/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/040528.mbx T R O U B L E D C O M P A N Y R E P O R T E R Friday, May 28, 2004, Vol. 8, No. 105 Headlines ADELPHIA COMMS: Wants To Reject Three Leases & Abandon Property AIR CANADA: Liquidity Solutions Soliciting to Purchase Claims AMERCO: Declares Quarterly Pref. Stock Dividend Payable June 1 AMERICAN BUILDERS: S&P Withdraws Ratings After Notes Redemption AMERICAN PLUMBING: Plan Confirmation Hearing Pushed to June 16 AUBURN FOUNDRY: Prepared to File Chapter 11 Plan by June 7 AXIA INC: S&P Rates Corporate & Bank Debt at B with Stable Outlook BAXTER BEVERAGE: Case Summary & 4 Largest Unsecured Creditors COVANTA: Inks Stipulation Resolving Union County Cure Disputes CREDIT SUISSE: Fitch Affirms Low Ratings on 6 Ser. 2000-C1 Classes CUMMINS: Fitch Affirms Low-B Ratings & Says Outlook is Stable DONINI INC: CEO Peter Deros Discusses Acquisition Strategy DYNEGY HOLDINGS: S&P Rates $1.3 Billion Credit Facility at BB- DYNEGY HOLDINGS: Fitch Gives B+ Rating to $1.3B Credit Facilities EES COKE: S&P Ups Senior Debt Rating to B+ over U.S. Steel Deal EL CAPITAN: Explores Possible Mining & Marketing of Iron Ore ENRON: Wants Court Nod on Transwestern Pipeline Settlement Pact EXIDE: Stamford Asks Court to Deem $977,809 Claim Timely Filed FEDERAL-MOGUL: Reconciliation Efforts Yield $4.4MM Claim Reduction FOSTER WHEELER: Names Stephen J. Davies as UK Unit Chairman & CEO FOSTER WHEELER: Subsidiary Wins FEED Contract From Saudi Aramco FRIEDMAN INC: Hiring Kroll Zolfo as Restructuring Advisors GENESCO INC: Reports Improved First Quarter Results GOODYEAR TIRE: Richard Kramer Replaces Robert Tieken as CFO HAYNES: Files Reorganization Plan & Disclosure Statement in Ind. HELLER FINANCIAL: Fitch Affirms Three 2000-PH1 Ratings at Low-Bs HORIZON LINES: S&P Places Low-B Ratings on Credit Watch Negative I.W. INDUSTRIES: Has Until May 30 to Decide on Unexpired Leases J.P. MORGAN: S&P Assigns Prelim. Ratings to 2004-PNC1 Certificates JP MORGAN: Fitch Affirms 1999-C7 Classes F,G & H Ratings at Low-Bs KAISER ALUMINUM: Modifies USWA and IAM Settlement Agreements KODIAK UTILITY: Case Summary & 20 Largest Unsecured Creditors MARY HOLMES COLLEGE: Case Summary & Largest Unsecured Creditors MATRIA HEALTHCARE: Extends 11% Sr. Debt Tender Offer to July 2 MCMC INVESTMENTS: Case Summary & 10 Largest Unsecured Creditors MEDIABAY: Converts $4.3MM Debt & Accrued Interest to Pref. Stock METALDYNE: Lenders Agree to Waive Reporting Default through Sept. METROMEDIA INTL: Files 2003 Annual Report on Form 10-K with SEC MIRANT CORPORATION: Wants To Reject TransCanada Gas Contracts NATIONAL BENEVOLENT: Committee Gets Nod to Hire Houlihan Lokey NAT'L CENTURY: Amedisys Wants Adequate Protection of Setoff Rights NES RENTALS: Names Andrew Studdert as New President & CEO NORTEL NETWORKS: Appoints Hon. John Manley to Board of Directors ONE PRICE: Gets Court Nod to Hire Grant Thornton as Accountant OPRYLAND HOTEL: S&P Upgrades Five Series 2001-OPRY Class Ratings OREGON STEEL: S&P Revises Outlook to Stable from Negative PACIFIC GAS: Files Cost of Capital Application with CPUC PARMALAT: Commissioner Bondi to File Restructuring Plan by Monday PERFORMANCE MATERIALS: Court Says Only Some Causes of Action Sold PILLOWTEX CORPORATION: Opts To Procure Replacement D&O Policy RCN CORPORATION: Files for Chapter 11 Protection in S.D. New York RCN CORPORATION: Case Summary & 17 Largest Unsecured Creditors RELIANCE GROUP: Still Unable To File Financial Reports With SEC SAFETY-KLEEN: Trustee Releases First Quarter 2004 Report SOUTHWEST RECREATIONAL: Has Until July 12 to Decide on Leases SPECTAGUARD: Barton Acquisition Plan Spurs S&P's Negative Watch SPIEGEL GROUP: Outlines Spiegel Catalog Sale Bidding Protocol STELCO: Liquidity Solutions Soliciting to Purchase Claims STRUCTURED ASSET: Fitch Upgrades 5 & Affirms 13 RMBS Ratings SUGARLOAF BREWING: Case Summary & 21 Largest Unsecured Creditors SUPERMARKET INC: Case Summary & 20 Largest Unsecured Creditors TRAVEL PLAZA: Wants Until Sept. 29 to File a Chapter 11 Plan UNITED AIRLINES: California Statewide Wants to Exercise Set-Off US AIRWAYS: Elects R. Stanley to Board & Consolidates Finance Dept USL FINANCIALS: Case Summary & 15 Largest Unsecured Creditors U.S. ONCOLOGY: S&P Lowers Corporate Credit Rating to B+ from BB US UNWIRED: Secures Requisite Consents to Amend 13-3/8% Sr. Notes U.S. WIRELESS: Sells Synapse Platform to TNS Inc. WESTAFF INC: Reports Increased Revenues for Second Fiscal Quarter WORLDCOM INC: Enters Into Choice One Settlement Agreement * Gardere Wynne Listed Among Top Business Law Firms in Texas * Deloitte Consulting to Expand Strategy & Operations Practice * John Manley to Air Restructuring Views at June 15 TMA Workshop * BOOK REVIEW: The Story Of The Bank Of America ********* ADELPHIA COMMS: Wants To Reject Three Leases & Abandon Property --------------------------------------------------------------- The Adelphia Communications (ACOM) Debtors seek the Court's authority to reject three unexpired non-residential real property leases for premises located at: (1) 45745 Nokes Boulevard, in Sterling, Virginia, 20166; (2) 1815 Centinella Avenue, in Santa Monica, California, 90404; and (3) Anthony Creek, in West Virginia. The Sterling Lease, dated September 11, 2000, is scheduled to expire by its terms on September 10, 2010. Pursuant to the Sterling Lease, the ACOM Debtors rent a 27,258-square foot office building. The ACOM Debtors determined that they no longer need a large amount of space, yet they have been unable to secure a lease with the landlord for less than the full amount of space in the building. They determined that they could lease the actual amount of space needed, around 6,000 square feet, at a different location for a substantially lower cost. The Santa Monica Lease, dated May 1, 2001, is scheduled to expire by its terms on April 30, 2011. The ACOM Debtors no longer need the premises governed by the Santa Monica Lease because the office and warehouse facilities, which formerly occupied the space, are being relocated to existing ACOM locations, which have sufficient vacancy to accommodate these facilities. In addition, rejecting the Santa Monica Lease will result in savings totaling $338,000 to the ACOM Debtors. The Vaughn Lease, dated November 1, 1998, is scheduled to expire by its terms on October 31, 1998. Pursuant to the Vaughn Lease, the ACOM Debtors lease real property upon which headend equipment receiving and transmitting cable signals are located. As a result of the consolidation of their headend equipment, the ACOM Debtors removed all equipment from the leased premises and determined that the Vaughn Lease is no longer required. Moreover, rejecting the Vaughn Lease will result in $1,900 savings to the ACOM Debtors. The ACOM Debtors believe that the Leases are at or above market and, therefore, would be of no value to the estate through subleasing, selling, or otherwise. Thus, the ACOM Debtors seek to reject the Leases promptly to minimize any further administrative expenses that may arise. The ACOM Debtors also seek the Court's authority to abandon personal property associated with any of the Leases that is of inconsequential value or is burdensome to their estates. The ACOM Debtors believe that the Personal Property has no fair market value for sale or other disposition and the cost of removing the Personal Property will exceed the value of the property. (Adelphia Bankruptcy News, Issue No. 59; Bankruptcy Creditors' Service, Inc., 215/945-7000) AIR CANADA: Liquidity Solutions Soliciting to Purchase Claims ------------------------------------------------------------- Liquidity Solutions, Inc., wants to buy claims against Air Canada from creditors caught-up in the carrier's CCAA restructuring. "Our firm represents investors who purchase receivables in bankruptcy [and] receivership situations," LSI says in a recent letter circulated to troubled company professionals, "and we would like to indicate our interest in your client's claim(s) against [Air Canada]." For additional information about LSI's offer and payment terms, contact: Mike Richards LIQUIDITY SOLUTIONS INC. One University Plaza, Suite 518 Hackensack, NJ 07601 Tel: (201) 968-0001 Fax: (201) 968-0010 mrichards@liquiditysolutions.com Headquartered in Saint-Laurent, Quebec Canada, Air Canada -- http://www.aircanada.ca/-- represents Canada's only major domestic and international network airline, providing scheduled and charter air transportation for passengers and cargo. The Company filed a CCAA petition on April 1, 2003 (Ontario Superior Court of Justice, Case No. 03-4932) and a 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 their creditors, they listed C$7,816,000,000 in assets and C$9,704,000,000 in liabilities. AMERCO: Declares Quarterly Pref. Stock Dividend Payable June 1 -------------------------------------------------------------- On May 5, 2004, the Board of Directors of AMERCO, the holding company for U-Haul International, Inc., and other companies, declared a regular quarterly cash dividend of $0.53125 per share on the Company's Series A, 8 1/2 percent Preferred Stock (NYSE: A0+A). The dividend will be payable June 1, 2004 to holders of record on May 17, 2004. For more information about AMERCO, visit http://www.amerco.com/ Headquartered in Reno, Nevada, AMERCO's principal operation is U- Haul International, renting its fleet of 96,000 trucks, 87,000 trailers, and 20,000 tow dollies to do-it-yourself movers through over 1,000 company-owned centers and 15,000 independent dealers located throughout the United States and Canada. The Company filed for chapter 11 protection on June 20, 2003 (Bankr. Nev. Case No. 03-52103). Craig D. Hansen, Esq., Jordan A. Kroop, Esq., Thomas J. Salerno, Esq., and Carey L. Herbert, Esq., at Squire, Sanders & Dempsey LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $1,042,777,000 in total assets and $884,062,000 in liabilities. (AMERCO Bankruptcy News, Issue No. 27; Bankruptcy Creditors' Service, Inc., 215/945-7000) AMERICAN BUILDERS: S&P Withdraws Ratings After Notes Redemption --------------------------------------------------------------- Standard & Poor's Rating Services said it withdrew its 'BB-' corporate credit rating and 'B' senior subordinated debt rating on American Builders & Contractors Supply Co. Inc. (ABC) at the company's request. The company requested that the ratings be withdrawn following its May 17, 2004, redemption of all outstanding 10.625% senior subordinated notes maturing on May 15, 2007. The outstanding principal balance of $63.6 million was redeemed for $64.8 million, plus accrued interest, with funds provided under an existing unrated bank financing agreement. Privately-owned Beloit, Wis.-based ABC is the largest wholesale distributor of roofing products and one of the largest distributors of vinyl siding in the U.S., primarily serving small and midsize contractors supplying residential (nearly two-thirds of total sales) and commercial markets. AMERICAN PLUMBING: Plan Confirmation Hearing Pushed to June 16 -------------------------------------------------------------- American Plumbing & Mechanical, Inc. (AMPAM) and the Creditors Committee have jointly agreed to a brief continuance of the plan confirmation hearing in an effort to reach agreement concerning a consensual plan of reorganization. The hearing has been rescheduled for June 16, 17, and 18, 2004. AMPAM filed its Joint Plan of Reorganization and Disclosure Statement with the United States Bankruptcy Court for the Western District of Texas, San Antonio Division on April 16, 2004. Robert Christianson, AMPAM's Chairman of the Board and Chief Executive Officer said, "We view this as a positive development in our efforts to reorganize. We have always been confident that a consensual plan offers the best opportunity to deliver the highest possible value to our economic stakeholders and to continue the highest level of service to our customers in our core businesses." About American Plumbing & Mechanical, Inc. Headquartered in Round Rock, Texas, American Plumbing & Mechanical, Inc. and its affiliates provide plumbing, heating, ventilation and air conditioning contracting services to commercial industries and single family and multifamily housing markets. The Company filed for chapter 11 protection on October 13, 2003 (Bankr. W.D. Tex. Case No. 03-55789). Demetra L. Liggins, Esq., at Winstead Sechrest & Minick P.C., represents the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $282,456,000 in total assets and $256,696,000 in total debts. Additional information and press releases about AMPAM are available on the Company's web site at http://www.ampam.com/ AUBURN FOUNDRY: Prepared to File Chapter 11 Plan by June 7 ---------------------------------------------------------- Auburn Foundry, Inc., tells the U.S. Bankruptcy Court for the Northern District of Indiana, Fort Wayne Division, that it is currently active in seeking support for a consensual chapter 11 Plan and anticipates filing that Plan on or before June 7, 2004. To allow the company's restructuring to proceed without delay and distraction, the Company asks the Court for a further extension of its exclusive periods afforded by 11 U.S.C. Sec. 1121. The Debtor asks the Court to extend, until July 22, 2004, its exclusive right to file a chapter 11 plan and asks for a concomitant extension, through August 22, 2004, to solicit acceptances of its plan from its creditors. Headquartered in Auburn, Indiana, Auburn Foundry, Inc. -- http://www.auburnfoundry.com/-- produces iron castings for the automotive industry and automotive aftermarket industry. The Company filed for chapter 11 protection on February 8, 2004 (Bankr. N.D. Ind. Case No. 04-10427). John R. Burns (DM), Esq., and Mark A. Werling (TW), Esq., at Baker & Daniels represent 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. AXIA INC: S&P Rates Corporate & Bank Debt at B with Stable Outlook ------------------------------------------------------------------ Standard & Poor's Ratings Services assigned its 'B' corporate credit rating to industrial products manufacturer AXIA Inc. The outlook is stable. At the same time, Standard & Poor's assigned its 'B' bank loan rating and its recovery rating of '4' to AXIA's proposed $150 million senior secured credit facility, based on preliminary terms and conditions. "The ratings on AXIA reflect its modest financial base, as evidenced by revenues of less than $200 million, a very aggressive financial policy, weak credit protection measures, thin free cash flow, some customer concentration, and exposure to rising interest rates," said Standard & Poor's credit analyst Dominick D'Ascoli. These negatives overshadow defensible positions in several niche product lines, low-cost operations, and good operating margins. The 'B' rating is the same as the corporate credit rating; this and the '4' recovery rating indicate that lenders can expect marginal recovery of principal (25%-50%) in the event of a default. Proceeds from the facilities, a $65 million privately placed subordinated note, and $20 million of 13.5% pay-in-kind notes at a holding company, Axia Holdings Inc., will be used to refinance existing debt of $134 million and pay a $75 million dividend to shareholder Cortec Group. Privately owned Houston, Texas-based AXIA manufactures automatic taping and finishing (ATF) tools for drywall joints through its Ames business unit (41% of 2003 sales), specialty wire products (37%) and bag closing products and flexible conveyors (22%). This product diversity imparts some stability to overall sales and earnings, as each of the businesses is affected by different demand factors. BAXTER BEVERAGE: Case Summary & 4 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Baxter Beverage, LLC 105 West Main Bozeman, Montana 59715 Bankruptcy Case No.: 04-61504 Chapter 11 Petition Date: May 17, 2004 Court: District of Montana (Butte) Judge: Ralph B. Kirscher Debtor's Counsel: James J. Screnar, Esq. Kommers Law Firm 517 South 22nd Avenue, Suite 5 Bozeman, MT 59718 Tel: 406-587-7717 Fax: 406-587-9461 Estimated Assets: $0 to $50,000 Estimated Debts: $1 Million to $10 Million Debtor's 4 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Security $17,929 Internal Revenue Service Unknown Montana Department of Revenue Unknown United States Bankruptcy Trustee Unknown COVANTA: Inks Stipulation Resolving Union County Cure Disputes -------------------------------------------------------------- Debtor Covanta Union, Inc., operates and maintains a waste-to- energy facility in Rahway, New Jersey. As part of its operation, Covanta Union entered into an Amended and Restated Waste Disposal Agreement, dated February 15, 1998, with the Union County Utilities Authority, which requires Covanta Union to accept certain quantities of solid waste from or on behalf of the Authority for processing at the Facility. The Authority has secured rights to a certain landfill located in Pennsylvania to provide for the disposal of residual waste that Covanta Union generates from operating the Facility. The Waste Disposal Agreement was further amended in June 1998 and July 2003. Covanta Union and the Authority also entered into an Amended and Restated Residue Disposal Agreement, dated February 15, 1998, which required Covanta Union to dispose of Residual Waste in the Landfill and pay the Authority a specified "Disposal Fee" that includes a per ton surcharge for bypass waste disposed of in the Landfill. The Residue Disposal Agreement was further amended and restated in June 1998. Effective July 2002, the State of Pennsylvania passed legislation imposing an additional fee on waste disposed of in municipal landfills located in Pennsylvania, including the Landfill. Under the Confirmed Covanta Second Reorganization Plan, the Debtors proposed to assume the Waste Disposal Agreement, the Residue Disposal Agreement, and other related agreements. The Debtors asserted that they were not in default of the Agreements and, thus, owed no cure amounts. The Authority, however, asserts that Covanta Union defaulted on its obligations under the Waste Disposal Agreement and the Residue Disposal Agreement by failing to pay $201,411 in bypass waste surcharges and $350,000 in Act 90 Fees. Covanta Union denies the allegations, arguing that the amounts, if owed at all, had not yet become due. To resolve their dispute, the parties stipulate that: (a) Covanta Union will pay to the Authority $201,411 reflecting the Bypass Waste Surcharges due. On a going forward basis, Covanta Union will pay the Bypass Waste Surcharges directly on the Authority's behalf; (b) Covanta Union will pay to the Authority $180,754, representing 51.64% -- i.e. 267,000/517,000 -- of the $350,000 of Act 90 Fees. All future Act 90 Fees or similar fees will be split and allocated 51.64% to Covanta Union and 48.36% to the Authority; (c) The Settlement Payments are agreed upon cure costs in connection with the Debtors' assumption of the Agreements; (d) The Debtors will assume the Agreements at the time the Authority receives the Settlement Payments; and (e) Upon the Authority's receipt of the Settlement Payments, the Authority's Objection to the Debtors' Statement of Cure Amount will be deemed withdrawn. The Court approves the parties' stipulation. 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. 57; Bankruptcy Creditors' Service, Inc., 215/945-7000) CREDIT SUISSE: Fitch Affirms Low Ratings on 6 Ser. 2000-C1 Classes ------------------------------------------------------------------ Fitch Ratings upgrades Credit Suisse First Boston (CSFB) Mortgage Securities Corp.'s commercial mortgage pass-through certificates, series 2000-C1, as follows: --$50.1 million class B to 'AA+' from 'AA'. In addition, Fitch affirms the following classes: --$138.8 million class A-1 'AAA'; --$677.5 million class A-2 'AAA'; --Interest-only class A-X 'AAA'; --$44.5 million class C 'A'; --$15.3 million class D 'A-'; --$29.1 million class E 'BBB'; --$13.9 million class F 'BBB-'; --$30.6 million class G 'BB+'; --$12.5 million class H 'BB'; --$11.1 million class J 'BB-'; --$11.1 million class K 'B+'; --$9.7 million class L 'B'. Class M remains at 'CCC'. The $15.1 million class N is not rated by Fitch. The upgrade reflects both the increased credit enhancement levels from one loan payoff and amortization, and the subordination levels of similar deals issued today. As of the May 2004 distribution date, the pool's aggregate certificate balance has decreased 4.1% to $1.06 billion from $1.11 billion at issuance. Of the original 211 loans, 210 remain outstanding in the pool. Fitch reviewed the credit assessed loan in the pool, 1211 Avenue of the Americas. This loan maintains its investment grade credit assessment. 1211 Avenue of the Americas is secured by a 44-story, 1.84- million-square-foot office building in midtown Manhattan. The weighted average debt service coverage ratio, based upon year-end 2003 operating results, improved to 1.60 times (x) versus 1.39x at issuance. The property is over 99% leased with 77% of the space leased to long-term credit tenants. There are seven loans (3.9%) in special servicing. The largest loan in special servicing (1.1%) is an 182,159 square feet (SF) office property located in Littleton, MA. The second largest loan in special servicing (1%) is secured by a 199-room hotel property in Williamsburg, VA. Both properties are currently real estate owned (REO) and are being marketed for sale by the special servicer. Some losses are possible upon disposition of these assets. CUMMINS: Fitch Affirms Low-B Ratings & Says Outlook is Stable ------------------------------------------------------------- Fitch Ratings affirms the senior secured debt rating of Cummins Inc. at 'BB+', the senior unsecured rating at 'BB-', and the preferred rating at 'B+'. The Rating Outlook has been revised to Stable from Negative, reflecting positive developments related to both economic fundamentals and Cummins' competitive position. Concerns remain surrounding the ability of Cummins to restore profit margins and cash flow generation to historic levels, especially in the face of unrelenting technological competition being driven by changes mandated by the Environmental Protection Agency (EPA). Additional concerns include the impact of continuing industry vertical integration in the vital Class 8 truck market and the impact of pensions/OPEB on the business. Over the last year economic trends have improved substantially. The impact of this is being felt through most of Cummins' end markets with Q1 year-over-year sales up 40% in the Engine segment, 38% in the Power Generation segment, 37% in the Filtration/Other segment, and 26% in the International Distributor segment. These higher sales figures, when combined with cost cutting and efficiency efforts, resulted in a substantial improvement in 1st quarter income and cash-flow ($33 million in Q1 2004 net income vs. a loss of $31 in Q1 2003). Expectations for the balance of the calendar year are up dramatically, albeit less than Q1 rates due to factors to include the impact of the 2002 engine pre-buy episode. Expectations are for sales to be up 10%-15% while income is projected to likely triple. These projections are based not only upon the improving revenue picture, but also better cost efficiency due to improving economies of scale and general cost cutting. The other major positive factor impacting the change in outlook is a clearer picture surrounding Cummins' competitive position in the vital Class 8 truck market. Originally Fitch was concerned that the 2004 emissions cycle would like present competitive challenges to Cummins as it struggled to fight off competitor Caterpillar (CAT). Over a year after the initial implementation, it appears that Cummins is holding its own against CAT and its ACERT technology. It appears that customers have accepted Cummins' as a capable engine solution. This is likely based not only upon Cummins' specific implementation of EGR, but also upon the fact that the remainder of the industry (with the exception of CAT) has also adopted EGR solutions. This acceptance, along with receding concerns over the transition path from 2004 to 2007 emissions standards, has lessened Fitch's concerns over the near to medium term competitive position of Cummins' heavy duty engine business. Another major concern impacting Cummins' position in Class 8 trucks was what appeared to be the prevailing trend towards vertical integration. This trend, based upon the European Class 8 business model, saw companies like DaimlerChrysler (DCX) acquire engine provider Detroit Diesel. This trend, had it extended to its logical conclusion, would have likely squeezed out a smaller independent supplier like Cummins. Several years later it now appears this trend has mostly played itself out with both Cummins and Caterpillar likely being options for non-integrated OEMs such as PACCAR and Navistar. Cummins' long term supply agreements with Volvo (a vertically integrated player), PACCAR, and Navistar likely provide at least a minimum amount of likely business going forward, especially given that all indications are that these customers are quite happy with Cummins latest engines. Beyond Class 8 trucks, Cummins continues to improve with special focus on the engines provided for recreational vehicles (RVs) and for the Dodge Ram truck. In the truck area Cummins stands to benefit from the increasing focus by DCX on the commercial segment of the Ram (where diesel engines are a key competitive issue). Potential business improvements could also be derived from aging population demographics in the U.S. which should support further RV volumes (boomers cruising through their retirements) and from the continuing potential for dieselization in the U.S. (beyond just pickup trucks). Longer term (likely beyond the 2007 emissions cycle) credit concerns continue to resolve around Cummins' technical position relative to competitors, especially CAT. Given the financial and technical strength of CAT, Cummins will have to keep its relative technology position through the upcoming emissions cycles. This will likely be challenging given Cummins' smaller size, weaker financial position (to include pension/OPEB obligations), and lack of comparable diversification (CAT is an OEM as well as a supplier). Near-term expectations are for credit metrics to remain relatively flat (12 month rolling interest coverage improved in Q1 vs. fiscal 2003 from 3.1 times [x] to 4.0x due to a substantial improvement in results versus prior year Q1). The major chance for substantial improvement in the near term will occur as Cummins finalizes its plan to pay down up to $225 million of debt. This debt pay down would be funded out of cash and expected free cash flow of at least $100 million. Any future rating action will be dependent upon Cummins' ability to maintain its competitive position while improving margins and free cash flow enabling it to substantially improve its credit metrics. DONINI INC: CEO Peter Deros Discusses Acquisition Strategy ---------------------------------------------------------- In a statement to shareholders, President and CEO Peter Deros of Donini, Inc. (OTCBB: DNNI) described his intentions to acquire small existing pizza and restaurant chains and convert them into Donini, Inc. restaurants as both the Pizza Donini and Donini Resto- Bar concepts. The Company believes that such acquisitions will decrease both start up costs, opening / launch times while speeding time to operational profitability. Initially, Donini, Inc. will target chains of 2 - 6 stores in size based upon location, customer profile, and locale of competitors. Previous to founding Pizza Donini Inc. in 1987, Mr. Deros was President and Chief Operating Officer of a highly successful public pizza chain operating under the "Mike's" banner. Under his leadership, the number of restaurants grew from 15 to 80 and total annual system sales for his chain grew from $5 million to more than $50 million. His executive team believes that other than major national and international chains, the Italian cuisine and pizza market is highly fragmented and dominated by 2 and 3 location 'mom and pop" establishments with no exit strategy and no real ability to control margins over time. "These same stores have reasonable customer loyalty, but no marketing budget or ability to quickly enhance, adjust or grow menu items to meet emerging customer trends, and when they do make the changes, it is typically at the expense of quality and consistency of their staple products," added Deros. "We will be able to offer these food service entrepreneurs liquidity through our publicly traded shares, consistency in product, stability of customer traffic, and a regional and national advertising campaign which will attract new customers to those locations once they have joined the Pizza Donini and Donini Resto-Bar family restaurants as either franchisees or new store managers." Deros believes that keeping owner / operators on after acquisition will allow Donini to maintain its neighborhood theme, a crucial ingredient to customer retention and loyalty. About the Company Pizza Donini -- whose February 29, 2004 balance sheet shows a total stockholders' equity deficit of $1,030,904 -- founded in 1987 has 29 franchised units and Company owned stores, has a business to business operation, marketing ingredients to other stores and operates a call center dedicated solely to supporting its own operations and that of it's franchisees. DYNEGY HOLDINGS: S&P Rates $1.3 Billion Credit Facility at BB- -------------------------------------------------------------- Standard & Poor's Ratings Services said that it assigned its 'BB-' rating to Dynegy Holdings Inc.'s (a subsidiary of Dynegy Inc.) new $1.3 billion senior secured credit facility. Standard & Poor's also assigned a recovery rating of '1' to the facility. The 'BB-' rating is two notches higher than the 'B' corporate credit rating on the company. Standard & Poor's determines that the collateral package indicates a strong likelihood of full recovery of principal in the event of a default or bankruptcy. The analysis assumes a bankruptcy court would accord priority to the senior lienholders in a bankruptcy. Standard & Poor's senior unsecured debt rating for Dynegy remains 'CCC+'. The outlook is negative. The bank facilities are guaranteed by Dynegy Inc. and substantially all of Dynegy Inc.'s direct and indirect subsidiaries, excluding Illinois Power Co., most foreign subsidiaries, and subsidiaries that are not able to be guarantors due to existing contractual or legal restrictions. Moreover, the bank facilities are collateralized by all of Dynegy Holdings' available assets, to the extent permitted by existing indentures at Dynegy Holdings. In a default or bankruptcy scenario, Standard & Poor's expects the value and quality of the collateral will provide a strong likelihood of full recovery of principal. The analysis assumes a bankruptcy court would accord priority to the senior lienholders in a bankruptcy. Unsecured senior lenders would be subordinated to secured lenders' claims on the assets. Therefore, given the value of the collateral relative to the credit facility and the strength of the lending documentation, the rating on the secured bank loan facility is two notches higher than the corporate credit rating. The ratings on Dynegy and its subsidiaries reflect the company's highly leveraged financial condition, the uncertain financial performance of its nonregulated merchant energy and midstream natural gas liquids businesses, and the consolidated creditworthiness of its own operations and those of its subsidiaries. The risks are partially offset by the generation portfolio's geographic and fuel diversity and the midstream unit's shift toward a predominantly percentage-of-proceeds and fee-based structure. Dynegy's nonregulated businesses operate in volatile price environments that make it difficult to accurately predict a stable cash flow stream. At year-end 2003, Dynegy's nonregulated generation business had interests in 30 in-service generating facilities. Currently, Dynegy owns or leases about 13,000 MW of generation capacity, including 3,800 MW of unregulated generation acquired from Illinova Corp., a second-tier holding company owned by Dynegy, which enhances Dynegy's commercial position in the Midwest. In 2003, this business's financial performance was affected by lower "spark spreads," defined as the relationship between prices for power and natural gas. Higher natural gas prices throughout the year reduced the margin that can be made on using natural gas- fired electricity generation. This phenomenon has continued in 2004, which depresses the cash flow of Dynegy's gas fired generation assets (about 10,000 MW of capacity). However, this is somewhat tempered by Dynegy's fleet of coal-fired generation that represents about 25% of total generation. Dynegy's critical mass in the gathering and processing business provides high cash flow potential, albeit at high risk due to the commodity price risk associated with absolute liquid prices. Dynegy's marketers offer multiple commodities and related services to customers enhancing the demand for Dynegy's processing, fractionation, and storage services. Dynegy is diverse, with ownership in 20 processing plants in Texas, Louisiana, and New Mexico. Moreover, there are substantial contractual arrangements between Dynegy and ChevronTexaco Corp. to support Dynegy's liquids operations for the long term. Dynegy has a definitive agreement to sell Illinois Power to Ameren Corp. The proposed transaction, if completed, is consistent with Dynegy's strategy to redefine its business into power generation and midstream activities. Also, the sale would reduce an existing obligation by eliminating an intercompany note between Illinova and Illinois Power, as well as the transfer of Illinois Power debt to Ameren. The terms of the deal include the assumption of $1.8 billion of Illinois Power debt by Ameren, the payment of $400 million in cash to Dynegy, along with $100 million held in escrow pending resolution of certain environmental items, and the elimination of a $2.3 billion intercompany note between Dynegy and Illinois Power, which would save Dynegy $170 million in annual interest expense. The intercompany note is related to the transfer of Illinois Power's generating assets that occurred after the companies merged. Dynegy could further improve its balance sheet by using the cash proceeds to pay down additional debt. Despite the potential benefit of this sale, Dynegy will still be burdened with a significant amount of debt leverage retained from its prior failed business strategy, which included energy trading and marketing and investments in telecommunications. Notably, the firm's business model is dependent on increasing power prices as a source of improved cash flow needed for debt reduction. Current ratings on Dynegy continue to reflect the challenges the firm faces regarding its future ability to access capital markets for debt refinancing, preserve an adequate liquidity position, and improve its highly levered balance sheet. Dynegy's expected credit-protection measures from the ongoing business lines and its financial health are commensurate with the 'B' corporate credit rating. In addition, Dynegy has taken concerted steps to bolster its financial profile and reduce its debt burden by divesting certain noncore assets, such as its U.S. communications unit. Dynegy's liquidity position is sufficient to meet working capital needs and other obligations. The firm's cash balance and available credit as of May 3, 2004 was about $1.3 billion. Capacity on the bank lines amounts to $1.1 billion, of which $213 million had been drawn in letters of credit as of May 3, 2004. Dynegy reduced its refinancing risk through a tender offer for debt issues maturing in 2005 and 2006 and an exchange for the series B preferred stock held by ChevronTexaco. After the successful completion of the bank transaction, maturities over the four years would be $331 million in 2004, $258 million in 2005, $130 million in 2006, $970 million in 2007 (including $700 million in currently unfunded credit commitment). The negative outlook on Dynegy reflects the continued uncertainty around the company's ability to generate sustainable cash flow given the current environment in electric generation, as well as the price volatility in gathering and processing of natural gas liquids. Given Dynegy's current financial profile, the firm is susceptible to adverse economic conditions, which could result in stagnant generation prices and volatile gathering and processing natural gas liquids margins. Rating stability and/or upward ratings momentum is principally predicated on the predictability and sustainability of incremental cash flows to meet debt-service obligations and reduce debt. DYNEGY HOLDINGS: Fitch Gives B+ Rating to $1.3B Credit Facilities ----------------------------------------------------------------- Fitch Ratings has assigned a 'B+' rating to Dynegy Holdings Inc.'s (DYNH) new $1.3 billion senior secured credit facilities, which consist of a $600 million six-year senior secured term loan B and a $700 million three-year senior secured revolving credit facility (the credit facilities). The credit facilities refinance DYNH's 'B+' rated $1.1 billion senior secured revolving credit facility, that was scheduled to mature in February 2005, and the Alpha credit facility. Security for the new facility is substantially similar to the collateral package of the existing facility. The Rating Outlook for DYNH and its parent company Dynegy Inc. (DYN) remains Positive. DYN subsidiary Illinois Power Company (IP) is on Rating Watch Positive, where it was placed following its announced sale to Ameren Corp. A complete listing of ratings for DYN affiliated companies is shown below. The Positive Outlook reflects the improved liquidity, financial flexibility, and reduced borrowing cost provided by the new credit facilities. It also considers the proposed sale of IP and several completed transactions that have had the net effect of reducing debt, extending debt maturities, and lowering near-term default risk. Proceeds from the term loan component of the new facility will be used repay the $169 million Alpha credit facility and for collateral requirements with counterparties, with the remainder available for general corporate purposes, including potentially reducing the remaining tolling obligations and resolving certain outstanding litigation. The credit facilities' 'B+' rating reflects Fitch's current assessment of the company's overall credit profile, their ranking in DYNH's capital structure, and the expected recovery for lenders in a bankruptcy based on Fitch's valuation of DYN's collateral. They are guaranteed by DYN and each of DYN's major domestic subsidiaries except for IP. In addition, DYNH's obligations under the Credit Facilities and its guarantor's obligations under the guarantees are secured on a first priority basis by substantially all the assets of DYNH and that of its guarantors and a pledge of stock of DYNH and its domestic subsidiaries. The credit facilities rank senior to approximately $4.2 billion of debt and preferred stock at DYN and DYNH. Not reflected in the above debt total is about $1 billion of secured project debt and the payment obligations on its four remaining tolling agreements with a net present value of over $1 billion. Current rating levels recognize several ongoing concerns including the significant cash drain from four remaining wholesale tolling agreements and the difficulty of terminating the agreements, the practical limits of materially reducing debt levels through cash from operations or common equity sales, and the negative overhang from ongoing litigation. Cash flows from core operations remain weak relative to its high debt burden and any financial recovery should be gradual and materially dependent on strengthened wholesale electricity prices. Ratings are: DYN --Indicative senior unsecured debt 'CCC+'; --Convertible debentures 'CCC+'; DYNH --Secured revolving credit facility and term loan B 'B+'; --Second priority secured notes 'B' --Senior unsecured debt 'CCC+'; Dynegy Capital Trust I --Trust preferred stock 'CC'; Illinois Power Co. (Rating Watch Positive) --Senior secured debt and pollution control bonds 'B'; --Indicative senior unsecured debt 'CCC+'; --Preferred stock 'CC'; Illinova Corp. --Indicative senior unsecured debt 'CCC+'. EES COKE: S&P Ups Senior Debt Rating to B+ over U.S. Steel Deal --------------------------------------------------------------- Standard & Poor's Ratings Services raised its rating on EES Coke Battery LLC's series B $75 million ($33.8 million outstanding) senior secured notes due 2007 to 'B+' from 'CCC+'. The upgrade reflects EES Coke's signing an agreement with United States Steel Corp. (U.S. Steel; BB-/Stable/--) for 100% of EES Coke's production in 2004 and 25% of EES Coke's production in 2005, and substantially increased pricing of coke in the market as reflected in EES Coke's first quarter 2004 results. The outlook is positive. "The agreement with U.S. Steel, although short-term in nature, demonstrates EES Coke's ability to be a competitive supplier of coke," said credit analyst Scott Taylor. "If EES Coke is able to and chooses to enter into additional contracts, Standard & Poor's may increase the rating." EES Coke used funds from the series A (now defeased) and B notes to purchase the number five coke battery at the Great Lakes Works from National Steel Corp. (NSC). Following the bankruptcy of NSC, U.S. Steel purchased the Great Lakes Works in May 2003. The rating reflects, among other things, the inherently high business risk of the coke industry, the high degree of operating risk at the project, and exposure to any drop in coke market pricing if EES Coke does not enter contracts for operations beyond 2004. However, the facility is cost-competitive with other coke- making facilities and there is a demonstrated need for coke at the Great Lakes Works. The project also has the ability to sell coke on the spot market if the Great Lakes Works do not require coke. As a result of improved pricing and declining debt-service requirements, debt service coverage for the 12 months ended March 2004 was about 1.8x as opposed to about 1.0x for the 12 months ended December 2003. EL CAPITAN: Explores Possible Mining & Marketing of Iron Ore ------------------------------------------------------------ El Capitan Precious Metals, Inc. (OTCBB:ECPN) announced that it is exploring the possible mining and marketing of iron ore from its El Capitan mine. The Company has engaged an independent consultant with extensive experience in marketing mining properties to assist in this effort and has met with several companies to discuss possible initiatives. The Company currently has no contracts or other agreements with respect to mining or marketing the iron ore. "There is significant interest in the iron ore market of late with prices reaching levels that make it feasible to market the ore," stated El Capitan President, Chuck Mottley. "We have received indications of interest from an offshore company for delivery of iron ore FOB California. In order to provide the ore, we must have the resources necessary to mine the ore, separate it, and ship it via rail to port. I believe we can find a partner, be it a contract miner, equipment supplier, or finance company, to assist us in this regard if we are able to secure a contract for the purchase of the ore," continued Mr. Mottley. "We are working very hard, with the limited resources we currently have at our disposal, to leverage this asset and fully believe we can succeed in making the El Capitan mine a success for our Company," concluded Mr. Mottley. About the Company El Capitan Precious Metals, Inc. -- whose December 31, 2003 balance sheet shows a total stockholders' deficit of $749,298 -- is a nominally capitalized development stage company that owns a 40% interest in the El Capitan mine located near Capitan, New Mexico, as well as 13 mining claims and other assets known as the COD Property located near Kingman, Arizona. ENRON: Wants Court Nod on Transwestern Pipeline Settlement Pact --------------------------------------------------------------- Enron North America Corporation and its related non-debtor entities, Enron Compression Services Company and ECC, LLC, and Transwestern Pipeline Company are parties to various agreements: (1) A Compression Services Agreement (Bisti Compressor Station), effective March 31, 1999, between Transwestern and ENA, as: (A) amended by (i) an Amendment to Compression Services Agreement (Bisti), effective June 30, 1999, (ii) a letter agreement between ENA and Transwestern dated June 30, 1999, and (iii) a letter agreement between ECS and Transwestern dated June 30, 1999; and (B) assigned (i) by ENA to ECS pursuant to an Assignment Agreement, effective as of June 30, 1999, and (ii) by ECS to ECC LLC pursuant to an Assignment Agreement, effective as of June 30, 1999; (2) A Compression Services Agreement (Bloomfield Compressor Station), effective March 31, 1999, between Transwestern and ENA, as: (A) amended by (i) an Amendment to Compression Services Agreement (Bloomfield), effective June 30, 1999, (ii) a letter agreement between ENA and Transwestern dated June 30, 1999, and (iii) a letter agreement between ECS and Transwestern dated June 30, 1999; and (B) assigned (i) by ENA to ECS pursuant to an Assignment Agreement, effective as of June 30, 1999, and (ii) by ECS to ECC, LLC, pursuant to an Assignment Agreement, effective as of June 30, 1999; and (3) A Compression Services Agreement (Gallup Compressor Station), effective October 18, 1999, between Transwestern and ECS, as: (A) amended by (i) a letter agreement between ECS and Transwestern, dated February 23, 2000, and (ii) a letter agreement between ECS and Transwestern, dated March 15, 2000; and (B) assigned by ECS to ECC, LLC, pursuant to an Assignment and Contribution Agreement, effective as of March 30, 2000. Herbert K. Ryder, Esq., at LeBoeuf, Lamb, Greene & MacRae, LLP, in New York, relates that under the Compression Services Agreements, ECS provides compression services for Transwestern's pipeline system at three stations in New Mexico: the Bisti Station, the Bloomfield Station and the Gallup Station. ECC, LLC, also owns certain equipment and real property located at and used in connection with the provision of compression services at the Compression Services Stations -- the Motor and Drive Systems. To perform its obligations under the Compression Services Agreements, ECS is also a party to other agreements, including: (1) the Gallup Gas Conversion Agreement; (2) the Equipment Leases; (3) the O&M Agreements; and (4) the Gallup Operational Control Agreement. ECS has determined to enter into a Purchase and Settlement Agreement with Transwestern to: (i) amend and restate the Compression Services Agreements which includes, among other things, the settlement of certain outstanding matters related to the provision of compression services at the Compression Services Stations; (ii) sell to Transwestern the Motor and Drive Systems; (iii) under certain circumstances, auction the Compression Services Arrangements; and (iv) under certain limited circumstances, terminate the Compression Services Agreements in certain limited circumstances and in the event there is a termination, to release each other and their affiliates from all claims, obligations, and liabilities under the Compression Services Arrangements. Amendment to Compression Services Arrangements According to Mr. Ryder, the amendments to the Compression Services Agreements include: (i) clarification of rights and remedies on fuel gas delivery obligations; (ii) fee adjustments related to those delivery obligations; (iii) a price increase pass-through related to the Power Purchase Agreements; (iv) a formula for determining termination payments in the event of termination of the underlying agreement; and (v) technical and conforming changes. For ECS to continue to perform under the O&M Agreements after the sale of the Motor and Drive Systems, ECS and Transwestern will enter into Equipment Leases that, among other things: (i) reflect the transfer of ownership of the underlying equipment needed to provide compression services; and (ii) disclose and set a $60,000 lease fee for each of the Compression Services Stations. Under the Purchase and Settlement Agreement, ECS's provision to Transwestern of amended and restated Compression Services Arrangements is a condition precedent to Transwestern purchasing the Motor and Drive Systems. ECS's Sale of Motor and Drive Systems to Transwestern Pursuant to the Purchase and Settlement Agreement, ECS will sell and Transwestern will purchase any and all of ECS's interests in and rights to the Motor and Drive Systems and make a $7,500,000 payment to ECS. At Closing, Transwestern will agree to pay and perform when due all liabilities arising out of the ownership or use of the Motor and Drive Systems relating to periods on or after the Closing Date. In turn, ECS will agree to pay and perform when due all liabilities arising out of the ownership or use of the Motor and Drive Systems relating to periods prior to the Closing Date. Auction of Compression Services Arrangements After the Purchase and Settlement Agreement has been executed, Mr. Ryder informs the Court that ECS and its related entities may market to, negotiate with, and solicit offers from interested parties in an attempt to sell, transfer, or otherwise dispose of the Compression Services Arrangements through one or more transactions. This Alternative Transaction would be subject only to the rights of Transwestern to consent to it and Transwestern would be entitled to participate as a bidder in the auction and sale process on the same terms as other bidders. If and when ECS determines to exercise these rights with respect to the Compression Services Arrangements, Bankruptcy Court approval for the auction and sale process will be sought. Termination of the Compression Services Arrangements Following the Closing Date, at any time on or before the date which is the last day of the month which is six calendar months after the Effective Time, ECS retains the right to elect to terminate, and require Transwestern to terminate, the Compression Services Arrangements, either in whole or in part, and thereby trigger Transwestern's entry into a mutual release of claims with respect to the Compression Services Arrangements so terminated. As a condition to exercising these termination rights, ECS agrees to assign the Power Purchase Agreements to Transwestern. Upon termination, ECS would receive as consideration from Transwestern all of Transwestern's rights in and to an amount of unsecured claims it filed in the Enron bankruptcy cases. Schedule L to the Purchase and Settlement Agreement sets forth the value and number of the ENE Claims to which ECS would be entitled, which is based on the estimate of the remaining contract value of the Compression Services Arrangements as of the time ECS exercises the Termination Rights, as determined pursuant to a calculation set forth in Schedule C to the Purchase and Settlement Agreement. Under the Fifth Amended Joint Plan of Reorganization, the ENE Claims would be treated and classified as Class 4 claims. The ENE Claims may be disputed, substantially discounted, subordinated, or disallowed in their entirety. ENA asks the Court to approve the Purchase and Settlement Agreement and authorize its consent to: (1) ECS's entry into and performance under the Purchase and Settlement Agreement; (2) the sale of certain assets of ECS to Transwestern under the Purchase and Settlement Agreement; (3) the amendment and restatement of certain Compression Services Arrangements, and ECS's entry into and performance under those amended and restated agreements; and (4) the consummation of the transactions contemplated in the Purchase and Settlement Agreement. Mr. Ryder relates that the proposed Purchase and Settlement Agreement will effectuate the sale of assets of a wholly owned non-debtor subsidiary of a debtor entity. Mr. Ryder points out that: (a) ENA needs to take certain action to consummate the sale of the Motor and Drive Systems; (b) ENA's interest in the Motor and Drive Systems is not integral to nor contemplated to be a part of the Debtors' reorganization; (c) the Purchase and Settlement Agreement was negotiated at arm's length and represents a fair market value for the Motor and Drive System; (d) ENA is not aware of any liens, claims or encumbrances in the Motor and Drive Systems; (e) the Purchase and Settlement Agreement will facilitate ECS in liquidating its position and reducing operational risk and liabilities associated with the Compression Services Arrangements; (f) ECS will no longer have physical or title ownership of the assets associated with the Compression Services Arrangements, and the gas volume volatility under the Compression Services Agreements will be significantly reduced; and (g) the Purchase and Settlement Agreement saves substantial administrative expenses, realizes value for the assets of ECS, and will permit ECS to be in a position to market the Compression Services Arrangements. (Enron Bankruptcy News, Issue No. 108; Bankruptcy Creditors' Service, Inc., 215/945-7000) EXIDE: Stamford Asks Court to Deem $977,809 Claim Timely Filed -------------------------------------------------------------- By a Lease Agreement dated August 31, 1995, Stamford Computer Group, Inc., entered into a lease with Exide Corporation, now known as Exide Technologies. Stamford timely filed a proof of claim for outstanding prepetition rentals due under the Lease Agreement for $47,162. Exide paid postpetition monthly rentals due under the Lease Agreement. Theodore J. Tacconelli, Esq., at Ferry, Joseph & Pearce, P.A., in Wilmington, Delaware, relates that on October 27, 2003, the Debtors sought the Court's authority to reject the Lease Agreement. Stamford challenged the request on the grounds that it was not in the best interests of the Debtors' creditors and estates to reject the Lease Agreement. The Court approved the rejection on November 24, 2003. Stamford filed a notice of appeal on December 9, 2003. The appeal is currently pending before the District Court. Stamford earlier indicated that if the Court would permit the Debtors to reject the Lease Agreement, the Debtors should be required to deliver the equipment covered by the Lease to Stamford immediately and the Court should allow Stamford to file proofs of claim or appropriate pleadings in the Court regarding its claims associated with the Lease. Accordingly, the Court required the Debtors to comply with the remaining obligations under the Lease Agreement until the effective date of rejection. The Court, noting that rejection does not serve as a termination, inquired whether it was the Debtors' intention to return the equipment. The Debtors replied that it was their intention to return the equipment. Mr. Tacconelli points out that the Court must have presumed that the Debtors were in a position to promptly return the equipment. Stamford provided Exide with contact information and the address of the refurbishment center to which the equipment should be returned. Beginning on December 10, 2003, Stamford began receiving equipment from Exide. On that day, Stamford received three pieces of equipment, each from a different Lease. Subsequently, Stamford received a few additional items of equipment. Stamford continued to invoice Exide based on the monthly rentals under the Leases. Given that so little of the equipment was returned expediently, coupled with Exide's interest in purchasing the equipment immediately prior to the hearing, it seemed apparent that Exide was still using the equipment. It was Stamford's contention that Exide was liable for the monthly rentals under a particular Lease until all of the equipment covered by that Lease was returned. Mr. Tacconelli relates that Stamford received correspondence from Exide via electronic mail, which indicated that it was continuing to return equipment. It was not until March 9, 2004 that Exide informed Stamford that it could not locate the vast majority of the equipment, having returned all that could be located. Less than 1% of the equipment has been returned, and Exide maintains that the remainder of the equipment cannot be located. In these instances, Mr. Tacconelli asserts that Stamford is entitled to the casualty value of equipment that is not returned, calculated based on a formula in the Lease Agreement. The total casualty value of all equipment covered by the Lease Agreement, if taken as of December 1, 2003, is $884,213. Stamford prepared a Proof of Claim for $977,809. The figure was obtained by subtracting from the total casualty value the $2,199 value of the usable equipment that Exide returned, to obtain $882,014 and adding Stamford's rejection damages of $95,795. The Proof of Claim was stamped as having been received on March 30, 2004. Stamford did not believe that it was required to file a proof of claim or a motion to allow its administrative claim until the Debtors returned the equipment as was represented. Mr. Tacconelli contends that the Claim should be considered timely filed because the Claim merely amends the amount of Stamford's total damages in these cases. The Claim should be viewed as an amendment of the Stamford's Original Claim. Accordingly, Stamford asks the Court deem its $977,809 Claim filed on March 30, 2004 as timely filed. Debtors Object Sandra G. McLamb, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, P.C., in Wilmington, Delaware, contends that Stamford failed to present any facts or law that would deem timely its late-filed rejection damages claim. There is no dispute that Stamford received proper notice of the April 23, 2003 Bar Date for filing proofs of claim and that it failed to timely file its proof of claim within the period specified. Furthermore, the reason for the delay was solely within Stamford's control. Stamford simply made a conscious decision not to comply with the Bar Date. As a result, there is no basis to allow Stamford's late-filed claim and the Debtors propose that the claim should be forever barred from being asserted against them. Headquartered in Princeton, New Jersey, Exide Technologies is the world-wide leading manufacturer and distributor of lead acid batteries and other related electrical energy storage products. The Company filed for chapter 11 protection on April 14, 2002 (Bankr. Del. Case No. 02-11125). Matthew N. Kleiman, Esq., and Kirk A. Kennedy, Esq., at Kirkland & Ellis, represent the Debtors in their restructuring efforts. On April 14, 2002, the Debtors listed $2,073,238,000 in assets and $2,524,448,000 in debts. (Exide Bankruptcy News, Issue No. 47; Bankruptcy Creditors' Service, Inc., 215/945-7000) FEDERAL-MOGUL: Reconciliation Efforts Yield $4.4MM Claim Reduction ------------------------------------------------------------------ At Federal-Mogul Corporation Debtors' request, the Court fixes and allows 48 reconciled claims, and approves the withdrawal of Claim No. 6525 filed by McKesson Corporation. James E. O'Neill, Esq., at Pachulski, Stang, Ziehl, Young & Jones, P.C., in Wilmington, Delaware, reports that the Debtors' reconciliation efforts resulted in a reduction of the collective face amount of 48 proofs of claim by $4,385,917: A. Multiple Claim Modifications The Debtors disagreed with the stated claim amounts of 42 Reconciled Claims. The claims were improperly classified as priority, secured or administrative claims, and were erroneously filed against a Debtor entity that is not liable with respect to the claims. The Debtors and the Claimants agree to, as applicable: (a) reduce and allow the claims; (b) reclassify the claims as general unsecured non-priority claims; and (c) modify the claims to reflect the correct Debtor case or cases. The modifications will reduce the face amount of the Reconciled Claims by $3,928,355. B. Multiple Claim Modification Due to Reclamation Among the Reconciled Claims, six are claims in which: (a) the claimant included in the asserted amount, an amount attributable to a reclamation claim; and (b) the Debtors disagreed with the claim amount, classification and the Debtor case asserted with respect to the non-Reclamation Claim Amount. Mr. O'Neill clarifies that the Debtors do not seek to fix and allow any Reclamation Claim Amounts at this time. The procedure for establishing reclamation claims is separate from that of the non-Reclamation Claims. Moreover, the Debtors disagree with the non-Reclamation Claim Amounts of the Claims because they are not supported by the documentation attached to the claim and are greater than the amount reflected in the Debtors' books and records. Thus, the Debtors and the Claimants agree to, as applicable: (a) reduce and allow the non-Reclamation Claim Amount; (b) reclassify the claims as general unsecured non-priority claims; and (c) modify the claims to reflect the correct Debtor case or cases. The modifications will reduce the non-Reclamation Claim Amounts of the Claims by $457,562. The Non-Reclamation Claims are: Claim Asserted Modified Modified Claimant Number Amount Amount Debtor -------- ------ -------- -------- -------- Die Tech Corp. 3674 $161,498 $137,022 F-M Ignition Durez Corp. 637 1,098,435 358 F-M Ignition 1,299,674 F-M Products 281,580 0 F-M Products 0 - F-M Products Englewood 4305 19,195 3,398 F-M Piston Electric Supply 11,865 F-M Powertrain 3,427 F-M Products ETCO, Inc. N/A 209,984 186,834 F-M Ignition 765 - F-M Ignition ETCO Cord Prod. N/A 18,078 - F-M Ignition Hollingsworth 6122 180,849 - F-M Mogul Corp. & Vose Co. 145,756 0 F-M Mogul Corp. ETCO Inc. and ETCO Cord Products informally inserted unsecured claims as part of their reclamation claims. C. Withdrawal of the McKesson Claim McKesson filed a contingent and unliquidated claim against Federal-Mogul Ignition Company, seeking reimbursement and contribution for any liability it incurred with respect to certain environmental remediation and related litigation. The Court permits McKesson to withdraw the McKesson Claim without prejudice to re-filing if the McKesson Claim becomes fixed and liquidated in the future. By agreeing to withdraw the Claim, McKesson is not precluded from seeking an administrative expense payment or asserting that its Claim is not subject to discharge. Nevertheless, the Debtors reserve all their rights to object to: (a) the allowance of any filed or refiled claims by McKesson, other than on the basis of timeliness; (b) the administrative treatment of the claims; and (c) the non-dischargeability of the claims. Headquartered in Southfield, Michigan, Federal-Mogul Corporation -- <http://www.federal-mogul.com/>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. 56; Bankruptcy Creditors' Service, Inc., 215/945-7000) FOSTER WHEELER: Names Stephen J. Davies as UK Unit Chairman & CEO ----------------------------------------------------------------- Foster Wheeler Ltd. (OTCBB:FWLRF) announced that Stephen J. Davies has been appointed chairman and chief executive officer of Foster Wheeler Energy Limited, headquartered in the UK, effective July 1, 2004. Mr Davies will succeed Ian Bill, who will remain a director of the company, supporting Davies, until his planned retirement in September 2004. "Last July, Steve was appointed to the new position of managing director, Global Sales, Marketing and Strategic Planning, reporting directly to me. During the past year, he has led the implementation of Foster Wheeler's market-focused strategic plan and has significantly strengthened the company's E & C customer focus in the key growth regions and across our core global business lines," said Raymond J. Milchovich, chairman, president and chief executive officer. "I would like to thank Ian for his dedication and commitment to Foster Wheeler over his 34 years with the company. Under his leadership, the last six years have been a period of outstanding performance by the UK group, highlighted by consistent growth and project execution excellence. I am sure that Steve, with his considerable operational and commercial experience, will build on this performance." Mr Davies has been with Foster Wheeler for 27 years and has an extensive background in a broad range of international projects. He has held a variety of senior management roles throughout the company, including in the commercial/proposal group, and the Engineering and Pharmaceutical Divisions. In 1995, he was appointed to the Board of Foster Wheeler Energy Limited and was assigned special responsibility for building upon the company's existing operations in Asia. Mr Davies has been instrumental in expanding Foster Wheeler's business firstly in Asia, then in Australasia and Africa, including the ongoing development of the company's execution centers in Malaysia, Thailand, China, Singapore and South Africa. He has acted as executive sponsor for a number of major international projects for clients, including ExxonMobil, BP, Shell, Huntsman, Bayer and BASF. Mr Davies holds an honors degree in Civil Engineering from Bristol University, is a Chartered Engineer and gained his MBA from Cranfield University School of Management. About Foster Wheeler Foster Wheeler Ltd. -- whose December 26, 2003 balance sheet shows a total shareholders' deficit of $872,440,000 -- is a global company offering, through its subsidiaries, a broad range of design, engineering, construction, manufacturing, project development and management, research and plant operation services. Foster Wheeler serves the refining, oil and gas, petrochemical, chemicals, power, pharmaceuticals, biotechnology and healthcare industries. The corporation is based in Hamilton, Bermuda, and its operational headquarters are in Clinton, New Jersey, USA. For more information about Foster Wheeler, visit http://www.fwc.com/ FOSTER WHEELER: Subsidiary Wins FEED Contract From Saudi Aramco --------------------------------------------------------------- Foster Wheeler Ltd. (OTCBB: FWLRF) announced that its subsidiary Foster Wheeler Energy Limited has been awarded a Program Management Services contract by Saudi Aramco and its partner, Sumitomo Chemical Co., Ltd. of Japan, for the planned development of a large, integrated refining and petrochemical complex at the Red Sea town of Rabigh, Saudi Arabia. Under the scope of the contract, Foster Wheeler will undertake the 12-month Front-End Engineering Design (FEED), develop capital and operating cost estimates and prepare bid packages. The terms of the contract were not disclosed. Once implemented, the proposed multi-billion dollar Rabigh Project would be one of the largest integrated complexes ever to be built at one time. A total of 2.2 million tons of olefins, along with large volumes of gasoline and other refined products, would be produced. Saudi Aramco's existing topping refinery and infrastructure at Rabigh will serve as the base platform for the development of the proposed complex. Steve Davies, managing director, Global Sales Marketing and Strategic Planning, Foster Wheeler, said: "This is a significant win for Foster Wheeler and reflects our competitive market position, the quality of our team, our superior engineering capabilities and our proven capacity and ability to manage complex, world-scale projects." Isam A. Al-Bayat, vice president, New Business Development, Saudi Arabian Oil Company, said: "We selected Foster Wheeler after a rigorous review process of competitive bids because of their in- depth petrochemical experience and the quality of their past work for Saudi Aramco, particularly in producing high quality FEEDs, on time, as they did for our Haradh and Qatif projects." O. Ishitobi, managing executive officer, Sumitomo Chemical Co., Ltd., said: "We are pleased to be working with Foster Wheeler on this landmark project. They were the best qualified engineering organization and have an impressive track record which gives us confidence that they will deliver the results we require." About Foster Wheeler Foster Wheeler Ltd. -- whose December 26, 2003 balance sheet shows a total shareholders' deficit of $872,440,000 -- is a global company offering, through its subsidiaries, a broad range of design, engineering, construction, manufacturing, project development and management, research and plant operation services. Foster Wheeler serves the refining, oil and gas, petrochemical, chemicals, power, pharmaceuticals, biotechnology and healthcare industries. The corporation is based in Hamilton, Bermuda, and its operational headquarters are in Clinton, New Jersey, USA. For more information about Foster Wheeler, visit http://www.fwc.com/ FRIEDMAN INC: Hiring Kroll Zolfo as Restructuring Advisors ---------------------------------------------------------- Friedman's Inc. announced that the Company's Board of Directors has taken the following actions: * Created a Special Litigation Committee to consist of Norman P. Deep, David B. Parshall and Sheldon Whitehouse. The authority of the Special Litigation Committee includes overseeing and coordinating the Company's responses to the investigation conducted by the United States Attorney's Office for the Eastern District of New York, the Securities and Exchange Commission investigation, inquiries that have arisen or may arise from other governmental authorities and existing and future private litigation; and * Voted, subject to certain conditions, to retain Kroll Zolfo Cooper LLC as restructuring advisors to Friedman's and to appoint representatives of Kroll Zolfo Cooper LLC as Chief Restructuring Officers. In addition, the Company announced that Robert W. Cruickshank has resigned as a director of the Company effective immediately. The Board of Directors of the Company authorized the independent directors to search for a new independent director. About the Company Friedman's Inc. is a leading specialty retailer of fine jewelry based in Savannah, Georgia. The Company is the leading operator of fine jewelry stores located in power strip centers. At April 12, 2004, Friedman's Inc. operated a total of 711 stores in 20 states, of which 224 were located in power strip centers and 487 were located in regional malls. * * * As reported in Troubled Company Reporter's January 2, 2003 edition, the Company was notified by its lenders that it is in default under certain provisions of its credit agreement. As the preliminary financial information becomes available, the Company will be in discussions with its lenders regarding these matters in an attempt to resolve them prior to the filing of its annual report. The Company's lenders continue to provide the Company with the benefits of its credit agreement, with certain limited exceptions, although they have the right to terminate their support at any time. Also, Friedman's Inc. announced that it has been notified that the New York Stock Exchange (NYSE) has made a determination to delist the company's Class A Common Stock that traded under the ticker symbol FRM on the NYSE effective May 11, 2004. Friedman's is evaluating an appeal of the decision of the NYSE. The Company noted that while it is disappointed with the NYSE's decision, the delisting from the Exchange does not affect Friedman's day-to-day business operations. The Company also noted that although its common stock is not eligible for trading on the NASD over-the-counter bulletin board (OTC), the Company understands that market makers have independently begun to make a market in the company's common stock on the Pink Sheets under the symbol "FRDM." The company's most recently published balance sheet shows $496 million in assets and $190 million in liabilities. GENESCO INC: Reports Improved First Quarter Results --------------------------------------------------- Genesco Inc. (NYSE: GCO) reported net earnings of $5.8 million, or $0.26 per diluted share, for the first quarter ended May 1, 2004. This compares with net earnings of $3.3 million, or $0.15 per diluted share, for the first quarter last year. Net sales for the first quarter of fiscal 2004 were $226 million compared to $193 million for the first quarter of fiscal 2004. Genesco President and Chief Executive Officer Hal N. Pennington, said, "These strong results represent a great start for the new fiscal year and underscore the improvements we have made across our businesses. Our positive momentum has given us a heightened degree of confidence about our prospects, enabling us to increase guidance for the year. "Journeys' same store sales increased 9%, footwear unit comparable sales rose 9% and margins came in above plan, due primarily to lower than anticipated markdowns. Our better than expected sales were driven by solid gains in footwear units, growth in accessories, and moderation in the decline in average selling price. We are very excited about these developments and we remain committed to further capitalizing on Journeys' leadership position in the market. "Comparable store sales for the Underground Station Group declined 3% for the quarter, but operating margin increased due to improved gross margin. Comparable store sales in the Underground Station stores declined 2%, compared to an increase of more than 7% last year. Much like what happened at Journeys last year, we believe Underground Station is being impacted by a lack of any distinctive fashion trends and a decline in average selling prices. On the positive side, footwear unit comps for the Underground Station stores were up 2.7%. While we do not expect to see much sales improvement in the second quarter in the Underground Station stores, we are optimistic about the second half of the year as comparisons improve from both a same store sales and a merchandising perspective. "Total sales at Johnston & Murphy were $41 million and same store sales increased 8%, driven by increases in average price per pair in the Johnston & Murphy shops. We were also pleased to achieve some significant operating margin expansion at Johnston & Murphy during the quarter, despite the ongoing effects of a stronger euro. The strategic plan to reposition the Johnston & Murphy brand that we implemented over a year ago appears to be working well. "Dockers Footwear registered operating income as a percent of sales of 10% on sales of $17.5 million in the first quarter. Based on current trends, we believe that we will see top line improvement in the Dockers business during our second fiscal quarter, which is earlier than we previously expected. "Hat World, which we acquired on April 1, 2004, outperformed plan in both sales and operating margin. Hat World reported a same store sales gain of 23% for the first quarter and 20% for the month of April. These excellent results, which came against difficult comparisons to a strong quarter last year, were driven by a number of favorable trends in the merchandise mix. The integration process since the acquisition has been very smooth; the Hat World business continues to be strong and we are excited about the growth opportunities this business represents." Genesco also stated that it is revising upward its fiscal 2005 guidance. The Company now expects sales for the year of approximately $1.1 billion and earnings per share to range from $1.74 to $1.80, including previously announced charges of approximately $0.09 per share associated with the planned closing of Jarman and other underperforming stores in fiscal 2005. Pennington concluded, "It is gratifying to see the positive results of all of our hard work over the past several quarters. We believe that our in-depth knowledge of our customers, our branded lifestyle focus and our ability to react quickly and execute our strategy set us apart from our peers. We will continue to draw on these strengths as we seek long-term growth and profitability." Genesco, based in Nashville, sells footwear and accessories in more than 1,040 retail stores in the U.S., principally under the names Journeys, Journeys Kidz, Johnston & Murphy and Underground Station, and on internet websites http://www.journeys.com/and http://www.johnstonmurphy.com/ The Company also sells footwear at wholesale under its Johnston & Murphy brand and under the licensed Dockers brand. Additional information on Genesco and its operating divisions may be accessed at its website http://www.genesco.com/ * * * As reported in the Troubled Company Reporter's March 15, 2004 edition, Standard & Poor's Ratings Services assigned its 'BB-' bank loan rating, along with a recovery rating of '3', to Genesco Inc.'s proposed $175 million senior secured credit facilities. The loan is rated at the same level as the corporate credit rating on the company; this and the '3' recovery rating indicate expectations for a meaningful (50%-80%) recovery of principal in the event of a default. At the same time, Standard & Poor's affirmed its outstanding ratings on Genesco, including the 'BB-' corporate credit rating. The affirmation follows the company's mostly debt-financed acquisition of Hat World. Although the acquisition of Hat World would somewhat diversify Genesco's sources of earnings, the business risk of the combined entity remains high due to the narrow product focus and aggressive growth of the headwear retailing business. However, the operating performance of Hat World has been positive and is expected to be accretive to Genesco's earnings in fiscal 2005. In addition, Hat World would provide additional growth opportunities to Genesco, given that the growth rate at the company's Journeys division is decelerating. GOODYEAR TIRE: Richard Kramer Replaces Robert Tieken as CFO ----------------------------------------------------------- Richard J. Kramer, senior vice president, strategic planning & restructuring for The Goodyear Tire & Rubber Company (NYSE: GT), has been named executive vice president and chief financial officer effective June 1. Kramer, 40, replaces Robert W. Tieken, who will retire on May 31. Tieken, 65, has been Goodyear's CFO since May 1994. "Rich is a respected leader with an outstanding background in business and finance," said Robert J. Keegan, chairman and chief executive officer. "His experience will be invaluable as our company continues its turnaround." Commenting on Tieken, who joined Goodyear after a 32-year career with General Electric Co., Keegan said: "Through his knowledge and experience, Bob has contributed significantly to Goodyear. We wish Bob and his wife Pat all the best as they enter this new era of their life." Kramer, senior vice president, strategic planning & restructuring since August 2003, served as vice president of finance for Goodyear's North American Tire business unit from July 2002. He joined the company in March 2000 as vice president, corporate finance, after 13 years with PricewaterhouseCoopers LLP. He joined PricewaterhouseCoopers in 1986 in Cleveland. He was based at the firm's Paris office from 1991 to 1994 and became a partner in 1998. He specialized in providing audit and business advisory services to Fortune 100 multi-national companies in the manufacturing, technology, retail and entertainment industries. Keegan said the timing of the appointment in an era of sharp focus on corporate governance supports Kramer's personal focus on the importance of financial credibility and individual accountability. "Rich is a believer in thorough processes and individual responsibility as it relates to a continual improvement of the company's reputation and credibility," Keegan said. "He will drive world class processes and accountability throughout the finance organization, consistent with the strong position I have taken committing the entire company to full and accurate public reporting." A Cleveland native, Kramer holds a bachelor of science in business administration degree in accounting from John Carroll University and is a Certified Public Accountant. About Goodyear Goodyear is the world's largest tire company. Headquartered in Akron, Ohio, the company manufactures tires, engineered rubber products and chemicals in more than 80 facilities in 28 countries. It has marketing operations in almost every country around the world. Goodyear employs about 86,000 people worldwide. As reported in yesterday's edition of the Troubled Company Reporter, Standard & Poor's Ratings Services lowered its corporate credit rating on Goodyear Tire & Rubber Co. to 'B+' from 'BB-' and removed it from CreditWatch, where it was placed Dec. 11, 2003. Other ratings were also lowered and removed from CreditWatch. The outlook is stable. "The downgrade reflects our view that the weak, albeit improving, operating performance of the company's North American tire operations, along with Goodyear's heavy schedule of debt maturities, pension funding, and other cash obligations during the next few years, will support a financial profile consistent with the now-lower rating," said Standard & Poor's credit analyst Martin King. "Although credit protection measures are currently stretched for the rating, they are expected to gradually improve, and liquidity remains adequate." HAYNES: Files Reorganization Plan & Disclosure Statement in Ind. ---------------------------------------------------------------- Haynes International, Inc. announced that it has filed its proposed Plan of Reorganization and related Disclosure Statement with the Bankruptcy Court for the Southern District of Indiana. The Plan of Reorganization and related Disclosure Statement are supported by the statutory Creditors' Committee and Haynes' majority equity holder. The Bankruptcy Court has scheduled a hearing on the adequacy of the Disclosure Statement for June 28, 2004. The proposed Plan of Reorganization incorporates the terms of the previously announced restructuring agreement, which provides that Haynes' Senior Note holders will exchange their $140 million of 11 5/8% Senior Notes due September, 2004 for 96% of the equity in the reorganized company. Haynes is privately held and its current majority equity holder has agreed to the cancellation of its current equity interests in exchange for its pro rata share of 4% of the equity in the reorganized company which, upon the company's emergence from Chapter 11, will be distributed to the current holders of the company's common stock. The Plan of Reorganization currently provides that the Company's trade creditors will be paid in full in cash. As previously announced, the other two key components of Haynes' restructuring, the modification of its collective bargaining agreement with the USWA and the commitment for exit financing received from Congress Financial Corporation (Central), are already in place. Haynes' Chief Executive Officer Francis J. Petro said, "The timely filing of our Plan of Reorganization and Disclosure Statement represents a significant milestone in our Chapter 11 reorganization. We are pleased to be able to present a Plan that is supported by our key constituencies, including our Senior Note holders and our majority equity holder. With their support, and upon approval of our Disclosure Statement, we are optimistic that the Plan will be confirmed in the near term. This should allow Haynes to emerge from Chapter 11 by the end of the summer as a stronger, more profitable and competitive company with a greatly de-leveraged balance sheet and significant cash resources to allow the Company to continue to prosper and grow." The Disclosure Statement also includes information about financial projections through fiscal 2006; the details of the proposed Plan of Reorganization, an estimated range of Haynes' enterprise value upon emergence from Chapter 11, including support for the "best interest" requirement under the Bankruptcy Code; and a description of the events leading up to the filing of the Chapter 11 cases. Approval of the Disclosure Statement and related voting solicitation procedures, which Haynes will seek on June 28, 2004, will permit Haynes to begin soliciting acceptances for the proposed Plan of Reorganization in late June and July and seek confirmation of the proposed Plan of Reorganization by the Bankruptcy Court in August 2004. It is anticipated that Haynes will emerge from Chapter 11 reorganization shortly after confirmation. Haynes' Chapter 11 cases are being presided over by the Honorable Anthony J. Metz III under consolidated Case No. 04- 05364 (AJM). Key elements of the proposed Plan of Reorganization, subject to approval by the Bankruptcy Court, include: -- Holders of allowed general unsecured claims (other than the Senior Notes) are to receive cash in respect of 100% of the allowed amount of such claims, without interest. -- Holders of Senior Note Claims are to receive their pro rata share of 96% of the stock in the reorganized company. Holders of old common stock are to receive their pro rata share of 4% of the stock in the reorganized company. Distribution of the stock in the reorganized company will be subject to dilution by a management incentive plan. -- As previously announced, Haynes will assume the Collective Bargaining Agreement with the USWA, as modified by the Tentative Agreement dated as of February 5, 2004 upon confirmation of the Plan. -- As previously announced, Haynes has received a commitment for up to $100 million in exit financing from Congress Financial Corporation (Central). This credit facility, which will be secured by substantially all of Haynes' assets, will restate or otherwise replace the current debtor-in-possession facility on the Effective Date of the Plan of Reorganization. As set forth in the projections, Haynes is optimistic that the positive financial trends that it has experienced in recent months will continue including increased sales in each of its major markets. Francis Petro added, "As we emerge from Chapter 11, we intend to continue as in the past to service our customers and capitalize on the increased customer demand for our products. We are confident that with continued support from our vendors and the $100 million exit financing that we have arranged, we will be able to continue to grow our business." Petro concluded, "We continue to be appreciative of the support that we have received during our restructuring from our vendors, customers and employees, all of whom have allowed us to use this process to lay the foundation for our future success." The Disclosure Statement and the proposed Plan of Reorganization can be accessed at http://www.haynesintl.com/or http://www.kccllc.net/haynes/ About Haynes International Haynes International, Inc. is a leading developer, manufacturer and marketer of technologically advanced, high performance alloys, primarily for use in the aerospace and chemical processing industries. HELLER FINANCIAL: Fitch Affirms Three 2000-PH1 Ratings at Low-Bs ---------------------------------------------------------------- Fitch Ratings upgrades Heller Financial Commercial Mortgage Asset Corp.'s mortgage pass-through certificates, series 2000 PH-1, as follows: --$43.1 million class B to 'AAA' from 'AA'; --$47.8 million class C to 'A+' from 'A'; --$12 million class D to 'A' from 'A-'. The following classes are affirmed by Fitch: --$106.2 million class A-1 'AAA'; --$532.3 million class A-2 'AAA'; --Interest only class X 'AAA'; --$35.9 million class E 'BBB'; --$14.4 million class F 'BBB-'; --$26.3 million class G 'BB+'; --$7.2 million class K 'B+'; --$9.6 million class L 'B'; --$9.6 million class M 'B-'. Fitch does not rate the $19.1 million class H, $9.6 million class J, or $14.8 million class N certificates. The upgrades reflect both the increased credit enhancement levels from loan payoffs and amortization, and the subordination levels of similar deals issued today. As of the May 2004 distribution date, the pool's certificate balance has paid down 7.1% to $887.8 million from $957.0 million at issuance. Seven loans (3.1%) are currently being specially serviced, including two 30 days delinquent (1.11%), a 60 days delinquent (0.10%), a 90 days delinquent (0.72%) and a real estate owned (REO) (0.29%). The largest specially serviced loan (1.10%) is secured by an industrial/warehouse property in Cicero, IL. The property is 82% occupied and the loan is 30 days delinquent. The borrower is trying to refinance and closing should be completed shortly. The REO is secured by a multifamily property in Clarksville, TN. Losses on the REO property are expected. Realized losses total $4.3 million to date, or 0.45% of the original principal balance. HORIZON LINES: S&P Places Low-B Ratings on Credit Watch Negative ---------------------------------------------------------------- Standard & Poor's Ratings Services said it placed its ratings, including its 'BB-' corporate credit rating, on Horizon Lines LLC on CreditWatch with negative implications. The CreditWatch placement follows the recent announcement that The Carlyle Group has entered into an agreement to sell its interest in Horizon Lines to Castle Harlan Inc., another private equity firm. "Castle Harlan's purchase price for Horizon Lines is $650 million, compared with the $315 million paid by The Carlyle Group in 2003," said Standard & Poor's credit analyst Kenneth L. Farer. "If the acquisition is financed with a substantial amount of debt, Horizon Lines' credit profile may weaken to a level no longer consistent with the current rating," continued the analyst. Standard & Poor's will meet with management and representatives from Castle Harlan to discuss the acquisition and financing plans, and the resultant credit profile, to resolve the CreditWatch. The ratings on Charlotte, N.C.-based Horizon Lines LLC reflect its high debt leverage, participation in the capital-intensive and competitive shipping industry, and relatively older fleet. These risks are somewhat offset by the barriers to entry afforded by the Jones Act (which applies to intra-U.S. shipping) and stable demand from the company's diverse customer base across the company's various markets. Horizon Lines is one of the leading ocean cargo carriers operating between the Continental U.S. and Alaska, Puerto Rico, Hawaii, and Guam. Horizon Lines operates under the Jones Act, which requires cargo shipments between U.S. ports to be carried on U.S.-built vessels registered in the U.S. and crewed by U.S. citizens. The Jones Act provides a barrier to entry by prohibiting direct competition from foreign-flagged vessels. The company operates 16 containerships, with at least a one-third market share in each of its shipping lanes. Horizon Lines was formerly CSX Lines LLC, a subsidiary of CSX Corp., until The Carlyle Group purchased 84.5% of the company in February 2003. The shipping industry is very capital-intensive, requiring large, cyclical outlays for oceangoing vessels. Management expects the existing vessels to continue to operate for another four or five years before requiring replacement. In general, the container shipping industry is more concentrated than most other shipping sectors, with the U.S. liner trade even more concentrated than the overall industry. Operating margins before depreciation and amortization have averaged 13% over the past few years, adequate for a shipping company. Margins have increased gradually as market conditions in Puerto Rico strengthened following the exit of a major competitor in 2002, and supplemented by improved operating efficiency. For 2003, EBITDA interest coverage was 2.5x, and funds from operations to debt was 28%. At March 31, 2004, lease-adjusted debt to capital was 75% and debt to EBITDA was 3.5x, both appropriate for the current rating. Future credit measures will be determined by acquisition financing. I.W. INDUSTRIES: Has Until May 30 to Decide on Unexpired Leases --------------------------------------------------------------- By order of the U.S. Bankruptcy Court for the Eastern District of New York, I.W. Industries, Inc., obtained an extension of its lease decision period. The Court gives the Debtor until May 30, 2004, to determine whether to assume, assume and assign, or reject its unexpired nonresidential real property lease. Headquartered in Melville, New York, I.W. Industries, is a leading manufacturer of brass products and machined parts such as plumbing and lightning fixtures and other industrial parts. The Company filed for chapter 11 protection on February 12, 2004 (Bankr. E.D.N.Y. Case No. 04-80852). Kathryn R. Eiseman, Esq., at Piper Rudnick LLP represents the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed estimated debts and assets of more than $10 million. J.P. MORGAN: S&P Assigns Prelim. Ratings to 2004-PNC1 Certificates ------------------------------------------------------------------ Standard & Poor's Ratings Services assigned its preliminary ratings to J.P. Morgan Chase Commercial Mortgage Securities Corp.'s $1.10 billion commercial mortgage pass-through certificates series 2004-PNC1. The preliminary ratings are based on information as of May 26, 2004. Subsequent information may result in the assignment of final ratings that differ from the preliminary ratings. The preliminary ratings reflect the credit support provided by the subordinate classes of certificates, the liquidity provided by the trustee, the economics of the underlying loans, and the geographic and property type diversity of the loans. Classes A-1, A-2, A-3, A-4, B, C, D, and E are currently being offered publicly. Standard & Poor's analysis determined that, on a weighted average basis, the pool has a debt service coverage of 1.55x, a beginning LTV of 84.0%, and an ending LTV of 70.9%. Preliminary Ratings Assigned J.P. Morgan Chase Commercial Mortgage Securities Corp. Class Rating Amount ($) A-1 AAA 37,400,000 A-2 AAA 113,700,000 A-3 AAA 98,400,000 A-4 AAA 442,164,000 B AA 28,809,000 C AA- 13,718,000 D A 17,834,000 E A- 10,974,000 A1-A AAA 246,662,000 F BBB+ 16,462,000 G BBB 10,975,000 H BBB- 20,577,000 J BB+ 2,744,000 K BB 6,859,000 L BB- 4,115,000 M B+ 5,487,000 N B 2,744,000 P B- 2,744,000 NR N.R. 15,090,311 X* AAA 1,097,458,311** *Interest-only class. **Notional amount. N.R.-Not rated. JP MORGAN: Fitch Affirms 1999-C7 Classes F,G & H Ratings at Low-Bs ------------------------------------------------------------------ Fitch Ratings upgrades J.P. Morgan Commercial Mortgage Finance Corp.'s mortgage pass-through certificates, series 1999-C7, as follows: --$40.1 million class B to 'AAA' from 'AA+'; --$40.1 million class C to 'AA-' from 'A+'. The following classes are affirmed by Fitch: --$106.3 million class A-1 'AAA'; --$357 million class A-2 'AAA'; --Interest-only class X 'AAA'; --$52.1 million class D 'BBB'; --$12 million class E 'BBB-', --$38.1 million class F 'BB'; --$26 million class G 'B'; --$4 million class H 'B-'. The $24 million class NR certificates are not rated by Fitch. The upgrades reflect the increased credit enhancement levels from loan payoffs and amortization. As of the May 2004 distribution date, the pool's aggregate principal balance has been reduced by 12.7% to $699.7 million from $801.4 million at issuance. One loan (1.1%) is real estate owned (REO) and one loan is 30 days delinquent. The REO is secured by an office property in Jackson, MS; the property was 68% occupied as of April 2004. The special servicer is working on stabilizing the property before marketing it for sale. Fitch is also concerned with three of the top ten loans (12%), including the largest loan in the pool (7%). The loans are on the master servicer's watchlist due to declined occupancy and performance. The largest loan is secured by six retail properties; their average occupancy declined to 66% as of YE 2003. The properties are in the process of renovations and redevelopment. There have been no realized losses in the pool to date. KAISER ALUMINUM: Modifies USWA and IAM Settlement Agreements ------------------------------------------------------------ The Kaiser Aluminum Corporation Debtors recently agreed to make certain modifications to the settlement agreements they reached with the United Steelworkers of America, AFL-CIO-CLC, and the International Association of Machinists & Aerospace Workers in January 2004. Agreed-Upon Modifications to the VEBA Advances The modifications address specific details required for the implementation of the Voluntary Employee Beneficiary Association established pursuant to the January Agreement between the Debtors and the USWA. The Debtors intend to enter into a letter agreement with the USWA to memorialize the VEBA Modifications. The VEBA Modifications include: (a) All persons eligible to receive retiree benefits under a VEBA that are represented by unions other than the USWA will be eligible to participate in the Kaiser/USWA VEBA. Eligible persons will: -- have all of the rights and obligations of, and will be subject to all of the terms and conditions applicable to the USWA-represented retirees under the Kaiser/USWA VEBA; and -- receive benefits as are provided to the USWA- represented participants in the Kaiser/USWA VEBA; (b) The Kaiser/USWA VEBA will not be required to keep the funding provided on behalf of the retirees represented by the other unions separate from that provided on behalf of the USWA-represented retirees; (c) Instead of the $1,100,000 aggregate monthly VEBA Advance -- that was to be shared by union and salaried retirees -- the Debtors will contribute $1,600,000 as monthly VEBA Advances with respect to all union-represented retirees; and (d) The Debtors will contribute a $1,000,000 one-time VEBA Advance in June 2004 with respect to all union- represented retirees. To provide comparable treatment for all retiree constituencies, the Debtors will increase the $181,250 monthly VEBA Advance for the VEBA established under their separate agreement with the Official Committee of Salaried Retirees to $300,000. The Debtors will also contribute a $200,000 one-time VEBA Advance in June 2004 to the Retirees Committee VEBA. The modified amounts of the VEBA contributions will ensure that sufficient resources are provided to the VEBAs so that benefits may begin by May 31, 2004. The VEBA Modifications do not increase the overall amount of the Debtors' funding obligations to the VEBAs since the aggregate amount of the VEBA Advances will be offset against the initial cash contribution of up to $36 million payable upon emergence. Daniel J. DeFranceschi, Esq., at Richards, Layton & Finger, in Wilmington, Delaware, notes that the Debtors have discussed the VEBA Modifications with the IAM, the Paper, Allied-Industrial, Chemical and Energy Workers Union, and the International Chemical Workers Union Council-United Food & Commercial Workers. The Debtors anticipate entering into corresponding letter agreements with each party. The Debtors intend to discuss and enter into a similar letter agreement with the Retirees Committee. Modifications to the IAM Agreement Mr. DeFranceschi states that, subsequent to the entry of the Final Order approving the January Agreements, the Debtors and the IAM continued negotiations to address certain open issues between them, including the Debtors' participation in the IAM National Pension Fund. The parties agreed to certain modifications to those agreements. Specifically, with regard to the agreement covering employees and retirees represented by the IAM at the Debtors' Richmond, Virginia facility, the parties agreed: (a) to include all other IAM retirees who are eligible for pension and retiree benefits, specifically those formerly employed at the Debtors' Erie, Pennsylvania facility; (b) that the Debtors will make annual contributions into the IAM National Pension Fund on the basis of one dollar per IAM employee per hour worked; (c) that the Debtors are entitled to a "free look" and may withdraw from the IAM National Pension Fund at any time within five years without incurring any withdrawal liability; and (d) that the IAM's allocable share of the VEBAs will be 0.6%. The parties also agreed to make changes regarding the agreement covering IAM retirees and employees at the Debtors' facility in Sherman, Texas. No VEBA modifications were necessary or appropriate for the Sherman facility retirees and employees because they are not entitled to receive retiree medical benefits. The Debtors maintain that the VEBA Modifications and the Modified IAM Agreements facilitate the implementation of the January Agreements, and help ensure adequate funding to establish the VEBAs. Accordingly, the Debtors ask the Court to approve the modifications. 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 Bankruptcy News, Issue No. 43; Bankruptcy Creditors' Service, Inc., 215/945-7000) KODIAK UTILITY: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Kodiak Utility Construction, Inc. 1314 South Baylis Street Baltimore, Maryland 21224 Bankruptcy Case No.: 04-22469 Type of Business: The Debtor is an Electrical Contractor that specializes in designing, developing and engineering projects. See http://www.kodiakutility.com/ Chapter 11 Petition Date: May 20, 2004 Court: District of Maryland (Baltimore) Judge: E. Stephen Derby Debtor's Counsel: Robert B. Scarlett, Esq. Scarlett & Croll, P.A. 201 North Charles Street, Suite 600 Baltimore, MD 21201-4110 Tel: 410-468-3100 Fax: 410-332-4026 Total Assets: $531,003 Total Debts: $1,678,451 Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Maryland Electrical Industry $152,115 Health Fund Maryland Electrical Industry $122,073 Severance & Annuity Fund Maryland Electrical Industry $53,963 Pension Fund Local Union No. 24, IBEW $45,638 Vacation & Holiday Fund National Electrical Benefit Fund $31,949 Local No. 24, IBEW, AFL-CIO $26,814 CNA Insurance $11,303 Maryland Electrical Industry $10,506 Apprenticeship & Training Committee Carroll Independent Fuel Co. $6,650 Hyper Media Corporation $5,494 Benefitmall.com $4,976 Baker Equipment $4,201 Jefferson Pilot Financial Insurance $4,000 Reliable Equipment & Service $3,203 Nextel $2,642 Baltimore Sun $2,373 Kauffman Electric $2,300 TCI Tire Center $1,807 University Sports Publications $1,700 Mutual Benefit Insurance Co. $1,658 MARY HOLMES COLLEGE: Case Summary & Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Mary Holmes College, Inc. Highway 50 West West Point, Mississippi 39773 Bankruptcy Case No.: 04-13168 Type of Business: The Debtor is a School Institution. See http://www.maryholmes.edu/ Chapter 11 Petition Date: May 25, 2004 Court: Northern District of Mississippi (Aberdeen) Judge: David W. Houston III Debtor's Counsel: Michael Leo Hall, Esq. Burr & Forman LLP 420 North 20th Street 3100 South Trust Tower Birmingham, AL 35203 Tel: 205-251-3000 Estimated Assets: $0 to $50,000 Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ U.S. Department of Education Neigh Dormitory $491,021 Darlene Carlson IDUES 1990 K Street NW 6th Fl. Washington, DC 20006 Great Western Dining Food service for $470,653 Services, Inc. cafeteria c/o John Crowell Gholson, Hicks & Nichols P.O. Box 1111 Columbus, MS 39703 Presbyterian Church (U.S.A.) Loan secured by Neigh $170,885 Dormitory (lien second to that of the U.S. Department of Agriculture) Internal Revenue Service Taxes, interest and $142,470 penalties Xerox Corporation Copier lease $33,246 4-County Electric Power Electric service $27,800 Association Navistar Financial Corp. 1997 International $19,962 3400, 33 Passenger Bus Hobsons, Inc. cd's produced on $19,390 Mary Holmes College for marketing PACTEC Litigation action $18,754 Wesley Peachtree Group 2002 financial audits $17,643 Campus Book Mart School books $17,518 BellSouth Telephone service $7,563 Blue Cross & Blue Employee insurance $7,300 Mississippi Valley Gas Natural gas to rental $6,468 houses and school Southern Roofing roof repair-should $5,782 have been paid-Gail trying to find out Lowndes Division Golden Waste disposal $5,452 Triangle McGriff, Seibel & Williams Athletic Insurance $4,874 Policy Vinu George 2 months salary $4,800 $2,400 Varsity Books School books $4,184 William Royal 2 months salary $4,000 $2,000 MATRIA HEALTHCARE: Extends 11% Sr. Debt Tender Offer to July 2 -------------------------------------------------------------- Matria Healthcare, Inc. (NASDAQ: MATR) announced that it has extended its pending tender offer for all of its outstanding 11% Series B Senior Notes due 2008. The expiration of the tender offer has been extended from 12:00 noon, New York City time, on May 28, 2004, to 12:00 noon, New York City time, on July 2, 2004, unless further extended by the Company. As of midnight May 25, 2004, the Company had received valid tenders from holders of $120 million in aggregate principal amount of the 11% senior notes, representing 98.36% of the outstanding principal amount of the notes. As a result of the extension, the Price Determination Date (as that term is defined in the Offer to Purchase and Consent and Waiver Solicitation Statement) has not occurred and has been extended until June 30, 2004, the second business day prior to the revised expiration date. The completion of the tender offer and the consent solicitation continues to be subject to the satisfaction of several conditions, including a financing condition that the Company is able to replace its existing credit facility with a new credit facility and/or obtain other financing through the sale of publicly or privately placed securities, in each case on terms acceptable to the Company, and in such amount and combination as the Company in its sole discretion may determine, the proceeds of which will be sufficient to allow the Company to purchase all of the outstanding 11% senior notes. On May 5, 2004, pursuant to its previously received waiver permitting it to incur up to $150 million in indebtedness prior to the consummation of the tender offer, the Company completed the sale of $75 million in aggregate principal amount of its 4.875% convertible senior subordinated notes due 2024 in a private placement in reliance upon an exemption from registration under the Securities Act of 1933. The Company also granted the initial purchaser of the 4.875% convertible notes an option to purchase (the "Over-allotment Option") up to $11.25 million aggregate principal amount of additional 4.875% convertible notes, which must be exercised on or before May 30, 2004. Although the Company is pursuing additional financing alternatives, there can be no assurance that the Company will be able to obtain sufficient financing to repurchase all of the outstanding 11% senior notes or that such financing will be available on terms acceptable to the Company, if at all. Notwithstanding the foregoing, the Company will be required to use the net proceeds from the sale of the 4.875% convertible notes (approximately $72.3 million plus the net proceeds of any notes sold under the Over-allotment Option) to purchase the 11% senior notes tendered in the tender offer, whether or not the conditions otherwise applicable to the tender offer are satisfied or the amendments to the indenture become operative. Pending the purchase of the 11% senior notes pursuant to the tender offer, the net proceeds of the 4.875% convertible notes offering are being held in escrow for the benefit of the holders of the 11% senior notes. On April 13, 2004, the Company received consents from the holders of a majority in principal amount of the 11% senior notes to amend the indenture governing such notes to eliminate substantially all of the restrictive covenants as well as certain events of default and related provisions in the indenture. If the financing condition is not satisfied or the other conditions to the tender offer and the consent solicitation are not satisfied or waived, the amendments to the indenture will not become operative. UBS Investment Bank is acting as the exclusive Dealer Manager for the offer and the solicitation agent for the consent solicitation. The tender offer and the consent solicitation are being made pursuant to an Offer to Purchase and Consent and Waiver Solicitation Statement and related documents, which fully set forth the terms of the tender offer and the consent solicitation. Additional information concerning the terms of the tender offer and the consent solicitation may be obtained from UBS Investment Bank at (888) 722-9555 or (203) 719-4210. Copies of the Offer to Purchase and Consent and Waiver Solicitation Statement and related documents may be obtained from MacKenzie Partners, Inc., the Information Agent, at 105 Madison Avenue, New York, New York 10016 at (800) 322-2885. About Matria Healthcare Matria Healthcare is a leading provider of comprehensive disease management programs to health plans and employers. Matria manages the following major chronic diseases and episodic conditions - diabetes, cardiovascular diseases, respiratory diseases, high-risk obstetrics, cancer, chronic pain and depression. Headquartered in Marietta, Georgia, Matria has more than 40 offices in the United States and internationally. More information about Matria can be found on line at http://www.matria.com/ MCMC INVESTMENTS: Case Summary & 10 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: MCMC Investments, Inc. dba B & J's Gas N Go P.O. Box 447 Ogallala, Nebraska 69153 Bankruptcy Case No.: 04-81647 Type of Business: The Debtor operates convenient stores. Chapter 11 Petition Date: May 14, 2004 Court: District of Nebraska (Omaha Office) Judge: Timothy J. Mahoney Debtor's Counsel: Howard T. Duncan, Esq. Duncan Law Office 1910 South 72nd Street, Suite 304 Omaha, NE 68124-1734 Tel: 402-391-4904 Fax: 402-391-0088 Total Assets: $2,975,352 Total Debts: $3,629,911 Debtor's 10 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Great Western Bank B&J's Gas & Go, $1,015,492 PO Box 4070 7202 F St., Omaha, NE 68104-0070 Omaha, NE Secured Value: $1,014,880 Adams Bank and Trust B&J's Gas & Go, $584,034 315 N. Spruce 7202 F St., Omaha, Ogallala, NE 69153 NE Secured Value: $1,014,880 Adams Bank and Trust B&J's Gas & Go, $576,814 315 N. Spruce 7202 F St., Omaha, Ogallala, NE 69153 NE Secured Value: $1,194,760 B and J Petroleum, Inc. F St $121,842 $261,456 PO Box 447 Blondo $139,615 Ogallala, NE 69153 Douglas County Treasurer B&J's Gas & Go, $13,067 7202 F St., Omaha, NE Secured Value: $1,014,880 Douglas County Treasurer B&J's Gas & Go, $11,682 7204 Blondo, Omaha, NE Secured Value: $1,194,760 Mark VII Equipment Inc. $9,495 Rion LLC Equipment $2,769 $7,517 Donuts $4,748 Douglas County Treasurer B&J's Gas & Go, $7,359 7204 Blondo, Omaha, NE Secured Value: $1,194,760 Douglas County Treasurer B&J's Gas & Go, $5,021 7202 F St., Omaha, NE Secured Value: $1,014,880 MEDIABAY: Converts $4.3MM Debt & Accrued Interest to Pref. Stock ---------------------------------------------------------------- MediaBay, Inc. (Nasdaq: MBAY), a leading spoken audio media marketing company, announced the conversion of approximately $4.3 million of related party debt and accrued interest into preferred stock. On April 28, 2004, MediaBay entered into a new credit agreement pursuant to which MediaBay and certain of its subsidiaries initially borrowed $9.5 million. The New Credit Agreement requires the aggregate amount of principal and interest owed by MediaBay to certain related parties be reduced to $6.8 million by June 1, 2004. In order to reduce the aggregate debt owed to them by MediaBay, the parties agreed, subject to and automatically upon the receipt of a fairness opinion from an independent investment banking firm, to exchange an aggregate of $4.3 million of principal and accrued interest of the notes and accrued dividends on the Trust's Series A Preferred Stock into units consisting of an aggregate of: (i) 43,527 shares of Series C Preferred Stock, convertible into an aggregate of 5,580,384 shares of Common Stock at a conversion price of $0.78, and (ii) warrants to purchase 11.2 million shares of Common Stock. The Series C Preferred Stock has a liquidation preference of $100 per share. The Warrants are exercisable for ten years at an exercise price of $0.53. On May 25, 2004, the fairness opinion was received from an independent investment banking firm, and, pursuant to the agreements described above, the exchange of debt for units occurred. The transactions described above will result in a charge to earnings estimated at $390,000. MediaBay CEO, Jeffrey Dittus said, "We are pleased to have completed this final portion of our financing activities. This transaction further decreases our debt and improves our balance sheet, enabling us to execute our growth strategy of digitizing MediaBay and leveraging our robust Radio Classics asset." On May 20, the Nasdaq Listing Qualification Panel notified MediaBay that it had failed to demonstrate stockholders' equity at the Nasdaq minimum requirement of $10.0 million. The Company subsequently received an extension for compliance, and as of yesterday's completion of the debt conversion, believes it has achieved compliance with shareholders equity of $13.8 million. MediaBay is aware that Nasdaq will continue to monitor MediaBay's ongoing compliance with the stockholders' equity requirement and, if at the time of its next periodic report MediaBay does not evidence compliance, that it may be subject to delisting. About MediaBay, Inc. MediaBay, Inc. (Nasdaq: MBAY) is a multi-channel, media marketing company specializing in the $800 million audiobook industry and old-time radio distribution. MediaBay's industry-leading content library includes over 60,000 classic radio programs, 3,500 film and television programs and thousands of audiobooks. MediaBay distributes content through more than 20 million direct mail catalogs; streaming and downloadable audio over the Internet; over 7,000 retail outlets; and a 260 station syndicated radio show. For more information on MediaBay, please visit http://www.MediaBay.com or its subsidiary sites: audiobookclub.com, radiospirits.com, and radioclassics.com. METALDYNE: Lenders Agree to Waive Reporting Default through Sept. ----------------------------------------------------------------- Metaldyne Corporation announced that it has received new extended waivers in respect of its senior secured credit facilities and accounts receivable securitization facility with respect to certain provisions requiring the Company to deliver financial statements and certain related matters. These waivers further extend previously received waivers. As previously announced, the Company has been delayed in completing certain of its financial statements and is reviewing its previously issued financial statements due to an independent inquiry into certain accounting allegations. In general, the new extended waivers waive delivery of financial statements until the earlier of September 30, 2004 or the occurrence of certain adverse events, including a delivery of a notice of default under certain other agreements. During the waiver period, the Company expects to have access to its revolving credit facility and to its accounts receivable securitization, as typically required, subject to compliance with covenants and other applicable limitations. Copies of these waivers will be filed with the Securities and Exchange Commission as Exhibits to a Form 8-K. In the event that certain waivers expire or are not obtained or notices of default are delivered in respect of the Company's debt securities, the Company could be materially and adversely affected and lose access to its revolving credit and accounts receivable securitization facilities. About Metaldyne Metaldyne is a leading global designer and supplier of metal-based components, assemblies and modules for the automotive industry. Through its Chassis, Driveline and Engine groups, the Company supplies a wide range of products for powertrain and chassis applications for engines, transmission/transfer cases, wheel-ends and suspension systems, axles and driveline systems. Metaldyne is also a globally recognized leader in noise and vibration control products. METROMEDIA INTL: Files 2003 Annual Report on Form 10-K with SEC --------------------------------------------------------------- Metromedia International Group, Inc. (currently traded as: OTCPK:MTRM - Common Stock and OTCPK:MTRMP - Preferred Stock), the owner of interests in various communications and media businesses in Russia and the Republic of Georgia, announced that it filed with the Securities and Exchange Commission its 2003 Annual Report on Form 10-K. The Company delivered a copy of the Current Annual Report to the Trustee of the Company's 10-1/2% Senior Discount Notes, along with required compliance certificates, and thereby remedied within the allowed cure period a default condition under the indenture governing the Senior Notes. As previously reported, the Trustee had advised the Company on April 2, 2004 that it must provide the Trustee its filed Current Annual Report and the compliance certificates by June 1, 2004 or there would be an event of default under the Indenture. Furthermore, as previously announced on May 18, 2004, the Company received notification from the Trustee of its Senior Notes that the Company was not in compliance with requirements of the Indenture since it has not yet filed its Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2004 with the SEC. The Company must resolve this compliance matter no later than July 15, 2004, the sixtieth day following the receipt of the Trustee's letter in order to avoid an event of default. The Company expects that it will file the Current Quarterly Report within the 60-day period. About Metromedia International Group Through its wholly owned subsidiaries, the Company owns communications and media businesses in Russia, Europe and the Republic of Georgia. These include mobile and fixed line telephony businesses, wireless and wired cable television networks and radio broadcast stations. The Company has focused its principal attentions on continued development of its core telephony businesses in Russia and the Republic of Georgia, while undertaking a program of gradual divestiture of its non-core media businesses. The Company's core telephony businesses include PeterStar, the leading competitive local exchange carrier in St. Petersburg, Russia, and Magticom, the leading mobile telephony operator in the Republic of Georgia. The Company's remaining non- core media businesses consist of eighteen radio businesses operating in Finland, Hungary, Bulgaria, Estonia, and the Czech Republic and one cable television network in Lithuania. MIRANT CORPORATION: Wants To Reject TransCanada Gas Contracts ------------------------------------------------------------- Pursuant to Section 365(a) of the Bankruptcy Code, the Mirant Corp. Debtors seek the Court's authority to reject: (a) Firm Service Capacity Release to Androscoggin Energy, LLC, under Gas Transportation Contract for Firm Transportation Service starting November 10, 1999 and ending November 1, 2018 for 11,000 MMBtu/day at primary delivery point Draicut; (b) the Gas Transportation Contract for Firm Transportation Service starting March 9, 1999 and ending October 31, 2018 between TransCanada Gas Services, Inc., and Portland Gas Transmission for 4,000 MMBtu/day at primary delivery point Draicut; and (c) the Gas Transportation Contract for Firm Transportation Service starting November 1, 2018 and ending March 9, 2019 between TransCanada Gas Services, Inc., and Portland Gas Transmission for 15,000 MMBtu/day at primary delivery point Draicut. The Contracts The Contracts are embodied in a Purchase and Sale Agreement (Margin), dated October 10, 2001, entered into among: * Mirant Americas Energy Marketing Canada, Ltd., or MCEM, * Mirant Americas Energy Marketing Investments, Inc., * TransCanada Pipelines Limited, * TransCanada Energy, Ltd., and * TransCanada Gas Services, Inc. Robin E. Phelan, Esq., at Haynes and Boone, LLP, in Dallas, Texas, relates that under the Purchase Agreement, the Mirant Entities agreed to purchase substantially all of the TransCanada Entities' assets, liabilities and business. The Mirant Entities are jointly and severally liable for all obligations that arise under the Purchase Agreement. The Contracts are the only remaining assets, liabilities, properties or businesses purchased under the Purchase Agreement that have not been sold to a third party or expired by their own terms. According to Mr. Phelan, under the Purchase Agreement, MCEM acquired certain TransCanada Energy Assets and MAEMII acquired certain TransCanada Gas Assets. On November 30, 2001, TransCanada Gas, MAEMII and Mirant Americas Energy Marketing, LP, or MAEM, executed the Agreement Relating to Purchase and Sale Agreement (Margin) in which the parties agreed that MAEM would assume the obligations of MAEMII under the Purchase Agreement, including the Contracts. However, Mr. Phelan clarifies that the Mirant Entities remained jointly and severally liable under the Purchase Agreement. On December 1, 2001, MAEM and MAEMII entered into the Contribution, Assignment and Assumption Agreement (Margin) and the General Conveyance (Margin) whereby MAEMII transferred the TransCanada Gas Assets to MAEM and MAEM assumed the TransCanada Gas Assets. Pursuant to the Contracts, MAEM was required to take a permanent assignment of certain firm pipeline transportation capacity on the Portland Natural Gas Transmission System in the amount of 4,000 MMBtu/day following the Closing of the Purchase Agreement through October 31, 2018 and 15,000 MMBtu/day from November 1, 2018 to March 9, 2019. The point of receipt for the Firm Gas Transportation Capacity is East Herford, New Hampshire and the point of delivery is Haverhill, Massachusetts. The Contracts also required MAEM to take permanent assignment of a release of firm capacity made by TransCanada Gas Services to Androscoggin Energy, LLC, for 11,000 MMBtu/day, from November 10, 1999. Pursuant to the Contracts, MAEM was required to replace TransCanada Gas as the party assigning the capacity to Androscoggin, and become financially obligated to PNGTS for any defaults by Androscoggin. However, because the Firm Capacity Release was not assigned to MAEM, TransCanada Gas continues to be liable to PNGTS for any Androscoggin default, and, in turn, MAEM would be liable to TransCanada Gas for the same default pursuant to the PSA. At this time, Androscoggin has not defaulted on its obligations under the Capacity Release. To date, Mr. Phelan informs Judge Lynn that MAEM has not taken permanent assignment of the Firm Gas Transportation Capacity or the Firm Capacity Release. Following the Closing, PNGTS would not accept MAEM as the assignee and an approved shipper, and required TransCanada Gas to keep the Firm Gas Transportation Capacity and Firm Capacity Release in its own name. Instead of taking permanent, wholesale assignment, MAEM takes assignment of the Firm Gas Transportation Capacity on a monthly basis, and Firm Capacity Release for which it prepays about $105,000 per month to PNGTS directly. In connection with the Contracts: * MCEM posted a Letter of Credit amounting to $562,100 in favor of PNGTS Operating Co., LLC, in connection with the 4,000 MMBtu/day firm gas transportation agreement. The PNGTS LC expires May 31, 2004; * Mirant issued a guaranty, dated December 1, 2001, for $100,000 on behalf of MAEM to PNGTS for the 4,000 MMBtu/day firm gas transportation agreement. The guaranty was terminated in December 2002; and * MCEM posted a Letter of Credit amounting to $3,356,785 to TransCanada Pipelines to support its overall transaction activity with TransCanada Pipelines. The TransCanada Pipelines LC expires September 30, 2004. The Canadian Proceeding Pursuant to the CCAA Court Order in the Canadian Proceedings, on October 2, 2003, the Canadian Debtors engaged in a sales process designed to sell its Canadian trading business as a going concern. At the closing of the bidding, there were no offers for Mirant Canada as an ongoing business. Rather, the offers consisted of various combinations of offers to purchase certain specific assets. To that end, in March 2004, Mirant Canada assigned most of the TransCanada transportation contracts to Tenaska Marketing Canada. The two TransCanada transportation contracts that have not been assigned to Tenaska are the Contracts the Debtors wish to reject. Mr. Phelan contends that the Court should authorize the rejection because the Debtors have no need of the pipeline capacity reserved by the Contracts at any price. The Mirant Entities entered into the Purchase Agreement to purchase substantially all of the TransCanada Entities assets and business, of which the Contracts were a minor component. Even at the time the Purchase Agreement was executed, the Mirant Entities did not need, and could not use, the Firm Gas Transportation Capacity. The Contracts are not currently, and have not previously, been used to supply the Debtors' power plants. The Mirant Entities agreed to accept assignment of the Contracts only as part of the overall transaction. However, the Contracts are undoubtedly severable from the Purchase Agreement and each contract stands on its own. 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. 34; Bankruptcy Creditors' Service, Inc., 215/945-7000) NATIONAL BENEVOLENT: Committee Gets Nod to Hire Houlihan Lokey -------------------------------------------------------------- The Official Unsecured Creditors Committee in The National Benevolent Associate of the Christian Church's chapter 11 cases sought and obtained permission to retain Houlihan Lokey Howard & Zukin Capital as its financial advisors. The Committee expects Houlihan to: a. evaluate the assets and liabilities of the Debtors; b. analyze the financial and operating statements of the Debtors; c. analyze the business plans and forecasts of the Debtors; d. evaluate the prospects for debtor in possession financing, cash collateral usage and adequate protection therefore, and the prospects for any exit financing in connection with any plan of reorganization and any budgets relating thereto; e. provide such specific valuation or other financial analyses as the Committee may require in connection with the Cases; f. assess the financial issues and options concerning the sale of the Debtors, or any of them, or their respective assets or structuring any plan of reorganization; and g. provide testimony in court, on behalf of the Committee, if necessary or as reasonably requested by the Committee, subject to the terms of the Engagement. Houlihan Lokey will bill the Debtors' estates: a. $150,000 per month; and b. a Transaction Fee equal to 0.9% of all consideration received pursuant to any Transaction by holders of general unsecured claims. Any Transaction Fee would be credited with 30% of the monthly fee paid in 7-12 months and 60% of any monthly fee paid after 12 months. Headquartered in Saint Louis, Missouri, The National Benevolent Association of the Christian Church (Disciples of Christ) -- http://www.nbacares.org/-- manages more than 70 facilities financed by the Department of Housing and Urban Development (HUD) and owns and operates 18 other facilities, including 11 multi- level older adult communities, four children's facilities and three special-care facilities for people with disabilities. The Company filed for chapter 11 protection on February 16, 2004 (Bankr. W.D. Tex. Case No. 04-50948). Alfredo R. Perez, Esq., at Weil, Gotshal & Manges, LLP represents the Debtors in their restructuring efforts. When the Company filed for protection from their creditors, they listed more than $100 million in both estimated debts and assets. NAT'L CENTURY: Amedisys Wants Adequate Protection of Setoff Rights ------------------------------------------------------------------ Amedisys, Inc., and its affiliates seek the segregation of certain funds because the National Century Financial Enterprises, Inc. Debtors' settlement with The Provident Bank would eviscerate prior protections already afforded to the Amedisys Funds, and would deprive Amedisys of the right to a set-off and other rights as a Class C-4 secured creditor. Daniel A. DeMarco, Esq., at Hahn, Loeser and Parks, in Columbus, Ohio, relates, that before the Petition Date Amedisys filed a lawsuit in the United States District Court for the Southern District of Ohio to obtain possession of $7,339,584 in proceeds of non-purchased Amedisys accounts receivable wrongfully being held by Debtors in various non-debtor banks and investment institutions, including JP Morgan Chase Bank. The Ohio Action was transferred to the U.S. Bankruptcy Court for the Southern District of Ohio and converted to an adversary proceeding. On February 21, 2003 Amedisys commenced a separate action in Louisiana to recover monetary damages against non-debtor parties based on the egregious conduct of certain related non-debtor parties, including JP Morgan, stemming from the Louisiana defendants' refusal to return the Amedisys Funds to Amedisys. The prosecution of the Louisiana Action by Amedisys is currently stayed by an August 20, 2003 Court Order. Amedisys has sought appellate review of the August 20, 2003 Order. In February 2003, the Bankruptcy Court entered the Final Cash Collateral Order. The intention and the effect of the Final Cash Collateral Order was to segregate the Amedisys Funds, then residing in the NPF VI Client Reserve Account. Included among these funds is the Amedisys Fund, totaling to $7,339,584, plus interest. Mr. DeMarco admits that the Debtors addressed the need to segregate the Amedisys Funds in subsequent versions of their Plan and Disclosure Statement by providing for the escrow of a sum no less than an amount equal to the Amedisys Funds pursuant to an escrow agreement. However, the Debtors' settlement agreement with The Provident Bank would deprive Amedisys of one of the benefits of the escrow -- an ability to apply the right to set off the Amedisys Funds against the obligations owed by Amedisys pursuant to a certain promissory note. Amedisys asks the Court to: (a) segregate the Amedisys Funds from the property referred in the Debtors' settlement agreement with Provident to enforce the previously issued Court orders; (b) protect its set-off rights; and (c) protect its rights as a Class C-4 Secured Creditor pursuant to the Plan. Mr. DeMarco contends that the Provident Bank Settlement would undo material protections that exist for Amedisys under the Final Cash Collateral Order, the Plan and the Amedisys Escrow Agreement. Furthermore, the Provident Bank Settlement would transfer out of the NCFE Consolidated Debtors' estates the Amedisys Note. The standard requirements to allow set-off are capacity, prepetition claim and mutuality. Mr. DeMarco points out that Amedisys has claims directly against National Century Financial Enterprises, Inc., NPF Capital and NPF VI, including those articulated in the Adversary Proceeding, the Amedisys Proofs of Claim, including breach of contract, breach of the loan documents, and failure to complete the set-off transaction agreed to in November 2002, and other state law claims. Mr. DeMarco asserts that the segregation of the Amedisys Funds, coupled with a strict prohibition on any use, assignment and transfer of these funds, or any alteration of any set-off rights, or any rights as a C-4 secured creditor, pending a resolution of the Adversary Proceeding, would be appropriate and necessary to provide adequate protection to the interests of Amedisys. Headquartered in Dublin, Ohio, National Century Financial Enterprises, Inc. -- http://www.ncfe.com/-- is the market leader in healthcare finance focused on providing medical accounts receivable financing to middle market healthcare providers. The Company filed for Chapter 11 protection on November 18, 2002 (Bankr. D. Ohio Case No. 02-65235). Paul E. Harner, Esq., Jones, Day, Reavis & Pogue represents the Debtors in their restructuring efforts. (National Century Bankruptcy News, Issue No. 40; Bankruptcy Creditors' Service, Inc., 215/945-7000) NES RENTALS: Names Andrew Studdert as New President & CEO --------------------------------------------------------- On the heels of a successful emergence from Chapter 11 bankruptcy in February, NES Rentals Holdings, Inc. (OTC Bulletin Board: NLEQ) names Andrew P. Studdert its new President & CEO, effective June 1. Studdert is the former Chief Operating Officer of UAL Corporation/United Airlines. NES Rentals, one of the industry's largest heavy equipment rental companies with more than 3,000 employees and 141 branches nationwide, generated $567 million in total revenues for 2003. The Company employs about 250 in the Chicago area. "We are delighted to have Andy join our organization," said NES Chairman John P. Neafsey. "He is a dynamic and experienced leader with a diverse background that will greatly benefit NES as it grows and continues to capture market share. His background and accomplishments in the transportation sector truly set him apart from his peers. The Board is confident that Andy is the best of all possible candidates to lead NES at this time." Mr. Studdert previously served as COO of UAL Corporation/United Airlines from 1999-2002. During his tenure as COO, Mr. Studdert led United to its highest ratings in company history for on-time performance and customer service (2002), completed the company's largest cost-reduction effort and guided the airline through the September 11 crisis. He also held the posts of Senior Vice President, Fleet Operations (1997-1999) and Chief Information Officer (1995-1997) at United. Prior to joining United, Mr. Studdert established Andrew Studdert & Associates, a private information technology consultancy, and served as Executive Vice President for First Interstate Bancorp, then the seventh largest U.S. bank holding corporation operating in 14 Western states. His operations background in technology, banking and finance, makes him particularly well-suited for NES, Neafsey said. "As CIO ('95-'97) of United, Mr. Studdert was responsible for significant upgrade of the systems infrastructure at the company, and he will be applying those operations skills to provide overall leadership to improving and enhancing NES's system infrastructure. His banking background, particularly in accounting and finance, are also a good fit for NES," which is completing a restructuring in large part due to a significant debt burden caused by an aggressive acquisitions profile. "I couldn't be more excited to join NES," Mr. Studdert said. "I have been watching this industry for more than two years and am enthusiastic about NES's potential. I am particularly impressed with the skill and dedication of the NES employees. I look forward to guiding the Company on a path to growth, operational excellence and increased profitability." Added Neafsey: "The selection process was long and quite rigorous, but with the help of ESS Executive Recruiters and Carl Marks Consulting Group we were able to identify the best possible candidate in Andy. We're pleased to welcome him aboard." About NES Rentals Holdings, Inc. NES Rentals Holdings, Inc. is the fourth largest company in the $24 billion equipment rental industry. The Company focuses on renting specialty and general equipment to industrial and construction end-users. It rents more than 750 types of machinery and equipment, and distributes new equipment for nationally recognized original equipment manufacturers. NES also sells used equipment as well as complementary parts, supplies and merchandise, and provides repair and maintenance services to its customers. In addition to the rental business NES is the second largest supplier of traffic and safety services to the construction industry. The Company is a leading competitor in each geographic market it reaches, from its approximately 141 locations in 34 states and Canada. NORTEL NETWORKS: Appoints Hon. John Manley to Board of Directors ---------------------------------------------------------------- Nortel Networks Corporation (NYSE:NT)(TSX:NT) announced that the Hon. John Manley, Former Deputy Prime Minister of Canada, has been appointed to the Company's Board of Directors. "Nortel Networks is a great company, a technology engine in Canada and one that has been successful around the world," said Manley. "I am confident in Nortel Networks future and I am pleased to be joining the Board of Directors. I look forward to being part of the team as we work through the Company's immediate challenges and build on Nortel Networks success as a leading provider of communications networking solutions." During his more than 15 years in public service, the Hon. John Manley held several senior portfolios in the Canadian federal government under former Prime Minister Jean Chretien including: Finance Minister; Minister of Industry, Minister of Foreign Affairs; Political Minister for Ontario; Chairman of the Cabinet Committees on Economic Union and Social Union; and the Minister for Infrastructure and Crown Corporations. While serving as Minister of Foreign Affairs and following the terrorist attacks of September 11, 2001, the Hon. John Manley was appointed by the Prime Minister as Chairman of the Ad Hoc Cabinet Committee on Public Security and Anti-terrorism. For his stand against terrorism and its causes, he was named TIME Canada's magazine "Newsmaker of the Year" in December 2001. The Hon. John Manley has announced that he will be joining the international law firm of McCarthy Tetrault LPP as counsel. Mr. Manley most recently chaired a review committee reporting to the Ontario Minister of Energy on the role of Ontario Power Generation, which delivered its report March 2004. Mr. Manley is a graduate of Carleton University with a Bachelor of Arts degree. He studied at l'Universite Lausanne - Ecole de francais moderne in 1972 and then studied law at the University of Ottawa graduating in 1976. Mr. Manley was also appointed to serve as a Director of Nortel Networks Limited, the principal operating subsidiary of Nortel Networks Corporation. 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. ONE PRICE: Gets Court Nod to Hire Grant Thornton as Accountant -------------------------------------------------------------- One Price Clothing Stores, Inc., and its debtor-affiliates sought and obtained approval from the U.S. Bankruptcy Court for the Southern District of New York to employ Grant Thornton LLP as its accountant and tax advisor. The Debtors anticipate that Grant Thornton will provide tax services required by the Debtors including, but not limited to: i) preparation and/or review of the income tax returns; ii) preparation of federal and state extensions and related payments (if any); iii) preparation and/or review of property tax returns; iv) preparation and/or review of sales & use tax returns; v) preparation of business license returns; and vi) preparation of annual reports Grant Thornton will charge the Debtors for its accounting and tax services on a blended hourly rate. The Debtors will compensate Grant Thornton in a blended hourly rates of: Period Blended Rate ------ ------------ prior to 4/15/04 $144 per hour 4/16/04 to 8/31/04 $108 per hour 9/1/04 to 9/15/04 $144 per hour 9/16/04 to the remainder of 2004 $108 per hour Headquartered in Duncan, South Carolina, One Price Clothing Stores, Inc. -- http://www.oneprice.com/-- operates a chain of off price specialty retail stores. These stores offer a wide variety of contemporary, in-season apparel and accessories for the entire family. The Company, together with its two affiliates, filed for chapter 11 protection on February 9, 2004 (Bankr. S.D.N.Y. Case No. 04-40329). Neil E. Herman, Esq., at Morgan, Lewis & Bockius, LLP represents the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $110,103,157 in total assets and $112,774,600 in total debts. OPRYLAND HOTEL: S&P Upgrades Five Series 2001-OPRY Class Ratings ---------------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on five classes of Opryland Hotel Trust's commercial mortgage pass-through certificates series 2001-OPRY. The raised ratings reflect the paydown in the certificate balance as a result of scheduled amortization and the unscheduled principal payments triggered by the cash trap. The current loan balance is $196.5 million, compared to $275 million at issuance. The unscheduled principal payments accounted for $53.1 million of the change and the scheduled amortization ($25.4 million). The cash trap was activated when the property's performance declined, causing the combined mezzanine and senior loan debt service coverage (DSC) thresholds to fall below prescribed levels. The cash trap provisions require that all excess cash flow after debt service payments are to be used to pay down the senior classes. As a result, the A-1 certificates have been retired and the A-2 class has partially paid down. In November 2003, the outstanding mezzanine loan was paid off. With the retirement of the mezzanine loan and improved DSCs, additional unscheduled principal payments are not anticipated at this time. According to the servicer, Wells Fargo Bank N.A., the actual DSC at March 31, 2004 was 1.70x. The cash trap senior loan threshold is 1.25x. The first mortgage is secured by a fee-simple interest in the Opryland Hotel and Convention Center in Nashville, Tenn., a full- service hotel and convention facility. The property caters primarily to the group meeting segment, which accounts for approximately 80% of the property's business. The hotel and convention center's improvements include 2,881 guest rooms and 582,637 sq. ft. of meeting and banquet facilities. Standard & Poor's visited the property in mid-May 2004 and met with senior management of Gaylord Entertainment Co., the owner and operator of the property. Standard & Poor's found the property to be in good condition. In the first four months of 2004, room night production for Opryland for all future periods that are definitely booked is 170,000, compared to 130,000 rooms during the same period in 2003. This reflects an increase in convention business. Advanced bookings with large business groups are viewed favorably, as they contribute to a more stabilized occupancy. Over the past few years, the mix of the hotel's total demand shifted toward association business from corporate business due to a reduction in corporate travel spending. There are indications that a recovery in corporate business is occurring. The positive consequence of this change is that a higher component of food and beverage revenue is expected, as corporate business generally spends more on food and beverage than the hotel's other market segments. In 2003, the property's operating performance improved by 15% compared to 2002. This reflects a very strong first quarter in 2003 due to several bookings by some very large clients. In the first quarter of 2004, operating performance declined when compared to the first quarter in 2003. For the full-year ending 2004, management expects operating income to be flat to slightly down from the actual results achieved in 2003. At Dec. 31, 2003 and 2002, occupancy/revenue per available room was 72.4%/$99.59 and 68.6%/$97.80, respectively. Standard & Poor's determined that based on the financial results through March 2004, and considering management's 2004 forecast, stabilized net cash flow is approximately $32 million. Standard & Poor's estimates that at this level, DSC is 1.57x at a loan constant of 10.2%, with a loan-to-value of 71%. The loan has been extended through March 31, 2005, and one, 12- month extension is still available. Ratings Raised Opryland Hotel Trust Commercial mortgage pass-thru certs series 2001-OPRY Rating Class To From A-2 AAA AA B AAA A+ C A+ BBB D BB+ B E BB B- OREGON STEEL: S&P Revises Outlook to Stable from Negative --------------------------------------------------------- Standard & Poor's Ratings Services said it revised its outlook on Oregon Steel Mills Inc. (OSM) to stable from negative. At the same time, Standard & Poor's affirmed its ratings on the Portland, Ore.-based company. The company has about $310 million in total debt. "The outlook revision reflects the improvement to the company's financial profile due to the strong and rapid rebound in the steel industry," said Standard & Poor's credit analyst Paul Vastola. Favorable market conditions should remain at least through most of 2004 and enable the company to bolster its liquidity and financial performance. The ratings on OSM reflect its highly competitive markets, volatile operating performance resulting from exposure to cyclical industries, particularly the oil and gas transmission pipeline business, and its aggressive capital structure. The corporate credit rating on OSM is affirmed at 'B'. Also affirmed are the 'B' rating on the company's $305 million first mortgage notes due 2009, and the 'B+' rating on a $65 million senior secured credit facility due June 30, 2005. Oregon Steel operates two steel minimill divisions: The Oregon Steel division, which produces plate out of the company's Portland, Ore. mill and includes its large-diameter pipe-finishing facility in Napa, Calif. and its 60%-owned Camrose, large-diameter pipe and electric resistance welded pipe mill in Alberta, Canada and; the Rocky Mountain Steel Mills division in Pueblo, Colo., which produces mainly rail, rod, bar, and seamless tubular products. The company primarily competes in markets west of the Mississippi River and in Western Canada, where there are fewer competitors, providing a transportation cost advantage relative to Eastern producers. Although its product mix and customer base are somewhat varied, the company is only modestly insulated during periods of economic distress, as most of its markets are tied to similar end markets. Oregon Steel is affected by intense competition, cyclical swings in demand, and fluctuations in the price of energy, as well as steel scrap and slab--critical raw materials. Indeed, scrap, slab, and energy costs have risen significantly in the past year. However, increasing demand and reduced supply levels have enabled steel companies to raise selling prices and implement surcharges, more than compensating for these higher costs. The company has also recently revised its business model and its product mix, as it is focusing on growing its plate business, concentrating on the West Coast market where it benefits from its closer proximity relative to its competition. Although this will lessen the company's production of its high-margin large-diameter pipe products, it will somewhat reduce the volatility of the company's performance. Oregon Steel has a very aggressive balance sheet highlighted by a total debt (adjusted for operating leases) to EBITDA ratio of 9.5x for the 12 months ended March 31, 2004, and a total debt to total capital ratio of 59%. Despite the spike in input costs and its less value-added product mix, the company's profitability levels improved dramatically in the first quarter ended March 2004, due to record shipments of its plate products and higher selling prices across its product lines. PACIFIC GAS: Files Cost of Capital Application with CPUC -------------------------------------------------------- Pacific Gas and Electric Company Vice President and Controller, Dinyar B. Mistry, discloses to the Securities and Exchange Commission that on May 12, 2004, PG&E filed a cost of capital application with the California Public Utilities Commission to recover in rates its: (a) actual cost of capital -- long term debt and costs of preferred stock -- from January 1, 2004 through April 11, 2004; (b) new cost of capital resulting from the Utility's financing consummated in connection with the implementation of the Utility's reorganization plan on April 12, 2004; and (c) costs associated with interest rate hedges for its Chapter 11 exit financing. The application also requests authorization for the Utility's forecast cost of capital and capital structure for 2005. According to Mr. Mistry, PG&E's currently authorized: -- return on equity is 11.22% for its electricity and natural gas distribution operations and its electricity generation operations; -- cost of debt is 7.57%; -- cost of preferred stock is 6.05%; and -- capital structure is 48.00% common equity, 46.20% long-term debt and 5.80% preferred equity. The December 2003 settlement agreement entered into among the Utility, PG&E Corporation and the CPUC, provides that from January 1, 2004 until Moody's Investor Services has issued an issuer rating for the Utility of not less than A3 or Standard & Poor's has issued a long-term issuer credit rating for the Utility of not less than A-, PG&E's authorized ROE will be no less than 11.22% per year and its authorized equity ratio will be no less than 52%. However, the Settlement Agreement provides that the PG&E's authorized equity ratio for 2004 and 2005 will equal the greater of the proportion of equity approved in the Utility's 2004 and 2005 cost of capital proceedings or 48.6%. The Settlement Agreement also provides that PG&E will be allowed to recover the reasonable costs of hedging interest rates for its exit financing and that the costs of financing, including fees, will be fully recoverable as part of the cost of debt to be collected in its retail gas and electric rates without further review. Requested Authorization for 2004 PG&E has not requested a change to its currently authorized ROE of 11.22% for 2004. Instead, the Utility has requested an authorized capital structure consisting of 49% common equity, 2.8% preferred equity, and 48.2% long-term debt. The Utility's new cost of long-term debt is 5.17% for the period from April 12 to December 31, 2004, which results in a weighted average cost of debt for 2004 of 5.82%. The Utility requested an authorized cost of preferred stock of 6.76% for 2004. The resulting overall rate of return for 2004 would be 8.49% and PG&E's annual revenue requirement for 2004 would decrease by $106 million compared to currently authorized revenue requirements. Requested Authorization for 2005 PG&E requested an authorized ROE of 11.60% for its: -- gas and electric distribution operations; -- electric generation operations; and -- natural gas transmission and storage operations. PG&E's requested cost of preferred stock for 2005 is 6.42%. PG&E has requested an authorized capital structure for 2005 consisting of 52% common equity, 45.5% long-term debt, and 2.5% preferred equity. The requested capital structure reflects an assumption that bonds of $2 billion, secured by a dedicated rate component are sold on January 1, 2005 and that the proceeds of the issuance are used to rebalance PG&E's capital structure to attain the target capital structure of 52% equity ratio as provided in the Settlement Agreement and to fund infrastructure capital expenditures. Mr. Mistry notes that the California legislation to authorize the DRC financing, Senate Bill 772, was approved by the California Assembly on May 10, 2004. The bill will be sent to the California Senate for consideration. If approved by the California Senate, the bill will be sent to the California Governor for signature by the end of May 2004. For 2005, Mr. Mistry states that PG&E has requested an authorized cost of debt of 5.94%. PG&E's estimated cost of debt for 2005 assumes that the first tranche of DRC financing of $2 billion has occurred on January 1, 2005. The Utility plans to use a portion of the proceeds from the DRC financing to redeem all or a portion of its 2-year floating rate notes issued in March 2004. Since the interest rate on these floating rate notes is significantly lower than the interest rates on the remaining long-term debt issued in PG&E's exit financing, redeeming the two-year floating rate notes would cause the average cost of the its remaining debt to be higher. The combined effect of the increased average cost of debt, the requested ROE, and the 52% equity ratio would cause PG&E's forecast revenue requirement for 2005 to increase by $104 million over the requested reduction for 2004 and would result in an overall ROR of 8.90% for 2005. This revenue requirement change would not include the reduction in revenue requirements that would result from the DRC financing. Mr. Mistry explains that after the DRC financing, the 11.22% ROE on the $2.21 billion after-tax regulatory asset established under the Settlement Agreement would be reduced by the amount of the financing. Instead, PG&E would recover the cost of debt -- principal and interest -- related to the DRC financing from customers through the dedicated rate component. PG&E has proposed to include any electric revenue requirement change authorized in the Chapter 11 proceeding in rates effective January 1, 2005. Additionally, PG&E has proposed to include any gas revenue requirement changes authorized in the next gas transportation rate change, annual true-up or the biennial cost allocation proceeding. PG&E proposes a procedural schedule for its cost of capital application that contemplates that hearings would begin August 23, 2004 and that the assigned administrative law judge would issue a proposed decision by November 2, 2004. Headquartered in San Francisco, California, Pacific Gas and Electric Company -- http://www.pge.com/-- a wholly-owned subsidiary of PG&E Corporation (NYSE:PCG), is one of the largest combination natural gas and electric utilities in the United States. The Company filed for Chapter 11 protection on April 6, 2001 (Bankr. N.D. Calif. Case No. 01-30923). James L. Lopes, Esq., William J. Lafferty, Esq., and Jeffrey L. Schaffer, Esq., at Howard, Rice, Nemerovski, Canady, Falk & Rabkin represent the Debtors in their restructuring efforts. On June 30, 2001, the Company listed $23,216,000,000 in assets and $22,152,000,000 in debts. (Pacific Gas Bankruptcy News, Issue No. 77; Bankruptcy Creditors' Service, Inc., 215/945-7000) PARMALAT: Commissioner Bondi to File Restructuring Plan by Monday ----------------------------------------------------------------- Parmalat Extraordinary Commissioner Dr. Enrico Bondi confirms that as previously announced at a meeting with creditors on March 26, 2004, he intends to file with the Minister for Production Activities a plan for the restructuring of the Group and a proposal for an agreement with creditors in order that Parmalat can emerge from Extraordinary Administration. Taking advantage of the changes introduced by Legislative Decree no. 119 of May 3, 2004 that introduced new rules aimed at facilitating the presentation and implementation of an agreement with creditors, Extraordinary Commissioner and Presiding Judge Dr. Vittorio Zanichelli have suspended the process to verify the list of creditors of the following companies in Extraordinary Administration. The Extraordinary Commissioner intends to present a proposal for an agreement with creditors in relation to these companies: PREVIOUSLY PUBLISHED COMPANIES HEARING DATE --------- -------------------- Parmalat SpA May 19, 2004 Parmalat Finanziaria SpA May 26, 2004 Eurolat SpA May 31, 2004 Lactis SpA June 4, 2004 Dairies Holding International bv June 28, 2004 Parmalat Finance Corporation bv June 28, 2004 Parmalat Capital Netherlands bv June 29, 2004 Parmalat Netherlands bv June 29, 2004 Olex sa June 30, 2004 Parmalat Soparfi sa July 1, 2004 Geslat srl July 2, 2004 Parmaengineering srl July 2, 2004 Contal srl July 6, 2004 Eurofood IFSC Limited July 7, 2004 Eliair srl September 2, 2004 Newco srl September 2, 2004 Panna Elena C.P.C. srl September 3, 2004 Centro Latte Centallo srl September 3, 2004 [Article 3, comma 1, point d) of Legislative Decree of May 3, 2004 no. 119 allows the Extraordinary Commissioner, even before the presentation of a proposed agreement with creditors, to ask the Presiding Judge to suspend the verification process to establish the total of indebtedness of the company or companies towards creditors.] As a result of this provision by the Presiding Judge the various hearings referred to above to establish the total indebtedness of these companies will now not take place. This will simplify the claims process for creditors. Given what follows, creditors are still encouraged to continue to register claims to be included in the list of the companies' creditors by following the procedures that are set out on the Court website http://web.ltt.it/tribunale/home.htmsince these claims will still be considered. The Extraordinary Commissioner's intention is to file with the Minister of Production Activities a restructuring plan and a proposed agreement with creditors, including a provisional list of creditors, very shortly. The current objective, as communicated to the meeting with creditors that took place on 26 March 2004 is that the plan and the proposed agreement with creditors will be filed on May 31, 2004. As foreseen under Italian law, the agreement will be subject to the approval of creditors. As normal, only those creditors that are registered in the final list that the Presiding Judge will compile with the cooperation of the Extraordinary Commissioner will be eligible to vote. In order to be sure to be able to exercise their vote on the agreement, and in any case so as to be recognized as creditors ahead of any distribution, interested parties: (1) Should continue to register their claims to be included in the list of creditors. From those claims received a provisional list of creditors will be compiled by the Extraordinary Commissioner. Creditors are recommended to follow this procedure in as much as this will keep to a minimum the task of addressing with those issues arising out of point 2. (2) The claims received after the Extraordinary Commissioner will have filed the provisional of creditors and before the end of a period to be determined by the Presiding Judge will be considered by the Judge as comments on the provisional list compiled by the Extraordinary Commissioner, on the amounts of credits indicated and on the claims to preferential treatment. Creditors that decide not to file their claims can, however, present documents and written submissions containing their observations on the provisional list of creditors drawn up by the Extraordinary Commissioner, on the amounts of the credits indicated and on relevant claims to preferential treatment. The Presiding Judge will use these claims and comments to complete or update the provisional list of creditors prepared by the Extraordinary Commissioner and to produce a definitive list of named creditors. Bond issues, like all other credits acknowledged by the companies listed above, will be included in the list of creditors even for that portion for which no named creditors have made a specific claim. In any case all bondholders are encouraged to register their claims for inclusion in the list of creditors since only those creditors named in the Presiding Judge's list will be eligible to vote. In the coming weeks the Extraordinary Commissioner will issue press releases that will detail the restructuring plan and the proposed agreement with creditors. It is also his intention to call a further meeting of creditors, the timing of which will also be made public. 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. 17; Bankruptcy Creditors' Service, Inc., 215/945-7000) PERFORMANCE MATERIALS: Court Says Only Some Causes of Action Sold ----------------------------------------------------------------- The U.S. Bankruptcy Court for the Middle District of Florida was called on to answer whether some or all causes of action were sold when Performance Materials Inc.'s assets were sold at auction. The Honorable Michael Williamson rules that the answer is some, not all. The issue before the bankruptcy court is the interpretation of an order (Doc. No. 85) authorizing the sale of an asset in Performance Material's bankruptcy case when it was being administered as a chapter 7 case. The case was originally filed under chapter 11, in March 2001. The Debtor is a corporation established by Alan Morris, the plaintiff in the adversary proceeding brought to the Bankruptcy Court, formed for the purpose of acquiring the assets of a business owned by defendant Joseph Puleo. The business dispute which arose between the Messrs. Morris and Puleo concerns Mr. Puelo's obligations under a covenant not to compete (which was listed as an asset in the bankruptcy schedules filed in the original chapter 11 case). More specifically, the potential violation by Mr. Puleo of the covenant not to compete was listed in the bankruptcy schedules and described as a "possible cause of action against former owner Charles Joe Puleo," under the category of property titled "other contingent and unliquidated claims of every nature." Background Unfortunately, the chapter 11 case was unsuccessful and it was voluntarily converted to a chapter 7 case, and John Brook was appointed as the chapter 7 trustee. The Action, as set forth in the schedules, is one of the assets to be administered by the Trustee. Mr. Brook, in January of 2002, during the course of his administration of the chapter 7 estate, filed a report and notice of intention to sell property of the estate, which included the Action. The Notice of Intention describes the Action as the "potential lawsuit for violation of non-compete against Charles J. Puleo." The original sale price was $250.00 and the potential buyer was Mr. Puleo. The sale, as is typical of bankruptcy sales, also provides that no warranties of any kind are provided and that the sale was subject to higher and better offers. Although it may seem peculiar to be selling a lawsuit against a person to the person who is the defendant, this a common practice in bankruptcy court, because the defendant is thus given an out from litigation and usually will offer something just for the finality of having pending litigation resolved. The defendant then dismisses the lawsuit against the defendant. In a typical case, that ends the litigation. At the time the Notice of Intention was filed, Alan Morris and the Debtor had pending before the Circuit Court of the Thirteenth Judicial Circuit a suit against Charles Puleo, Florida Pool Finishers, Inc., and Performance Marcite, Inc. Objections to the proposed sale were filed by two parties, Mr. Morris and CIT, the primary secured lender of the Debtor. CIT held a floating Article 9 lien on the Debtor's contract rights and general intangibles, and therefore asserted a claim. To the extent that the potential lawsuit constituted either of those, CIT did not want to waive its claim to credit bid. The Circuit Court scheduled a hearing to hear objections to the sale by the two parties, Mr. Morris and CIT. The Circuit Court sustained the objections and ordered an auction of the Action, which produced a higher bid by Mr. Puleo in the cash amount of $9,900.00. The Order authorizing the sale by the Trustee to Mr. Puleo states in relevant part that: "[t]he Court approves the sale of the estate's tort and non-contract claims to Joseph Puleo for the sum of $9,900 (cash). . . ." Judge Williamson Reviews The Law Controlling The Order Authorizing Sale Of The Action Asset Mr. Puleo asserted in the state court action that the effect of the Order was to actually convey all of the bankruptcy estate's tort and non-contract claims against not only himself but also against other parties, including Mr. Morris and Mr. Morris' attorney Buddy Ford and Mr. Ford's law firm, Buddy Ford P.A. This large assertion, writes Judge Williamson, has caused Messrs. Morris and Ford to invoke the jurisdiction of the Bankruptcy Court to seek a declaration as to whether Mr. Puleo's assertion is valid. The Court concludes that Mr. Puleo's assertion does not have merit. The actual party is the bankruptcy trustee, Judge Williamson explains; it is the trustee who has the function of liquidating the bankruptcy estate, with the accompanying power of selling the assets of the bankruptcy estate. "Where a sale is not in the ordinary course of business, as was the situation here, court approval is necessary. Armed with court authority, the trustee then sells or liquidates the assets. In the ordinary case, the trustee obtains the authority from the court to conduct a private sale or an auction. The order granting such authority may not even be very specific and may only generally describe the assets for sale at an auction." Judge Williamson observes also that while the order granting authority under which the trustee acts may be very broad, the Bankruptcy Rules have specific requirements for conducting such sales. For example, the Judge cites Bankruptcy Rule 6004 (f) requiring that a notice be filed with the court providing a statement of the specific property sold and the name of each purchaser. Additionally, Judge Williamson cites Bankruptcy Rule 2002 (c)(1) which also requires that parties in interest receive notice of the proposed sale which gives a general description of the property to be sold. In the instant case before the Bankruptcy Court, writes the Judge, the Notice of Intention described the asset being sold as the "potential lawsuit for violation of non-compete against Charles J. Puleo." There was no issue as to adequacy of service to creditors nor was there any objection regarding the content of the content of the Notice of Intention. The operative document that effectuates the sale, continued Judge Williamson's Opinion, is the assignment. In this case, the assignment specifically transfers the estate's interest in the Action for violation of the non-compete agreement against Charles J. Puleo, Performance Marcite, Inc. and Florida Pool Finishers, Inc. to Charles Puleo. Thus, it is clear, in light of the language in the Notice of Intention and in the Assignment as well, that the Trustee only sold and assigned to Mr. Puleo the non-contract rights and claims that the estate had against Mr. Puleo, Performance Marcite and Florida Pool Finishers. There is no ambiguity present, observes Judge Williamson, because, while the Order authorizing the sale is broader than the Assignment and the Notice of Intention, the Order itself does not operate to cause the sale to occur. The Order merely authorizes the sale by the Trustee, who in turn must function within the terms of the Notice of Intention and the Assignment, as provided by the Bankruptcy Rules cited above, concludes Judge Williamson. Accordingly, the Court declares that the parties' rights under the Notice of Intention and Order are limited to the sale of the claims of the Debtor against Charles Puleo, Performance Marcite and Florida Pool Finishers as they appear in the Notice. The case is In re Performance Materials Inc., Bankr. M.D. Fla., Case No. 01-3452-8W7, Adv. Pro. No. 03-516. The Plaintiffs, Performance Materials, Inc., Alan Morris, individually, and his attorney Buddy Ford, Esq., were represented by Buddy Ford, Esq., in Tampa, Florida. Brett Wadsworth, Esq., in Tampa, Florida, represented the Defendants, Florida Pool Finishers Inc., Joseph Puleo, individually, and himself. PILLOWTEX CORPORATION: Opts To Procure Replacement D&O Policy ------------------------------------------------------------- The Pillowtex Corporation Debtors currently maintain a $40,000,000 insurance program to cover certain liabilities of their directors and officers. The Existing Policy covers claims arising during the one-year period ending May 24, 2004, on which date the program's coverage is due to expire, subject to renewal. Being a "layered" policy, the Existing Policy is under multiple insurance providers, with primary coverage provided by National Union Fire Insurance of Pittsburgh, Pennsylvania. According to Gilbert R. Saydah, Jr., Esq., at Morris Nichols Arsht & Tunnel, in Wilmington, Delaware, the aggregate annual premium payments under the Existing Policy total $1,069,000, which have been paid in full by the Debtors through May 24, 2004. In light of the approaching expiration of the Existing Policy, the Debtors discussed with their officers and directors, their insurance broker, and the Official Committee of Unsecured Creditors, the renewal of coverage. At the Committee's request, the Debtors reassessed their coverage needs and explored the possibility of procuring alternative replacement policies that would reduce their annual premium payments. Subsequently, the Debtors determined to procure a replacement policy to be provided entirely by National Union. The Replacement Policy will effectively extend the Existing Policy at a reduced amount of coverage for claims that: -- arose from May 24, 2003 through the end of the coverage period; and -- are actually brought before the end of the coverage period. The material terms of the Replacement Policy are: Coverage Amount: $5,000,000, inclusive of defense expenses Retention: None Term: May 24, 2004 through May 24, 2005, subject to renewal Coverage: The Debtors' past, present and future directors, officers and employees Premium: $175,000 per year Under the proposed Replacement Policy, the premiums that would be due represent an annualized reduction of $894,000, more than 80% as compared with the premiums under the Existing Policy. Procuring and maintaining the Replacement Policy, and paying premiums under the Replacement Policy constitutes a use of property that is within the ordinary course of the Debtors' business, as contemplated by Section 363(c) of the Bankruptcy Code, Mr. Saydah says. However, in an abundance of caution, the Debtors seek the Court's permission to: (a) procure and maintain the Replacement Policy as replacement to the Existing Policy; and (b) perform Replacement Policy obligations, including the payment of premiums and associated policy renewal costs. The Debtors believe that obtaining the Replacement Policy is necessary to the effective administration of their estates. although the Debtors have ceased all of their manufacturing operations, they continue to own and control substantial real and personal property assets, all of which must be maintained, both to preserve the value for creditors and to comply with applicable law. The Debtors also continue to reconcile and settle claims, sell assets, and either reject or assume and assign executory contracts. The Debtors' ability to perform these tasks and continue administering their estates for the benefit of their creditors would be severely jeopardized if they were unable to retain their officers and directors. Headquartered in Dallas, Texas, Pillowtex Corporation -- http://www.pillowtex.com/-- sells top-of-the-bed products to virtually every major retailer in the U.S. and Canada. The Company filed for Chapter 11 protection on November 14, 2000 (Bankr. Del. Case No. 00-4211). David G. Heiman, Esq., at Jones, Day, Reavis & Poque represents the Debtors in their restructuring efforts. On July 30, 2003, the Company listed $548,003,000 in assets and $475,859,000 in debts. (Pillowtex Bankruptcy News, Issue No. 64; Bankruptcy Creditors' Service, Inc., 215/945-7000) RCN CORPORATION: Files for Chapter 11 Protection in S.D. New York ----------------------------------------------------------------- RCN Corporation announced that its senior secured lenders and members of an ad hoc committee of holders of its Senior Notes have agreed to support a financial restructuring on the terms set forth below. In order to facilitate the restructuring, RCN Corporation, the parent holding company, and several non-operating subsidiaries have filed voluntary petitions for reorganization under Chapter 11 of Title 11 of the United States Code in the U.S. Bankruptcy Court for the Southern District Court of New York. In connection with the proposed financial restructuring, RCN also announced that it has entered into a commitment letter with Deutsche Bank Securities Inc. pursuant to which Deutsche Bank has committed to provide the Company with new financing upon the consummation of the plan of reorganization. The new financing will consist of (i) a $310 million first lien facility, including a $285 million term loan facility and a $25 million letter of credit facility, and (ii) a $150 million second lien facility. Each of the facilities will be guaranteed by all of RCN's wholly owned domestic subsidiaries and secured by substantially all the assets of RCN and its wholly owned domestic subsidiaries. Each of the facilities will contain prepayment provisions, covenants and events of default customary for facilities of this nature. Closing and funding for each of the facilities is subject to satisfaction of customary conditions precedent for facilities of this nature. "We continue to believe that our strategy of selling bundled services over a broadband network will define the future of the industry," said Chairman and CEO David C. McCourt. "This has been proven true over the last several months as competitors continue to emulate our strategy. Today's filing is very positive news for RCN employees and customers. RCN can reduce its debt and emerge as a stronger, more efficient company, giving us a competitive advantage in the long run." In the event that the financial restructuring is completed in accordance with the terms outlined below, RCN estimates that today's $1.66 billion of indebtedness to the senior secured lenders and noteholders could be reduced to approximately $480 million. "This was a careful, proactive and deliberate process that achieved a consensus among all these stakeholders," said John Dubel, President and Chief Operating Officer who led the restructuring process. "Having worked on many telecom restructurings, I am very optimistic about RCN emerging quickly from Chapter 11 because its underlying business strategy remains sound." The Company said it planned to emerge from Chapter 11 in the fourth quarter of 2004. In connection with the Chapter 11 filings, RCN has obtained waivers from its existing Lenders that waive any events of default caused by the Chapter 11 filings and amend the minimum cash requirements under its existing senior secured credit facility. RCN reiterated that today's Chapter 11 filing is not expected to result in any disruption of service to RCN's customers. Summary of the terms of the financial restructuring: -- On the effective date of a plan of reorganization or sooner, the existing senior secured credit facility will be repaid in full in cash, unless any existing lender elects to roll its outstandings into the new facility. All undrawn letters of credit will be either replaced on the effective date of a plan of reorganization or cash collateralized on terms agreed by the issuing bank. -- On the effective date of a plan of reorganization, each holder of an allowed general unsecured claim will receive, in exchange for its total claim (including principal and interest in the case of a bond claim), its pro rata portion of 100% of the fully diluted new common stock of reorganized RCN, before giving effect to (i) any management incentive plan and (ii) the exercise of the equity warrants described below, if any. -- Holders of RCN's existing preferred stock and common stock will receive, on a basis to be determined, equity warrants that are exercisable into two percent of reorganized RCN's common stock (before giving effect to any management incentive plan,) with a two-year term beginning on the consummation of a plan of reorganization, and set at a strike price equivalent to an enterprise valuation of $1.66 billion. Holders of existing warrants and options will not be entitled to receive a distribution under the plan of reorganization on account of such interests. -- On the effective date of a plan of reorganization, all obligations under the Commercial Term Loan and Credit Agreement, dated as of June 6, 2003, among the Company, the lenders party thereto and HSBC Bank USA, as agent (the "Evergreen Facility"), will either (i) remain outstanding on terms agreed upon between the Company and the lenders under the Evergreen Facility or as otherwise permitted by the Bankruptcy Code or (ii) be refinanced in whole or in part. -- On the effective date of a plan of reorganization, the sole equity interests in reorganized RCN will consist of new common stock, the equity warrants described above and equity interests to be issued in any management incentive plan. -- On the effective date of a plan of reorganization, there will be no debt, security or other material obligation of reorganized RCN other than indebtedeness or securities described above and obligations arising in the ordinary course of reorganized RCN's business. "Ultimately this agreement was achieved since all of us believe that RCN has a solid long-term business plan," said Russ Belinsky, Senior Managing Director of Chanin Capital Partners, financial advisors to the Noteholders' Committee. "We are eager to see a stronger RCN emerge with the right capital structure." The agreement reached between RCN and its creditors covers the broad economic terms of the financial restructuring and not all material terms expected to be contained in a plan of reorganization. The agreement is not binding on RCN or the creditors with whom it was negotiated and not all RCN stakeholders are party to this agreement or participated in its negotiations. Therefore, there can be no assurance that the current agreement will result in a binding definitive agreement and fully consensual plan of reorganization, or if such plan of reorganization is reached, when or if such plan will be approved by all RCN stakeholders entitled to vote thereon. In addition, the implementation of a plan of reorganization is dependent upon a number of conditions typical in similar reorganizations, including court approval of the plan and related solicitation materials and approval by the requisite stakeholders of RCN. In addition, the financing to be provided by Deutsche Bank is subject to material conditions including confirmation of a plan of reorganization, no material adverse effect on the business, operations, financing or finances of RCN and its subsidiaries, no material change in market conditions or on the ability of Deutsche Bank to syndicate the new financing and the achievement of certain financial performance criteria. There can be no assurances that these conditions or the other conditions to the financing will be met. Additional terms and conditions of a plan of reorganization will be outlined in a Disclosure Statement which will be sent to creditors and security holders entitled to vote on the plan of reorganization after it is approved by the bankruptcy court. RCN is represented by AlixPartners LLC, The Blackstone Group L.P., and Skadden, Arps, Slate, Meagher & Flom LLP. 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. RCN CORPORATION: Case Summary & 17 Largest Unsecured Creditors -------------------------------------------------------------- Lead Debtor: RCN Corporation fka RCN Telecom Corporation 105 Carnegie Center Princeton, New Jersey 08540 Bankruptcy Case No.: 04-13638 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Hot Spots Productions, Inc. 04-13637 RLH Property Corporation 04-13639 RCN Finance, LLC 04-13640 TEC Air, Inc. 04-13641 Type of Business: The Debtor is a provider of bundled telecommunications services. See http://www.rcn.com/ Chapter 11 Petition Date: May 27, 2004 Court: Southern District of New York (Manhattan) Judge: Robert D. Drain Debtors' Counsels: Frederick D. Morris, Esq. Jay M. Goffman, Esq. Skadden Arps Slate Meagher & Flom LLP Four Times Square New York, NY 10036-6522 Tel: 212-735-2262 Fax: 917-777-2262 Total Assets: $1,486,782,000 Total Debts: $1,820,323,000 Debtor's 17 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ HSBC Bank USA 11.125% Senior $315,995,000 452 Fifth Avenue Discount Notes due New York, New York 10018 2007 HSBC Bank USA 9.8% Senior Discount $290,289,000 452 Fifth Avenue Notes due 2008 New York, New York 10018 HSBC Bank USA 10.125% Senior $202,871,000 452 Fifth Avenue Notes due 2010 New York, New York 10018 HSBC Bank USA 10.0% Senior $160,879,000 452 Fifth Avenue Notes due 2007 New York, New York 10018 HSBC Bank USA 11.0% Senior Discount $139,472,000 452 Fifth Avenue Notes due 2008 New York, New York 10018 Bombardier Inc. Trade $194,126 Affinitas Corporation Trade $60,284 Nextel Communications Trade $9,170 Boise Cascade Office Products Trade $7,218 Sony Music Studios Trade $2,039 Gels Film Lighting Pty Ltd Trade $1,287 Encore Trade $1,031 Warrenwood Studios Trade $880 Nortel Networks Trade $466 Pitney Bowes Trade $362 Universal Access Trade $250 Hello World Communications Trade $72 RELIANCE GROUP: Still Unable To File Financial Reports With SEC --------------------------------------------------------------- Paul W. Zeller, President and CEO of Reliance Group Holdings, tells the Securities and Exchange Commission in a Form 12b-25 filing on May 19, 2004, that RGH has been unable to complete the work necessary to issue audited financial statements for fiscal year 2000 or any subsequent fiscal year. Unless this work is completed by Deloitte & Touche, LLP, and an audit opinion is issued, it will not be possible to prepare a Form 10-Q for the fiscal quarter ended March 31, 2004. Headquartered in New York, New York, Reliance Group Holdings, Inc. -- http://www.rgh.com/-- is a holding company that owns 100% of Reliance Financial Services Corporation. Reliance Financial, in turn, owns 100% of Reliance Reliance Insurance Company. The Company filed for chapter 11 protection on June 12, 2001 (Bankr. S.D.N.Y. Case No. 01-13403). When the Company filed for protection from their creditors, they listed $12,598,054,000 in assets and $12,877,472,000 in debts. (Reliance Bankruptcy News, Issue No. 52; Bankruptcy Creditors' Service, Inc., 215/945-7000) SAFETY-KLEEN: Trustee Releases First Quarter 2004 Report -------------------------------------------------------- Oolenoy Valley Consulting, LLC, represented by Donna L. Culver, Esq., at Morris Nichols Arsht & Tunnell in Wilmington, Delaware, presents its First Quarterly Report as Trustee under the Safety- Kleen Creditor Trust Agreement for the period commencing December 24, 2003 through March 31, 2004. The beneficiaries of the Trust are the holders of Allowed Claims in Classes 4 through 7 under the Plan. The Trust Assets Under the Plan, the Reorganized Debtors irrevocably transferred a Cash Component Trust Distribution totaling $1,091,220, and the Trust Claims, consisting of a total of 418 Avoidance Claims they previously filed. During the Reporting Period, the Trustee recovered $157,905 from the settlement of various Avoidance Actions. Ten actions were dismissed as a result of: (1) settlements reached between the Reorganized Debtors and the defendants before the Plan's Effective Date; (2) an ensuing bankruptcy by the defendant; or (3) an inability to effect service of process on the proper defendant. At the end of the Reporting Period, a number of actions have been settled in principle, for which settlement proceeds in excess of $500,000 remain outstanding. The Trustee, through its counsel, continues to negotiate with many defendants in the Avoidance Actions in an effort to resolve those claims in a prompt and cost- effective manner. Disbursements totaling $153,828 were made from the Cash Component Trust Distribution during the Reporting Period. The Creditor Trust's assets are to be used to pay and reimburse the costs and expenses associated with the administration of the Trust. Any remainder is to be distributed pro rata to the holders of Allowed Class 6 and 7 Claims. The Laidlaw Distribution and Cash Component On December 24, 2003, the Reorganized Debtors irrevocably transferred to the Creditor Trust the Laidlaw Distribution and Cash Component totaling $28,382,792.88. These assets are held in "constructive trust," together with any amounts retained or received in that connection, for the benefit of holders of Allowed Class 4 and 5 Claims. There were no distributions from the Laidlaw Distribution and Cash Component Distribution during the Reporting Period. The PwC Litigation Distribution The Reorganized Debtors are parties to a civil damages action captioned "Safety-Kleen Corp. v. PricewaterhouseCoopers LLP and PricewaterhouseCoopers LLP (Canada)," pending in the Circuit Court of South Carolina, Richland County. The Reorganized Debtors' lenders are parties to a civil action captioned "Toronto Dominion (Texas), Inc. et al. v. PricewaterhouseCoopers, LLP" pending in the State Court of Fulton County, Georgia. Under the Trust, the holders of Allowed Claims in Classes 4 through 7 will receive a pro rata distribution of 20% of the net proceeds, if any, from the PwC Litigation Claim, and the Lenders' PwC Litigation Claim in excess of $200 million, after reimbursement of the actual fees and expenses incurred by the Reorganized Debtors and Lenders in connection with those actions. As of the end of the Reporting Period, the suits remain pending. The Trustee is unable to make any current estimate either as to the likelihood or timing of any recovery from those actions. Claims Reconciliation As of the beginning of the Reporting Period, there were: -- 2,640 claims and scheduled liabilities in Class 4 totaling $561,149,000; and -- 21,100 claims and scheduled liabilities in Class 7 totaling $4,474,000,000. As a result of the Trustee's success in prosecuting claims objections and, in many cases, obtaining voluntary withdrawals of claims, as of the end of the Reporting Period: -- 640 Class 4 claims and scheduled liabilities totaling $519,653,000 remained; and -- 21,530 Class 7 claims and scheduled liabilities totaling $3,711,186,000 remained. The increase in the number of Class 7 claims is largely attributable to the reclassification of claims from Class 4 to Class 7. The Trustee is working diligently to reconcile the remaining claims in Classes 4 through 7. However, due to the large number of claims remaining to be reconciled and the limited number of objections that can be filed by the Trustee on a monthly basis under local court rules, the Trustee is seeking to extend the deadline by which it may file claims objection through December 18, 2004. In addition to the claims reconciliation activity, the Trustee is seeking to amend the Trust Agreement to reduce expenses. Income and Distributions by the Trustee Classes Classes 4 & 5 6 & 7 Total ------------ ------------ ----------- Cash receipts: Initial funding $28,382,793 $1,091,220 $29,474,013 Preference collections -- 157,905 157,905 ------------ ------------ ----------- 28,392,793 1,249,125 29,631,918 Cash receipts from investing activities: Interest income 21,725 796 22,521 Cash disbursements from trust operations: Distributions -- -- -- Trust expenses -- 153,828 153,828 ------------ ------------ ----------- 28,404,518 1,096,093 29,500,611 Net increase in cash 28,404,518 1,096,093 29,500,611 Cash, period beginning -- -- -- Cash, period end $28,404,518 $1,096,093 $29,500,611 ============ ============ =========== (Safety-Kleen Bankruptcy News, Issue No. 78; Bankruptcy Creditors' Service, Inc., 215/945-7000) SOUTHWEST RECREATIONAL: Has Until July 12 to Decide on Leases ------------------------------------------------------------- By order of the U.S. Bankruptcy Court for the Northern District of Georgia, Southwest Recreational Industries, Inc., and its debtor- affiliates obtained an extension of their lease decision period. The Court gives the Debtors until July 12, 2004 to decide whether they should assume, assume and assign, or reject their unexpired nonresidential real property leases. Headquartered in Leander, Texas, Southwest Recreational Industries, Inc. -- http://www.srisports.com/-- designs, manufactures, builds and installs stadium and arena running tracks for schools, colleges, universities, and sport centers. The company filed for chapter 11 protection on February 13, 2004 (Bankr. N.D. Ga. Case No. 04-40656). Jennifer Meir Meyerowitz, Esq., Mark I. Duedall, Esq., and Matthew W. Levin, Esq., at Alston & Bird, LLP represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, they listed $101,919,000 in total assets and $88,052,000 in total debts. SPECTAGUARD: Barton Acquisition Plan Spurs S&P's Negative Watch --------------------------------------------------------------- Standard & Poor's Ratings Services placed its 'B+' corporate credit and senior secured debt ratings on security officer services provider SpectaGuard Acquisition LLC (conducting business under the name Allied Security Inc.) on CreditWatch with negative implications. The CreditWatch placement follows the May 24, 2004, announcement by Allied Security stating that it had signed an agreement to acquire Atlanta, Ga.-based Barton Protective Services. Negative implications means that the ratings could be lowered or affirmed following Standard & Poor's review. King of Prussia, Pa.-based Allied Security had about $178.4 million of total debt outstanding at Dec. 31, 2003. "Although terms of the transaction were not publicly disclosed, we believe that the acquisition will likely be debt financed," said Standard & Poor's credit analyst David Kang. "We expect that the company would remain highly leveraged and that any potential incremental debt related to the purchase could result in a weaker financial profile for the company." Standard & Poor's will continue to monitor developments and will meet with management to discuss the company's business strategy, future capital structure, and financial policy before resolving the CreditWatch listing. Allied Security is the third-largest participant in the U.S. contract security officer services industry. SPIEGEL GROUP: Outlines Spiegel Catalog Sale Bidding Protocol ------------------------------------------------------------- At the Spiegel Group Debtors' request, the Court authorizes them to conduct an auction to determine the highest and best offer for substantially all of the assets of Spiegel Catalog, Inc., Spiegel Publishing Co., Spiegel Catalog Services, LLC, and Spiegel Group Teleservices-Canada, Inc., subject to these bidding procedures: (a) Qualified Overbids The Debtors have agreed to require a minimum initial overbid of greater than: (1) $2,300,000 -- which amount represents the sum of: * the $2,000,000 Purchase Price; * the $50,000 Overbid Increment; and * the $250,000 maximum amount of Expense Reimbursement; plus (2) the consideration to the Debtors arising from the assumption of the Assumed Liabilities under the Purchase Agreement between the Debtors and Spiegel Catalog International Limited; plus (3) all other consideration to the Debtors under the Purchase Agreement. (b) Delivery of Overbid A Qualified Overbidder who desires to make a bid must deliver its good-faith deposit via wire transfer in Account No. 3752186004 at Bank of America, in Dallas, Texas, ABA No. 111000012 -- account in the name of Spiegel, Inc. -- in an amount equal to or greater than $350,000. This amount is the sum of: * $50,000, which represents the amount of Spiegel Catalog International's deposit; plus * $250,000, representing the maximum Expense Reimbursement amount; plus * the $50,000 Overbid Increment. The Qualified Overbidder must deliver a copy of its Required Bid Documents to: (1) Shearman & Sterling, LLP 599 Lexington Avenue New York, New York 10022 Attention: Andrew V. Tenzer, Esq. atenzer@shearman.com (2) Miller Buckfire Lewis Ying & Co. 250 Park Avenue, 19th Floor New York, New York 10177 Attention: Stuart Erickson stuart.erickson@mbly.com (3) Chadbourne & Parke, LLP 30 Rockefeller Plaza New York, New York 10112 Attention: David LeMay, Esq. dlemay@chadbourne.com (4) Spiegel Catalog, Inc. c/o Spiegel, Inc. 3500 Lacey Road Downers Grove, Illinois 60515 Attention: Robert H. Sorensen, General Counsel robert_sorensen@spgl.com (5) Spiegel Catalog International Limited Suite 902, 61 Spain Garden Lane 1980 Luo Xiu Road, Minhang Shanghai, China 201100 Attention: Jordan Rosenberg jordan@pangeaholdingsltd.com David Evatz devatz@gosrr.com (6) Gould & Ratner 222 North LaSalle Street, Eighth Floor Chicago, Illinois 60601 Attention: Christopher J. Horvay, Esq. chorvay@gouldratner.com (7) Kaye Scholer, LLP 425 Park Avenue New York, New York 10022 Attention: Gary B. Bernstein, Esq. gbernstein@kayescholer.com so as to be received not later than June 11, 2004 at 4:00 p.m. (c) Auction If the Debtors determine, in consultation with their professionals and the Creditors Committee, that one or more Qualified Overbids has been timely tendered, the Auction, if required, will commence at 10:00 a.m. on June 15, 2004, before the Honorable Cornelius Blackshear, United States Bankruptcy Judge for the Southern District of New York, at the United States Bankruptcy Court, Courtroom 601, in One Bowling Green, New York. The Bidding will begin at the purchase price stated in the highest or otherwise best Qualified Overbid, and will subsequently continue in minimum increments of at least $50,000 higher than the previous Qualified Overbid. All subsequent bids submitted by Spiegel Catalog International will be "cash only" and will not be deemed to include a credit in an amount equal to the sum of the maximum amount of the Expense Reimbursement. No entity may object to any overbid not made by Spiegel Catalog International on the grounds that after deduction of the maximum amount of the Expense Reimbursement, that overbid is not the highest bid. (d) Determination of the Highest and Best Bid Upon conclusion of the Auction, the Debtors, in consultation with the Creditors Committee, will: * review each Qualified Overbid on the basis of financial and contractual terms and other factors relevant to the sale process, including those factors affecting the speed and certainty of consummating the sale of the Spiegel Catalog Assets; and * identify the Successful Bid and the second highest and best offer for the purchase of the Spiegel Catalog Assets. The Debtors, after consultation with the Creditors Committee may: -- determine, in their business judgment, which Qualified Overbid, if any, is the highest or otherwise best offer; and -- reject, at any time before the Court enters an Order approving a Qualified Overbid, any bid that they determine to be inadequate or insufficient, not in conformity with the requirements of the Bankruptcy Code or the terms and conditions of the Purchase Agreement, or contrary to their best interests and that of their estates and their creditors. (e) The Sale Hearing A hearing to approve the sale of the Spiegel Catalog Assets to Spiegel Catalog International or, alternatively, to the Successful Bidder will be conducted immediately after the Auction. If the Successful Bidder fails to consummate an approved sale because of a breach or failure to perform on its part, the Back-up Bid, as disclosed at the Sale Hearing, will be deemed to be the Successful Bid and the Debtors will be authorized, but not required, to consummate the sale with the Back-up Bidder without further Court order. (f) Failure to Close If any sale of the Spiegel Catalog Assets to a Qualified Overbidder other than Spiegel Catalog International fails to close for any reason and Spiegel Catalog International has made the Back-up Bid, then Spiegel Catalog International will purchase the Spiegel Catalog Assets on the terms and conditions set forth in the Purchase Agreement and at the final purchase price bid by Spiegel Catalog International at the Auction, without requiring further Court approval. 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. 26; Bankruptcy Creditors' Service, Inc., 215/945-7000) STELCO: Liquidity Solutions Soliciting to Purchase Claims --------------------------------------------------------- Liquidity Solutions, Inc., wants to buy claims against Stelco, Inc., (TSX:STE) from creditors caught-up in the steel company's CCAA restructuring. "Our firm represents investors who purchase receivables in bankruptcy [and] receivership situations," LSI says in a recent letter circulated to troubled company professionals, "and we would like to indicate our interest in your client's claim(s) against [Stelco]." For additional information about LSI's offer and payment terms, contact: Mike Richards LIQUIDITY SOLUTIONS INC. One University Plaza, Suite 518 Hackensack, NJ 07601 Tel: (201) 968-0001 Fax: (201) 968-0010 mrichards@liquiditysolutions.com Stelco Inc. is a large, diversified steel producer. Stelco is involved in all major segments of the steel industry through its integrated steel business, mini-mills, and manufactured products businesses. Consolidated net sales in 2003 were $2.7 billion. Ernst & Young, the Monitor appointed by the Canadian Court, filed its Fourth Report earlier this month. The Report provides an update on developments surrounding the Company's Court-supervised restructuring under the Companies' Creditors Arrangement Act. The full text of the Fourth Report of the Monitor is available through a link on Stelco's Web site at http://www.stelco.ca/ STRUCTURED ASSET: Fitch Upgrades 5 & Affirms 13 RMBS Ratings ------------------------------------------------------------ Fitch Ratings upgrades five and affirms thirteen classes of Structured Asset Securities Corp. (SASCO) residential mortgage- backed certificates, as follows: Structured Asset Securities Corp., mortgage pass-through certificates, series 1998-ALS2 --Class A affirmed at 'AAA'; --Class B-1 affirmed at 'AAA'; --Class B-2 affirmed at 'AAA'; --Class B-3 upgraded to 'AA' from 'A+'; --Class B-4 upgraded to 'BBB+' from 'BB'; --Class B-5 affirmed at 'B'. Structured Asset Securities Corp., mortgage pass-through certificates, series 1999-ALS1 --Class A affirmed at 'AAA'; --Class B-1 affirmed at 'AAA'; --Class B-2 affirmed at 'AAA'; --Class B-3 affirmed at 'AA'; --Class B-4 affirmed at 'A+'; --Class B-5 affirmed at 'A-'. Structured Asset Securities Corp., mortgage pass-through certificates, series 2000-ALS2 --Class A affirmed at 'AAA'; --Class B-1 upgraded to 'AAA' from 'AA+'; --Class B-2 upgraded to 'AA' from 'A+'; --Class B-3 upgraded to 'A' from 'BBB'; --Class B-4 affirmed at 'BB'; --Class B-5 affirmed at 'B'. The upgrades are being taken as a result of low delinquencies and losses, as well as increased credit support. The affirmations reflect credit enhancement consistent with future loss expectations. SUGARLOAF BREWING: Case Summary & 21 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Sugarloaf Brewing Company RR #1, P.O. Box 2268 Carrabassett Valley, Maine 04947 Bankruptcy Case No.: 04-11025 Debtor affiliate filing separate chapter 11 petition: Entity Case No. ------ -------- S.B.C. Inc. 04-11026 Type of Business: The Debtor operates restaurant and brewery. See http://www.sugarloafbrewing.com/ Chapter 11 Petition Date: May 25, 2004 Court: District of Maine (Bangor) Debtor's Counsel: Michael A. Fagone, Esq. Bernstein, Shur, Sawyer & Nelson P.O. Box 9729 Portland, ME 04104-5029 Tel: 207-774-1200 Estimated Assets Estimated Debts ---------------- --------------- Sugarloaf Brewing Company $0 to $50,000 $1 M to $10 M S.B.C. Inc. $100,000-$500,000 $500,000 to $1 M A. Sugarloaf Brewing Company's 17 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Ken Leeman $16,058 Perry Associates $15,759 Reg Perry $5,000 Creative Printed Forms $3,554 Castine Leasing $3,000 Water Treatment $2,113 Carvic Food Service $2,097 Great Western Malting $1,752 Dennis Levasseur $1,274 Maine Employers Mutual $1,048 Cumulus Broadcasting $960 Hanover Insurance $955 Management Tools $651 Central Maine Power Company $572 TDS Telecom $186 Quest $110 TDS Telecom $92 B. S.B.C. Inc.'s 4 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Carrabassett Sanitary District $18,439 Town of Carrabassett Valley $6,808 Perry Associates $2,894 Hanover Insurance $1,338 SUPERMARKET INC: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Supermarket, Inc. 770 Main Street Osterville, Massachusetts 02655 Bankruptcy Case No.: 04-14447 Type of Business: The Debtor is a supermarket operating in Osterville, Massachusetts. Chapter 11 Petition Date: May 25, 2004 Court: District of Massachusetts (Boston) Judge: William C. Hillman Debtor's Counsels: John M. McAuliffe, Esq. Kathryn Skahan, Esq. McAuliffe & Associates, P.C. 430 Lexington Street Newton, MA 02466 Tel: 617-558-6889 Estimated Assets: $250,000 Estimated Debts: $1,300,000 Debtor's 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Bozzuto's Inc./AB Small Inventory $371,167 Business Invest 275 Schoolhouse Rd. Cheshire, CT 06411 Hostetter Realty $80,000 Republic Leasing $38,000 Agar Supply Company $34,150 Retail Services $26,533 Tracker 1 $18,000 M.F. Foley $16,300 Prima Provisions $16,000 American Express $12,198 Keyspan $11,500 NStar $11,408 Aro's Poultry Farm $8,100 RJ Franney Mechanical $7,000 George Weston Bakeries $5,668 Papperidge Farm Cookies $4,745 Nabisco Biscuit Co. $4,500 Coca Cola Bottling Co. $4,000 MaCrae Provisions $3,737 Mullare News Agency $3,592 Browning-Ferris Industries $3,587 TRAVEL PLAZA: Wants Until Sept. 29 to File a Chapter 11 Plan ------------------------------------------------------------ Travel Plaza of Baltimore II, LLC, along with Calverton Hotel Venture, LLC, wants more time to propose a chapter 11 plan and solicit acceptances of that plan. The Debtors tell the U.S. Bankruptcy Court for the District of Maryland, Baltimore Division, that they need until September 29, 2004, to prepare and file a plan and, during that time, they want to preclude other parties- in-interest from filing a plan. The Debtors also ask the Court for an extension, through November 28, 2004, to solicit acceptances of any plan they file from their creditors. The Debtors report that they have negotiated an agreement for the sale of the Property and various related assets in conjunction with the operation of the hotel on the Property to Northstar Management, Inc. for $10.5 million Although the size of the Debtors' business may not be large by some standards, they are in the process of selling substantially all of their assets. The outcome of the sale of the Property will directly affect the formulation of a plan or plans of reorganization in these cases. Although there is no creditors' committee in this case, the Debtors and the Lender have been engaged in discussions in an effort to resolve existing issues. The Lender has been involved in the Asset Sale process. The final terms of the Asset Sale will not be known until late June. Accordingly, it is not possible for the Debtors to prepare adequate information regarding any proposed plan until after the Exclusive Filing Period has expired. Headquartered in Baltimore, Maryland, Travel Plaza of Baltimore II, LLC, a hotel company, filed for chapter 11 protection on February 2, 2004 (Bankr. Md. Case No. 04-12481). Cameron J. Macdonald, Esq., Karen Moore, Esq., and Kevin G. Hroblak, Esq., at Whiteford Taylor & Preston L.L.P. represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed both estimated debts and assets of more than $10 million. UNITED AIRLINES: California Statewide Wants to Exercise Set-Off --------------------------------------------------------------- The California Statewide Communities Development Authority is a joint powers authority sponsored by the California State Association of Counties and the League of California Cities. Cal Statewide is organized pursuant to Chapter 5 of Division 7 of Title 1 of the Government Code of the State of California. Cal Statewide is authorized to issue revenue bonds to pay the cost and expenses of acquiring, or constructing publicly owned or operated commercial aviation airports and airport facilities. Cal Statewide issued tax-exempt revenue bonds in four separate transactions: (1) The Special Facilities Lease Revenue Bonds 1997 Series A (United Air Lines, Inc. - San Francisco International Airport Projects) on August 1, 1997 for $154,845,000; (2) The Special Facilities Revenue Bonds, Series 1997 (United Air Lines, Inc. - Los Angeles International Airport Projects) on November 1, 1997 for $190,240,000; (3) The Special Facilities Revenue Bonds, 2000 Series A (United Air Lines, Inc. - San Francisco International Airport Terminal Projects) on November 1, 2000, for $33,200,000; and (4) The Special Facilities Revenue Bonds, Series 2001 (United Air Lines, Inc. - Los Angeles International Airport Cargo Project) on April 1, 2001, for $34,590,000. HSBC Bank USA is the Indenture Trustee for the 1997 SFO and LAX Transactions. BNY Western Trust is the Indenture Trustee for the 2000 SFO Transaction. U.S. Bank is the Indenture Trustee for the 2001 LAX Transaction. Because the Bonds are limited obligations of Cal Statewide, and are payable from amounts received from the Debtors to the Indenture Trustees, Cal Statewide is a conduit issuer. The obligations and liabilities are imposed directly on the Debtors as the direct private beneficiaries of the bond proceeds. Cal Statewide merely facilitates the issuance of the Bonds and operates as a conduit. R. Dale Ginter, Esq., at Downey & Brand, in Sacramento, California, tells Judge Wedoff that Cal Statewide's costs and overhead must be paid, as its member agencies do not provide contributions. Cal Statewide charges initial issuance fees and annual fees to the private user of the exempt facility, which in this case, are the Debtors in the Bond Transactions. Each of the Financing Agreements governing the Bond Transactions provides for three types of fees, only two of which are extant to the Debtors: (1) The Initial Fee, which ranges from 0.05% to 1.5% of the principal. The Initial Fees were paid at the closing of the Bond Transactions; (2) An Annual Fee of 0.045% of the principal on the first day of each Bond Year; and (3) Any out-of-pocket expenses incurred by Cal Statewide. Cal Statewide was unfamiliar with the Debtors before the 1997 SFO Transaction, so it was unwilling to issue the Bonds unless the Debtors posted collateral to ensure payment of its fees. As a result, the Debtors posted $1,000,000 in an escrow account with Wells Fargo Bank. The Debtors posted another $1,000,000 in collateral for the 1997 LAX Transaction. Cal Statewide and the Debtors revised the Escrow Agreement so the entire $2,000,000 was pledged as collateral to secure all the Debtors' obligations under either the SFO or LAX Transactions. In other words, the $2,000,000 cross-collateralized both Transactions. No additional collateral was pledged for the 2000 and 2001 Transactions. Mr. Ginter asserts that the Debtors owe Cal Statewide $286,161 in annual fees, which is collateralized by the $2,000,000 on deposit. Therefore, Cal Statewide asks the Court to lift the automatic stay to exercise its remedies as a secured creditor by setting off the annual fees with the collateral. Headquartered in Chicago, Illinois, UAL Corporation -- http://www.united.com/-- through United Air Lines, Inc., is the holding company for United Airlines -- the world's second largest air carrier. the Company filed for chapter 11 protection on December 9, 2002 (Bankr. N.D. Ill. Case No. 02-48191). James H.M. Sprayregen, Esq., Marc Kieselstein, Esq., David R. Seligman, Esq., and Steven R. Kotarba, Esq., at KIRKLAND & ELLIS represent the Debtors in their restructuring efforts. When the Company filed for protection from their creditors, they listed $24,190,000,000 in assets and $22,787,000,000 in debts. (United Airlines Bankruptcy News, Issue No. 48; Bankruptcy Creditors' Service, Inc., 215/945-7000) US AIRWAYS: Elects R. Stanley to Board & Consolidates Finance Dept ------------------------------------------------------------------ The Board of Directors for US Airways Group Inc., elected Ronald E. Stanley to the board, effective immediately. The Board also approved the promotion of three senior officers as part of the consolidation of the company's finance department. David M. Davis, previously chief financial officer, is now executive vice president and chief financial officer. Anita P. Beier, previously vice president and controller is now senior vice president and controller. Eiliff Serck-Hanssen, previously vice president-finance and treasurer, is now senior vice president- finance, and treasurer. Beier and Serck-Hanssen report to Davis, who in turn reports to Lakefield. These three officers are handling the responsibilities of a fourth position, which will remain vacant. US Airways Group, Inc. Chairman Dr. David G. Bronner said, "We are pleased to have been able to attract such a high-caliber and reputable individual as Ronald Stanley to our board. The Board's actions reflect an ongoing effort to build and maintain a strong management team and build a partnership with our employees." Stanley is currently a director of Scholefield, Turnbull & Partners, a business travel consulting firm based in London, vice chairman and director of Decatur Foundry Inc., and strategic partner of Venpartners LLC. He previously was chief operating officer and director, HSBC Equator, and vice president at Harris Bank. He also held several key positions at the Royal Bank of Canada Europe, including general manager, Europe, Middle East and Africa. Stanley was a member of the executive committee for RBC Dominion Securities, culminating a four-year tenure as senior vice president and general manager of the bank's European division. Stanley served in the U.S. Air Force in the U.S., Europe, and South East Asia. He is a veteran of the Vietnam War. Davis joined US Airways in April 2002 as vice president of financial planning and analysis and was responsible for operating and capital budgeting, divisional cost control, financial analysis, and transactions support. Prior to joining US Airways, Davis held the position of vice president - financial planning and analysis for Budget Group, Inc. Previously, he held key finance positions at both Delta Air Lines and Northwest Airlines. Davis holds an MBA in finance and a bachelor of science degree in aerospace engineering, both from the University of Minnesota. Beier is responsible for the management of all accounting functions for US Airways Group, Inc., and its subsidiaries, including financial reporting, revenue accounting, accounts payable and payroll. She came to the airline from CSX Corp., where she held a number of positions in financial management. Beier also was chief financial officer of American Commercial Lines and an economist for the Federal Railroad Administration. She holds a bachelor of science degree in business administration and a master's in business administration from the University of Maryland. Serck-Hanssen is responsible for US Airways' capital markets and aircraft financing, insurance programs, risk and cash management, pensions, investments programs, treasury, tax and fuel. Before joining US Airways, Serck-Hanssen spent six years with Northwest Airlines as managing director of finance and assistant treasurer. While at Northwest, his responsibilities included bank and airport bond financing, credit and collections, insurance and risk management, fleet planning, flight profitability, labor analysis, alliance finance and the development of the company's business plans. His professional career included work for PepsiCo, where he oversaw an aggressive program for expansion into Vietnam. He also worked for PricewaterhouseCoopers in London and is a member in good standing of the Institute of Chartered Accountants in England and Wales. He has an MBA from the University of Chicago, a BA in management science from the University of Kent, UK, and a BSc in civil engineering from University of Bergen, Norway. (US Airways Bankruptcy News, Issue No. 55; Bankruptcy Creditors' Service, Inc., 215/945-7000) USL FINANCIALS: Case Summary & 15 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: USL Financials, Inc. 900 South Washington Street Falls Church, Virginia 22046 Bankruptcy Case No.: 04-22572 Type of Business: The Debtor is the leading full encumbrance fund accounting system, offering all the enterprise financial management features needed today by government agencies, not-for-profit agencies and educational institutions. See http://www.uslfinancials.com/ Chapter 11 Petition Date: May 21, 2004 Court: District of Maryland (Baltimore) Judge: E. Stephen Derby Debtor's Counsel: Robert B. Scarlett, Esq. Scarlett & Croll, P.A. 201 North Charles Street, Suite 600 Baltimore, MD 21201-4110 Tel: 410-468-3100 Fax: 410-332-4026 Total Assets: $1,170,824 Total Debts: $2,582,674 Debtor's 15 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ USL Fund, Inc. $1,800,000 Professional Consultancy Int'l Corp. $240,666 900 South Washington LLC $216,000 Professional Consulting Services, Inc. $166,102 World Com Long Distance $126,153 PDS $8,488 Piracle-Create-A-Check $6,321 Kyorcera Mita American, Inc. $6,212 World Com UUNet Internet Connection $4,525 Hartford Insurance Company $2,196 Pan-Am. Retirement & Investment Corp. $2,181 Best Software $1,273 Allison, Slutsky & Kennedy PC $1,230 CBS Digital Solutions $750 Securian $579 U.S. ONCOLOGY: S&P Lowers Corporate Credit Rating to B+ from BB --------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on Houston, Texas-based cancer-services company US Oncology Inc. to 'B+' from 'BB'. At the same time, Standard & Poor's assigned its 'B+' senior secured debt rating and '2' recovery rating (indicating a 80%-100% recovery of principal in the event of default) to US Oncology's proposed $400 million term loan maturing in 2011 and $100 million revolving credit facility maturing in 2010. Standard & Poor's also assigned its 'B-' rating to the company's proposed $200 million senior unsecured notes maturing in 2012, and assigned its 'B-' rating to the company's proposed $475 million senior subordinated notes maturing in 2014. In addition, the ratings were removed from CreditWatch, where they were placed on March 22, 2004, due to concerns about the anticipated increase in US Oncology's debt leverage as part of its merger agreement with financial sponsor Welsh, Carson, Anderson & Stowe IX L.P. (WCAS). The outlook is stable. "The rating actions reflect US Oncology's additional financial obligation and weakened financial profile due to the proposed leveraged buyout by WCAS," said Standard & Poor's credit analyst Jesse Juliano. "Additionally, we remain concerned about the coming 2005 change in Medicare prescription drug reimbursement." Proceeds from the new debt, along with $145 million of on-hand cash and $313 million of new equity, will be used to buyout US Oncology's existing equity and refinance its existing debt. Pro forma for the transaction, the company will have approximately $1.1 billion of debt outstanding. US UNWIRED: Secures Requisite Consents to Amend 13-3/8% Sr. Notes ----------------------------------------------------------------- US Unwired Inc. (OTCBB:UNWR) announced that pursuant to its previously announced tender offer and consent solicitation for any and all of its $400,000,000 aggregate face amount of 13-3/8% senior subordinated discount notes due 2009, that it has received the requisite consents to adopt the proposed amendments to the indenture governing the Notes. Adoption of the proposed amendments required the consent of holders of at least a majority of the aggregate principal amount of the outstanding Notes under the indenture. The proposed amendments eliminate substantially all of the restrictive covenants and certain events of default in the indenture. The Company and U.S. Bank National Association, in its capacity as Trustee under the indenture, executed a supplemental indenture setting forth the proposed amendments on May 25, 2004. Notes tendered pursuant to the Offer may no longer be validly withdrawn, and the related consents may no longer be validly revoked. The proposed amendments to the indenture will be of no effect if the Notes are not accepted for payment and paid for pursuant to the terms of the Offer. The proposed amendments are binding upon the holders of the Notes, including those not tendered into the Offer. The consent solicitation period expired at 5:00 P.M., New York City time, on May 25, 2004. Holders that tender their Notes after such date and on or prior to 12:00 midnight, New York City time, on June 9, 2004, unless the Offer is extended, will receive the tender price of $1,020 per $1,000 face amount of Notes, but such tendering Holders will not receive the consent payment that is payable to holders that tendered their Notes prior to the expiration of the consent solicitation period. Lehman Brothers is the sole Dealer Manager and Solicitation Agent for the Offer. Questions regarding the Offer may be directed to Lehman Brothers, Inc. Liability Management Group, at (800) 438- 3242 (US toll-free) and (212) 528-7581 (collect). Copies of the Offer to Purchase and Consent Solicitation Statement may be obtained from the Information Agent for the Offer, D.F. King & Co., Inc., at (800) 290-6431 (US toll-free) and (212) 269-5550 (collect). About US Unwired US Unwired Inc., headquartered in Lake Charles, La., holds direct or indirect ownership interests in five PCS affiliates of Sprint: Louisiana Unwired, Texas Unwired, Georgia PCS, IWO Holdings and Gulf Coast Wireless. Through Louisiana Unwired, Texas Unwired, Georgia PCS and IWO Holdings, US Unwired is authorized to build, operate and manage wireless mobility communications network products and services under the Sprint brand name in 67 markets, currently serving over 650,000 PCS customers. US Unwired's PCS territory includes portions of Alabama, Arkansas, Florida, Georgia, Louisiana, Mississippi, Oklahoma, Tennessee, Texas, Massachusetts, New Hampshire, New York, Pennsylvania, and Vermont. For more information on US Unwired and its products and services, visit the company's web site at http://www.usunwired.com/US Unwired is traded on the OTC Bulletin Board under the symbol "UNWR". U.S. WIRELESS: Sells Synapse Platform to TNS Inc. ------------------------------------------------- TNS, Inc. (NYSE:TNS), a leading provider of business-critical, cost-effective data communications services for transaction- oriented applications, announced it has acquired certain assets of U.S. Wireless Data, Inc., the provider of wireless transaction delivery and gateway services to the payments processing industry that filed bankruptcy under Chapter 11 in March 2004. In this acquisition TNS acquired the Synapse platform, which enables wireless point-of-sale/point-of-service transactions in existing as well as expanding vertical markets. Synapse offers wireless payment solutions for a variety of merchants including Taxi and Limousine companies, Towing services, Arts and Crafts shows, Mobile Concession and Souvenir Stands and Outdoor Markets. Jack McDonnell, Chairman and CEO of TNS, commented, "This is the first acquisition for TNS since going public in March and is exactly the type of strategic acquisition we will continue to look for in the future. Not only does this acquisition augment our current wireless abilities, but the addition of the Synapse capabilities broadens our wireless data transport services and helps to jump start our entrance into new markets such as Quick Serve Restaurants (QSRs)." The QSR market represents over 100,000 service locations in the United States alone with an estimated $129 Billion in annual revenue and transactions numbering approximately 11 Billion annually. Said, Brian Bates, President and CEO of TNS, "We are very excited to combine the technology of Synapse with the data network management expertise and experience of TNS. The addition of the Synapse platform broadens TNS' wireless data transport services to meet the current and future needs of our customers." About TNS TNS, Inc. is one of the leading providers of business-critical, cost-effective data communications services for transaction- oriented applications. TNS provides rapid, reliable and secure transaction delivery platforms to enable transaction authorization and processing across several vertical markets and trading communities. Since its inception in 1990, TNS has designed and implemented multiple data networks, each designed specifically for the transport of transaction-oriented data. TNS is able to provide mission critical transaction data transport via Dial Up, VPN, IP or Wireless communication. TNS' networks support a variety of widely accepted communications protocols and are designed to be scalable and accessible by multiple methods incorporating the latest technologies. These technologies include CDPD, Mobitex, DSL, Persistent Dial, CDMA and GPRS. TNS' network technologies have been deployed in the United States and internationally, and TNS' networks have become preferred networks servicing the trading community, wireless and wireline carriers, and the electronic payment processing and dial-up automated teller machine markets. For further information about TNS, refer to http://www.tnsi.com/ About U.S. Wireless Data Headquartered in New York, New York, U.S. Wireless Data, Inc. -- http://www.uswirelessdata.com/-- is a Delaware corporation that provides proprietary enabling solutions and wireless transaction delivery and gateway services to the payments processing industry. The company filed for chapter 11 protection on March 26, 2004 (Bankr. S.D.N.Y. Case No. 04-12075). Alan David Halperin, Esq., at Halperin & Associates represent the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed $2,719,000 in total assets and $5,709,000 in total debts. WESTAFF INC: Reports Increased Revenues for Second Fiscal Quarter ----------------------------------------------------------------- Westaff, Inc. (NASDAQ:WSTF), a leading provider of temporary light industrial, clerical/administrative and call center staff, reported financial results for its second fiscal quarter, which ended April 17, 2004. Revenue for the second quarter of fiscal 2004 was $131.2 million, up $14.7 million or 12.7% from the second quarter of fiscal 2003. Domestic revenue increased 8.2%, primarily as a result of an increase in billed hours of 6.6%. International revenue increased 31.7%, largely due to the effect of favorable exchange rates. Excluding the effect of exchange rate fluctuations, international revenue increased 9.1% reflecting continued sales growth, particularly in the United Kingdom and Australia. "I am very pleased with the increase in revenue for the quarter," commented Westaff President and CEO Dwight S. Pedersen. "The increased revenue is an indication of the success of our focused sales and marketing programs as well as a strengthening in the overall economy." Gross margin for the quarter was 16.8% compared with 17.0% for the second quarter of 2003. The lower gross margin primarily reflects increases in workers' compensation costs and in state unemployment insurance rates. Selling and administrative expenses decreased $1 million for the second quarter of fiscal 2004 compared to the fiscal 2003 quarter. As a percentage of revenue, selling and administrative expenses were down from 14.8% in the second quarter of fiscal 2003 to 12.4% in 2004. Selling and administrative expenses in the current quarter were reduced by a gain of $0.7 million relating to the sale of the former executive headquarters building in Walnut Creek, California. The Company reported operating income of $0.7 million in the second quarter of 2004 compared with a loss of $2.3 million in 2003. The Company also reported net income of $0.2 million, or $0.01 per share, for the second quarter of 2004 compared with a net loss of $2.7 million, or $(0.17) per share in the 2003 quarter. "I am also pleased to report that nearly all domestic offices are running on our recently developed, proprietary front-office system," commented Mr. Pedersen. "I believe that the improved functionality and productivity this system provides are enabling our field management and staff to focus on consistent, quality service to our customers and on an improved sales process." For the first 24 weeks of fiscal 2004, revenue increased $19.4 million or 8.3% over the same period in fiscal 2003. The Company reported operating income from continuing operations of $0.4 million as compared to an operating loss of $2.5 million for the fiscal 2003 period. Liquidity and Capital Resources In its Form 10-Q for the quarterly period ended January 24, 2004, filed with the Securities & Exchange Commission, Westaff, Inc. reports: "In addition to its borrowings under debt facilities, the Company's liquidity is dependent upon a variety of factors including its operating performance, accounts receivable, the timing of cash inflow and outlays and other economic factors, many of which are outside the control of management. There can be no assurance that the Company will not face potential cash shortfalls, which, even if for a short period of time, could have a material adverse effect on the Company's business and financial condition. If the Company were to experience significant or prolonged cash shortfalls, the Company would need to pursue additional debt or equity financing; however there can be no assurance that such alternatives could be obtained. "The Company and its lending agents executed a fourth amendment to the Company's Multicurrency Credit Agreement which, among other things, eliminated events of default on an EBITDA covenant as of November 1, 2003 and through January 24, 2004. In the event the Company is out of compliance with one or more covenants in the future, there can be no assurance that its lenders would grant a waiver or amendment with respect to those covenants, which could have a significant adverse effect on the Company's financial condition and operations." About Westaff Inc. Westaff provides staffing services and employment opportunities for businesses in global markets. Westaff annually employs approximately 150,000 people and services more than 14,000 client accounts from more than 260 offices located throughout the U.S., the United Kingdom, Australia, New Zealand, Norway and Denmark. For more information, please visit our Web site at http://www.westaff.com/ WORLDCOM INC: Enters Into Choice One Settlement Agreement --------------------------------------------------------- The Worldcom Inc. Debtors and Choice One Communications, Inc., are parties to several prepetition contracts for the purchase and sale of telecommunications services. Choice One asserts that the Debtors owe them $3.856 million as outstanding balance for services rendered prepetition. The Debtors dispute owing Choice One $1.940 million of the MCI Prepetition Debt. Alfredo R. Perez, Esq., at Weil, Gotshal & Manges, LLP, in Houston, Texas, contends that Choice One owes the Debtors $1.304 million for prepetition services the Debtors provided. However, Choice One disputes owing $700,000 of the Choice One Prepetition Debt. In addition, Choice One withheld $151,000 from amounts invoiced by the Debtors for postpetition services. To resolve their disputes, the Debtors and Choice One negotiated a settlement agreement. The salient terms of the Court-approved Settlement Agreement are: (a) The Debtors' Prepetition Debt will be reduced to $1,916,710 and the Choice One Prepetition Debt will be $1,303,948; (b) The Debtors and Choice One will offset $1,303,948 against their prepetition debts, thereby completely absolving the Choice One Prepetition Debt and reducing the MCI Prepetition Debt to $612,762, which amount will be waived by Choice One; and (c) Effective April 16, 2004, Choice One will pay the Debtors $150,523 in cash or other immediately available funds in full satisfaction of the Choice One Postpetition Debt. Headquartered in Clinton, Mississippi, WorldCom, Inc., now known as MCI-- http://www.worldcom.com-- is a pre-eminent global communications provider, operating in more than 65 countries and maintaining one of the most expansive IP networks in the world. The Company filed for chapter 11 protection on July 21, 2002 (Bankr. S.D.N.Y. Case No. 02-13532). On March 31, 2002, the Debtors listed $103,803,000,000 in assets and $45,897,000,000 in debts. On April 20, the company (WCOEQ, MCWEQ) formally emerged from U.S. Chapter 11 protection as MCI, Inc. This emergence signifies that MCI's plan of reorganization, confirmed on October 31, 2003, by the U. S. Bankruptcy Court for the Southern District of New York is now effective and the company has begun to distribute securities and cash to its creditors. (Worldcom Bankruptcy News, Issue No. 54; Bankruptcy Creditors' Service, Inc., 215/945-7000) * Gardere Wynne Listed Among Top Business Law Firms in Texas ------------------------------------------------------------ Gardere Wynne Sewell has been recognized as one of the top law firms in Texas in the second annual listing of "America's Leading Lawyers for Business." In addition, nine firm partners have been named among the best in their areas of practice, including one partner who shares the honor as the state's top business bankruptcy litigation attorney. Chambers USA, an annual guide published by London-based Chambers & Partners, recognizes the leading individual attorneys and top business law firms in the United States. The firms and attorneys selected for the merit- based listing were chosen based on interviews with more than 4,500 private attorneys and in-house counsel across the United States. "We are extremely proud to have been recognized by other attorneys for the quality of the work we do for our clients," says Gardere Managing Partner Steve Good. "As a full service firm it is rewarding to see that we have the respect of our peers in a wide variety of specialized practice areas." Gardere and individual firm partners earned recognition in eight of the 16 areas of law highlighted in Chambers USA. The firm was ranked among Texas' top business law firms in the fields of antitrust, bankruptcy, corporate/mergers & acquisitions, insurance, intellectual property, real estate, tax, and technology/communications. In each practice area, a select number of individual attorneys also received personal accolades in recognition of their work. Firm partners recognized among the top in their fields of expertise include the following: Antitrust -- Curtis L. Frisbie Jr. Bankruptcy -- Holland O'Neil, Deirdre B. Ruckman Corporate: Mergers and Acquisitions -- Larry Schoenbrun Litigation: Bankruptcy -- Richard M. Roberson Intellectual Property -- Kenneth R. Glaser Tax -- Allen B. Craig III Technology: Communications -- Frank Putman, Peter Vogel Additionally, Kevin L. Kelley and James Cooper were cited for their work in leading the firm's real estate and insurance groups, respectively. About Chambers Chambers & Partners is the publisher of Commercial Lawyer magazine, the United Kingdom's leading monthly legal publication. The company also publishes several merit-based guides to leading lawyers. About Gardere Wynne Sewell LLP Gardere Wynne Sewell LLP, an AmLaw 200 firm, was founded in 1909 and is one of the Southwest's largest full-service law firms. With offices in Austin, Dallas, Houston, Mexico City and Washington, D.C., Gardere provides legal services to private and public companies and individuals in areas of litigation, corporate, tax, environmental, labor and employment, intellectual property and financial services. * Deloitte Consulting to Expand Strategy & Operations Practice -------------------------------------------------------------- Deloitte Consulting LLP announced that it has agreed to purchase certain assets of Gunn Partners, a division of Exult, Inc. (Nasdaq: EXLT) that specializes in organization transformation and selling, general and administrative (SG&A) effectiveness and efficiency services for Global 1000 Companies. The assets will be integrated into Deloitte Consulting's Strategy & Operations Practice, expanding the firm's capabilities in enterprise-wide cost reduction services, shared services, finance and human resource transformation, corporate strategy and restructuring, and outsourcing and offshoring advisory services. The asset purchase agreement, between Deloitte Consulting and Exult, entered into on May 25, 2004, follows Deloitte Consulting's hiring of five senior consulting practitioners from Gunn Partners in early April 2004. "A key focus of our Strategy & Operations Practice is to expand and extend Deloitte Consulting's capabilities in CFO services, SG&A effectiveness, shared services and enterprise-wide cost reduction service offerings," said Doug Lattner, National Managing Director, Deloitte Consulting LLP. "The Gunn Partners team brings superior experience in these areas as well as a strong base of clients. We look forward to working with our new colleagues to enhance our advisory footprint." Omar Aguilar, former Gunn Partners managing director who is now a principal with Deloitte Consulting, said, "We are delighted to become part of Deloitte Consulting, a leader in strategy and operations advisory services that shares our commitment to transforming organizations and delivering value- centered client service." In addition to Mr. Aguilar, senior practitioners who joined Deloitte Consulting's team consist of Rick Ferraro, David Peach, Jeffrey Liss and Michael Monroe. About Deloitte Deloitte, one of the nation's leading professional services firms, provides audit, tax, financial advisory services and consulting through nearly 30,000 people in more than 90 U.S. cities. Known as an employer of choice for innovative human resources programs, the firm is dedicated to helping its clients and its people excel. "Deloitte" refers to the associated partnerships of Deloitte & Touche USA LLP (Deloitte & Touche LLP and Deloitte Consulting LLP) and affiliated entities. Deloitte is the US member firm of Deloitte Touche Tohmatsu. For more information, please visit Deloitte's web site at http://www.deloitte.com/us/ Deloitte Touche Tohmatsu is an organization of member firms devoted to excellence in providing professional services and advice. We are focused on client service through a global strategy executed locally in nearly 150 countries. With access to the deep intellectual capital of 120,000 people worldwide, our member firms (including their affiliates) deliver services in four professional areas: audit, tax, financial advisory services and consulting. They serve over one-half of the world's largest companies, as well as large national enterprises, public institutions, and successful, fast- growing global growth companies. Deloitte Touche Tohmatsu is a Swiss Verein (association), and, as such, neither Deloitte Touche Tohmatsu nor any of its member firms has any liability for each other's acts or omissions. Each of the member firms is a separate and independent legal entity operating under the names "Deloitte," "Deloitte & Touche," "Deloitte Touche Tohmatsu" or other related names. The services described herein are provided by the member firms and not by the Deloitte Touche Tohmatsu Verein. For regulatory and other reasons certain member firms do not provide services in all four professional areas listed above. About Exult, Inc. Exult (EXLT) is the innovator and leading outsourcer in the HR-led BPO market. Meeting an increasingly critical need for Global 500 companies and other large complex corporations, Exult provides comprehensive Human Resources outsourcing solutions and expertise in high volume business processes, including related Finance and Accounting and Procurement offerings. Exult offers tailored solutions to a diverse client base by leveraging its customizable and scalable Multi-Process Outsourcing(SM) operational platform, which includes Multi-Client, Multi-Center, Multi-Channel, Multi-Shift and Multi-Shore capabilities. Exult uses Six Sigma standards to design, measure and deliver its processes to provide a high quality service experience to clients. Exult is the proven cost-effective BPO resource for Global 500 clients seeking increased flexibility to strategically advance their businesses. Exult's quality delivery reduces costs, improves productivity, streamlines operations and provides responsive service to clients' employees throughout the world. For more information, visit http://www.exult.com/ * John Manley to Air Restructuring Views at June 15 TMA Workshop ---------------------------------------------------------------- Former Finance Minister and Deputy Prime Minister of Canada, the Honourable John Manley, will have much in common with the corporate renewal professionals attending his keynote address at the Turnaround Management Association's Advanced Education Workshop, June 15 at the University of Toronto. They all have experience in financial restructurings and in "telling it like it is." These turnaround management pros are likely to hear the outspoken Manley, now counsel to the international law firm of McCarthy Tetrault LLP, tell why the review panel he headed advised the Ontario government to rebuild nuclear facilities to address the province's power crisis and the "monumental mess," as Manley put it, at Ontario Power Generation. Manley will also recap where the North American economy is going and why improving the closely intertwined economic and security relationship between the U.S. and Canada is so vital. Manley's appearance at 11:45 a.m. on Tuesday closes the June 14-15 workshop held at the J.L.L. MacLeod Auditorium at the University of Toronto campus, 1 King's College Circle. Other presentations during the 1 1/2-day workshop blend research presented by academics from law and business schools at Dartmouth, Harvard, Boston College, University of British Columbia, and New York University with practical applications by some of the most recognized attorneys and practitioners in the turnaround management industry. Panel topics include: -- Air Pockets Encountered by United Airlines and Air Canada: a Comparative Overview -- Outlook for 2004-2005 of Defaulted Bonds and Bank Loans -- Current Issues in Corporate Governance -- Canadian/U.S. Approaches to Labor and Pension Issues in a Turnaround -- Performance of Firms Emerging from Chapter 11 -- International Comparison of Business Insolvency and Managerial Behavior -- Auctioning Bankrupt Firms This is the first time in TMA's 15-year history that the association is holding a conference outside the United States, an indication of its growing international membership and commitment to member service. Turnaround Management Association -- http://www.turnaround.org/-- is the only international non-profit association dedicated to corporate renewal and turnaround management. With international headquarters in Chicago, TMA's 7,800 members in 33 regional chapters comprise a professional community of turnaround practitioners, attorneys, accountants, investors, lenders, venture capitalists, accountants, appraisers, liquidators, executive recruiters and consultants. Members adhere to a Code of Ethics specifying high standards of professionalism, integrity and competence. Its Certified Turnaround Professional (CTP) program recognizes professional excellence and provides an objective measure of expertise related to workouts, restructurings and corporate renewal. * BOOK REVIEW: The Story Of The Bank Of America ----------------------------------------------- Author: Marquis James and Bessie R. James Publisher: Beard Books Softcover: 592 pages List Price: $31.80 Order your personal copy today at http://www.amazon.com/exec/obidos/ASIN/1587981459/internetbankrupt The Bank of America began as the Bank of Italy in 1904. A. P. Giannini was motivated to found the Bank out of his indignation over the neglect by other banks of the Italian community in San Francisco's North Beach area. Local residents were quickly drawn to Giannini's new type of bank suited for their social circumstances, financial needs, and plans and aspirations. Before Giannini's Bank of Italy, the field was dominated by large, well-connected, and politically influential banks typified by the magnate J. P. Morgan's House of Morgan catering to corporations and the wealthy industrialists and their families of the Gilded Age. Giannini's Bank proved to be a timely enterprise with great potential far beyond its founder's original aims. The early 1900s following the Gilded Age was a time of spreading democratization in American society with large numbers of immigrants being assimilated. It was also a time of considerable industrial growth after the heyday of the tycoons such as Morgan, Rockefeller, and Carnegie in the latter 1800s. Giannini's idea was also helped by the growth of California in its early stages of becoming one of the most prosperous and most populous states. As California grew, so did the Bank of America. A. P. Giannini was the perfect type of individual to oversee the growth of a bank that stood in sharp contrast to the House of Morgan and which reflected broad changes in American society and business. Giannini followed the quick success of his North Beach bank with Bank of Italy branches elsewhere in San Francisco. With the success of these followed branches throughout California's agricultural valleys and Los Angeles as Giannini reached out to populations of other average persons generally ignored by the traditional banks. Throughout the rapid growth of his bank, Giannini never lost touch with his original motive for creating a bank suited for the average individual. When he died at 80 years of age in 1949, he lived in the same house as he did when he opened the original Bank of Italy; and his estate was less than half a million dollars. Throughout all the stages of the Bank of America's growth, business recessions and depressions, and changes in American society, including increased government regulation, the Bank continued to reflect its founder's purposes for it. In the 1920s, the Bank of Italy became a part of the corporation Transamerica. In 1930, the Bank was merged with the Bank of America of California. The newly formed bank was given the name the Bank of America National Trust and Savings Association, with Giannini appointed as chairman of the committee to work out the details of the merger. In 1930, he selected Elisha Walker to head Transamerica so he could be free to pursue his interest of establishing a national bank with the same goals and nature as his original Bank of Italy. But becoming alarmed over Walker's proposed measures for dealing with the pressures of the Depression, Giannini waged a battle involving board members, stockholders, and allies he had worked with in the past to regain control of Transamerica. In 1936, A. P. Giannini's son, Lawrence Mario, succeeded his father as president of Bank of America, with A. P. remaining as chairman of the board. The story of Bank of America is largely the story of A. P. Giannini: his ideas, his values, his ambitions, his goals, his personality. The co-authors follow the stages of the Bank's growth by focusing on the genteel, yet driven and innovative, A. P. Giannini. There's a balance of basic business material such as stock prices, rationale of momentous business decisions, and balance-sheet data, with portrayals of outsized characters of the time. Among these, besides Giannini, are the federal government official Henry Morgenthau and Charles Stern, California's superintendent of banks in the early 1900s. With this balance, The Story of the Bank of America is an engaging and informative work for readers of more technical business books and human-interest business stories alike. ********* 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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