, the extension will provide IHS Liquidating with much-needed time to effectively evaluate all claims, prepare and file additional objections to claims, and where possible attempt to consensually resolve disputed claims. Judge Walrath will consider IHS Liquidating's request at a hearing on May 26, 2004. By application of Del.Bankr.LR 9006-2, IHS Liquidating's Claims Objection Deadline is 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. 75; Bankruptcy Creditors' Service, Inc., 215/945-7000) INTERACTIVE MOTORSPORTS: Perfect Line Posts First Positive Results ------------------------------------------------------------------ Interactive Motorsports and Entertainment Corporation reported in its 10-QSB SEC filing that its wholly owned subsidiary, Perfect Line, Inc., showed a positive cash flow from operations for the first time since the company was formed in August of 2002. The announcement came from William R. Donaldson, Chairman and CEO of Interactive Motorsports and Entertainment Corp. (OTCBB:IMTS). For the three months ended March 31, 2004, the Company showed a net loss of $520,377, a reduction of $236,059 from losses reported during the same period one year ago, and net cash provided by operations of $23,109 as compared to a net cash loss of $654,179 for the same period one year ago. "Our improved first quarter financials are due primarily to the restructuring of the company's business model from company owned and operated, mall-based racing centers to revenue share racing centers, mobile leases and simulator equipment sales," said Donaldson. "We are expecting continued financial improvement as we execute the revised business plan." At March 31,2004, Interactive Motorsports' balance sheet shows a stockholders' deficit of $2,656,988 compared to a deficit of $2,397,995 at December 31, 2003. For more information on IMTS, visit http://www.SMSonline.com/ KAISER: Selling Alumina Refining & Related Mining Asset for $23M ---------------------------------------------------------------- Kaiser Aluminum announced that, pending certain conditions outlined below, it has signed an agreement to sell its Gramercy, Louisiana, alumina refinery and its related 49% interest in the Kaiser Jamaica Bauxite Mining operation (KJBC) to a newly formed joint venture between Century Aluminum Company and Noranda Inc. Under the terms of the agreement, the Government of Jamaica will retain its 51% interest in KJBC. Prior to any sale of its interests in Gramercy and KJBC, Kaiser may conduct an auction for the assets, under direction of the U.S. Bankruptcy Court for the District of Delaware. The company has requested the Court to rule on bidding procedures for any such auction at the regularly scheduled monthly hearing on June 21, 2004. If such procedures are approved and, subsequently, if any qualified bids are received, an auction would be conducted, and the Court would be expected to rule on the winning bid at the regular monthly hearing on July 19, 2004. KJBC mines bauxite, approximately two-thirds of which is used by Gramercy to produce alumina, with the balance sold to a third party. Approximately 75-80% of Gramercy's output is, in turn, supplied under long-term contracts to aluminum smelters owned by Century and Noranda. Under the terms of the transaction, Kaiser would receive cash proceeds of approximately $23 million, a substantial portion of which may be used to satisfy transaction-related costs and obligations. "We believe this transaction benefits the interests of all concerned parties," said Jack A. Hockema, president and chief executive officer of Kaiser Aluminum. "For Kaiser, it represents another significant step forward in our restructuring process as we continue to shift our focus to the company's fabricated products operations. For the buyers, it represents a strategic move to control the long-term supply of a critical feedstock. For employees, civic, and governmental organizations in Louisiana and Jamaica, it provides assurance of continued operation of assets that generate significant economic value." Hockema added, "We extend our profound gratitude to the employees and government officials in Louisiana and Jamaica who have contributed so much for so many years to Kaiser's efforts at these facilities." The transaction is subject to various approvals, as more fully discussed in Kaiser's Form 10-K for 2003. In particular, Kaiser is working with the lenders under its Post-Petition Credit Agreement to obtain an amendment to the Credit Agreement that, among other things, would permit the sale of the company's interests in and related to Gramercy and KJBC. The Gramercy refinery began producing alumina in 1959; it has approximately 500 employees and an annual rated capacity of 1.25 million metric tonnes. Kaiser began its involvement in bauxite mining in Jamaica in 1950; presently, KJBC has approximately 600 employees and an annual production capacity of approximately 4.5 million metric tonnes of bauxite. Noranda operates an aluminum reduction smelter in New Madrid which produced 244,044 tonnes of metal in 2003 and employs 1,100 people. The smelter has procured substantially all of its alumina requirements from the Gramercy alumina refinery over the past several years. Both the New Madrid smelter and the Gramercy refinery are located on the Mississippi River, facilitating logistics and transportation. About Noranda Noranda Inc. (NYSE:NRD) is one of the world's largest producers of zinc and nickel and a significant producer of copper, primary and fabricated aluminum, lead, silver, gold, sulphuric acid, and cobalt. Noranda is also a major recycler of secondary copper, nickel and precious metals. It employs 15,000 people at its operations and offices in 18 countries. About Century Century owns 615,000 metric tons per year (mtpy) of primary aluminum capacity. The company owns and operates a 244,000-mtpy plant at Hawesville, KY, a 170,000-mtpy plant at Ravenswood, WV and a 90,000-mtpy plant at Grundartangi, Iceland. Century also owns a 49.67-percent interest in a 222,000-mtpy reduction plant at Mt. Holly, SC. Alcoa Inc. owns the remainder and is the operating partner. Century's corporate offices are located in Monterey, CA. About Kaiser Aluminum Headquartered in Houston, Texas, Kaiser Aluminum Corporation operates in all principal aspects of the aluminum industry, including mining bauxite; refining bauxite into alumina; production of primary aluminum from alumina; and manufacturing fabricated and semi-fabricated aluminum products. The Company filed for Chapter 11 protection on February 12, 2002 (Bankr. Del. Case No. 02-10429). Corinne Ball, Esq., at Jones, Day, Reavis & Pogue, represent the Debtors in their restructuring efforts. On September 30, 2001, the Company listed $3,364,300,000 in assets and $3,129,400,000 in debts. KAISER: Stockholders' Deficit Widens to $1.8 Billion at March 31 ---------------------------------------------------------------- Kaiser Aluminum reported a net loss of $64.0 million, or $.80 per share, for the first quarter of 2004, compared to a net loss of $65.1 million, or $.81 per share, for the same period of 2003. Results for the first quarter of 2004 include a non-cash pre-tax charge of $33.0 million to reduce the carrying value of the company's 90% interest in the Valco smelter in Ghana, based on the terms of a May 2004 amendment to the previously disclosed Memorandum of Understanding. Net sales in the first quarter of 2004 were $367.6 million, compared to $339.4 million in the year-ago period. Commenting on the company's first-quarter performance, Kaiser President and Chief Executive Officer Jack A. Hockema said, "Although Kaiser's operating loss in the first quarter of 2004 was essentially the same as that of the prior year period - primarily due to the Valco-related charge - the company's underlying operating results improved markedly in relation to the year-ago period. That improvement was mainly attributable to increases in realized prices for alumina and primary aluminum, lower depreciation in the alumina business unit, and the fact that the year-ago results for primary aluminum included certain costs associated with potline curtailments at the Valco smelter." Hockema continued, "Our fabricating business -- the core around which the company is reorganizing -- reported improved cost performance and sharply higher shipments and revenues as we witnessed continued recovery in demand. While volumes are still not at what we would consider to be the long-term run rate -- and certain markets, including certain aerospace products, have still not recovered -- we believe the trend is promising. On the other hand, the increased volumes have not yet translated into improved sales margins, many of which remain under pressure. As such, there remains plenty of room for improvement in results and cash flow." Hockema said, "We are encouraged by the fact that substantially all of the cash used by operations in the first quarter of 2004 was related to an increase in working capital that is in large part associated with improved demand and higher primary aluminum prices - and that the company was otherwise essentially cash-flow neutral in the quarter." Hockema said, "Despite these positive developments, Kaiser still reported an operating loss in the quarter due in part to ongoing 'legacy related' expenses or accruals for retiree medical benefits and hourly pensions, the majority of which are expected to be reduced or eliminated as part of the company's restructuring." Hockema added, "We are pleased by the increasing pace of our Chapter 11 case, as evidenced by the agreements on retiree medical with the USWA, certain other unions, and the committee representing salaried retirees; the transactions for Alpart and Mead; and the pending or contemplated transactions for other commodity assets. We intend to maintain this pace so that we can emerge as early as late in the third quarter of this year." At March 31, 2004, Kaiser Aluminum Corporation reported a stockholders' deficit of $1,800,900,000 compared to a $1,738,700,000 deficit at December 31, 2003. About Kaiser Aluminum Headquartered in Houston, Texas, Kaiser Aluminum Corporation operates in all principal aspects of the aluminum industry, including mining bauxite; refining bauxite into alumina; production of primary aluminum from alumina; and manufacturing fabricated and semi-fabricated aluminum products. The Company filed for Chapter 11 protection on February 12, 2002 (Bankr. Del. Case No. 02-10429). Corinne Ball, Esq., at Jones, Day, Reavis & Pogue, represent the Debtors in their restructuring efforts. On September 30, 2001, the Company listed $3,364,300,000 in assets and $3,129,400,000 in debts. KMART HOLDING: Posts $93 Million Net Income for First Quarter 2004 ------------------------------------------------------------------ Kmart Holding Corporation (Nasdaq: KMRT) reported financial results for the first quarter of fiscal 2004. For the 13 weeks ended April 28, 2004, Kmart Holding Corporation reported net income of $93 million, or $0.94 per diluted share. Kmart Corporation (the Predecessor Company) reported a net loss of $862 million for the same period in 2003. Operating income for the 13 weeks ended April 28, 2004 was $165 million, or 3.6% of sales, as compared to a loss of $39 million, or negative 0.6% of sales, for the same period in 2003. The improvement was primarily due to the decrease in selling, general and administrative (SG&A) expenses and the improvement in gross margin rate, as noted below, partially offset by an overall decline in gross margin dollars due to a reduced store base. Operating income was also impacted by net gains on sales of assets of $32 million in the current quarter, and restructuring, impairment and other charges of $37 million in the same period in 2003. Same-store sales and total sales decreased 12.9% and 25.3%, respectively, for the 13 weeks ended April 28, 2004, compared to the 13 weeks ended April 30, 2003. Julian C. Day, President and Chief Executive Officer of Kmart, said: "We are delighted with the progress we've made in our business. For the fourth consecutive fiscal quarter, we have reported improved year-over-year profitability and liquidity through our consistent approach of focusing on profitable sales with an improved gross margin rate, reducing operating costs through operational execution, and working to improve the productivity of our assets. These initiatives, together with a renewed focus on communicating the benefits of the Kmart shopping experience to our customers, will continue to characterize our approach going forward." Day added: "Our focus on the productivity of our asset base, exemplified by the diligent management of our inventories which ended the quarter at $3.4 billion, a reduction of over 23% from the prior year, has been a primary element of our improved liquidity position. We apply similar rigor to managing the productivity of our capital assets, focusing on the need to allocate those assets to their best use. Given our success, Kmart today is a financially strong company." As of April 28, 2004, Kmart had approximately $2.2 billion in cash and cash equivalents. Same-store sales include sales of all open stores that have been open for more than 13 full months. The decrease in same-store sales is due primarily to several Company-wide promotional events that occurred in the first quarter of fiscal 2003 along with a reduction in advertising, including the frequency of mid-week circulars in the current year. The decrease in total sales is attributable to the decrease in same-store sales and the closure of 316 stores in the first quarter of fiscal 2003. Gross margin decreased $282 million to $1.14 billion, for the 13 weeks ended April 28, 2004, from $1.42 billion for the 13 weeks ended April 30, 2003. Gross margin, as a percentage of sales, increased to 24.6% for the 13 weeks ended April 28, 2004, from 23.0% for the comparable period a year ago. Favorably affecting the gross margin rate were fewer clearance markdowns and reduced depreciation expense as a result of the write-off of long-lived assets in conjunction with the application of Fresh-Start accounting. SG&A expenses decreased $417 million to $1 billion, or 21.8% of sales for the 13 weeks ended April 28, 2004, from $1.42 billion, or 23.0% of sales, for the 13 weeks ended April 30, 2003. The decrease in SG&A resulted from reduced payroll and related expenses in stores during the current quarter, as well as the impact of store closings and the corporate cost reduction initiatives implemented in the first quarter of fiscal 2003. Also impacting the decline was a reduction in advertising expenses and lower depreciation as a result of the write-off of long-lived assets in conjunction with the application of Fresh-Start accounting. LEAP WIRELESS: Stockholders' Deficit Tops $922 Million at March 31 ------------------------------------------------------------------ Leap Wireless International, Inc., a leading provider of innovative and value-driven wireless communications services, announced strong financial and operating results for the first quarter of 2004, which reflect broadly improved performance across the Company's operations. Total consolidated revenues for the first quarter were $206.8 million, representing a 12% increase over the $183.8 million total consolidated revenues reported for the first quarter of 2003. Consolidated operating loss for the first quarter was $22.3 million, representing an improvement of 65% over the $63.9 million consolidated operating loss reported for the first quarter of 2003. Consolidated net loss for the first quarter was $28.0 million, representing an improvement of 79% over the $133.5 million consolidated net loss reported for the first quarter of 2003. Consolidated earnings before interest, taxes, depreciation and amortization (EBITDA) for the first quarter of 2004 was $51.2 million, representing a 311% increase over the consolidated EBITDA of $12.5 million for the first quarter of 2003. Leap's Cricket operations added approximately 65,700 net new subscribers during the first quarter to end the period with approximately 1,538,000 total customers, and had a customer churn rate of 3.1%. "Throughout the Company's restructuring process, we have maintained a disciplined focus on improving our financial performance while remaining committed to strengthening our business through the development of new products and services," said Doug Hutcheson, Leap's executive vice president and CFO. "Recently completed internal research indicates that 43% of Cricket customers do not have traditional wireline phone service at home, up from 37% as measured in May 2003 and from 26% as measured in June 2002. Our continued leadership position in the wireless industry's trend toward landline displacement, combined with the operational and financial results we have delivered for the first quarter of 2004, demonstrate that we continue to make strong progress in positioning our company for long-term success in the telecommunications marketplace." Key operational and financial performance measures for the first quarter of 2004 were as follows: * Average revenue per user per month (ARPU), based on service revenue, was approximately $37.45, an improvement of $2.33 from the ARPU of $35.12 for the first quarter of 2003. * Overall non-selling cash costs per user per month (CCU) for Leap's consolidated business was approximately $20.08, an improvement of $3.68 from the CCU of $23.76 for the first quarter of 2003. * Cost per gross customer addition (CPGA) was approximately $124, an improvement of $53 from the CPGA of approximately $177 for the first quarter of 2003. * Churn was approximately 3.1%, an improvement of 1% from the churn of approximately 4.1% for the first quarter of 2003. * Average minutes of use per customer per month (MOU) was approximately 1,500, compared to an average minutes of use per customer per month of approximately 1,350 for the first quarter of 2003. * Cash paid for property and equipment (cash capital expenditures) was $16.2 million for the first quarter of 2004. As a result of the adoption of Emerging Issues Task Force (EITF) Issue No. 00-21, "Accounting for Revenue Arrangements with Multiple Deliverables" on July 1, 2003, the Company began recognizing activation fees immediately as equipment revenue, which reduced ARPU and CPGA by $0.75 and $28, respectively, for the three months ended March 31, 2004, compared to the ARPU and CPGA results that would have been reflected if EITF Issue No. 00- 21 had not been adopted. "Over the past year we have focused on lowering our fixed cost structure, and our performance during the first quarter reflects the results of this process," said Glenn Umetsu, Leap's executive vice president and COO. "While we have benefited from a traditionally strong first quarter which had a positive impact on both customer growth and churn rates, we expect to continue exploring every opportunity to improve the operational efficiencies and growth potential of our business." At March 31, 2004, Leap Wireless International Inc.'s balance sheet shows a stockholders' deficit of $921,775,000 compared to a deficit of $893,356,000 at December 31, 2003. As previously announced, Leap, Cricket and substantially all of their subsidiaries filed voluntary petitions for reorganization under Chapter 11 of the Bankruptcy Code on April 13, 2003 in the U.S. Bankruptcy Court for the Southern District of California, in San Diego, Calif. In October 2003, the Bankruptcy Court entered an order confirming the Company's Fifth Amended Joint Plan of Reorganization, clearing the way for the Company to complete its financial restructuring and emerge from Chapter 11. Consummation of the Plan of Reorganization is subject to compliance with the terms and conditions set forth in the Plan, including receipt of the required regulatory approval from the Federal Communications Commission. The existing stockholders of Leap will not receive any distribution under the Plan of Reorganization, and the existing stock, options and warrants of Leap Wireless International, Inc. will be cancelled on the effective date of the Plan. The full text of the Company's Plan of Reorganization can be found under the Restructuring Overview/Legal Documents section of the Company's website, http://www.leapwireless.com/ About Leap Leap, headquartered in San Diego, Calif., is a customer-focused company providing innovative communications services for the mass market. Leap pioneered the Cricket Comfortable Wireless(R) service that lets customers make all of their local calls from within their local calling area and receive calls from anywhere for one low, flat rate. For more information, please visit http://www.leapwireless.com/ About Cricket Service Cricket(R) service is an affordable wireless alternative to traditional landline service and appeals to customers who want the most affordable, predictable and best wireless value. With a commitment to value, predictability and simplicity as the foundation of its business, Cricket designs and markets wireless products to meet the needs of everyday people. Cricket(R) service is available in 39 markets in 20 states across the country stretching from New York to California. For more information, please visit http://www.mycricket.com/ LMI AEROSPACE: First Quarter 2004 Net Loss Climbs to $1.5 Million ----------------------------------------------------------------- LMI Aerospace, Inc. (Nasdaq: LMIA), a leading provider of assemblies, kits and detail sheet metal and machined components to the aerospace, defense and technology industries, announced that net sales for the quarter ended March 31, 2004, were $18.5 million, a decrease of 11 percent from the quarter ended March 31, 2003. LMI reported a net loss after restructuring costs of $1.5 million or ($0.19) per diluted share for the quarter ended March 31, 2004, compared to a net loss of $1 million or ($0.12) per diluted share for the quarter ended March 31, 2003. Restructuring expenses of $0.5 million were incurred in the first quarter of 2004, compared to none in the first quarter of 2003. Sales for the sheet metal segment in the first quarter of 2004 were $14.7 million, a decrease of 14.1 percent from $17.2 million in the first quarter of 2003. The decrease is due to lower sales of business jet and military components. Commercial aircraft sales of $5.6 million in the first quarter of 2004 were higher than the $5.2 million reported in the first quarter of 2003. As previously reported, weakness in demand for business jets in 2003, evidenced by production stoppages at several of LMI's customers followed by their aggressive inventory reduction strategies, significantly reduced business jet sales in the first quarter of 2004 and fiscal 2003. Backlog for the sheet metal segment was approximately $45.2 million at March 31, 2004, down from $51.9 million at March 31, 2003. Orders for new components on regional, business and commercial aircraft received in April 2004 have caused the backlog for this segment to increase to $50 million as of April 30, 2004. For the machining and technology segment, sales in the first quarter of 2004 were $3.8 million, up from $3.7 million in the first quarter of 2003. Beginning in September 2003, LMI began to receive significant reorders of laser equipment and military components and orders have continued at a high rate through the first quarter of 2004. Backlog for this segment at March 31, 2004, was approximately $14.8 million, up from $11.7 million at March 31, 2003. Backlog at April 30, 2004, is about $16.7 million. Gross profit for the Company for the first quarter of 2004 was $2.7 million, or 14.4 percent of net sales, compared to $2.2 million, or 10.6 percent of net sales in the first quarter of 2003. Gross profit for the sheet metal segment increased primarily because of cost reduction and restructuring efforts during the second half of 2003 and the first quarter of 2004 at the Company's St. Charles, Missouri and Wichita, Kansas facilities. Gross profit in the machining and technology segment increased due to higher sales and a more favorable product mix. Selling, general and administrative expenses, excluding restructuring charges of $0.5 million, for the first quarter of 2004 were $3.2 million, down from $3.3 million in 2003. Budgeted cost reductions were offset primarily by legal expenses for preparing a C130 claim and providing information to satisfy an administrative subpoena filed in February 2004 by the Department of Defense against Versaform, a wholly-owned subsidiary of the Company. Restructuring charges during the first quarter of 2004 were $0.5 million. The Company continues to expect that these expenses will total $0.9 million. The loss before income taxes in the first quarter of 2004 was ($1.0) million, net of restructuring charges, a decline from ($1.5) million in the first quarter of 2003. At March 31, 2004, LMI had $9.0 million outstanding under its $9.7 million revolving line of credit. "Our first quarter 2004 results fell below our budgeted targets by $0.5 million," said Ronald S. Saks, President and CEO of LMI Aerospace, Inc. "However, based on current customer demand and preliminary performance estimates for the second quarter 2004 to date, we expect to meet our budgeted targets for the second quarter. As previously announced, our sales forecast for 2004 indicated a $3.0 million increase in our machining and technology segment and flat sales in our sheet metal segment. We are modifying our forecast to include a $4.0 million increase in our machining and technology segment and a $1.0 million to $5.0 million increase in our sheet metal segment, resulting in sales of $81 million to $85 million in 2004. We also expect gross margins to improve from the 14.4 percent level in the first quarter of 2004 to an average of 18 percent to 20 percent for the full year. Selling, general and administrative expense before restructuring changes is expected to be about the same as 2003, given the added legal costs associated with the Department of Defense investigation and our claim against a military customer," said Saks. "This has been a challenging period for our management and employee group -- our cost reduction and restructuring efforts, together with negotiated price increases on selected products and the winding down of a B-52 refurbishment program have set the stage for improved performance as we progress through 2004. Increased demand from several key customers, as well as some improvement in production rates in the commercial aircraft, regional and business jet, and semiconductor markets we serve, will help us resume the growth we have been anticipating for some time. Our employees are motivated to execute well in this environment and, barring unforeseen economic disturbances, we believe that these markets will continue to grow in the next two years. We remain committed to our strategy of expanding our market reach and improving our supply chain and distribution management so we can better serve our customers needs," said Saks. About LMI Aerospace LMI Aerospace, Inc. is a leading supplier of quality components to the aerospace and technology industries. The Company operates twelve manufacturing facilities that fabricate, machine, finish and integrate formed, close tolerance aluminum and specialty alloy components for commercial, corporate, regional and military aircraft, laser equipment used in the semiconductor and medical industries, and for the commercial sheet metal industries. * * * As reported in the Troubled Company Reporter's April 19, 2004 edition, LMI announced that its independent certified public accountants, BDO Seidman, LLP, has included an explanatory paragraph in its opinion regarding uncertainty related to the Company's ability to continue as a going concern. This conclusion was based upon the Company's substantial losses in recent years and uncertainty about the Company's ability to meet its financial covenants with its primary lender. MERDIAN & COMPANY: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Merdian & Company, Inc. 11995 FM 3083 Conroe, Texas 77301 Bankruptcy Case No.: 04-36582 Type of Business: The Debtor is a contractor specializing in the preparation of sites for construction. Chapter 11 Petition Date: May 3, 2004 Court: Southern District of Texas (Houston) Judge: Marvin Isgur Debtor's Counsel: Barbara Mincey Rogers, Esq. Waldron Schneider and Todd 15150 Middlebrook Drive Houston, TX 77058 Tel: 281-488-4438 Fax: 281-488-4597 Total Assets: $3,342,568 Total Debts: $5,449,558 Debtor's 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ AT&T Damage in New Waverly $273,040 Room 204 Second Floor to fiber optic cable 440 Hamilton Ave. on 8-22 White Plains, NY 10601 APAC - Texas Business $193,199 Texas Stretch, Inc. Goods & Services $182,773 CPR Services & Supplies Inc. Business $144,222 Sun Coast Resources Inc Business $110,985 Century Asphalt Materials Business $85,895 Hodge's Bros. Inc. Business $71,569 Pavers Supply Company Business $44,882 McNorton Dewatering, Inc. Goods & Services $42,500 Romco Equipment Co. Business $28,842 Municipal Pipe & Fabricating Business $27,504 Conroe Concrete Ltd. Business $24,821 Premium Assignment Corp. Goods & Services $22,581 Hertz Equipment Rental Goods & Services $21,036 Lewis-Quinn Construction Business $20,350 Services Inc. Service Ready Concrete, Inc. Business $19,732 Godwin Pumps of America Inc. Goods & Services $19,678 Hartman Building Business $19,430 Specialities, Ltd. Few Ready Mix Concrete Business $18,804 Recovery One, LLC Goods & Services $17,013 MIRANT TEXAS: Asks Court to Approve Bosque County Settlement Pact ----------------------------------------------------------------- Mirant Texas, LP, provides electricity for sale to various wholesale purchasers. Mirant Texas owns about 270.813 acres of land at FM 56, Bosque County, Texas where it operates a natural gas powered electric generating plant. The Plant mainly consists of two simple cycle gas turbines each rated at 154 MW output, and a 1x1 combined cycle generating unit that is rated at a total output of 230 MW. Mirant Texas earned $33,670,701 in revenues for 2003. Frances A. Smith, Esq., at Haynes and Boone, LLP, in Dallas, Texas, relates that the Property contains buildings, structures, fixed machinery and equipment, office space and related fixed improvements. In the tax year 2003, the Subject Property had a $131,200,980 appraisal value and received a pollution control tax exemption that reduced the valuation of the Subject Property to $118,196,970. The total amount of property taxes assessed against the Subject Property in 2003, based on the 2003 Assessed Value, was $2,255,192 of which $403,996 was due to Bosque County and $1,851,196 was due to the Clifton Independent School District. Beginning February 1, 2004, those amounts have accrued interest at the statutory rate of 1% per month. Bosque County asserts that the amounts owed were due on or before January 31, 2004. The Mirant Texas Debtors assert that, pursuant to the Bankruptcy Code, they would not have to pay the amounts owed prior to plan confirmation. In April 2004, Ms. Smith reports that Mirant Texas and Bosque County successfully reached a compromise on the amount due for the 2003 taxes, the timing of that payment, and how taxes will be calculated for the next seven tax years. By this motion, the Debtors ask the Court to approve the Settlement Agreement between Mirant Texas and Bosque County pursuant to Rule 9019 of the Federal Rules of Bankruptcy Procedure. Under the terms of the Settlement Agreement, for the tax years 2004 through 2010, the Debtors will receive from Bosque County the Tax Abatement Exemption in the amount of 60% of the Assessed Value of the Subject Property when computing the amount of taxes due to Bosque County. However, the Tax Abatement Exemption is subject to a "soft floor" of $139,000 per year. Thus, if the Subject Property's Taxable Value is greater than $40,667,000, Mirant Texas will pay the greater of (i) the taxes due on the Taxable Value of the Subject Property or (ii) $139,000. If the Taxable Value of the Subject Property is less than $40,667,000, Mirant Texas will pay the lesser of (i) the actual taxes due on the Assessed Value or (ii) $139,000. At current tax rates, Mirant Texas will receive tax savings over the status quo if the Taxable Value of the Subject Property is greater than $40,667,000. Mirant Texas is economically indifferent if the Taxable Value of the Subject Property is less than $40,667,000 because the taxes due under the Tax Abatement Exemption are the same as would be paid without the Tax Abatement Exemption in place. The Taxable Value on the Subject Property was $118,196,670 in 2003. Using the 2003 taxable value and the tax rate, the Settlement Agreement would have represented a tax savings to Mirant Texas of $242,398 for tax year 2003 alone. Although the actual tax savings may fluctuate from year to year depending on the tax rate and the Appraised Value of the Subject Property, Mirant Texas anticipates substantial tax savings for each year the Settlement Agreement is in place. Ms. Smith informs the Court that Mirant will pay to Bosque County and the Clifton Independent School District the property taxes due for tax year 2003 amounting to $2,263,496 plus interest. Under Texas law, property taxes constitute a secured claim that would be paid at 100% upon the Debtors' emergence from bankruptcy. In the interim, interest is accruing at 1% per month or 12% per year, which is approximately $22,000 per month total. Terms of the Settlement Agreement Bosque County will provide an invoice to Mirant Texas, and Mirant Texas will pay to the Tax Assessor-Collector of the County of Bosque, Texas $2,263,496, plus interest as provided by Section 33.01 of the Texas Tax Code, of which $405,484 plus interest is due to Bosque County, and $1,858,013 plus interest is due to the Clifton Independent School District. Upon Mirant's payment, it will receive the property Tax Abatement Exemption, as authorized by the Texas Property Redevelopment and Tax Abatement Act, Chapter 312 of the Texas Tax Code, from Bosque County that will provide for a Tax Abatement Exemption subject to these terms and conditions: A. Tax Abatement Exemption Mirant Texas will receive a Tax Abatement Exemption of 60% of the Assessed Value of the Subject Property, as determined by the Bosque County Appraisal District, except as provided in the Settlement Agreement. B. Term Mirant Texas' Tax Abatement Exemption will be for a term of seven years, commencing with the tax year 2004 and continuing through the tax year 2010. Unless terminated sooner, the Tax Abatement Exemption will terminate in the tax year 2011, and upon termination, the Subject Property will be appraised and taxed as provided by the Texas Property Tax Code. If in any year during the Term, the amount of the Tax Abatement Exemption reduces the Taxable Value of the Subject Property so that the resulting tax assessment to Bosque County is less than $139,000, the amount of Mirant Texas' Tax Abatement Exemption will be adjusted so that the resulting Taxable Value of the Subject Property when multiplied by Bosque County's tax rate for that year results in a tax assessment of $139,000; provided, however, that in no instance will Mirant Texas' tax assessment for any tax year during the Term exceed the amount of taxes that would be due by calculating the tax assessment based on the Assessed Value of the Subject Property. C. Events of Default; Termination and Recapture During the Term, Mirant Texas will timely pay all property taxes levied against the Subject Property by any taxing authority. It will be considered an Event of Default if Mirant allows the property taxes assessed against the Subject Property by Bosque County or any other taxing authority to become delinquent, and fails to timely and properly follow the legal procedures for their protest or contest. It will be an Event of Default if Mirant's fixed machinery or equipment is removed from the Subject Property and is not replaced with fixed machinery or equipment of like value within a reasonable time. It is understood and agreed that it will not be an Event of Default if Mirant Texas removes: 1. Miscellaneous pieces of equipment that are not material to the operation of the Subject Property; and 2. One or both of its simple cycle gas turbines each rated at 154 MW output and associated equipment. D. Notice of Default, Termination Should Bosque County determine that Mirant Texas is in default, it will send written notification to Mirant identifying the Event of Default and that if that default is not cured within 60 days from the date of Notice of Default, the Tax Abatement Exemption will terminate. In the event Mirant Texas fails to cure the default within 60 days of receipt of Notice of Default from Bosque County, the Tax Abatement Exemption will terminate effective in the year of the Event of Default. The taxes otherwise abated for that calendar year will be paid to Bosque County within 60 days from the date of termination. E. Recapture In the event that the Tax Abatement Exemption is terminated due to Mirant Texas' delinquency, in addition to the termination and payment of abated taxes in the year of the termination, all taxes for all years that have been abated by virtue of the Settlement Agreement will be recaptured. Bosque County will notify Mirant Texas of the amount of all taxes previously abated by virtue of the Settlement Agreement. The abated taxes will be delinquent if not paid by the first day of the next month following the expiration of 60 days from the date of receipt of the tax notice. If the abated taxes are not paid at that time, penalty and interest will begin to accrue on the abated taxes in accordance with Sections 33.01, 33.07 and 33.08 of the Texas Tax Code. F. Inspection Mirant Texas will allow employees and representatives of Bosque County to have access to the Subject Property during the Term of this Tax Abatement Exemption to inspect the Subject Property and to determine compliance with the terms and conditions of the Settlement Agreement. All inspections will be made only upon five days' prior notice and will only be conducted in a manner as to not unreasonably interfere with the operation of the facility. All inspections will be conducted in accordance with all Subject Property safety procedures. G. Termination on Sale or Conveyance The Tax Abatement Exemption is only for the benefit of Mirant or any of its subsidiaries; the Tax Abatement Exemption may be assigned to a new owner of the Subject Property only upon the express written consent of the Bosque County Commissioner's Court. H. Preservation of Rights Mirant Texas reserves its right to follow the legal procedures to protest or contest assessed taxes. 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. 33; Bankruptcy Creditors' Service, Inc., 215/945-7000) MORTGAGE CAPITAL: S&P Affirms Low-B Ratings on 4 1998-MC-1 Classes ------------------------------------------------------------------ Standard & Poor's Ratings Services raised its ratings on five classes from Mortgage Capital Funding Inc.'s series 1998-MC-1. At the same time, the remaining ratings from the same issuer are affirmed. The raised ratings reflect increased credit support levels and the seasoning of the underlying loan pool. The affirmed ratings reflect appropriate levels of credit enhancement for the respective ratings. As of April 2004, the pool consisted of 227 fixed-rate mortgages with an aggregate principal balance of $1,137 million, down from $1,294 million since issuance. The master servicer, GMAC Commercial Mortgage Corp., provided interim and year-end 2003 net operating income data for 87% of the pool and year-end 2002 NOI for 8% of the pool. Based on this information, Standard & Poor's calculated the weighted average debt service coverage ratio at 1.58x, up from 1.51x at issuance. The calculation excludes 1.85% of the pool, which has been defeased. To date, realized losses have been experienced on six mortgage loans totaling $14.7 million. The top 10 loans constitute 24.5% of the outstanding pool balance. The weighted average DSC ratio of the top 10 loans increased to 1.48x from 1.43x, at issuance. Five of coverages on the top 10 mortgages have increased, three have declined less than 10%, and two have experienced NOI declines in excess of 20%. Of the two mortgages, one appears on GMACCM's watchlist and is described in the watchlist section of this release. The other mortgage is secured by a 723-unit multifamily property located in Las Vegas, Nev.; the DSC ratio declined from to 1.18x from 1.57x due to competitive pressures, which resulted in concessions to maintain occupancy levels. As of the April 2004 distribution date, there were four specially serviced assets totaling $20.5 million (or 1.8% of the pool), all of which are delinquent and constitute the only delinquent assets in the pool. Two of the assets are 90-days delinquent totaling $14.25 million. One is in foreclosure, with a balance of $5.4 million, and another is REO, at $811,000. Details concerning the specially serviced assets are as follows: -- The 90-plus days delinquent loans are secured by retail and lodging properties. The retail loan has a current outstanding balance of $12 million and a total exposure of $14 million, and is secured by two properties located in Detroit, Michigan. The properties were formerly tenanted by Kmart (173,000 sq. ft.) and Builder's Square (110,000 sq. ft.). The loan became delinquent after Kmart rejected the leases in bankruptcy. A May 2003 appraisal valued the properties in excess of the outstanding loan balance. The special servicer, ARCap Special Servicing Inc., has requested an updated appraisal and is pursuing foreclosure. The 90-plus days delinquent lodging loan is secured by a property in Provo, Utah, with a total exposure of $2.4 million. The 101-room property was reflagged as a LaQuinta (from Comfort Inn) in 2003. The property was sold without lender consent. Based on discussions with the special servicer, a moderate loss is expected upon disposition. -- The asset in foreclosure has a total balance of $5.4 million (total exposure $6.1 million). The collateral includes two office buildings with a combined area of 149,666 sq. ft. The properties, which have a receiver in place, are in Westlake, Ohio, and are suffering from occupancy levels in the low 60% range. ARCap obtained a September 2003 appraisal valuing the property at $7.6 million. Of concern to Standard & Poor's is a comment on the property inspection report where the inspector suggests the most optimally used of the properties may require reconfiguring or redeveloping the property. ARCap plans to stabilize the property and market it for sale. -- The REO property is a 25,448-sq.-ft. office building in Jackson, Mississippi, with total exposure of $891,000. A November 2003 property inspection ranks the property as "fair." Nine of 24 tenants rent on a month-to-month basis. A modest loss is expected upon disposition. GMACCM reported 62 mortgages totaling $300.3 million (or 26.4% of the pool) on its watchlist. The largest asset on the watchlist is the third-largest loan in the pool. The $38.7 million loan is secured by a nine-story 668,641-sq.-ft. office property, and appears on the watchlist due to a decline in DSC. The DSC ratio as of December 2003 was reported at 1.29x, down from 1.69 at issuance. Built in 1920, and located in Portland, Oregon, the office property had an occupancy level of 75% as of February 2004. Market occupancy levels for office properties in Portland are extremely weak at 83%. The borrower has an average rental rate of $20 per sq. ft. with a five-year term, and is currently asking for rates of $18.00, which is below REIS' reported rates for the area of $19.98. The remaining mortgages appear on the watchlist for a variety of reasons. Approximately, 21% of the loans appear on the list due to low DSC ratios (below 1.0x). The pool has a geographic concentration in excess of 10% in California (13.1%) and Texas (11.7%). The property type composition of the pool includes retail (31.9%), multifamily (31.2%), office (24.8%), lodging (6.1%), and an assortment of other property types (6.0%). Standard & Poor's stressed the specially serviced, watchlisted loans in the pool that appeared to be underperforming. The resultant credit enhancement levels support the raised ratings. RATINGS RAISED Mortgage Capital Funding Inc. Commercial mortgage pass-thru certs series 1998-MC-1 Rating Credit Class To From Support (%) B AAA AA+ 30.42 C AAA A+ 24.16 D AA+ A 23.02 E A+ BBB+ 17.33 F A BBB 16.19 RATINGS AFFIRMED Mortgage Capital Funding Inc. Commercial mortgage pass-thru certs series 1998-MC-1 Class Rating Credit Support (%) A-1 AAA 34.97 A-2 AAA 34.97 X AAA - H BB+ 8.23 J BB 7.09 K BB- 5.95 L B 3.11 NEW ERA DIE CO: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: New Era Die Company P.O. Box 39 Red Lion, Pennsylvania 17356 Bankruptcy Case No.: 04-02621 Type of Business: The Debtor is a service driven die manufacturer. See http://www.neweradie.com/ Chapter 11 Petition Date: April 30, 2004 Court: Middle District of Pennsylvania (Harrisburg) Judge: Mary D. France Debtor's Counsels: Craig S. Sharnetzka, Esq. Lawrence Young, Esq. Countess Gilbert Andrews, P.C. 29 North Duke Street York, PA 17401 Tel: 717 848-4900 Fax: 717 843-9039 Total Assets: $742,965 Total Debts: $4,577,361 Debtor's 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Robert Gist Note plus interest $917,375 1541 Randy Wolf Place El Paso, TX 79935 Business Loan Express Land, building, $706,000 645 Madison Ave, 19th Fl. Machinery & equipment New York, NY 10022 Defined Benefit Pension Plan Unpaid contributions $600,000 New Era Die Company to defined benefit c/o Peoples Bank plan P.O. Box 2887 York, PA 17405 Peoples Bank A/R, Inventory (line $298,371 105 Leader Heights Road of credit) P.O. Box 2887 York, PA 17405 Larry E. Ward stock buyout, non- $204,804 compete, guaranty fees Larry E. Ward Note $180,000 Roy T. Collins Trust Note $150,000 I.A.M. National Pension Fund default under pension $126,378 benefit plan Alice R. Ward Guaranty fees $60,900 Gail Sechrist Note $50,000 Mary Jane King Note $50,000 PA Unemployment Compensation Tax liability $46,908 Fund PA Dept. of Revenue Withholding tax $45,033 PA Dept. of Revenue Withholding tax $43,442 York Area Earned Income Tax Tax liability $33,149 Bureau Chrysler Financial 2002 Jeep $31,000 PA Dept. of Revenue Withholding tax $27,512 Acucote, Inc. Trade debt $29,118 Progressive Serv. Die Co. Trade bill $28,470 Chrysler Financial 2002 Jeep Grand $27,000 Cherokee NEW WORLD PASTA: Has Until July 9 to Complete & File Schedules -------------------------------------------------------------- The U.S. Bankruptcy Court for the Middle District of Pennsylvania gave New World Pasta Company and its debtor-affiliates more time to file their schedules of assets and liabilities, statements of financial affairs and lists of executory contracts and unexpired leases required under 11 U.S.C. Sec. 521(1). The Debtors have until July 9, 2004 to file their Schedules of Assets and Liabilities and Statement of Financial Affairs. Headquartered in Harrisburg, Pennsylvania, New World Pasta Company -- http://www.nwpasta.com/-- is the leading dry pasta manufacturer in the United States. The Company filed for chapter 11 protection on May 10, 2004 (Bankr. M.D. Pa. Case No. 04-02817). Eric L. Brossman, Esq., at Saul Ewing LLP represents the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, they listed both estimated debts and assets of over $100 million. NORTEL: Ontario Securities Commission Issues Cease Trade Order -------------------------------------------------------------- Nortel Networks Corporation (NYSE:NT)(TSX:NT) announced that the Ontario Securities Commission (OSC) has issued a temporary order that prohibits, effective immediately, all trading by directors, officers and certain current and former employees in the securities of the Company and its principal operating subsidiary, Nortel Networks Limited (NNL). Under the procedures of the OSC, this temporary order is expected to be replaced by a permanent order within the next 15 days. The permanent management cease trade order is expected to be in place until two full business days following receipt by the OSC of all filings that the Company and NNL are required to make pursuant to Ontario securities laws. The Company expects that securities commissions in certain other provinces will also issue similar orders with respect to residents in those jurisdictions. Under the guidelines pursuant to which this management cease trade order was issued, Nortel Networks expects to generally provide bi-weekly updates on the affairs of the Company. On April 28, 2004, Nortel Networks had announced the possibility of a management cease trade order being issued as a result of the Company's and NNL's inability to file their financial statements in a timely manner. About Nortel Networks Nortel Networks is an industry leader and innovator focused on transforming how the world communicates and exchanges information. The Company is supplying its service provider and enterprise customers with communications technology and infrastructure to enable value-added IP data, voice and multimedia services spanning Wireless Networks, Wireline Networks, Enterprise Networks, and Optical Networks. As a global company, Nortel Networks does business in more than 150 countries. More information about Nortel Networks can be found on the Web at http://www.nortelnetworks.com/ or http://www.nortelnetworks.com/media_center/ * * * As reported in the troubled Company Reporter's April 30, 2004 edition, Standard & Poor's Rating Services lowered its 'B' long- term corporate credit rating and other long-term ratings on Nortel Networks Corp. and Nortel Networks Ltd. to 'B-'. The CreditWatch implications are revised to developing from negative. The short- term corporate credit and commercial paper ratings are unchanged, and remain on CreditWatch with negative implications. "The actions reflect an increased possibility that holders of Brampton, Ontario-based Nortel Networks' securities could provide notice of noncompliance to Nortel Networks, following its announcement of major changes to its senior executive team, in addition to an expansion of the existing investigation into its accounting for fiscal years 2001 through 2003," said Standard & Poor's credit analyst Bruce Hyman. As a result of the previously announced delayed filing of its 2003 Form 10-K beyond March 30, 2004, Nortel Networks is not in compliance with obligations under its indentures on $3.6 billion in public debt. No notice of noncompliance has been provided by holders of its securities as a result of that delayed filing, although holders have had the right to do so since March 29, 2004. If holders of at least 25% of the outstanding amount of any debt securities were to provide such notice of noncompliance to Nortel Networks, and if the company were then to fail to file the 10-K within a further 90 days, the holders would have the right to accelerate the maturity of its securities. The ongoing review means the filing of the 2003 Form 10-K and first quarter 2004 financial reports will continue to be delayed. Nortel Networks' cash balances at March 31, 2004, were $3.6 billion, approximately equal to the outstanding debt, while the company has no other sources of liquidity; cash balances had declined by about $400 million since December 31, 2003. As a result of the work to date by the independent audit review, Nortel Networks will have to further restate 2001 and 2002 financial statements and revise previously reported 2003 results. Net earnings for 2003 are expected to be reduced by about 50%, and will be reported in prior periods, resulting in a decrease in losses reported in 2002 and 2001. NRG ENERGY: Agrees To Resolve Societe Generale's $35MM+ Claim ------------------------------------------------------------- Societe Generale is the Administrative Agent and Collateral Agent to that certain Credit and Reimbursement Agreement, dated as of November 12, 1999, among certain borrowers affiliated with NRG Energy, the lenders party, Societe Generale and Credit Suisse First Boston, as an arranger. LSP-Kendall Energy, LLC, a non-debtor subsidiary of NRG, entered into a Credit Agreement to finance a portion of the costs of owning, developing, constructing, operating and maintaining an 1160 MW gas-fired combined-cycle electric generating facility located primarily in the Village of Minooka, Kendall County, Illinois. In relation to the Credit Agreement, NRG entered into an Agreed Contingency Fund Guaranty, under which NRG guaranteed to contribute up to $35,000,000 in capital to the Project to fund costs relating to a change order. Societe Generale claims that only $27,550,000 has been contributed pursuant to the Agreed Contingency Fund Guaranty, leaving a shortfall of at least $7,450,000, plus accrued but unpaid attorneys' fees, costs and expenses in an as yet undetermined amount. Subsequently, in July 2003, Societe Generale filed Claim No. 358 against NRG for $35,000,000 plus accrued but unpaid attorneys' fees, costs and expenses in an undetermined amount, for alleged obligations of NRG related to the Agreed Contingency Fund Guaranty. In its 1st Omnibus Claims Objection, the Debtors objected to Claim No. 358 on various grounds. Societe Generale and NRG, together with NRG Power Marketing, Inc., Granite Power Partners II, L.P., Granite II Holding, LLC, the Borrower, and Australia and New Zealand Banking Group Limited, New York Branch entered into a settlement agreement to amicably resolve a series of issues arising under the Credit Agreement, the Equity Contribution Agreement, the Indemnity Agreement, the Agreed Contingency Fund Guaranty, and a letter of credit issued by ANZ in favor of Societe Generale, to secure NRG's performance pursuant to the Equity Contribution Agreement and the Indemnity Agreement. As part of the Kendall Global Settlement Agreement, NRG and Societe Generale agreed that Societe Generale will have an Allowed Claim for $7,450,000. All of the precedent conditions in the Kendall Global Settlement Agreement have been satisfied, and the parties desire to settle and resolve Societe Generale's Claim without further costs of litigation and associated risks. Accordingly, NRG and Societe Generale stipulate and agree that: (a) The Societe Generale Collateral Agent Claim will be deemed to be an Allowed Claim in Class 5 for $7,450,000 and Societe Generale will be entitled to receive distributions based on the amount in accordance with the Plan; and (b) The amount of Societe Generale's Claim in excess of $7,450,000 will be disallowed for all purposes; and (c) The portion of the 1st Omnibus Objection relating to the Societe Generale Allowed Claim will be withdrawn. (NRG Energy Bankruptcy News, Issue No. 27; Bankruptcy Creditors' Service, Inc., 215/945-7000) O'SULLIVAN IND: Appoints Robert Parker as New President & CEO ------------------------------------------------------------- O'Sullivan Industries Holdings, Inc. (Pink Sheets: OSULP) announces the appointment of Robert S. Parker as its new President and Chief Executive Officer, succeeding Richard Davidson, who has resigned these positions. Mr. Davidson will continue as a member of O'Sullivan Furniture's Board of Directors and will assist during the transition period. Mr. Parker has also been named to the O'Sullivan Furniture Board of Directors and will also serve as President and CEO of the company's domestic subsidiaries. "O'Sullivan Furniture continues to move forward with several important initiatives that are beginning to create new top line growth and improving profitability for the company," stated Richard Davidson, former President and CEO of O'Sullivan Furniture. "I am proud of the initiatives that are beginning to transform O'Sullivan Furniture into a stronger company, and I have the highest regard and respect for Bob. He has the knowledge, leadership and experience to take O'Sullivan Furniture to the next level. I will continue to watch the progress of O'Sullivan Furniture with great pride." Mr. Parker, age 58, joins O'Sullivan Furniture from Newell Rubbermaid, a global manufacturer and marketer of name-brand consumer products, where he served as Chief Operating Officer of the Sharpie/Calphalon Group since September 2003. From August 1998 through August 2003, he was Group President of Newell Rubbermaid's Sharpie business segment. From October 1990 to August 1998, Mr. Parker was President of Sanford Corporation, both before and after its acquisition by Newell. As a recognized industry leader, Mr. Parker brings decades of experience dealing with many of the largest retailers in the world to O'Sullivan Furniture. "Attracting a CEO candidate with the industry stature of Robert Parker is testament to what we think is the unrealized potential of O'Sullivan Furniture," stated Harold Rosser, member of the O'Sullivan Furniture Board of Directors and Managing Director of Bruckmann, Rosser, Sherrill & Co., majority equity holder of O'Sullivan Furniture. "Bob's intimate knowledge and dealings with many of the largest retail chains in the world will be invaluable as he begins the process of transforming O'Sullivan Furniture into a stronger company for the future. This appointment solidifies and strengthens O'Sullivan Furniture's senior management team at a critical time in the company's history." "During the past few years, the RTA furniture industry as a whole has been dealt many challenges," said Robert Parker, President and CEO of O'Sullivan Furniture. "These times provide an opportunity for O'Sullivan Furniture to build on the company's current strengths and to continue its role as an industry leader in the future." About the Company O'Sullivan Industries Holdings, Inc. (OTC Bulletin Board: OSULP) is a leading manufacturer of ready-to-assemble furniture. At March 31, 2004, O'Sullivan Industries reported a shareholders' deficit of $154 million compared to the $138 million deficit recorded at June 30, 2003. OXFORD AUTOMOTIVE: Sells Mexican Plant & Amends Credit Agreement ---------------------------------------------------------------- Oxford Automotive, Inc. announced the closing of the sale of its manufacturing facility located in Ramos Arizpe, Mexico for approximately $40 million (including $3 million to be held in escrow). Pending investment of the net proceeds in capital assets, the company has applied the funds to reduce the amount currently outstanding under its revolving credit facility. The company also announced the completion of an amendment to its revolving credit facility to modify certain financial covenants and pricing. The maximum availability of the amended credit facility continues to be $60 million, subject to reserves which may be established at the discretion of the lenders. The company, together with its investment bankers, continues to pursue strategic options to further optimize the value of the company and to further increase liquidity, which may include a sale of some or all of its assets in North America and Europe. About Oxford Automotive, Inc. Oxford Automotive, Inc., with headquarters in Troy, Michigan, is a leading Tier 1 supplier of specialized welded metal assemblies and related services. The company, which is privately held, currently has approximately 6,600 employees at 32 locations in nine countries, including technology centers in the United States, France and Germany. Annual sales in 2003 were approximately $1 billion. * * * As reported in the Troubled Company Reporter's March 1, 2004 edition, Standard & Poor's Ratings Services lowered its corporate credit rating on Troy, Michigan-based Oxford Automotive Inc. to 'B-' from 'B'. In addition, Standard & Poor's lowered its rating on the company's second-lien senior secured debt to 'CCC' from 'CCC+'. Oxford remains on CreditWatch with negative implications. "The downgrade follows Standard & Poor's assessment that Oxford's vulnerability to adverse business, financial, or economic developments has increased, given the company's announcement that its EBITDA will likely fall short of Standard & Poor's prior expectations for both March fiscal years 2004 and 2005," said Standard & Poor's credit analyst Nancy C. Messer. In addition, Oxford faces liquidity challenges in the next 12 to 18 months, while it prepares for the launch of a significant Mercedes program at its new McCalla, Ala. facility. Furthermore, financial results for fiscal 2006 remain highly dependent on the success of the new Mercedes program launch that is scheduled for December 2004. Oxford's financial return on the Mercedes program investment will depend on its successful launch and implementation of production efficiencies, as well as whether actual sales and production levels reach the projected volumes for this vehicle. The company estimates that fiscal 2004 EBITDA will range between $57 million and $59 million, and that the Mercedes program will generate an incremental $30 million of annual EBITDA after launch. Currently, most of Oxford's EBITDA is generated in Europe. PARMALAT: Chilean Unit Creditors Approve Sale to Bethea SA ---------------------------------------------------------- Parmalat Finanziaria SpA, in | Parmalat Finanziaria SpA, in Extraordinary Administration, | Amministrazione Straordinaria, communicates that the Creditors | comunica che l'assemblea dei Meeting of its subsidiary | creditori della societa company Parmalat Chile SA | controllata Parmalat Chile SA taking place on 3 May 2004 | il 3 maggio 2004 ha approvato approved the proposal for | la proposta di Convenio Convenio Judicial Preventivo | Judicial Preventivo, che that foresees the sale to the | prevede la vendita alla Chilean company Bethia SA of | societa cilena Bethia SA del the business of Parmalat Chile | complesso aziendale di and of shares representing | Parmalat Chile e delle azioni 99.9% of the capital of its | rappresentative del 99,99% subsidiary company Comercial | della sua controllata Parmalat SA. | Comercial Parmalat SA. | The final contract for the | Il contratto definitivo sale of the Parmalat business, | di cessione del complesso including the holding in | aziendale, ivi inclusa la Comercial Parmalat SA, will be | partecipazione in Comercial signed within 10 days and the | Parmalat SA, sara sottoscritto final price will be destined in | entro 10 giorni ed il prezzo its entirety to the payment of | definitivo interamente Parmalat Chile creditors. It | devoluto al pagamento dei is also foreseen that within 10 | creditori di Parmalat Chile. days a contract will be signed | E prevista, inoltre, sempre for the licensing of the | entro dieci giorni, la Parmalat brand and of Parmalat | sottoscrizione di un contratto know-how by Parmalat SpA in | di licenza del marchio e del Extraordinary Administration to | know-how Parmalat tra Parmalat Bethia SA. | SpA in Amministrazione | Straordinaria e la societa Once approved, the | Bethia SA. Convenio Judicial Preventivo | will be final and binding for | Una volta passato in all creditors. | giudicato, il Convenio | Judicial Preventivo avra The transaction, that has | efficacia definitiva e been approved by Ministry of | vincolante per tutti i [Productive] Activities having | creditori. also been put to the | Surveillance Committee, will | L'operazione, autorizzata secure employment levels at the | dal Ministero delle Attivita Chilean company, the recovery | Produttive, sentito il of a portion of the credits | Comitato di Sorveglianza, extended by Group companies to | permette la salvaguardia Parmalat Chile, the reduction | occupazionale dei dipendenti of Parmalat SpA in | delle societa cilene, il Extraordinary Administration | recupero di parte dei crediti debt exposure towards its banks | vantati da societa del Gruppo and the securing of a stream of | creditrici di Parmalat Chile, income from the licensing | la riduzione dell'esposizione contract. | debitoria di Parmalat SpA in | Amministrazione Straordinaria | nei confronti delle banche | garantite e l'assicurazione di | un flusso di proventi | derivanti dal contratto di | licenza. 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. 16; Bankruptcy Creditors' Service, Inc., 215/945-7000) PER TE CORPORATION: Case Summary & 7 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Per Te Corporation 1706 Calle Loiza Esquina Taft San Juan, Puerto Rico 00911 Bankruptcy Case No.: 04-04519 Chapter 11 Petition Date: April 29, 2004 Court: District of Puerto Rico (San Juan) Debtor's Counsel: Jean-Philip Gauthier I�esta, Esq. 1311 Ponce de Leon Ave., Suite 601 San Juan, PR 00907 Tel: 725-6625 Estimated Assets: $1 Million to $10 Million Estimated Debts: $500,000 to $1 Million Debtor's 7 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Westernbank of Puerto Rico Mortgage $770,000 Edificio Westernbank, Penthouse Mendez Vigo, Num.19 Mayaguez, PR 00680 Kashiyama - NCO Clothing Apparel $41,930 Internal Revenue Service Taxes $27,000 Alberta Ferreti Clothing Apparel $7,000 Gilar Clothing Apparel $5,000 Sonia Rikiel $4,815 Longchamp Clothing Apparel $1,360 PG&E NAT'L: ET Debtors Enter Into Morgan Stanley Settlement Pact ---------------------------------------------------------------- NEGT Energy Trading - Gas Corporation, NEGT Energy Trading - Power, LP, and NEGT Energy Trading Holdings Corporation are parties to several contracts with Morgan Stanley Capital Group, Inc.: (a) Natural Gas Sale and Purchase Contract, dated March 1, 1995, as amended on May 29, 2001; (b) ISDA Master Agreement, Schedule and Credit Support Annex dated May 15, 1998, as amended on June 30, 1998, and on May 29, 2001; (c) Master Agreement including Collateral Annex, dated October 1, 1998, as amended on May 29, 2001, and December 11, 2002; and (d) ISDA Master Agreement including Schedule and Credit Support Annex, dated September 2, 1999, as amended on May 29, 2001 and December 11, 2002. Gas Transmission Northwest Corporation, a non-debtor affiliate of the ET Debtors, and Morgan Stanley, formerly known as Morgan Stanley Dean Witter & Co., each issued certain guaranty agreements as credit support for the Contracts. In addition, the ET Debtors provided additional collateral, in the form of cash, totaling $21,360,000. Pursuant to the terms of the Contracts, all executory transactions under the Contracts were terminated when the ET Debtors filed for bankruptcy. To amicably settle all issues relating to the Contracts and the Guaranties, the ET Debtors, GTNC and the Morgan Stanley Parties entered into a settlement agreement. As approved by the Court, pursuant to the Settlement Agreement, GTNC, as guarantor, will pay Morgan Stanley Capital $4,115,187 in full satisfaction of the ET Debtors' obligations under the Contracts and GTNC's obligations under the Guaranties. In addition to the Settlement Payment, Morgan Stanley Capital will be entitled to retain the Collateral and set it off against outstanding claims against the ET Debtors. By making the Settlement Payment, GTNC will become entitled to general unsecured claims against the ET Debtors in amounts equaling each ET Debtors' individual liability for the Settlement Payment: (a) $3,701,983 against ET Gas; and (b) $413,204 against ET Power. Furthermore, the ET Debtors and GTNC, on one hand, and the Morgan Stanley Parties, on the other hand, will release each other from all claims arising from and relating to the Contracts, including without limitation, any avoidance or recovery claims or causes of action. The Settlement Agreement is warranted. The ET Debtors are in the process of winding down their energy trading operations and terminating all remaining contracts, or determining whether any contracts are susceptible to being assigned for value. After numerous meetings and teleconferences, the Morgan Stanley Parties, GTN, and the ET Debtors all have agreed on the amount of Morgan Stanley Capital's claim, which represents a compromise of the claims asserted by the Morgan Stanley Parties and avoids the need for further potentially costly litigation in settling these claims. Moreover, the allowance of GTNC's subrogation claims as part of the Settlement Agreement will fix the amount of the GTNC claims in each ET Debtor's claims register, and avoids the risk of inconsistent judgments if GTNC's claims were reserved for determination at a later date. 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. 21; Bankruptcy Creditors' Service, Inc., 215/945-7000) PHILLIPS INDUSTRIAL: Case Summary & Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Phillips Industrial Services Corporation 549 Long Point Road Mount Pleasant, South Carolina 29464 Bankruptcy Case No.: 04-05032 Type of Business: The Debtor offers Industrial Painting, Special Coatings, Tank Linings, High Pressure Waterblasting and any Commercial Painting requirements. See http://www.phillipsindsvc.com/ Chapter 11 Petition Date: April 29, 2004 Court: District of South Carolina (Charleston) Judge: John E. Waites Debtor's Counsel: Ivan N. Nossokoff, Esq. Ivan N. Nossokoff, LLC 25 Cumberland Street Charleston, SC 29401 Tel: 843-577-5292 Fax: 843-723-3159 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 ------ --------------- ------------ Workforce USA $543,067 Post Office Box 850001 Orlando FL 32885-0132 First Federal $383,727 2440 Mall Drive, Suite 100 Charleston SC 29426 Wachovia Lien $300,000 16 Broad Street Charleston SC 29402 Labor Ready - Charleston $125,757 Eddie P Phillips $82,874 First Federal $81,806 Wachovia Visa $77,673 Wachovia $76,000 Wachovia $76,000 First Federal $73,895 Presidion Solutions $67,004 Bank of South Carolina Lien $62,668 BB&T UCC - Secretary of $69,531 State Value of Collateral: $12,500 Net Unsecured: $57,031 BB&T $54,348 First Federal $50,686 First Federal $50,579 Hertz Equipment Rental $40,641 Sunbelt $39,298 BB&T UCC - Secretary of $38,507 State Value of Collateral: $1,000 NES Rental $35,782 PLEJ'S LINEN: Looks to Finley Group for Financial Advice -------------------------------------------------------- The U.S. Bankruptcy Court for the Western District of North Carolina, Charlotte Division, gave its nod of approval to PLEJ'S Linen Supermarket SoEast Stores LLC, and its debtor-affiliates' request to hire The Finley Group as consultants and financial advisors in their bankruptcy proceedings. The Debtors understand that Finley Group has a wealth of experience in providing consulting and financial advisory services in restructurings and reorganizations and enjoys an excellent reputation for services it has rendered in large and complex Chapter 11 cases on behalf of debtors and creditors throughout the United States. Finley Group will provide services to the Debtors with respect to: i. pre-planning Chapter 11; ii. leading negotiations for Debtor-In-Possession financing facility; iii. leading the Debtors' restructuring initiatives; iv. providing expert testimony before the Bankruptcy Court as required; v. providing post-petition bankruptcy consulting services as required; vi. assisting in post-petition financial restructuring and plan of reorganization formulation; and vii. other consulting services as may be required. The customary hourly rates charged by Finley Group's personnel anticipated to be assigned in this case are: Professionals Billing Rate ------------- ------------ Partners $285 per hour Associates $200 per hour Armand J. Carrano will maintain overall responsibility for the engagement on behalf of Finley Group. Headquartered in Rock Hill, South Carolina, Plej's Linen Supermarket SoEast Stores LLC, with its debtor-affiliates, are engaged primarily in two core businesses: retail sale of first quality program home accessories for bed, bath, window, decorative and house wares and limited closeout and discontinued opportunistic merchandise; and wholesale distribution of similar bed and bath textiles. The Company filed for chapter 11 protection on April 15, 2004 (Bankr. W.D. N.C. Case No. 04-31383). John R. Miller, Jr., Esq., and Paul R. Baynard, Esq., at Rayburn Cooper & Durham, P.A., represent the Debtors in their restructuring efforts. When the Company filed for protection from their creditors, they listed both estimated debts and assets of over $10 million. RCN CORP: Lenders Agree to Extend Forbearance Pact Until June 1 --------------------------------------------------------------- RCN Corporation (OTC Bulletin Board: RCNC) announced that the negotiations with its senior secured lenders, members of an ad hoc committee of holders of its Senior Notes and others on a consensual financial restructuring of its balance sheet are continuing. In connection with the continuing negotiations, RCN, the Lenders and certain members of the Noteholders' Committee have agreed to extend expiration of their previously announced forbearance agreements until 11:59 p.m. on June 1, 2004. RCN remains hopeful that the continuing negotiations will lead to agreement on a consensual financial restructuring plan in the near term, although there is no assurance this will occur. Under the extended forbearance agreements, the Lenders and certain members of the Noteholders' Committee have agreed not to declare any Events of Default, which they would be entitled but not required to do, under RCN's senior credit facilities or RCN's senior notes, respectively, as a result of RCN not making an interest payment on its 10-1/8% Senior Notes due 2010, its 9.8% Senior Discount Notes due 2008, its 10% Senior Notes due 2007, and its 11-1/8% Senior Discount Notes due 2007 and certain other defaults. Any acceleration of amounts due under RCN's senior credit facilities or any of the Senior Notes would, due to cross default provisions in RCN's indentures governing its other senior notes, entitle, but not require, the holders of other senior notes to declare RCN's other senior notes immediately due and payable if they so choose. Holders of any of the Senior Notes that are not members of the Noteholders' Committee or who have not entered into the extended forbearance agreement are not subject to the terms of the forbearance agreements. If acceleration of RCN's senior credit facilities and Senior Notes were to occur, RCN would not, based on current and expected liquidity, have sufficient cash to pay the amounts that would be payable. RCN's objective is to reach agreement on a consensual financial restructuring plan during the current forbearance period. However, if financial restructuring negotiations were to proceed beyond that period, or were to end, RCN would need additional forbearance, waiver and/or amendment agreements to support its continuing operations. In addition, in the absence of an agreement on a consensual financial restructuring upon expiration of the forbearance agreements, the Lenders and members of the Noteholders' Committee who hold any of the Senior Notes would be entitled, but not required, to declare RCN's senior credit facilities and the outstanding Senior Notes, respectively, immediately due and payable. RCN expects any financial restructuring to be implemented through a reorganization under Chapter 11, Title 11 of the United States Code. Since financial restructuring negotiations are ongoing, the treatment of existing creditor and stockholder interests in RCN is uncertain at this time. However, the restructuring as currently contemplated will likely result in a conversion of a substantial portion of RCN's outstanding Senior Notes into equity and an extremely significant, if not complete, dilution of current equity. Accordingly, the value of the RCN's securities is highly speculative. RCN urges that appropriate caution be exercised with respect to existing and future investments in any of its debt obligations or its Common Stock. As previously announced, RCN's Common Stock became eligible for quotation on the OTC Bulletin Board under the symbol RCNC on May 12, 2004. Although RCN is actively pursuing discussions towards a final agreement on a consensual financial restructuring, there can be no assurance that such an agreement will ultimately be reached, that RCN would be able to obtain further extensions of its forbearance agreements with the Lenders and members of the Noteholders' Committee or that holders of any of the Senior Notes that are not parties to the extended forbearance agreement will not declare an Event of Default under the Senior Notes (which would terminate the forbearance agreement with the Lenders), or seek other remedies available under applicable law or the terms of any of the Senior Notes, prior to such time. RCN will continue to apply substantial effort and resources to reaching a formal agreement on a consensual financial restructuring while also continuing to evaluate the best alternatives for RCN under current circumstances and as discussions and events unfold. For additional information about the restructuring process, please visit http://www.rcntomorrow.com/ About RCN Corporation RCN Corporation (Nasdaq: RCNC) is the nation's first and largest facilities-based competitive provider of bundled phone, cable and high speed Internet services delivered over its own fiber-optic local network to consumers in the most densely populated markets in the U.S. RCN has more than one million customer connections and provides service in the Boston, New York, Eastern Pennsylvania, Chicago, San Francisco and Los Angeles. The Company also holds a 50% LLC membership interest in Starpower, which serves the Washington, D.C. metropolitan area. REPTRON ELECTRONICS: Reorganized Company Publishes Q1 2004 Results ------------------------------------------------------------------ Reptron Electronics, Inc. (OTC Bulletin Board: RPRN), an electronics manufacturing services company, reported financial results for its first quarter ended March 31, 2004. As previously reported, Reptron sold certain assets of its electronic components distribution and memory module divisions in two separate transactions during 2003. The 2003 results have been adjusted to reflect the remaining operations while segregating and summarizing the electronic components distribution and memory module divisions as discontinued operations. Reptron filed a voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code on October 28, 2003. The Plan of Reorganization was confirmed by the U.S. Bankruptcy Court on January 14, 2004 and became effective on February 3, 2004 allowing the Company to emerge from bankruptcy. Expenses incurred through the reorganization process have been segregated and summarized as Reorganization Costs. Additionally, the difference between the fair market value of new common stock issued and new debt issued when compared to the debt discharged as outlined in the Plan of Reorganization has been summarized as a Reorganization Gain on Debt Discharge. Also, as a result of the reorganization, January 2004 operations are presented as "Predecessor" while the two month period ended March 31, 2004 is presented as "Reorganized." Reptron recorded first quarter 2004 net sales of $35.6 million, a 3.0% increase from the same period a year ago. The Company recorded a first quarter 2004 loss from continuing operations prior to the Reorganization Gain on Debt Discharge and Reorganization Costs, totaling $751,000. This compares to a $2.2 million loss from continuing operations during the same period a year ago. During the first quarter of 2004, Reptron also recorded additional losses from its 2003 discontinued operations, reorganization costs and a reorganization gain on debt discharge which collectively resulted in net earnings of $1.3 million. These items when combined with the results from continuing operations resulted in first quarter 2004 net earnings of $587,000 compared to a net loss of $19.6 million, in the same period a year ago. The 2003 net loss includes interest costs on the subordinated debt that was extinguished in bankruptcy and losses from discontinued operations. Reptron's Plan of Reorganization became effective on February 3, 2004 allowing the Company to emerge from bankruptcy. The Company is applying "fresh start" accounting to its balance sheet as of January 31, 2004, the date of emergence for accounting purposes, which requires valuation analysis and allocation of assets and liabilities in the opening balance sheet of the reorganized entity. Reptron has engaged various professionals to assist with this valuation which is expected to be substantially complete by June 30, 2004. Therefore, the June 30, 2004 balance sheet is expected to reflect these allocation adjustments. Later periods may also include finalization of such allocations. "Reptron's restructuring activity is now substantially completed," stated Paul J. Plante, President and Chief Executive Officer. Plante continued, "Our suppliers have been paid in full for all pre-petition obligations as outlined in the Plan of Reorganization and our new common stock began trading on March 22, 2004 under the symbol "RPRN." Plante concluded, "We are encouraged by signs of an improving economy which should help to increase sales and enable profitable operating results. We sincerely thank all customers, suppliers, employees and investors who supported Reptron through a rapid and successful reorganization." At March 31, 2004, reorganized Reptron Electronics' balance sheet shows a recovery of stockholders' equity at $15,408,000 compared to a $35,054,000 deficit at December 31, 2003 prior to its emergence. About Reptron Reptron Electronics, Inc. is a leading electronics manufacturing services company providing engineering services, electronics manufacturing services and display integration services. Reptron Manufacturing Services offers full electronics manufacturing services including complex circuit board assembly, complete supply chain services and manufacturing engineering services to OEMs in a wide variety of industries. Reptron Display and System Integration provides value-added display design engineering and system integration services to OEMs. For more information, please access http://www.reptron.com/ REPTRON: Expects to File Delayed Form 10-Q No Later than Monday --------------------------------------------------------------- Reptron Electronics, Inc. (OTC Bulletin Board: RPRN), an electronics manufacturing services company, reported that it will file Form 12b-25 with the Securities and Exchange Commission requesting an extension to file its first quarter 2004 Form 10-Q. Due to the emergence from bankruptcy and the implementation of fresh start accounting, the Company requires additional time to complete its financial statements. The Company expects that the Form 10-Q will be filed no later than May 24, 2004. Reptron filed a voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code on October 28, 2003. The Plan of Reorganization was confirmed by the U.S. Bankruptcy Court on January 14, 2004 and became effective on February 3, 2004 allowing the Company to emerge from bankruptcy. About Reptron Reptron Electronics, Inc. is a leading electronics manufacturing services company providing engineering services, electronics manufacturing services and display integration services. Reptron Manufacturing Services offers full electronics manufacturing services including complex circuit board assembly, complete supply chain services and manufacturing engineering services to OEMs in a wide variety of industries. Reptron Display and System Integration provides value-added display design engineering and system integration services to OEMs. For more information, please access http://www.reptron.com/ REVLON CONSUMER: S&P Affirms B- Rating with Developing Outlook -------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'B-' corporate credit rating on cosmetics manufacturer Revlon Consumer Products Corp. At the same time, Revlon's outlook was revised to developing from positive. The company has approximately $1.1 billion of debt outstanding. "The outlook revision follows Revlon's decision to postpone the refinancing of $550 million of debt maturities due in 2005 and 2006," said Standard & Poor's credit analyst Patrick Jeffrey. "While Revlon has demonstrated improved operating performance during the past two quarters and has reduced leverage through an $800 million exchange offer completed in March 2004, it will still need to refinance these substantial issues. Furthermore, a waiver that the company has received for covenant violations under its bank facility will expire on Jan. 31, 2005." As a result of this postponement, Standard & Poor's has withdrawn its 'B' senior secured bank loan and '1' recovery rating on Revlon's previously planned $680 million senior secured bank facility. In addition, Standard & Poor's has withdrawn its 'CCC' senior unsecured debt rating on Revlon's previously planned $400 million senior unsecured note offering due in 2011. The rating on New York, New York-based Revlon reflects its participation in the highly competitive mass-market cosmetics industry, its high leverage, and an inconsistent operating history. These risks are mitigated somewhat by the company's leading position in the sector and its recent operating performance improvement. Revlon faces two significantly larger competitors with leading market positions, L'Oreal (Maybelline) and Procter & Gamble Co. (Cover Girl, Max Factor). Significant advertising and promotional investment is required in the cosmetics industry to maintain brand image with consumers and shelf space with key retailers. Pricing is also highly competitive in this category. In part because of its highly leveraged capital structure, Revlon has in the past underinvested in advertising, promotion, and in-store merchandising presentation, and this led to declining sales and earnings, as well as lost market share. However, initiatives implemented during the past two years to reverse these trends resulted in improved sales and earnings in the fourth quarter of 2003 and the first quarter of 2004, as well as improved market share and operating efficiencies with key retailers. The improvements resulted from increased investments in promotional spending, better in-store displays and merchandising, improved pricing, and better supply-chain management. R.G. BARRY: First Quarter Net Loss Shoots Up to $14.2 Million ------------------------------------------------------------- R.G. Barry Corporation (NYSE: RGB) reported first quarter 2004 operating results. For the quarter ended April 3, 2004: -- Net sales from continuing operation were $18.4 million, down from the $20.4 million reported in the first quarter of 2003; -- Net loss was $14.2 million, or a loss of $1.44 per share, from continuing operations, compared to a net loss in the first quarter of 2003 of $3.9 million, or a loss of $0.39 per share, comprised of a $3 million, or $0.30 per share, loss from continuing operations, and a $918,000, or $0.09 per share, loss from discontinued operations; and -- The quarterly net loss includes restructuring and asset impairment charges totaling $8.3 million primarily related to the Company's phase-out of its manufacturing operations in Mexico. "There were no real surprises in the first quarter results," said Thomas M. Von Lehman, interim President and Chief Executive Officer. "The numbers reflect the negative impact we had anticipated from charges associated with the restructuring and refinancing of the Company. A substantial portion of the decline in quarterly sales was related to customer concerns dealing with our publicly announced liquidity problem in early 2004 and to the introduction of a more restrictive product return policy for our retailer customers. "The phase-out of our North American manufacturing operations is on track and it is reflected in the restructuring and asset impairment charges reported for the quarter. We anticipate that by year-end 2004 R.G. Barry will begin to recognize important infrastructure and operating cost savings as a result of the phase-out, the outsourcing of all of our product requirements and the reduction of selling, general and administrative costs associated with our former business model. "As we reported on April 2, 2004, we do not expect to report an operating profit for 2004. We do believe, however, that the lower infrastructure and operating costs and a more efficient supply chain that are expected to result from the successful implementation of our new business model should give the Company the opportunity to return to profitability in 2005," Mr. Von Lehman said. Also, the company stated, "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." ROYAL D ENTERPRISES: Case Summary & 3 Largest Unsecured Creditors ----------------------------------------------------------------- Debtor: Royal D Enterprises, LLC P.O. Box 11159 Rock Hill, South Carolina 29731-11159 Bankruptcy Case No.: 04-05093 Chapter 11 Petition Date: April 30, 2004 Court: District of South Carolina (Columbia) Judge: Thurmond Bishop Debtor's Counsel: Reid B. Smith, Esq. Smith & Kiser, LLC P.O. Box 5537 Columbia, SC 29250 Tel: 803-779-2255 Estimated Assets: Unstated Estimated Debts: $1 Million to $10 Million Debtor's 3 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ York County Tax Collector $24,317 Days Inn Worldwide, Inc. $18,718 South Carolina Dept. Revenue $1,775 SEQUOIA MORTGAGE: Fitch Takes Rating Actions on Securitizations --------------------------------------------------------------- Fitch Ratings has affirmed 30 classes for the following Sequoia Mortgage Trust, mortgage pass-through certificates: Sequoia Mortgage Trust, Trust 5, mortgage pass-through certificates --Class A, AR 'AAA'; --Class B-1 'AA'; --Class B-2 'A'; --Class B-3 'BBB'; --Class B-4 'BB'; --Class B-5 'B'. Sequoia Mortgage Trust, Trust 6, mortgage pass-through certificates --Class A, AR 'AAA'; --Class B-1 'AA'; --Class B-2 'A'; --Class B-3 'BBB'; --Class B-4 'BB'; --Class B-5 'B'. Sequoia Mortgage Trust, Trust 7, mortgage pass-through certificates --Class A, AR 'AAA'; --Class B-1 'AA'; --Class B-2 'A'; --Class B-3 'BBB'; --Class B-4 'BB'; --Class B-5 'B'. Sequoia Mortgage Trust, Trust 8, mortgage pass-through certificates --Class A, AR 'AAA'; --Class B-1 'AA'; --Class B-2 'A'; --Class B-3 'BBB'; --Class B-4 'BB'; --Class B-5 'B'. Sequoia Mortgage Trust, Trust 9, mortgage pass-through certificates --Class A, AR 'AAA'; --Class B-1 'AA'; --Class B-2 'A'; --Class B-3 'BBB'; --Class B-4 'BB'; --Class B-5 'B'; The affirmations reflect credit enhancement consistent with future loss expectations. SOLUTIA INC: Shutting Down Chlorobenzene Business ------------------------------------------------- Historically, Solutia, Inc., has been the world's largest integrated chlorobenzene manufacturer, making a range of intermediate "building block" chemicals -- monochlorobenzene, ortho- and para-dichlorobenzene, ortho- and para- nitrochlorobenzene, ortho- and paranitroaniline -- used in a large number of applications, including dyes and tints, herbicides, pain relievers, moth balls, and rubber chemicals. Solutia's chlorobenzene manufacturing business is operated solely from its William G. Krummrich Plant in Sauget, Illinois. M. Natasha Labovitz, Esq., at Gibson, Dunn & Crutcher, LLP, in New York, relates that the Chlorobenzene Business has shown deteriorating and disappointing financial performance in the several years leading up to the Petition Date. Significant causes of these financial difficulties have been increased competition from foreign sources in China and India, a global oversupply of chlorobenzene and a rise in the cost of the raw materials needed for production. Prior to the Petition Date, Solutia wound down and closed the "back end" of the Chlorobenzene Business, which was primarily involved in the refinement of chlorobenzene into more complex products, like animal feed antioxidants and process chemicals for the rubber chemicals industry. The remaining "front end" of the Chlorobenzene Business involves the initial steps in the manufacture of chlorobenzene from raw materials -- into monochlorobenzene and dichlorobenzene -- and, like the "back end" of the business, has operating costs that exceed the benefits Solutia can derive from production and sales. The Chlorobenzene Business currently operates at a loss of approximately $150,000 to $200,000 per week, which has been exasperated by recent increases in benzene prices of up to 30%. Ms. Labovitz states that in addition to Solutia's Chlorobenzene Business, these non-debtor entities each run separate chemical operations at the Krummrich Facility: (a) Astaris, LLC -- a joint venture between Solutia and FMC Corporation; (b) Flexsys America, LP -- a joint venture between Solutia and Akzo Nobel N.V.; and (c) Occidental Chemical Corporation, pursuant to operating agreements with Solutia. The Operating Agreements generally govern the relationships between Solutia and the Krummrich Facility Guests and specifically allocate certain "fixed costs" between the parties for utility and other ancillary support services used by all of them at the Krummrich Facility. If Solutia shuts down the Chlorobenzene Business, certain fixed costs related to operations at the Krummrich Facility would be re-allocated from Solutia to the Krummrich Facility Guests and would be shared among them in accordance with the terms of the Operating Agreements. Over the past several months, Solutia conducted a thorough review of the benefits of its continued operation of the Chlorobenzene Business, as compared to the effects of a complete shutdown. Solutia's review of operations included an analysis of potential contract termination and rejection damages, possible employee severance exposure and wind down costs. Solutia estimates that costs associated with a shutdown of the Chlorobenzene Business would total approximately $11 million through 2006. However, Solutia believes that these costs would be outweighed by the significant benefits that a closure would provide to its estate. Solutia estimates that a shutdown of the Chlorobenzene Business would enable it to save roughly $13 million in cash over the same period, $7 million of which would be attributed to the reallocation of fixed costs to the Guests under the Operating Agreements. Additional savings would continue from year to year thereafter. Ms. Labovitz points out that Solutia also considered the potential negative effects of a shutdown on the Krummrich Facility Guests' operations at the Krummrich Facility due to the reallocation of fixed costs and the potential impact of the termination. Solutia believes that the associated risks are minimal and can be substantially alleviated by its effort to resolve issues related to fixed cost allocations and other issues going forward. Finally, Solutia investigated the potential for additional environmental liability as a result of a shutdown of the Chlorobenzene Business, but does not expect the closure to trigger any new remediation obligations. Solutia intends to meet its environmental obligations at the Krummrich Facility relating to the Chlorobenzene Business both before and after shutdown, and expects to decontaminate and decommission the equipment located thereon. As an alternative to closure, Solutia considered proposals for the sale of the Chlorobenzene Business. However, over the past several years, Solutia has not been successful in finding a buyer. The fact that the business has been consistently losing money year after year and the potential environmental liability associated with the manufacturing of chlorobenzenes have both hindered Solutia's ability to reach agreement with a buyer in which the purchase price would justify a sale of the business rather than a total shutdown of operations. Accordingly, Solutia has concluded that a sale of the Chlorobenzene Business cannot be justified from a business perspective. Based on its review of operations, Solutia concluded that the wind down and closure of the Chlorobenzene Business would be cost effective, even in light of potential shutdown costs and other risks. Solutia has begun the planning process for implementing an effective and efficient wind down and closure of the Chlorobenzene Business, and plans to take roughly one month to complete the shutdown process. This would enable Solutia to shutdown its facilities in a safe and environmentally responsible manner, and allow its chlorobenzene customers to transition to alternative service providers. The wind down period also would give Solutia adequate time to renegotiate or terminate the remaining miscellaneous contracts. Renegotiation or Termination of Related Contracts Ms. Labovitz relates that Solutia is a party to roughly 60 contracts related to the Chlorobenzene Business, but reasonably believes that less than a handful of them could realistically expose its estate to termination damages in excess of $50,000. Solutia believes that it can successfully renegotiate or terminate many of the contracts and reduce potential damage claims to minimal amounts or even to zero. Solutia estimates that its damages exposure for these Miscellaneous Executory Contracts could be approximately $200,000. Many of the Miscellaneous Executory Contracts are better candidates for renegotiation or termination than rejection. Certain of the Miscellaneous Executory Contracts cover several Solutia facilities and could be renegotiated to shift Solutia's obligations to operations other than Krummrich. According to Ms. Labovitz, other Miscellaneous Executory Contracts contain provisions that may excuse Solutia's performance upon shutdown of the Chlorobenzene Business or that allow Solutia to terminate the contracts upon little or no notice. Thus, Solutia believes that it would be more cost effective for it to renegotiate or terminate the Miscellaneous Executory Contracts rather than to reject them. If Solutia needed to obtain Court approval of the renegotiation or termination of each of the Miscellaneous Executory Contracts, this would impose unnecessary administrative burdens on Solutia's estate that may reduce or even eliminate the economic benefits of Solutia's renegotiation or termination. However, with respect to the Miscellaneous Executory Contracts for which renegotiation or termination is not successful or to other executory contracts for which Solutia reasonably believes there would be significant damage claims against the estate, Solutia would seek to modify, terminate or reject the contracts pursuant separate motions to be filed with the Court at a later date. On May 4, 2004, after consulting with the Creditors Committee, Solutia issued a notice required under the Worker Adjustment and Retraining Notification Act to its salaried and union employees at the Krummrich Facility whose positions would be terminated in connection with the Chlorobenzene Business closure. The Debtors sought to re-institute Solutia's severance program effective as of the Petition Date, which would permit Solutia to pay severance obligations of the salaried employees affected by the Chlorobenzene Business shutdown. In addition, Solutia plans to pay severance obligations for its union employees as required pursuant to its collective bargaining agreement. With respect to third party operations at the Krummrich Facility, Solutia has notified the Guests of the proposed wind down and closure of the Chlorobenzene Business in accordance with the terms of the Operating Agreements. Pursuant to Sections 105 and 363 of the Bankruptcy Code, Solutia asks the Court to approve the wind down and closure of the Chlorobenzene Business and the renegotiation or termination of the Miscellaneous Executory Contracts. Ms. Labovitz clarifies that Solutia does not seek to abandon or otherwise dispose of the real property, fixtures, or equipment related to the Chlorobenzene Business at this time. Instead, Solutia intends to administer the property through separate motions to be filed with the Court or under the terms of a reorganization plan. Likewise, notwithstanding the wind down and closure of the Chlorobenzene Business, Solutia does not seek to reject any executory contracts connected with their operations at the Krummrich Facility. Solutia intends to reject certain of these contracts by separate motions and reserves all of its rights until further Court action is requested. Headquartered in St. Louis, Missouri, Solutia, Inc. -- http://www.solutia.com/-- with its subsidiaries, make and sell a variety of high-performance chemical-based materials used in a broad range of consumer and industrial applications. The Company filed for chapter 11 protection on December 17, 2003 (Bankr. S.D.N.Y. Case No. 03-17949). When the Company filed for protection from their creditors, they listed $2,854,000,000 in assets and $3,223,000,000 in debts. (Solutia Bankruptcy News, Issue No. 15; Bankruptcy Creditors' Service, Inc., 215/945-7000) SPIEGEL INC: Agrees To Terminate Newport Centre Lease ----------------------------------------------------- Eddie Bauer, Inc., and Newport Centre, LLC, entered into a lease, dated August 24, 1998, covering certain premises commonly known as Unit 0A63, totaling 6,165 square feet, located at the Newport Centre Mall in Jersey City, New Jersey. Newport Centre has filed a prepetition claim against Eddie Bauer for $23,438 and a prepetition claim against Spiegel, Inc., for the same amount. The Debtors' records indicate that Eddie Bauer owes Newport Centre a prepetition amount equal to $26,695. The $3,257 increase results from year-end adjustments that have not yet been billed, but which Eddie Bauer calculates will be due and owing as prepetition amounts. Newport Centre's records, however, indicate that Eddie Bauer owes Newport Centre a prepetition amount equal to $29,447, with the $6,009 increase also resulting from year-end adjustments that have not yet been billed, but which Newport Centre calculates will be due and owing as prepetition amounts. Through March 8, 2004, Eddie Bauer is current on its postpetition rent obligations in accordance with Section 365(d)(3) of the Bankruptcy Code. Newport Centre and Eddie Bauer wish to terminate the Lease, effective as of March 8, 2004. In a Court-approved stipulation, the Parties agree that: (1) Newport Centre will waive the $29,447 prepetition claim against Eddie Bauer and will withdraw its claim against Spiegel on the bases that it was filed against the wrong debtor and is duplicative of the claim against Eddie Bauer. (2) Eddie Bauer will surrender the Premises to Newport Centre and as well as surrender all Eddie Bauer's right, title and interest in and to the Premises. Each of the parties acknowledges performance of all obligations of the other party under the Lease or otherwise in connection with the Premises, and agrees that the Lease and all rights and obligations of the parties under it will be deemed to have expired and terminated fully and completely, and that the Lease is null and void and of no further force and effect as of the Termination Date. (3) Eddie Bauer and Newport Centre release and discharge each other from all manner of claims relating to or arising out of the Lease or the Premises, including any lease rejection claims, administrative expense claims or claims relating to Eddie Bauer's prepetition or postpetition use and occupancy of the Premises, provided, however, that Newport Centre does not release and assert any claims against Eddie Bauer relating to claims asserted by third parties against the Newport Centre, and provided that Newport Centre will not seek to recover from Eddie Bauer any sums not covered by insurance. (4) To the extent that Newport Centre has filed or does file any proofs of claim with respect to the Leases or the Premises, Newport Centre consents to the expungement of these claims, with prejudice. Headquartered in Downers Grove, Illinois, Spiegel, Inc. -- http://www.spiegel.com/-- is a leading international general merchandise and specialty retailer that offers apparel, home furnishings and other merchandise through catalogs, e-commerce sites and approximately 560 retail stores. The Company filed for Chapter 11 protection on March 17, 2003 (Bankr. S.D.N.Y. Case No. 03-11540). James L. Garrity, Jr., Esq., and Marc B. Hankin, Esq., at Shearman & Sterling represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $1,737,474,862 in assets and 1,706,761,176 in debts. (Spiegel Bankruptcy News, Issue No. 24; Bankruptcy Creditors' Service, Inc., 215/945-7000) STEAKHOUSE: Reorganized Restaurant Operator Posts Q1 Losses ----------------------------------------------------------- Steakhouse Partners, Inc. (Pink Sheets: STKP) announced financial results for the first quarter ended March 30, 2004. The results for the period include revenues and losses associated with four restaurants, which were sold during the period as a part of the Company's emergence from bankruptcy on December 31, 2003, which have been disclosed separately in the financial statements. The revenues for the first quarter of 2004 including all stores were approximately $14.2 million. Normal comparisons cannot be readily made between quarters (2004 versus 2003), as the Company disposed of 20 units between the end of the first quarter of 2003 and the end of the first quarter of 2004. The 25 core restaurants held by Steakhouse Partners had sales of approximately $13.6 million for the first quarter, a comparable increase of 4.3% over same store sales from the previous year's first quarter. The gross margin generated by the core units increased to 10.5%, an increase of 28% over the same stores in the first quarter of 2003. The net loss for the first quarter, including the revenues and losses of the disposed restaurants was $113,227 or ($.02) per share. Adjusting for discontinued units (and two prior period, non-recurring adjustments of $134,706), the results of the core restaurants would have reported net earnings of slightly more than $.06 per share. Chairman and CEO A. Stone Douglass said, "Our company and its almost 1700 employees are pleased to finally leave behind the almost two year reorganization process. The disposal of the last four restaurants as a part of our emergence from bankruptcy reorganization will allow Steakhouse Partners to focus on its basic business and allow for meaningful quarterly comparisons in the future." Mr. Douglass continued, "Our profitable core units achieved positive same store sales increases for the first time in over five years. We are proud of the results our core restaurants achieved in our first quarter after reorganization. These results were realized in spite of the daily challenges facing our business, such as increased food, labor and insurance costs." About Steakhouse Partners, Inc. Steakhouse Partners, Inc. owns and operates 25 steakhouse full- service restaurants located in 8 states. The restaurants specialize in complete steak and prime rib meals, and also offer fresh fish and other lunch and dinner dishes. The Company serves approximately 3 million meals annually and operates principally under the brand names of Hungry Hunter, Hunter Steakhouse, Mountain Jack's and Carvers. Steakhouse Partners emerged from bankruptcy on December 31, 2003. * * * As previously reported, the Company emerged from bankruptcy on December 31, 2003 pursuant to a plan of reorganization approved by order of the United Stated Bankruptcy Court for the Central District in California -- Riverside Division. As a result of the Plan of Reorganization, all shares of the Company's common stock, preferred stock, stock options and warrants outstanding as of December 31, 2003 were cancelled and no longer exist. On March 22, 2004, 4,500,000 shares of the Company's "new" common stock were issued in connection with the Company's emergence from bankruptcy. As of the date hereof, the only validly issued and outstanding shares of the Company's common stock are those, which have been issued by the Company since March 22, 2004 and trade under the symbol "STKP.PK". Steakhouse Partners filed for Chapter 11 protection on February 15, 2002, in the U.S. Bankruptcy Court for the Central District of California, Riverside (Bankr. Case No. 02-12648). TRICO MARINE: Missed Interest Payment Prompts S&P's D Ratings ------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit and senior unsecured debt ratings on Trico Marine Services Inc. to 'D' and removed the ratings from CreditWatch with negative implications. Houma, Lousiana-based Trico has about $400 million of debt. "The rating action follows the failure of Trico to make the May 15, 2004 interest payment due on its $250 million senior unsecured notes due 2012," said Standard & Poor's credit analyst Paul B. Harvey. In its May 10 announcement, Trico said it planned to use the 30- day grace period provided by the notes to continue the study of strategic alternatives for the company, including the possible restructuring or refinancing of the senior notes. If Trico makes the interest payment within the grace period, Standard & Poor's would reevaluate its ratings and outlook on the company at that time. UNUMPROVIDENT CORP: S&P Rates $300MM 8.25% Senior Debt at BB+ ------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BB+' senior debt rating to UnumProvident Corp.'s (NYSE:UNM) $300 million, 8.25% adjustable conversion rate equity security units. The equity units consist of a stock purchase contract and a senior note. The notes mature in May 2009, two years following the mandatory equity purchase. The offering follows a significant reinsurance transaction, which will eliminate some of the downside exposure on the company's closed block of older individual disability insurance business. The proceeds of the issuance are expected to be used to fund the cost of this reinsurance transaction, reduce holding-company debt, and increase liquidity. "The rating reflects concerns about the company's risk controls and valuation practices, given significant reported earnings volatility and reserve charges over the last several quarters," noted Standard & Poor's credit analyst Rodney A. Clark. "Somewhat offsetting these factors are strong capital adequacy following several recent capital initiatives, substantial scale and market penetration in the group and individual disability insurance areas, and an improved investment risk profile." Given that a portion of the proceeds will be used to repay debt, this issue will only modestly increase financial leverage, which should remain less than 45% (excluding FAS 115 and goodwill). Fixed-charge coverage is expected to improve to about 5x by 2005. Pretax operating margins for full-year 2004 are expected to be about 10% before one-time items, with modestly negative GAAP net income for the full year, including special charges. VITAL BASICS: Gets Nod to Retain Marcus Clegg as Attorneys ---------------------------------------------------------- Vital Basics, Inc., sought and obtained approval from the U.S. Bankruptcy Court for the District of Maine to employ and retain Marcus, Clegg & Mistretta, P.A. as its bankruptcy attorneys in its chapter 11 proceeding. The Debtors expect Marcus Clegg to render services including: (a) analysis of the Debtor's financial situation and advice and assistance to the Debtor in determining whether to file a petition under Chapter 11 of the Code; (b) preparation and filing of the Debtor's Petition, Schedules, Statement Of Financial Affairs, amendments to the foregoing, and all other documents and pleadings required by this Court, the Bankruptcy Code, the Federal Rules of Bankruptcy Procedure and/or the Local Rules of this Court; (c) representation of the Debtor at the first meeting of creditors and in response to individual creditor inquiries; (d) representation of the Debtor in the purchase and sale of any of its assets; (e) development of the Debtor's plan of reorganization, analysis of the feasibility of any such plan, negotiation and drafting of the plan and any disclosure statement, response to objections to the adequacy of the disclosure statement and to confirmation of the plan; (f) review and evaluation of the Debtor's executory contracts and unexpired leases, and representation of the Debtor with respect to any motions to assume or reject such contracts and leases; (g) representation of the Debtor in connection with any adversary proceedings or automatic stay litigation which may be commenced in these proceedings; (h) analysis of the Debtor's cash flow and business operations, advice to the Debtor regarding its responsibilities as a debtor in possession and its post- petition financial operations, negotiation of any borrowing and cash collateral stipulations which may be required, furnishing of financial information to the United States Trustee's Office and to any committee appointed pursuant to Section 1102 of the Code; (i) review and analysis of various claims of the Debtor's creditors and the treatment of such claims; (j) representation of the Debtor regarding post-confirmation operations and consummation of any plan of reorganization; (k) representation of and advice to the Debtor with respect to general corporate law matters and general business law issues; (l) representation of the Debtor's wholly owned subsidiary, Vital Basics Media, Inc., in its simultaneously filed Chapter 11 proceedings; and (m) general representation of the Debtor and its subsidiary during these bankruptcy proceedings. The Debtor will employ Marcus Clegg under a $150,000 general retainer. The Debtor will pay the firm its current standard hourly rates. Specific hourly rates are however not disclosed. George J. Marcus, Esq., will lead the team in this engagement. Headquartered in Portland, Maine, Vital Basics, Inc. -- http://www.vitalbasics.com/-- is engaged in the business of Sales, through direct consumer marketing and at retail, of nutraceutical and related products throughout the United States and Canada. The Company filed for chapter 11 protection along with its debtor-affiliate, Vital Basics Media, Inc., on May 10, 2004 (Bankr. D. Maine Case No. 04-20734). When the Debtors filed for protection from their creditors, Vital Basics, Inc., listed $6,291,356 in total assets and $16,314,589 in total debts; Vital Basics Media, Inc., listed total assts of $378,308 and total debts of $179,242. VISTA GOLD: May Require More Capital to Meet Bond Obligation ------------------------------------------------------------ Vista Gold Corp. (Amex: VGZ; TSX) announced its financial results for the quarter ended March 31, 2004, as filed on May 17, 2004, with the US Securities and Exchange Commission in the Corporation's Quarterly Report on Form 10-Q. For the quarter ended March 31, 2004, Vista reported a consolidated net loss of US$1.1 million or US$0.08 per share compared to the quarter ended March 31, 2003, consolidated net loss of US$0.8 million or US$0.07 per share. Net cash used for operations in the quarter ended March 31, 2004, was US$0.4 million compared to US$0.7 million for the same period in 2003. Net cash used in investing activities in the quarter ended March 31, 2004, was US$2.4 million compared to US$0.8 million in the same period 2003. The increased spending in investing activities was primarily due to US$2.3 million paid into the reclamation bond account for the Hycroft mine in Nevada. The Corporation received net cash from financing activities of US$2.2 million in the quarter ended March 31, 2004, compared to US$3.3 million for the same period in 2003. The US$2.2 million proceeds in the 2004 period were all from the exercise of warrants. During the same period in 2003, the Corporation raised US$2.9 million in net proceeds from a private placement and US$0.4 million from the exercise of warrants. The financial position of the Corporation included current assets at March 31, 2004, of US$5.4 million compared to US$6.5 million at December 31, 2003, and total assets of US$27.5 million at March 31, 2004, compared to US$26.3 million at December 31, 2003. Current liabilities were US$0.4 million at March 31, 2004, compared to US$0.4 million at December 31, 2003. Total liabilities at March 31, 2004, were US$4.6 million compared to US$4.6 million at December 31, 2003, and shareholders' equity was US$22.9 million at March 31, 2004, compared to US$21.7 million at December 31, 2003. The Corporation's working capital as of March 31, 2004, was US$4.9 million compared to US$6.1 million at December 31, 2003. From March 31, 2004, through April 30, 2004, approximately US$628,443 has been obtained from the exercise of warrants issued during previous private placements. In order for the Corporation to continue its growth strategy and meet the final bond payment for its Hycroft mine in Nevada which is due in December 2004, it may be necessary for the Corporation to raise additional capital through private placements or sale or joint venture of certain of its assets. The annual general meeting of the Corporation's shareholders was held on May 10, 2004. Re-elected to the Board of Directors for a one-year term were John M. Clark, Ronald J. McGregor, C. Thomas Ogryzlo, Robert A. Quartermain and Michael B. Richings. PricewaterhouseCoopers was re-appointed independent auditor. Vista Gold Corp., based in Littleton, Colorado, evaluates and acquires gold projects with defined gold resources. Additional exploration and technical studies are undertaken to maximize the value of the projects for eventual development. The Corporation's holdings include the Maverick Springs, Mountain View, Hasbrouck, Three Hills, Hycroft and Wildcat projects in Nevada, the Long Valley project in California, the Yellow Pine project in Idaho, the Paredones Amarillos and Guadalupe de los Reyes projects in Mexico, and the Amayapampa project in Bolivia. As reported in the Troubled Company Reporter's April 1, 2004 edition, Vista Gold's Form 10-K as of December 31, 2003 contained a going concern qualification from the Corporation's independent auditors. WOMEN FIRST: Taps Latham & Watkins as Lead Bankruptcy Counsel ------------------------------------------------------------- Women First Healthcare, Inc., is asking the U.S. Bankruptcy Court for the District of Delaware for permission to employ Latham & Watkins LLP as lead bankruptcy counsel in its chapter 11 proceeding. Latham & Watkins has served as principal corporate, regulatory and securities counsel to the Debtor since approximately February 1998 and intends to continue representing the Debtor in its bankruptcy case. Latham & Watkins is expected to: a) advise the Debtor of its powers and duties as a debtor-in- possession in the continued operation of its business and management of its properties; b) assist, advise and represent the Debtor in its consultations with creditors regarding the administration of this case; c) provide assistance, advice and representation concerning the preparation and negotiation of a plan and disclosure statement and any asset sales or other transactions proposed in connection with this chapter 11 case; d) provide assistance, advice and representation concerning any investigation of the assets, liabilities and financial condition of the Debtor that may be required; e) represent the Debtor at hearings on matters pertaining to its affairs as a debtor-in-possession; f) prosecute and defend litigation matters and such other matters that might arise during and related to the chapter 11 case, except to the extent that the Debtor has employed or hereafter seek to employ other counsel with respect to such matters; g) provide counseling and representation with respect to the assumption or rejection of executory contracts and leases and other bankruptcy-related matters arising from this case; and h) perform such other legal services as may be necessary and appropriate for the efficient and economical administration of this chapter 11 case. Latham & Watkins will bill the Debtor its current hourly rates of: Professionals Billing Rates ------------- ------------- Partners $425 - $795 per hour Associates $205 - $520 per hour Law Clerks $205 - $265 per hour Paralegals $110 - 265 per hour The professionals expected to be most active in this retention are: Professionals Designation Billing Rate ------------- ----------- ------------ Robert A Klyman Partners $595 per hour Robert E. Burwell Partners $450 per hour Scott K. Milsten Associates $385 per hour Jonathan S. Shenson Associates $375 per hour Eric D. Brown Associates $315 per hour Jeffrey D. Diener Associates $295 per hour Jennifer L. Barry Associates $235 per hour Colleen M. Greenwood Paralegals $175 per hour Headquartered in San Diego, California, Women First HealthCare, Inc. -- http://www.womenfirst.com/-- is a specialty pharmaceutical company dedicated to improve the health and well-being of midlife women. The Company filed for chapter 11 protection on April 29, 2004 (Bankr. Del. Case No. 04-11278). Michael R. Nestor, Esq., and Sean Matthew Beach, Esq., at Young Conaway Stargatt & Taylor represent the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed $49,089,000 in total assets and $73,590,000 in total debts. * Elliott Management Commends 3rd Circuit's Recusal Decision ------------------------------------------------------------ Elliott Management Corporation issued a statement regarding the decision by the United States Court of Appeals for the Third Circuit recusing Judge Alfred Wolin in the Chapter 11 cases of Owens Corning, W.R. Grace & Co. and USG Corporation. Kensington International and Springfield Associates, which are managed by Elliott Management and are the largest creditors of Owens Corning, sought Judge Wolin's recusal in October 2003 upon discovering conflicts of interest among Judge Wolin's advisors. Kensington and Springfield's recusal motion was supported by the agent bank for a $1.6 billion lending syndicate. Parallel recusal motions were filed by USG, the official USG commercial creditors' committee, and the largest creditors of W.R. Grace. In its statement, Elliott Management said: "The Court of Appeals has upheld two fundamental precepts of the American judicial system -- transparency and neutrality. The decision will help to safeguard the public's confidence in our courts. The Court of Appeals found: "The record reveals that the Advisors' conflict, which cannot at this stage be disassociated from Judge Wolin as well as the ex parte meetings that the Advisors and Judge Wolin participated in, reveal an abuse of discretion that requires disqualification. If these circumstances were revealed to a reasonable person, it would undoubtedly lead to a perception that Judge Wolin's impartiality might be seriously questioned." "Far from creating delay, we anticipate that Judge Wolin's recusal will finally open the way for a fair and expeditious resolution to the Owens Corning case. The Company has been in bankruptcy for three and one-half years, yet no substantive decisions have been issued; no asbestos bar date has been set; no steps have been taken to litigate the value of the asbestos claims; and no steps have been taken to recover hundreds of millions of dollars management paid to tort lawyers on the eve of bankruptcy. We hope that a new District Judge, unburdened by conflicted advisors and mediators, will create the level playing field without which no fully consensual resolution will be reached. "Unfortunately, ethical lapses such as those uncovered in the Owens Corning, W.R. Grace and USG cases seem rampant in asbestos bankruptcy cases. The Court of Appeals' decision will hopefully encourage the media, other courts, and prosecutors to identify and pursue similar abuses in these and other cases. As Professor Lester Brickman of Cardozo Law School stated in a recent speech: "An increasing amount of asbestos claiming is now being channeled through the bankruptcy process where such proceedings are largely insulated from public view. The issues are complex and newspaper coverage fails to inform the public of what is occurring, which, in plainest terms, amounts to a perversion of legal process. ... No matter how inculpatory [the] evidence, the civil justice system is simply incapable of penetrating the inner sanctum of asbestos trusts. The only way that evidence could be accessed would be through investigative grand jury processes which will only come about if there is a public outcry.' "Often the victims of these improprieties are worthy asbestos victims themselves. For example, the bankruptcy reorganization in Combustion Engineering would permit asbestos claimants who are not sick to recover more than 95 cents on the dollar while paying many cancer victims far less. No wonder, then, that 291 cancer victims have appealed to the Third Circuit to block that reorganization. Similarly indefensible discrimination in the ACandS bankruptcy case led Bankruptcy Judge Newsome to reject a bankruptcy plan that favored some tort lawyers' clients over others'. As Judge Newsome stated: "...[I]t is fundamentally unfair that one claimant with non- symptomatic pleural plaques will be paid in full, while someone with mesothelioma [a deadly form of cancer] runs the substantial risk of receiving nothing. Both should be compensated based on the nature of their injuries, not based on the influence and cunning of their lawyers. The court is informed that other judges have confirmed plans with such discriminatory classifications. This judge cannot do so in good conscience." "Conduct that would normally be considered out of the question seems commonplace in asbestos bankruptcies. To give a few examples: * In five asbestos bankruptcies, not only did Judge Wolin appoint advisors with full knowledge of their conflicting interests, he failed to comply with well- established requirements for disclosing those conflicts. * In the W.R. Grace case, the company sought to appoint one of Judge Wolin's advisors to serve as a zealous advocate for future asbestos claimants. * In the Combustion Engineering bankruptcy, the company's parent agreed to pay a $20 million fee to its adversary, plaintiffs' attorney Joe Rice, for negotiating the reorganization plan. When the bankruptcy judge ruled that fee to be unethical unless Mr. Rice obtained his clients' consent, Mr. Rice instead appealed to Judge Wolin, who allowed the fee to be paid. * In the ACandS case, the company's claims-processing agent -- the firm that evaluates asbestos claims -- failed to disclose that it had subcontracted its services, and $2.4 million of its fees, to a company having the same address as Mr. Rice's firm and run by a paralegal purportedly on leave from Mr. Rice's firm. When this information came to light through court-ordered discovery, Judge Newsome found that 'willful concealment' had occurred, disqualified the claims-processing firms, and ordered them to disgorge their fees. "The asbestos crisis that is unique to America, and that has during the last four years invaded our bankruptcy process, lends credence to the adage that 'the only thing necessary for the triumph of evil is for good men to do nothing.' We are heartened by the principled stances of the Third Circuit and Judge Newsome, and hope that their unwillingness to let expediency overwhelm integrity will be followed by other judges." About Elliott Management Corporation Elliott Management Corporation manages Elliott Associates, L.P. and Elliott International, L.P., which have $4 billion of capital. Founded in 1977, Elliott Associates is one of the oldest hedge funds under continuous management. The Elliott funds' investors include large institutional investors, high-net-worth individuals and families, and employees of the firm. * Upcoming Meetings, Conferences and Seminars --------------------------------------------- May 13-14, 2004 BEARD GROUP & RENAISSANCE AMERICAN MANAGEMENT The First Annual Conference on Distressed Investing - Europe: Maximizing Profits in the European Distressed Debt Market Le Meridien Piccadilly Hotel - London, UK Contact: 1-800-726-2524; 903-592-5168; dhenderson@renaissanceamerican.com May 20-22, 2004 ALI-ABA Fundamentals of Bankruptcy Law Astor Crowne Plaza, New Orleans Contact: 1-800-CLE-NEWS; http://www.ali-aba.org June 2-5, 2004 AMERICAN BANKRUPTCY INSTITUTE Central States Bankruptcy Workshop Grand Traverse Resort, Traverse City, MI Contact: 1-703-739-0800 or http://www.abiworld.org June 10-12, 2004 ALI-ABA Chapter 11 Business Reorganizations Omni Hotel, San Francisco Contact: 1-800-CLE-NEWS; http://www.ali-aba.org June 14-15, 2004 TURNAROUND MANAGEMENT ASSOCIATION 2004 Advanced Education Workshop Toronto Univesity, Toronto Canada Contact: 312-578-6900 or www.turnaround.org June 24-25, 2004 BEARD GROUP & RENAISSANCE AMERICAN MANAGEMENT The Seventh Annual Conference on Corporate Reorganizations Successful Strategies for Restructuring Troubled Companies The Millennium Knickerbocker Hotel - Chicago Contact: 1-800-726-2524; 903-592-5168; dhenderson@renaissanceamerican.com June 24-26,2004 AMERICAN BANKRUPTCY INSTITUTE Hawaii Bankruptcy Workshop Hyatt Regency Kauai, Kauai, Hawaii Contact: 1-703-739-0800 or http://www.abiworld.org July 15-18, 2004 AMERICAN BANKRUPTCY INSTITUTE The Mount Washington Hotel Bretton Woods, NH Contact: 1-703-739-0800 or http://www.abiworld.org July 28-31, 2004 AMERICAN BANKRUPTCY INSTITUTE Southeast Bankruptcy Workshop The Ritz-Carlton Reynolds Plantation, Lake Oconee, GA Contact: 1-703-739-0800 or http://www.abiworld.org September 18-21, 2004 AMERICAN BANKRUPTCY INSTITUTE Southwest Bankruptcy Conference The Bellagio, Las Vegas, NV Contact: 1-703-739-0800 or http://www.abiworld.org October 9-10, 2004 INTERNATIONAL WOMEN'S INSOLVENCY & RESTRUCTURING CONFEDERATION IWIRC Annual Fall Conference Nashville, TN Contact: 1-703-449-1316 or www.iwirc.com October 10-13, 2004 NATIONAL CONFERENCE OF BANKRUPTCY JUDGES Seventy Seventh Annual Meeting Nashville, TN Contact: http://www.ncbj.org/ October 15-18, 2004 TURNAROUND MANAGEMENT ASSOCIATION 2004 Annual Convention Marriott Marquis, New York City Contact: 312-578-6900 or www.turnaround.org November 29-30, 2004 BEARD GROUP & RENAISSANCE AMERICAN MANAGEMENT The Eleventh Annual Conference on Distressed Investing Maximizing Profits in the Distressed Debt Market The Plaza Hotel - New York City Contact: 1-800-726-2524; 903-592-5168; dhenderson@renaissanceamerican.com December 2-4, 2004 AMERICAN BANKRUPTCY INSTITUTE Winter Leadership Conference Marriott's Camelback Inn, Scottsdale, AZ Contact: 1-703-739-0800 or http://www.abiworld.org March 9-12, 2005 TURNAROUND MANAGEMENT ASSOCIATION 2005 Spring Conference JW Marriott Desert Ridge, Phoenix, AZ Contact: 312-578-6900 or www.turnaround.org April 28- May 1, 2005 AMERICAN BANKRUPTCY INSTITUTE Annual Spring Meeting J.W. Marriot, Washington, DC Contact: 1-703-739-0800 or http://www.abiworld.org June 2-4, 2005 ALI-ABA Partnerships, LLCs, and LLPs: Uniform Acts, Taxation, Drafting, Securities and Bankruptcy Omni Hotel, San Francisco Contact: 1-800-CLE-NEWS; http://www.ali-aba.org July 14 -17, 2005 AMERICAN BANKRUPTCY INSTITUTE Ocean Edge Resort, Brewster, MA Contact: 1-703-739-0800 or http://www.abiworld.org July 27- 30, 2005 AMERICAN BANKRUPTCY INSTITUTE Southeast Bankruptcy Workshop Kiawah Island Resort and Spa, Kiawah Island, SC Contact: 1-703-739-0800 or http://www.abiworld.org October 19-23, 2005 TURNAROUND MANAGEMENT ASSOCIATION 2005 Annual Convention Chicago Hilton & Towers, Chicago Contact: 312-578-6900 or www.turnaround.org November 2-5, 2005 NATIONAL CONFERENCE OF BANKRUPTCY JUDGES Seventy Eighth Annual Meeting San Antonio, TX Contact: http://www.ncbj.org/ December 1-3, 2005 AMERICAN BANKRUPTCY INSTITUTE Winter Leadership Conference Hyatt Grand Champions Resort, Indian Wells, CA Contact: 1-703-739-0800 or http://www.abiworld.org The Meetings, Conferences and Seminars column appears in the Troubled Company Reporter each Wednesday. Submissions via e-mail to conferences@bankrupt.com are encouraged. ********* 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, Rizande B. Delos Santos, Paulo Jose A. Solana, Jazel P. Laureno, Aileen M. Quijano and Peter A. Chapman, Editors. Copyright 2004. All rights reserved. ISSN: 1520-9474. 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