/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/040601.mbx T R O U B L E D C O M P A N Y R E P O R T E R Tuesday, June 1, 2004, Vol. 8, No. 107 Headlines ABERDEEN FINANCE: Case Summary & 10 Largest Unsecured Creditors ABINGTON FITNESS: Case Summary & 20 Largest Unsecured Creditors AEGIS COMMS: Deutsche Bank & DB Advisors Hold 66.6% Equity Stake AESP INC: Intends to Appeal Nasdaq Delisting Determination AFTON FOOD: Stockholders' Deficit Tops $18.9 Million at March 31 ALDEAVISION INC: Expects to Complete Recapitalization Plan by June AMERICANA PUBLISHING: Demands Berlin Stock Exchange Delisting ASAP AMERICAN WAY: Case Summary & 42 Largest Unsecured Creditors AURORA: ACE Insurance Presses for Administrative Expense Payment AVADO BRANDS: Wants to Tap DJM Asset as Real Estate Consultants AZTAR CORP: 8-7/8% Sr. Note Tender Offer Extended Till Tomorrow BEAR STEARNS: S&P Rates $150MM Series 2004-ESA Class J at BB+ BLARNEY STONE PERSONAL: Voluntary Chapter 11 Case Summary BOYD GAMING: Obtains Consents to Amend Coast Hotels' 9.5% Sr Notes CALPINE CORP: Signs 25-Year Sale Agreement with Dow Chemical CELTRON INTERNATIONAL: Former Auditors Express Going Concern Doubt CENTERPOINT: Texas Genco Opts to Increase STP Nuclear Plant Stake CHAMPIONLYTE: Wants Immediate Delisting from Berlin Stock Exchange CHEMED CORP: S&P Assigns B+ Corp Rating & Says Outlook is Negative CMS ENERGY: Shareholders Elect Board Members & Approve 4 Proposals CMS ENERGY: Utility Unit Declares Quarterly Preferred Dividends CSG SYSTEMS: S&P Rates $200 Mil. Senior Subordinated Debt at B CWMBS INC: Fitch Rates Series 2004-J5 Classes B-3 & B-4 at BB/B CYBERADS INC: Losses & Deficit Trigger Going Concern Doubt DELTA AIR LINES: Files Registration Statement with SEC DVI INC: Fitch Downgrades Medical Equipment Securitizations DAN RIVER: Court Grants Final Approval of $145 Million DIP Loan E.SPIRE: Trustee Wants to Talk to KPMG Partners & Managers EL PASO CORP: Provides Financial and Operational Update EL PASO CORP: Annual Stockholders Meeting Set for Sept. 9 in Texas ENRON CORPORATION: Court Approves Texaco Settlement Agreement EXIDE TECHNOLOGIES: U.S. & European Debtors Sign Credit Agreement FLEMING COMPANIES: Court Sets Solicitation & Tabulation Protocol FLINTKOTE: Future Claimants Seek to Employ Analysis Research FOREST OIL: S&P Cuts Corp. & Sr. Debt Ratings to BB- & Lifts Watch GARDEN CITY: Cal Pac Pays 56-Cents-on-the-Dollar for Unsec. Claim GLOBAL CROSSING: Outlines VoIP Regulatory Vision to FCC GOODYEAR TIRE: S&P Lowers Ratings & Removes Watch on Related Notes GSR MORTGAGE: Fitch Ups Series 2003-5F Class B-5 Rating to BB- HEALTHSOUTH: Extends Consent Solicitations through June 4, 2004 KENNEDY MANUFACTURING: Gets Court Nod to Hire CBIZ as Actuaries LOUDEYE CORP: Resale Registration Statement Declared Effective MEDIABAY: John Levy Named Acting Chairman as Carl Wolf Resigns MINORPLANET SYSTEMS: Court Approves Amended Disclosure Statement MIRANT CORPORATION: Creditors' Committee Retains PA Consulting NATIONAL BENEVOLENT: Panel Taps Moore Diversified as Accountants NATIONAL CENTURY: Agrees To Allow Amedisys' $7,339,584 Claim NEP INC: S&P Assigns 'B+' Corporate Credit Rating NORTEL NETWORKS: Export Development Agrees to Waive Unit's Default OMI CORP: Proposed Stelmar Merger Prompts S&P's Negative Watch PACIFIC GAS: Court Issues Opinion On CPUC Holding Company Clause PARMALAT GROUP: Perry's Ice And Friendship Dairies Want Examiner PILLOWTEX CORP: Creditors' Committee Taps Trenwith as Advisor QUEBEC CENTER LTD: Case Summary & 6 Largest Unsecured Creditors RENAL CARE: Completes National Nephrology Acquisition for $345MM RICA FOODS: Second Quarter Net Loss Widens to $1.2 Million SAFETY-KLEEN: Creditor Trustee Wants To Amend Trust Agreement SCHILS AMERICA: Case Summary & 20 Largest Unsecured Creditors SEQUOIA MORTGAGE: Fitch Assigns Low-B Ratings to 2 2004-5 Classes SOUTHWEST RECREATIONAL: Atlas Partners Serves Real Estate Agent SPECTRUM PHARMA: Will Present at Friedman's Conference Tomorrow SPIEGEL GROUP: Court Authorizes $250,000 Expense Reimbursement SPORTS CLUB COMPANY: U.S. Bank Issues Default Notice STATEN ISLAND: Fitch Downgrades $49.4MM Bond Rating to BB- STATER BROS.: S&P Upgrades Corporate Debt Rating to BB- from B+ STERLING FINANCIAL: Completes StoudtAdvisors Acquisition STRATUS SERVICES: Reports Unauthorized Berlin Stock Listing STRUCTURED ASSET: Fitch Assigns Low-Bs to Two 2004-12H Classes SUPERIOR GALLERIES: Strained Liquidity Raises Going Concern Doubt TENET HEALTHCARE: Sells Barcelona Hospital to BC Partners TESORO PETROLEUM: S&P Rates New $625MM Credit Facilities at BB TOWER AIR: Bankruptcy Court Won't Help Ernst & Young Escape TRANSMONTAIGNE INC: S&P Lowers Ratings to BB- & Removes Watch ULTRA MOTORCYCLE: Trustee Selling Unissued Shares for $15,000 UNIFAB INTERNATIONAL: Receives Delisting Notice from Nasdaq Market UNITED AIRLINES: Rejecting N344UA & N345UA Aircraft Leases WEIGHT LOSS FOREVER: Going Concern Ability is in Doubt WORLDCOM INC: Objects to 94 Mechanic's Lien Claims Totaling $21MM+ * John D. Bond III to Lead Bradley Arant's New Charlotte Office * Large Companies with Insolvent Balance Sheets ********* ABERDEEN FINANCE: Case Summary & 10 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Aberdeen Finance Corporation dba Aberdeen Insurance Agency P.O. Box 59 Aberdeen, South Dakota 57402-0059 Bankruptcy Case No.: 04-10175 Type of Business: The Debtor is a small loan and insurance company. Chapter 11 Petition Date: May 20, 2004 Court: South Dakota (Northern Aberdeen) Judge: Irvin N. Hoyt Debtor's Counsel: Patrick T. Dougherty, Esq. Dougherty & Dougherty P.O. Box 1004 Sioux Falls, SD 57101-1004 Tel: 605-335-8586 Total Assets: $4,467,589 Total Debts: $6,670,242 Debtor's 10 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ George Rich Subordinated note $767,172 22 17th Avenue SW Aberdeen, SD 57401 Clarence Vilhauer Subordinated note $423,928 2001 Amber Skies Avenue #9 Alamogordo, NM 88310 Bill Meidinger Subordinated note $259,154 P.O. Box 1912 Aberdeen, SD 57402-1912 Harold W. Kolb Subordinated note $235,044 Douglas Vilhauer Subordinated note $227,804 T. Sydney Mortenson Subordinated note $223,647 Wilbert Schultz Subordinated note $160,676 NUI Telecom, Inc. Letter of credit $158,721 World Xchange Corporation Letter of credit $150,000 Ervin Marzolf Subordinated note $138,762 ABINGTON FITNESS: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Abington Fitness & Country Club, Inc. 300 Meetinghouse Road Jenkintown, Pennsylvania 19146 Bankruptcy Case No.: 04-17224 Type of Business: The Debtor provides fitness, aquatics and golf-related services. See http://www.abingtonclub.com/ Chapter 11 Petition Date: May 24, 2004 Court: Eastern District of Pennsylvania (Philadelphia) Judge: Diane W. Sigmund Debtor's Counsel: Eric L. Frank, Esq. DiDonato & Winterhalter, PC 1818 Market Street, Suite 3520 Philadelphia, PA 19103 Tel: 215-564-5597 Total Assets: $666,282 Total Debts: $1,192,112 Debtor's 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Duffy Management Loan $525,000 c/o Prime Properties 55 East Cheltenham Avenue Cheltenham, PA 19012 Foxcroft Square Club Rent $100,000 Associates Michael Feite Loan $35,000 Kelley Energy Pro-shop Trade $20,000 Unruh Turner Burke & Frees Legal $17,672 PECO Trade $6,063 Berardelli Pool Service Trade $6,061 Advanta Leasing Services Trade $5,600 Keystone Health Plan East Trade $3,408 Home Depot Trade $3,227 Golf Cars, Inc. Trade $2,900 Kelley Energy-Club House Trade $2,768 Wet Whistle Abington Club Trade $2,248 Lawn & Golf Supply Co. Trade $2,160 Titleist Trade $2,090 Comcast Advertising Trade $1,400 Leisure Fitness Equipment Trade $1,393 KSB Trade $1,056 Callaway Golf Trade $984 PSW Trade $912 AEGIS COMMS: Deutsche Bank & DB Advisors Hold 66.6% Equity Stake ---------------------------------------------------------------- Deutsche Bank AG and DB Advisors, L.L.C. beneficially owns 263,303,304 shares of the common stock of Aegis Communications Group, Inc. The amount of stock held represents 66.6% of the outstanding common stock of Aegis Communications Group. The entities share the power of voting and disposing of the stock. Deutsche Bank AG is organized under the laws of the Federal Republic of Germany. On April 21, 2004, the Company issued warrants to purchase 229,329,130 shares of common stock to the London branch of Deutsche Bank following the satisfaction of certain conditions, including the increase of the Company's authorized share capital. On November 5, 2003, Deutsche Bank, acting through its London branch and DB Advisors, acquired the Aegis' Initial Warrants. Pursuant to the Purchase Agreement, the Company issued the Subsequent Warrants to the London branch of Deutsche Bank on April 21, 2004 following the satisfaction of certain conditions, including the increase of the Company's authorized share capital and adjustment of the conversion rate for the Company's Series F Preferred Stock. Based on the 131,915,490 shares of common stock outstanding as of April 21, 2004, and assuming that the Warrants are fully exercised, after such exercise Deutsche Bank would beneficially own approximately 66.6% of the outstanding common stock. DB Advisors acts as the discretionary investment manager for Deutsche Bank with respect to the Warrants and, as such, shares the power to exercise and dispose of such Warrants and the shares of common stock issuable upon the exercise of the Warrants, and, upon exercise of the Warrants, would share the power to vote or direct the vote of the shares of common stock issuable upon such exercise. Pursuant to the Purchase Agreement, the Company amended its Certificate of Incorporation to increase the authorized number of shares of common stock and amended the Certificate of Designation of its Series F Preferred Stock to adjust the conversion rate such that the 23,375 shares of Series F Preferred Stock outstanding immediately after the date of the Purchase Agreement are convertible into 46,910,503 shares of common stock as of April 21, 2004. Aegis Profile Aegis Communications Group, Inc. -- whose March 31, 2004 balance sheet shows a total shareholders' deficit of $32,306,000 -- is a marketing services company that enables clients to make customer contact efforts more profitable. Aegis' services are provided to a blue chip, multinational client portfolio through a network of client service centers employing approximately 3,700 people and utilizing approximately 4,600 production workstations. Further information regarding Aegis and its services can be found on its website at http://www.aegiscomgroup.com/ AESP INC: Intends to Appeal Nasdaq Delisting Determination ---------------------------------------------------------- AESP, Inc. (Nasdaq: AESP) announced that it has received a notice from the Listing Qualifications unit of the Nasdaq Stock Market that its common stock is subject to delisting, pending the outcome of the hearing described below. The delisting determination was based on AESP's current non- compliance with Marketplace Rule 4310(c)(2)(B). The rule requires that a listed company maintain a minimum stockholders' equity of $2,500,000, or $35,000,000 in securities market value, or $500,000 in income from continuing operations for the most recent fiscal year, or for two of the three most recent years. At March 31, 2004, AESP's stockholders' equity was $1.8 million, and AESP does not otherwise meet the alternative measures for continued compliance with the rule. AESP intends to request an oral hearing before the Nasdaq Listing Qualifications Panel to appeal this decision and seek continued listing. When Nasdaq receives the hearing request, the delisting of the common stock will be automatically stayed pending the outcome of the hearing. The common stock of AESP will continue to trade on the Nasdaq Small-Cap Market under the symbol "AESP" pending the outcome of these proceedings. There can be no assurance that the Listing Qualifications Panel will grant AESP's request for continued listing. AESP is actively pursuing measures to regain compliance with the applicable Nasdaq Marketplace Rule. Slav Stein, AESP's President and CEO, stated: "As we have previously disclosed, we are actively seeking to raise additional equity capital to reduce our debt, provide working capital for our business and for acquisitions in an amount sufficient to increase our net worth beyond that required for continued listing by the Nasdaq marketplace rule. We are also currently exploring strategic options. We intend to appeal the decision of the Nasdaq staff through the proper channels at the Nasdaq Stock Market, and we believe that we will present a compelling case to the Listing Qualifications Panel when our appeal is heard." As previously reported, the Company commented that in their audit report on the Company's 2003 financial statements, the Company's auditors had included an explanatory paragraph in their report with respect to the Company's ability to continue as a going concern. About the Company AESP, Inc. designs, manufactures, markets and distributes network connectivity products under the brand name Signamax as well as customized solutions for original equipment manufacturers worldwide. For additional Company information, visit our websites, http://www.aesp.com/,http://www.Signamax.comand http://www.Signamax.de/ AFTON FOOD: Stockholders' Deficit Tops $18.9 Million at March 31 ---------------------------------------------------------------- Afton Food Group Ltd. (TSX-V:AFF) announced their interim results for the first quarter ending March 31, 2004. The Company announced gross profit of $1.8 million on total revenues of $4.6 million. Gross profit improved $541,000 in comparison to the previous year on revenues that declined $527,000 when comparing the current quarter to the same quarter of the previous year. The improved gross margin is directly related to the significant benefits achieved through the restructuring initiatives that were implemented throughout fiscal 2003. Earnings for the quarter totaled $7,000 representing an improvement of $648,000 in comparison to the first quarter of fiscal 2003. Lower interest costs and amortization expense both contributed to the earnings improvement realized in the quarter. In addition to the contribution provided by the restructuring initiatives, revenues for the quarter were positively impacted by the opening of new locations in Saskatoon, Saskatchewan and Penticton, B.C. The master franchise license agreement with RoadKing, for the Alberta and British Columbia markets was also completed in the quarter, which was a positive contributor to franchise revenues. During the quarter, the Company continued discussions with their secured lenders regarding covenant deficiencies reported previously, including arrears of interest and principal payments. Discussions are continuing with the lenders on alternatives available to assist in the restructuring of the Company's balance sheet. Bruce Smith, President and Chief Financial Officer, commented, "the 2003 restructuring was a painful process at the time; however it is for the most part behind us. The savings realized are apparent in the first quarter results and we expect that 2004 results will continue to reap the benefits of the cost saving initiatives implemented throughout fiscal 2003." At March 31, 2004, Afton Food Group's balance sheet shows a total stockholders' deficit of $18,954,351 compared to a deficit of $19,070,106 at December 31, 2003. About Afton Food Group Afton, through its subsidiaries, is a leading franchisor in the Quick Service Restaurant industry with locations throughout Canada operating under two principal brands, 241 Pizzar and Robin's Donuts. ALDEAVISION INC: Expects to Complete Recapitalization Plan by June ------------------------------------------------------------------ AldeaVision Inc. (TSX-V: ALD) announces that it intends to complete by the end of June 2004 the recapitalization plan it announced earlier this year. The proposed debt restructuring agreement reached in March 2004 between AldeaVision and Miralta Capital II Inc., acting, on behalf of 16 beneficial holders of AldeaVision's $4.6 million debenture due January 14, 2005 and acting as creditor for AldeaVision's $2 million credit facility, contemplates that: (i) the debenture's term will be extended by one year to January 14, 2006; (ii) $430,000.00 of unpaid interest thereon will be capitalized and a further $100,494.72 of unpaid interest will be forgiven (iii) its conversion price will be lowered from $1.25 per share to $0.16 per share; and (iv) its forced conversion provision will be modified to allow for the forced conversion by AldeaVision if the market price of AldeaVision's common shares is at least $0.25 per share for twenty consecutive trading days. The debt restructuring agreement also contemplates that credit facility will be transformed into a convertible debenture in the principal amount of $2.5 million on identical terms and conditions as the modified $4.6 million debenture, including a conversion price of $0.16 per share. "Once the debt restructuring transaction is completed, AldeaVision's financial position will be improved and provide a sound base on which to move forward in the execution of its business plan" said Lionel Bentolila, President and Chief Executive Officer of AldeaVision. The debt restructuring agreement constitutes a related party transaction under applicable securities regulatory requirements and AldeaVision intends to rely on an exemption from the valuation and minority approval requirements available thereunder to issuers in financial difficulty. The Board of Directors of AldeaVision including all of its independent directors unanimously made a determination to the effect that AldeaVision was in serious financial difficulty and therefore could avail itself of an exemption from the valuation and minority approval requirements provided under Ontario Securities Commission Rule 61-501 and the Autorit� des march�s financiers Policy Statement Q-27 in connection with the proposed debt restructuring. The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release. About AldeaVision Montreal-based AldeaVision Inc. is an innovative provider of broadcast quality video networking services and solutions for the television, film and media industries. The AldeaVision Global Video Network uses digital facilities over broadband fiber networks and is designed to provide seamless end-to-end broadcast digital video connections among broadcasters, content producers, post-production and media companies. AldeaVision services are available in Miami, New York, Washington D.C., Los Angeles, Toronto, Montreal, Mexico City, Lima, Peru and Caracas, Venezuela. AMERICANA PUBLISHING: Demands Berlin Stock Exchange Delisting ASAP ------------------------------------------------------------------ Americana Publishing, Inc. (OTC Bulletin Board: APBH) said it has instructed its SEC counsel to take whatever steps are necessary to be immediately delisted from the Berlin Stock Exchange. The Company said it was aware of an organized effort to fraudulently list U.S. privately traded companies and has been closely monitoring the situation. Americana Chairman and CEO, George Lovato, said the Company was notified Friday morning of the listing. "Unfortunately we, along with more than 200 U.S. publicly traded companies, are a victim of an organized effort by domestic and foreign brokers to circumvent the recent National Association of Securities Dealers (NASD) and Securities Exchange Commission (SEC) restrictions against so-called naked short selling," said Lovato. "Obviously we are outraged that we could be listed on an exchange without our consent or authorization. To protect our valued shareholders, I have instructed our SEC counsel to take whatever steps are necessary to be immediately delisted from the Berlin Exchange." Lovato said that anyone interested in purchasing shares of Americana Publishing, Inc. should do so only from the Nasdaq Over The Counter Bulletin Board (OTCBB) under the symbol APBH. About Americana Publishing, Inc. Americana Publishing, Inc. is a vertically integrated multimedia publishing company whose primary business is publishing and selling audio books, print books and electronic books in a variety of genres. Sales of its products are conducted through the Internet as well as through a distribution network of more than 35,000 retail stores, libraries and truck stops. * * * GOING CONCERN UNCERTAINTY In its Form 10-KSB for the fiscal year ended December 31, 2003, Americana Publishing, Inc. states: "Our financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. During the years ended December 31, 2003 and 2002, we incurred losses of $2,520,972 and $2,615,518, respectively. In addition, as of December 31, 2003, our total current liabilities exceeded our total current assets by $2,895,438, and our shareholders' deficit was $2,525,828. These factors, among others, raise substantial doubt about our ability to continue as a going concern." AMERICAN WAY: Case Summary & 42 Largest Unsecured Creditors ----------------------------------------------------------- Lead Debtor: American Way Investments Corporation 3379 Main Street, State Route 46 Mineral Ridge, Ohio 44440 Bankruptcy Case No.: 04-42629 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Freedom Leasing, Inc. 04-42630 Glenn View Manor, Inc. 04-42631 Glenn View Land Company, Inc. 04-42632 Glenn View Village, Inc. 04-42633 Omega Farms, Inc. 04-42634 Type of Business: The Debtor is the holding company of its subsidiaries, owning and operating a nursing home and assisted living facility. Chapter 11 Petition Date: May 27, 2004 Court: Northern District of Ohio (Youngstown) Judge: William T. Bodoh Debtors' Counsel: Joseph F. Hutchinson, Jr., Esq. Brouse McDowell 1001 Lakeside Avenue, Suite 1600 Cleveland, OH 44114 Tel: 216-830-6830 Fax: 216-830-6807 Estimated Assets Estimated Debts ---------------- --------------- American Way Investments $100,000-$500,000 $1 M to $10 M Corporation Freedom Leasing, Inc. $1 M to $10 M $1 M to $10 M Glenn View Manor, Inc. $1 M to $10 M $1 M to $10 M Glenn View Land Company, $1 M to $10 M $1 M to $10 M Inc. Glenn View Village, Inc. $0 to $50,000 $1 M to $10 M Omega Farms, Inc. $100,000-$500,000 $1 M to $10 M A. American Way Investment's 2 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Ohio Department of Taxation Franchise Tax $3,162 American Express Unknown B. Glenn View Manor, Inc.'s 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Internal Revenue Service $908,340 Collection Div- Insolvency Group P.O. Box 99183 Cleveland, Ohio 44199 Attorney General of Ohio $608,073 101 East Town Street Columbus, OH 43215-5148 Smart Healthcare Service Corp. $604,046 8180 Corporate Park Drive #200 Cincinnati, OH 45242 Lo Med Prescription $148,246 Damon Industries $72,430 Nicola Gudbranson & Cooper $71,030 St. Elizabeth's Health Center $49,780 CMS Therapies $48,448 Northern Haserot $28,574 Ameritech $28,083 Decubiti Concepts $27,180 WKBN TV $23,155 American Express $18,409 Sniderman Bros. Inc. $17,486 Reminger & Reminger $16,545 Trade Masters Medical $16,073 First USA Bank, NA $14,368 Geoffrey E. Webster, Esq. $14,090 Druzak Medical Inc. $11,593 WFMJ-TV $10,720 C. Glenn View Land Company's 13 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Hood, Edward C. $20,000 First USA Bank, NA $12,128 AUL $3,750 Dominion East Ohio $1,350 Trumbull Co. Water & Sewer $1,054 Hobart Service $624 Farmers National Bank $478 Imperial Premium Finance, Inc. $304 Sarko's Trumbull Chem-Dry $286 City of Niles $280 Ameritech $89 J & L Comm Service $37 Ohio Edison $20 D. Glenn View Village, Inc.'s 5 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Damon Industries $4,602 Freedom Leasing, Inc. $4,302 Trumbull Co. Water & Sewer $353 Medical Mutual of Ohio $287 Lo Med Prescription $68 E. Omega Farms, Inc.'s 2 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Trumbull County Treasurer $3,311 Ohio Edison $550 AURORA: ACE Insurance Presses for Administrative Expense Payment ---------------------------------------------------------------- ACE American Insurance Company and Pacific Employers Insurance Company, Inc., members of the ACE group of companies, issued a number of insurance policies to the Aurora Foods, Inc. Debtors since September 30, 2000, including workers compensation, automobile, general liability, and excess commercial liability insurance. Recently, ACE issued various workers compensation and general liability insurance policies on the Debtors' behalf for the term October 31, 2003 through March 30, 2004. These insurance policies are: Coverage Type Policy No. Issuer Policy Term ------------- --------- ------ ----------- Business Auto CAL H07959394 Pacific 10/31/01-10/31/02 CAL H07932042 Pacific 09/30/00-09/30/01 Excess Commercial General Liability XSL G20588792 ACE 10/31/03-04/30/04 XSL G20588299 ACE 10/31/02-10/31/03 XSL G20557035 ACE 10/31/01-30/31/02 Workers Compensation SCF C43960866 ACE 10/31/01-04/30/04 WLR C43960908 ACE 10/31/03-04/30/04 WLR C42992549 Pacific 10/31/02-10/31/03 SCF C42992501 Pacific 10/31/02-10/31/03 WLR C43002478 Pacific 10/31/01-10/31/02 SCF C43003379 Pacific 10/31/01-10/31/02 WLR C43002296 Pacific 09/30/01-10/31/01 SCF C43003367 Pacific 09/30/01-10/31/01 SCF C43003355 Pacific 09/30/00-09/30/01 WLR C4298212A Pacific 09/30/00-09/30/01 General Liability OGL G19902912 Pacific 09/30/00-09/30/01 From October 2003 through March 2004, ACE and the Debtors entered into program agreements with respect to the insurance policies. Michael L. Vild, Esq., at The Bayard Firm, in Wilmington, Delaware, relates that the Debtors have continuing obligations under the Policies and Program Agreements, including obligations to pay premiums, taxes, surcharges, etc., for the insurance coverage, as well as for their share of the paid losses, claims administration fees and other expenses for claims arising out of occurrences covered under the policies. The Debtors are also required to: (1) notify the Insurers of claims; (2) provide access to files and information; and (3) participate and cooperate in the investigation and defense of claims. The Debtors are also required to provide security in the form of bonds and letters of credit to secure all of their payment obligations. Based on the nature of the claims arising out of occurrences covered under the policies, the Debtors' obligations under the Policies and Program Agreements can continue for years. Thus, Mr. Vild notes, the full extent of the Debtors' obligations to the Insurers under the Policies and Program Agreements is currently not known, and will not be known until all the claims arising out of covered occurrences are resolved. Pursuant to the First Day Orders, the Debtors were authorized to continue paying all prepetition workers compensation obligations. The Debtors continued to perform their obligations under the workers compensation policies issued by the Insurers for claims arising out of prepetition occurrences. In addition, the Debtors obligated themselves to satisfy the obligations as unimpaired unsecured claims pursuant to the Plan. Accordingly, based on both the Employee Obligations Order and the Plan, the Debtors are authorized and required to continue to meet all of their obligations under the Policies and Program Agreements. In effect, Mr. Vild asserts, the Debtors' obligations to the Insurers under the Policies and Program Agreements as to the claims arising out of postpetition occurrences are necessary costs and expenses of preserving the Debtors' estates under Section 503 of the Bankruptcy Code, and are entitled to treatment as ordinary business expenses or administrative expenses. Pursuant to the Plan, those obligations should be paid in full. The ultimate amount of the Debtors' obligations under the Policies and Program Agreements is currently unliquidated and may continue to be unliquidated for several years. The bar date for filing requests for payment of administrative expense claims expired on May 3, 2004. Accordingly, ACE seeks to preserve and protect its right to receive payment from the Debtors for all of their obligations under the Policies and Program Agreements. Hence, ACE asks the Court to direct the Debtors to pay it an amount to be determined based on the Debtors' obligations under the Policies and Program Agreements related to claims arising out of postpetition occurrences. Aurora Foods Inc. -- http://www.aurorafoods.com/-- based in St. Louis, Missouri, produces and markets leading food brands, including Duncan Hines(R) baking mixes; Log Cabin(R), Mrs. Butterworth's(R) and Country Kitchen(R) syrups; Lender's(R) bagels; Van de Kamp's(R) and Mrs. Paul's(R) frozen seafood; Aunt Jemima(R) frozen breakfast products; Celeste(R) frozen pizza; and Chef's Choice(R) skillet meals. With $1.2 billion in reported assets, Aurora Foods, Inc., and Sea Coast Foods, Inc., filed for chapter 11 protection on December 8, 2003 (Bankr. D. Del. Case No. 03-13744), to complete a pre-negotiated sale of the company to J.P. Morgan Partners LLC, J.W. Childs Equity Partners III, L.P., and C. Dean Metropoulos and Co. Judge Walrath confirmed the Debtors' pre-packaged plan on Feb. 20, 2004. Sally McDonald Henry, Esq., and J. Gregory Milmoe, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP provide Aurora with legal counsel, and David Y. Ying at Miller Buckfire Lewis Ying & Co., LLP provides financial advisory services. (Aurora Foods Bankruptcy News, Issue No. 13; Bankruptcy Creditors' Service, Inc., 215/945-7000) AVADO BRANDS: Wants to Tap DJM Asset as Real Estate Consultants --------------------------------------------------------------- Avado Brands, Inc., wants approval from the U.S. Bankruptcy Court for the Northern District of Texas, Dallas Division in their application to employ DJM Asset Management, LLC as their real estate consultants. DJM Assets will: a. provide Owned Property1 valuations and "desktop" valuations of leases; b. negotiate for the benefit of the Debtors rent reductions and modifications with respect to Debtors leased properties; c. negotiate for the benefit of the Debtors waivers or reductions of pre-petition cure claims and Bankruptcy Code Section 502(b)(6) claims with respect to leased properties; d. develop, design, and implement a marketing plan for the properties and negotiate for the benefit of the Debtors the sale, lease or other disposition of Owned Properties and the termination, assignment, sublease or other disposition of leases; e. coordinate and organize the biding procedures and the sale process for the purpose of maximizing the attendance of interested bidders for the properties; f. provide weekly progress reports to the Debtors; and g. advise the Debtors generally regarding the real property assets. Andrew B. Graiser reports that his firm will be compensated with: a) 4% of the Gross Proceeds in Lease Dispositions; b) 3% of the Gross Proceeds of the Sale or Lease of Owned Properties; c) 5% of the total amount of Reduction in Bankruptcy Claims; d) 4% of the present value, using a 6% discount factor, in Rent reductions and other Lease modifications: e) Valuation Services: $400 per Lease, $750 per Owned Property; and f) $250 per hour for additional consulting services. Headquartered in Madison, Georgia, Avado Brands, Inc. -- http://www.avado.com/-- is a restaurant brand group that grows innovative consumer-oriented dining concepts into national and international brands. The Company filed for chapter 11 protection on February 4, 2004 (Bankr. N.D. Tex. Case No. 04-31555). Deborah D. Williamson, Esq., and Thomas Rice, Esq., at Cox & Smith Incorporated represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $228,032,000 in total assets and $263,497,000 in total debts. AZTAR CORP: 8-7/8% Sr. Note Tender Offer Extended Till Tomorrow --------------------------------------------------------------- Aztar Corporation (NYSE: AZR) announced that it has extended the expiration date of its previously announced tender offer and consent solicitation for all of its 8 - 7/8% Senior Subordinated Notes due 2007 (CUSIP# 054802AD5). The Offer, previously set to expire at 5:00 p.m., New York City time, on Friday, May 28, 2004, will now expire at 9:00 a.m., New York City time, on Wednesday, June 2, 2004, unless further extended or earlier terminated. Holders who validly tender their Notes prior to the new expiration date will receive the tender offer consideration of $1,003.33 per $1,000 principal amount of Notes, plus accrued and unpaid interest (if such notes are accepted for purchase). The Offer is expected to be consummated promptly on or after the expiration date. Except for the extension described above, all other terms and conditions of the Offer remain unchanged. A total of approximately $191.8 million in aggregate principal amount of Notes has been tendered to date. Tendered Notes may no longer be withdrawn. The Company intends to close the Offer on June 2, 2004, subject to the satisfaction of certain conditions, including the Company obtaining satisfactory financing as well as other general conditions, which are further detailed in the Offer to Purchase. Copies of the Offer to Purchase may be obtained from the Information Agent for the Offer, Global Bondholder Services Corporation, at (866) 470-3800 (US toll-free) and (212) 430-3774 (collect). The Company has engaged Banc of America Securities LLC to act as exclusive dealer manager and solicitation agent in connection with the Offer. Questions regarding the Offer may be directed to Banc of America Securities LLC High Yield Special Products at (888) 292-0070 (U.S. toll-free) or (212) 847-5834 (collect). * * * As reported in the Troubled Company Reporter's May 27, 2004 edition, Standard & Poor's Ratings Services assigned its 'B+' rating to Aztar Corp.'s proposed $250 million senior subordinated notes due 2014. At the same time, Standard & Poor's affirmed its 'BB' corporate credit and senior secured bank loan ratings on the Phoenix, Ariz.- based company. The 'B+' subordinated debt rating is also affirmed. The outlook is stable. Pro forma for the new notes, Aztar had $648 million in debt and $5.1 million in preferred stock outstanding at March 31, 2004. "The ratings for Aztar reflect its modest debt leverage, offset by cash flow concentration from its flagship Atlantic City property where the company is in the midst of an expansion project," said Standard & Poor's credit analyst Peggy P. Hwan. Aztar operates five casinos: two Tropicana-branded hotel casinos, one located on the Atlantic City boardwalk and the other on the Las Vegas Strip, Nevada; two Casino Aztar-branded riverboats, one located in Caruthersville, Mo. and the other in Evansville, Ind.; and the Ramada Express casino in Laughlin, Nev. BEAR STEARNS: S&P Rates $150MM Series 2004-ESA Class J at BB+ ------------------------------------------------------------- Standard & Poor's Ratings Services assigned its preliminary ratings to Bear Stearns Commercial Mortgage Securities Inc.'s $1.95 billion commercial mortgage pass-through certificates series 2004-ESA. The preliminary ratings are based on information as of May 28, 2004. Subsequent information may result in the assignment of final ratings that differ from the preliminary ratings. The preliminary ratings reflect the historical and projected performance of the underlying collateral, the experience and financial strength of the sponsors and management company, the liquidity provided by the trustee, the terms of the loan, and the transaction structure. Standard & Poor's determined that the senior loan has a debt service coverage of 1.29x on an assumed 10.50% refinance constant, and a beginning and ending LTV of 75.8%. These statistics are based on the senior participation of the first mortgage and do not reflect the impact of the junior participation, which is held outside of the trust, or the mezzanine financing. Portions of the class A-1 and A-2 certificates equal to approximately $252 million and $48 million, respectively, are being swapped to euro-denominated certificates pursuant a euro swap. The euro-denominated certificates will represent class A-1E (with a preliminary amount of $252 million) and class A-2E (with a preliminary amount of $48 million). Preliminary Ratings Assigned Bear Stearns Commercial Mortgage Securities Inc. Class Rating Amount ($) A-1 AAA 502,000,000 A-2 AAA 632,500,000 A-3 AAA 103,500,000 X-1* AAA 1,800,000,000** X-2* AAA 1,134,500,000** B AA+ 80,000,000 C AA 96,000,000 D A+ 129,000,000 E A 64,000,000 F A- 43,000,000 G BBB+ 43,000,000 H BBB 43,000,000 J BBB- 64,000,000 K BB+ 150,000,000 *Interest-only class. **Notional amount. BLARNEY STONE PERSONAL: Voluntary Chapter 11 Case Summary --------------------------------------------------------- Debtor: Blarney Stone Personal Care, Inc. c/o James M. Edwards P.O. Box 266 Nanty Glo, Pennsylvania 15943 Bankruptcy Case No.: 04-26798 Chapter 11 Petition Date: May 21, 2004 Court: Western District of Pennsylvania (Pittsburgh) Judge: Bernard Markovitz Debtor's Counsel: James R. Walsh, Esq. Spence Custer Saylor Wolfe & Rose 400 U.S. Bank Building P.O. Box 280 Johnstown, PA 15907 Tel: 814-536-0735 Fax: 814-539-1423 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million The Debtor did not file a list of its 20-largest creditors. BOYD GAMING: Obtains Consents to Amend Coast Hotels' 9.5% Sr Notes ------------------------------------------------------------------ Boyd Gaming Corporation, in connection with its proposed acquisition of Coast Casinos, Inc., announced that it has received the requisite consents necessary to adopt certain amendments to the indenture governing Coast Hotels and Casinos, Inc.'s 9.50% Senior Subordinated Notes due 2009 pursuant to its previously announced offer to purchase and consent solicitation for the Notes. Pursuant to the Merger, CCI will be merged with and into, and will become, a wholly owned subsidiary of Boyd Gaming. The Merger is expected to close in mid-2004, subject to the receipt of various regulatory and other approvals. As of 5:00 P.M. (New York City time) on May 27, 2004, holders of $300.5 million, or approximately 92.5%, aggregate principal amount of the outstanding Notes have delivered valid tenders and consents pursuant to the Tender Offer. Adoption of the amendments required the consent of holders of at least a majority of the aggregate principal amount of the outstanding Notes under the indenture. The amendments will eliminate substantially all of the restrictive covenants and certain events of default in the indenture governing the Notes. Although the supplemental indenture adopting the amendments has been executed and is effective, the provisions of the supplemental indenture will not become operative until Boyd Gaming accepts for payment Notes tendered pursuant to the Tender Offer, which will occur on the same date that the Merger is consummated. Once the provisions of the supplemental indenture become operative, they will be binding upon the holders of the Notes, including those not tendered into the Tender Offer. The Tender Offer is scheduled to expire at 9:00 a.m., New York City time, on June 16, 2004, unless extended or earlier terminated. The settlement date for Notes accepted for purchase by Boyd Gaming in the Tender Offer will be promptly after the Expiration Date. The Tender Offer is subject to the satisfaction of certain conditions, including the satisfaction of certain conditions to consummate the Merger, the effectiveness of Boyd Gaming's new credit facility which will be used in part to finance the Tender Offer and other general conditions. Boyd Gaming has engaged Banc of America Securities LLC and Deutsche Bank Securities Inc. to act as joint dealer managers and solicitation agents in connection with the Tender Offer and the Consent Solicitation. Questions regarding the Tender Offer may be directed to Banc of America Securities LLC, High Yield Special Products, at 888-292-0070 (US toll-free) and 704-388-4813 (collect) or Deutsche Bank Securities Inc., High Yield Capital Markets, at 800-553-2826 (US toll-free) and 212-250-4270 (collect). About Boyd Gaming Corporation Headquartered in Las Vegas, Boyd Gaming Corporation (NYSE: BYD) is a leading diversified owner and operator of 14 gaming entertainment properties located in Nevada, New Jersey, Mississippi, Illinois, Indiana and Louisiana. Boyd Gaming press releases are available at http://www.prnewswire.com/Additional news and information on Boyd Gaming can be found at http://www.boydgaming.com/ As reported in the Troubled Company Reporter's April 15, 2004 edition, Standard & Poor's Ratings Services lowered its senior secured debt rating on casino operator Boyd Gaming Corp. to 'BB' from 'BB+'. Concurrently, the 'BB-' senior unsecured debt rating on Boyd was affirmed. Both ratings were removed from CreditWatch where they were placed on Feb. 10, 2004. "The lower rating on the senior secured debt reflects Standard & Poor's expectation that these creditors would not be in a position to fully recover principal in the event of default, given the significant amount of secured debt that will exist in the capital structure," said Standard & Poor's credit analyst Michael Scerbo. CALPINE CORP: Signs 25-Year Sale Agreement with Dow Chemical ------------------------------------------------------------ Calpine Corporation (NYSE: CPN) signed a 25-year agreement on May 25 with The Dow Chemical Company, Midland, Mich., for the sale of up to 200 megawatts of electricity and 1 million pounds per hour of steam to Dow's Freeport, Texas, facility. Under the agreement, Calpine will develop a modern, 250-megawatt, natural gas-fired cogeneration facility that will be constructed in phases and will begin the delivery of steam in 2005 and achieve fully operational status in 2006. The proposed facility will use one of Calpine's existing F-class gas turbines, a steam turbine and four boilers to ensure reliability. Calpine expects to utilize project financing for the majority of the capital costs. A portion of Calpine's equity in the project will be through the use of the natural gas combustion turbine from its existing inventory. Construction is expected to begin in June 2004. "We are very pleased to be entering into our third project with Dow and further extending our mutually beneficial business relationship," said Calpine Marketing and Sales Vice President Peter Gross. "Calpine appreciates the opportunity to be part of Dow's focus on reducing its energy costs while enhancing operations through more efficient and reliable power and steam generation," Gross added, noting, "Securing such long-term agreements with large industrial customers has served as the foundation for our presence in Texas." The Dow Chemical Company is a leading science and technology company that provides innovative chemical, plastic and agricultural products and services to customers in more than 180 countries. "We are very pleased with the efficiency improvement and flexibility that this plant will bring to Dow in Freeport as well as the continued good relationship with Calpine Corporation," said Bill Jewell, Dow's Business Vice President for Energy. Calpine's plant at Dow's Freeport facility will be Calpine's 12th power plant in Texas, where Calpine is the largest independent power producer. With the Freeport facility, Calpine will own or lease eight cogeneration plants in Texas. About Calpine Calpine Corporation (S&P, CCC+ Senior Unsecured Convertible Note and B Second Priority Senior Secured Note Ratings, Negative Outlook), celebrating its 20th year in power in 2004, is a leading North American power company dedicated to providing electric power to customers from clean, efficient, natural gas- fired and geothermal power facilities. The company generates power at plants it owns or leases in 21 states in the United States, three provinces in Canada and in the United Kingdom. Calpine is also the world's largest producer of renewable geothermal energy, and owns or controls approximately one trillion cubic feet equivalent of proved natural gas reserves in the United States and Canada. For more information about Calpine, visit http://www.calpine.com/ CELTRON INTERNATIONAL: Former Auditors Express Going Concern Doubt ------------------------------------------------------------------ Celtron International, Inc. has obtained a new independent accountant due to its former independent accountant's resignation. The new independent accountant is Cordovano and Honeck, P.C., 201 Steele Street, Suite 300, Denver, Colorado 80206; (303) 329-0220. The appointment of the new accountant was recommended by the Company's audit committee. Discussions were held with the new accountant prior to its appointment to assure the Company that the accountant would comply with all applicable audit procedures. The prior independent accountant's report on the financial statements for the Company over the past two years included an opinion that, due to the Company's lack of revenue producing assets and history of losses, there is doubt about Celtron's ability to continue as a going concern. CENTERPOINT: Texas Genco Opts to Increase STP Nuclear Plant Stake ----------------------------------------------------------------- The Board of Directors of Texas Genco Holdings, Inc. (NYSE: TGN), a majority-owned subsidiary of CenterPoint Energy, Inc. (NYSE: CNP), voted to exercise its right of first refusal to purchase up to the entire 25.2 percent interest in the South Texas Project Electric Generating Station (STP) that is currently owned by American Electric Power (AEP). In addition to AEP, the 2,500 megawatt nuclear plant is owned by Texas Genco (30.8 percent), City Public Service of San Antonio (CPS) (28 percent) and Austin Energy (16 percent). AEP had previously announced that it had received an offer of $333 million, subject to certain adjustments, to purchase its 630 megawatt interest. Under the STP Participation Agreement, co- owners wishing to acquire AEP's interest are entitled to do so at the proposed sale price. Austin Energy indicated that it will not exercise its right of first refusal, while CPS indicated that it intends to purchase at least 12 percent or 300 megawatts. Accordingly, Texas Genco should be entitled to purchase a 13.2 percent interest or 330 megawatts from AEP. About the Company Texas Genco Holdings, Inc., based in Houston, Texas, is one of the largest wholesale electric power generating companies in the United States with over 14,000 megawatts of generation capacity, of which approximately 2,500 megawatts are currently in mothball status. It sells electric generation capacity, energy and ancillary services in one of the nation's largest power markets, the Electric Reliability Council of Texas (ERCOT). Texas Genco has one of the most diversified generation portfolios in Texas, using natural gas, oil, coal, lignite, and uranium fuels. The company owns and operates 60 generating units at 11 electric power-generating facilities and owns a 30.8 percent interest in a nuclear generating plant. Texas Genco currently is a majority-owned subsidiary of CenterPoint Energy, Inc. For more information, visit our web site at http://www.txgenco.com/ CenterPoint Energy, Inc. (Fitch, BB+ Preferred Securities and Zero-Premium Exchange Notes' Ratings, Negative), headquartered in Houston, Texas, is a domestic energy delivery company that includes electric transmission and distribution, natural gas distribution and sales, interstate pipeline and gathering operations, and more than 14,000 megawatts of power generation in Texas, of which nearly 3,000 megawatts are currently in mothball status. The company serves nearly five million customers primarily in Arkansas, Louisiana, Minnesota, Mississippi, Oklahoma, and Texas. Assets total $21 billion. With more than 11,000 employees, CenterPoint Energy and its predecessor companies have been in business for more than 130 years. Visit http://www.CenterPointEnergy.com/for more information. CHAMPIONLYTE: Wants Immediate Delisting from Berlin Stock Exchange ------------------------------------------------------------------ ChampionLyte Holdings, Inc. (OTC Bulletin Board: CPLY) announced that to protect is shareholders, it has sent a demand letter to the Berlin Stock Exchange demanding immediate delisting. The Company said its stock was listed on the Exchange without any prior knowledge, consent or authorization. The listings, which include more than 200 U.S. publicly traded companies, appear to be part of an organized effort by domestic and foreign brokers to circumvent the recent National Association of Securities Dealers (NASD) and Securities Exchange Commission (SEC) restrictions against "naked short selling." "As soon as we learned of this fraudulent listing, we notified our SEC counsel to proceed with whatever steps are necessary to delist our stock from the Berlin Exchange," said David Goldberg, president of ChampionLyte Holdings, Inc. "This is an egregious act against our company and its shareholders which we will not tolerate." About ChampionLyte Holdings, Inc. ChampionLyte Holdings, Inc. -- whose March 31, 2004 balance sheet shows a total stockholders' deficit of $1,787,854 -- is a fully reporting public company whose shares are quoted on the OTC Bulletin Board under the trading symbol CPLY. Its recently formed beverage division, ChampionLyte Beverages, Inc., a Florida corporation, manufactures, markets and sells ChampionLyte(R), the first completely sugar-free entry into the multi-billion dollar isotonic sports drink market. Its The Old Fashioned Syrup Company subsidiary manufactures, distributes and markets three flavors of sugar-free syrups. The products are sold in more than 20,000 retail outlets including some of the nation's largest supermarket chains. CHEMED CORP: S&P Assigns B+ Corp Rating & Says Outlook is Negative ------------------------------------------------------------------ Standard & Poor's Ratings Services assigned its 'B+' corporate credit rating to Cincinnati, Ohio-based hospice, plumbing, and drain cleaning services provider Chemed Corporation (formerly Roto-Rooter, Inc.). At the same time, Standard & Poor's assigned its 'B+' senior secured debt rating to Chemed's $110 million floating rate notes maturing on Feb. 24, 2010, and assigned its 'B-' senior unsecured debt rating to the company's $150 million senior notes maturing on Feb. 24, 2011. The outlook is negative. Proceeds from the new debt, along with $31 million of on-hand cash, $100 million of new equity, and $75 million from the company's senior secured credit facilities (Standard & Poor's does not rate the senior secured credit facilities), were used to acquire 63% of Vitas Healthcare Corp. Vitas is a Miami, Fla.-based hospice care provider in which Chemed had already owned a 37% interest prior to this transaction. The funds were also used to repay the existing debt of Vitas and Chemed and pay for related expenses. Shortly after the transaction, Chemed had about $320 million of debt outstanding. "The low speculative-grade ratings on Chemed reflect the company's flat to declining plumbing, drain cleaning, and heating and air conditioning business, its limited experience functioning as a combined entity, its exposure to third-party reimbursement, and the integration risks associated with its future acquisition strategy," said Standard & Poor's credit analyst Jesse Juliano. "These concerns are partially offset by the company's industry leading positions in its two businesses, the positive near- and long-term growth potential in the hospice industry, and its ability to generate significant operating cash flows." Chemed is the industry leader in two disparate business segments: hospice care services and plumbing and drain cleaning. CMS ENERGY: Shareholders Elect Board Members & Approve 4 Proposals ------------------------------------------------------------------ CMS Energy (NYSE: CMS) shareholders reelected 10 incumbents and one new member to the Company's Board of Directors at May 28's annual shareholders meeting. The incumbents reelected are: * Kenneth Whipple, chairman and chief executive officer of CMS Energy and its principal subsidiary, Consumers Energy. Whipple is a former executive vice president, Ford Motor Company, and former president, Ford Financial Services Group, Dearborn, Mich. * Earl D. Holton, vice chairman of Grand Rapids, Mich.-based Meijer, Inc., operator of food and general merchandise centers. * David W. Joos, president and chief operating officer of CMS Energy and Consumers Energy. * Michael T. Monahan, president of Monahan Enterprises, L.L.C., a Michigan-based consulting firm, former chairman of Munder Capital Management, and former president of Comerica, Inc., and Comerica Bank. * Joseph F. Paquette Jr., former chairman and chief executive officer of PECO Energy, formerly the Philadelphia Electric Company. * William U. Parfet, chairman and chief executive officer of MPI Research, of Mattawan, Mich., a research laboratory conducting risk assessment toxicology studies. * Percy A. Pierre, professor of electrical engineering, Michigan State University, East Lansing, Mich. * S. Kinnie Smith Jr., vice chairman and general counsel of CMS Energy. * Kenneth L. Way, former chairman of the board and chief executive officer of Lear Corporation, a Southfield, Mich.- based supplier of interior systems to the automotive industry. * John B. Yasinsky, former chairman and chief executive officer, OMNOVA Solutions, Inc., of Fairlawn, Ohio, a developer, manufacturer, and marketer of emulsion polymers, specialty chemicals, and building products. The new director is: * Merribel S. Ayres, president of Lighthouse Energy Group, L.L.C., of Washington, D.C. Ayres founded the firm, which provides governmental affairs and communications expertise, as well as management consulting and business development services, to domestic and international clients focused on energy and environmental matters. She also has served as chief executive officer of the National Independent Energy Producers. The shareholders also approved the four proposals recommended by management and described in the proxy materials. Those were: * Ratifying Ernst & Young, L.L.P., as the Company's independent auditors for 2004 * Amending the Performance Incentive Stock Plan * Retaining the Company's income tax deductibility for incentive compensation * Amending CMS Energy's articles of incorporation to increase the amount of authorized common stock to 350 million shares. About the Company CMS Energy (Fitch, B- Preferred Share Rating, Stable Outlook) is an integrated energy company, which has as its primary business operations an electric and natural gas utility, natural gas pipeline systems, and independent power generation. For more information on CMS Energy, visit its Web site at http://www.cmsenergy.com/ CMS ENERGY: Utility Unit Declares Quarterly Preferred Dividends --------------------------------------------------------------- The Board of Directors of Consumers Energy, the principal subsidiary of CMS Energy (NYSE: CMS), has declared regular quarterly dividends on both series of the Company's preferred stock. The following dividends are payable July 1, 2004, to shareholders of record June 8, 2004: $1.04 per share on the $4.16 stock, and $1.125 per share on the $4.50 stock. Distributions on the 8.36 percent Trust Originated Preferred Security (TOPrS) are payable June 30, 2004, in the amount of $0.5225 per preferred security, to holders of record on June 29, 2004. Similarly, distributions are payable June 30, 2004, on the 8.20 percent TOPrS in the amount of $0.5125 per preferred security, $0.578125 on the 9.25 percent TOPrS, and $0.5625 on the 9 percent Trust Preferred Securities. These distributions are for holders of record June 29, 2004. The Company will pay to the Trustees interest on related debentures to cover such distributions. Also, a dividend on the Quarterly Income Preferred Securities (QUIPS) is payable on July 15, 2004, in the amount of $0.96875 per security to holders of record on June 30, 2004. CMS Energy will pay to the Trustee interest on related debentures to cover such dividend. About the Company CMS Energy (Fitch, B- Preferred Share Rating, Stable Outlook) is an integrated energy company, which has as its primary business operations an electric and natural gas utility, natural gas pipeline systems, and independent power generation. For more information on CMS Energy, visit its Web site at http://www.cmsenergy.com/ CSG SYSTEMS: S&P Rates $200 Mil. Senior Subordinated Debt at B -------------------------------------------------------------- Standard & Poor's Ratings Services said that it assigned its 'B' rating to Englewood, Colo.-based CSG Systems Inc.'s $200 million senior subordinated convertible contingent debt securities. At the same time, Standard & Poor's affirmed its 'BB-' corporate credit rating with a stable outlook. The proceeds of this issue, along with a portion of cash on the balance sheet, will be used to refinance approximately $199 million in senior secured bank debt and to repurchase up to $40 million of CSG's common stock. "The ratings reflect the company's concentrated customer base in a highly competitive market, partially offset by CSG's recurring revenue base and moderate, but predictable, earnings and cash flow," said Standard & Poor's credit analyst Ben Bubeck. CSG provides billing solutions for converging communications markets, including cable television, direct broadcast satellite, telephony, and on-line services, through a combination of both outsourced and licensed formats. Pro forma for the issuance of the senior subordinated securities, the company had operating lease- adjusted total debt of approximately $277 million as of March 2004. CSG competes in a highly competitive market in which the company remains vulnerable to substantially larger competitors, although the company can defend its market positions over the intermediate term because of contractual customer relationships and high switching costs. In addition to a recently negotiated new five- year deal with Comcast, its largest customer, CSG also recently extended contracts with Echostar and Cox Communications. Customer concentrations are high, however, as CSG's two largest customers represent about one-third of its revenue base. Following the refinancing of its bank facility, debt maturities are essentially eliminated until 2011, at which point the convertible subordinated notes are puttable. CSG has no major contract renewals through 2006, which supports expectations for relatively stable revenue and cash flow generation over the near to intermediate term. CWMBS INC: Fitch Rates Series 2004-J5 Classes B-3 & B-4 at BB/B --------------------------------------------------------------- CWMBS, Inc.'s $155.8 million mortgage pass-through certificates series 2004-J5, CHL Mortgage Pass-Through Trust 2004-J5 classes A- 1 through A-6, X, PO and A-R (senior certificates) are rated 'AAA' by Fitch Ratings. In addition, class M ($2,000,000) is rated 'AA', class B-1 ($880,000) is rated 'A', class B-2 ($480,000) is rated 'BBB', privately offered class B-3 ($320,000) is rated 'BB', and privately offered class B-4 ($160,000) is rated 'B' by Fitch Ratings. The 'AAA' rating on the senior certificates reflects the 2.60% subordination provided by the 1.25% class M, the 0.55% class B-1, the 0.30% class B-2, the 0.20% class B-3, the 0.10% class B-4, and the 0.20% class B-5 (not rated by Fitch). Fitch believes the above credit enhancement will be adequate to support mortgagor defaults as well as bankruptcy, fraud and special hazard losses in limited amounts. In addition, the ratings also reflect the quality of the underlying mortgage collateral, strength of the legal and financial structures and the master servicing capabilities of Countrywide Home Loans Servicing LP (Countrywide Servicing), a direct wholly owned subsidiary of Countrywide Home Loans, Inc. (CHL). Countrywide Servicing is rated an 'RMS2+' for master servicing and 'RPS1' for primary servicing by Fitch. The senior certificates are collateralized primarily by a pool of conventional, fully amortizing, mostly 30-year fixed-rate, mortgage loans secured by first liens on one- to four-family residential properties. As of the cut-off date (May 1, 2004), the aggregate pool balance totaled $129,050,296. Additional loans totaling $30,949,703 will be acquired from closing through June 2004. If loans are not acquired during this period, the amount in the prefunding account will be used to pay certificate principal. Of the mortgage loan collateral at closing, the weighted-average original loan-to-value ratio (OLTV) was 69.01%. Cash-out and rate/term refinance loans represent 9.00% and 53.10% of the initial mortgage pool, respectively. Second homes account for 4.70% of the initial pool. The average loan balance is $524,595. The weighted average FICO credit score is approximately 749. The three states that represent the largest portion of mortgage loans are California (38.21%), Ohio (6.54%) and Florida (5.59%). None of the mortgage loans are 'high cost' loans as defined under any local, state or federal laws. Countrywide Servicing, Fifth Third Mortgage Company and Greenpoint Mortgage Funding, Inc. will directly service approximately 81.13%, 18.61% and 0.26% of the initial mortgage loans, respectively. CWMBS purchased the mortgage loans from CHL and deposited the loans in the trust, which issued the certificates, representing undivided beneficial ownership in the trust. For federal income tax purposes, an election will be made to treat the trust fund as multiple real estate mortgage investment conduits (REMICs). The Bank of New York will act as Trustee. CYBERADS INC: Losses & Deficit Trigger Going Concern Doubt ---------------------------------------------------------- CyberAds, Inc., a Florida corporation, was organized on April 12, 2000, under the laws of the State of Florida. CYAD initially compiled member lists through an Internet-based opt-in e-mail list found on its website -- http://www.sportsforcash.com/ "Internet-based opt-in e-mail" creates member lists by requiring website visitors to provide the Company with certain personal information and consent to receiving e-mails from the company in order to gain access to its website. The Company's goal was to sell the member lists to direct marketers seeking to target promotional campaigns to large groups of people via electronic mail. The Company initially had the concept of awarding prizes to attract potential members to its website. However, it terminated its prize program after determining that the business model was not profitable. This segment of its operations has been recently discontinued. CYAD has not been profitable and has experienced negative cash flow from operations due to its development stage, substantial on- going investment in research and development efforts. Consequently, CYAD has been dependent on the sales of equity to fund cash requirements. Timothy L. Steers, CPA, LLC, Portland, Oregon, independent auditor for the Company, in his Auditors Report dated April 6, 2004, said, in part: "... the Company had a loss from continuing operations of $1,201,111 and a working capital deficiency of $2,720,748. These matters raise substantial doubt about the Company's ability to continue as a going concern." DELTA AIR LINES: Files Registration Statement with SEC ------------------------------------------------------ Delta Air Lines (NYSE: DAL) announced that it has filed a registration statement on Form S-3 with the Securities and Exchange Commission relating to its outstanding 2-7/8% Convertible Senior Notes due 2024, which were originally issued in a private placement in February 2004. When the SEC declares the registration statement effective, the holders of the notes will be able to resell the notes and the common shares issuable upon conversion of those notes. The company will not receive any of the proceeds from any resale of the notes or the underlying common stock. The registration statement relating to these securities has been filed with the SEC but has not yet become effective. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any state in which the solicitation or sale would be unlawful prior to registration or qualification under the securities laws in such state. * * * As reported in the Troubled Company Reporter's May 13, 2004 edition, Standard & Poor's Ratings Services affirmed its ratings on Delta Air Lines Inc. (B-/Negative/--) and revised the long-term rating outlook to negative from stable. Delta disclosed in its first-quarter 2004 10Q filing with the SEC that failure to secure needed cost reductions, regain profitability, and maintain access to the capital markets could force the company to file for bankruptcy. "The warning makes explicit what previous company statements had hinted at, and may indicate that Delta believes it will have to move to the brink of bankruptcy to persuade its pilots to grant concessions," said Standard & Poor's credit analyst Philip Baggaley. DVI INC: Fitch Downgrades Medical Equipment Securitizations ----------------------------------------------------------- Fitch Ratings takes rating actions on the classes of DVI, Inc. securities listed below. Additionally, all noted ratings are removed from Rating Watch Negative. These rating actions affect 55 classes of notes in 9 transactions totaling $1.3 billion in securities. Many of these classes were placed on Rating Watch Negative by Fitch on May 20, 2004. S Fitch's actions are based on continued loan performance deterioration as reflected in the servicer reports for the period ending April 30, 2004. While the rate of defaults has slowed, actual delinquency rates, particularly later stage delinquencies, are higher than expected and may result in defaults in excess of conservative expectations applied by Fitch at the time of Fitch's March 5, 2004 rating actions. As of the January 2004 reporting period, total delinquencies averaged approximately 28% and delinquencies over 90 days averaged approximately 12.0%. As of the April 2004 reporting period, total delinquencies averaged approximately 27.4% and delinquencies over 90 days averaged approximately 15.4%. Fitch has had discussions with U.S. Bancorp Portfolio Services (USBPS) which replaced DVI, Inc. as servicer for each of the securitizations under the terms of each transaction's Contribution and Servicing Agreements in February 2004. While Fitch acknowledges the prior experience of USBPS in taking over the servicing of distressed portfolios, reduced collections efforts by DVI prior to the servicing transition combined with the volume of leases that are currently delinquent and in default have contributed to severe loan performance deterioration. USBPS has dedicated substantial resources to collections and work out activities on the portfolios, but Fitch expects that it will be difficult to realize significant near-term improvements in performance given the magnitude of loan performance deterioration. Fitch will continue to closely monitor performance of the transactions, will have regular contact with USBPS, and may raise, lower or withdraw ratings as appropriate. Ratings have been lowered or affirmed as indicated below. DVI Receivables VIII, L.L.C., Series 1999-1, --Class A-5 notes to 'B' from 'BBB'; --Class B notes to 'CCC' from 'BB'; --Class C notes to 'CCC' from 'B'; --Class D notes to 'CCC' from 'B-'; --Class E notes to 'CC' from 'CCC';. The Class A-5, B, C and D notes are also removed from Rating Watch Negative. DVI Receivables X, L.L.C., Series 1999-2, all outstanding classes: --Class A-4 notes to 'CCC' from 'B'; --Class B notes to 'CCC' from 'B-'; --Class C notes to 'CC' from 'CCC'; --Class D notes to 'CC' from 'CCC'; --Class E notes to 'CC' from 'CCC'; The Class A-4 and B notes are also removed from Rating Watch Negative. DVI Receivables XI, L.L.C., Series 2000-1, --Class A-4 notes to 'CCC' from 'B'; --Class B notes to 'CCC' from 'B-'; --Class C notes to 'CC' from 'CCC'; --Class D notes to 'CC' from 'CCC'; --Class E notes to 'CC' from 'CCC'; The Class A-4 and B notes are also removed from Rating Watch Negative. DVI Receivables XII, L.L.C., Series 2000-2, --Class A-4 notes to 'CCC' from 'B-'; --Class B notes to 'CC' from 'CCC'; --Class C notes to 'CC' from 'CCC'; --Class D notes to 'CC' from 'CCC'; --Class E notes to 'CC' from 'CCC'; The Class A-4 notes are also removed from Rating Watch Negative. DVI Receivables XIV, L.L.C., Series 2001-1, --Class A-3 notes to 'CCC' from 'BB'; --Class A-4 notes to 'CCC' from 'BB-'; --Class B notes to 'CC' from 'B'; --Class C notes to 'CC' from 'CCC'; --Class D notes to 'CC' from 'CCC'; --Class E notes to 'CC' from 'CCC'; The Class A-3, A-4 and B notes are also removed from Rating Watch Negative. DVI Receivables XVI, L.L.C., Series 2001-2, --Class A-3 notes to 'CCC' from 'BB+'; --Class A-4 notes to 'CCC' from 'BB+'; --Class B notes to 'CC' from 'BB-'; --Class C notes to 'CC' from 'B'; --Class D notes to 'CC' from 'CCC'; --Class E notes to 'CC' from 'CCC'; The Class A-3, A-4, B and C notes are also removed from Rating Watch Negative. DVI Receivables XVII, L.L.C., Series 2002-1, --Class A-3A and A-3B notes are affirmed at 'CCC'; --Class B notes to 'CC' from 'CCC'; --Class C notes to 'CC' from 'CCC'; --Class D notes to 'C' from 'CC'; --Class E notes to 'C' from 'CC'. DVI Receivables XVIII, L.L.C., Series 2002-2, --Class A-3A and A-3B notes to 'CCC' from 'BB-'; --Class B notes to 'CC' from 'B-'; --Class C notes to 'CC' from 'CCC'; --Class D notes to 'CC' from 'CCC'; --Class E notes to 'CC' from 'CCC'. The Class A-3A and A-3B, and B notes are also removed from Rating Watch Negative DVI Receivables XIX, L.L.C., Series 2003-1, all outstanding classes: --Class A-2A and A-2B notes to 'CCC' from 'B', --Class A-3A and A-3B notes to 'CCC' from 'B'; --Class B notes to 'CC' from 'B-'; --Class C-1 and C-2 notes to 'CC' from 'CCC'; --Class D-1 and D-2 notes to 'C' from 'CCC'; --Class E-1 and E-2 notes to 'C' from 'CCC'; The Class A-2A and A-2B, A-3A and A-3B, and B notes are also removed from Rating Watch Negative. DAN RIVER: Court Grants Final Approval of $145 Million DIP Loan --------------------------------------------------------------- Dan River Inc. (OTC:DVERQ) reported that the bankruptcy court granted final approval of its $145 million debtor-in-possession (DIP) credit facility. The facility is being provided by a group of lenders led by Deutsche Bank Trust Company Americas. The Company had received interim approval of the DIP facility pursuant to a "first day order" approved by the bankruptcy court on April 1, 2004. Dan River filed a voluntary petition to restructure under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Northern District of Georgia on March 31, 2004. The DIP financing, combined with the Company's cash from operations, is expected to provide funding for the Company's operations during the Chapter 11 process, and will expire on March 31, 2005. The Company is in compliance with all of the terms and conditions of the DIP credit agreement. "We are pleased that we were able to reach agreement with our lenders concerning the terms of our final DIP facility," said Joseph J. Lanier, Jr., Chairman and CEO of Dan River. "Our number one priority is to continue to supply our customers with the competitively priced, quality products they rely on from Dan River. We are pleased that our Chapter 11 filing has not impeded our ability to provide the excellent service which our customers expect." Mr. Lanier continued, "Final approval of our DIP credit facility allows us to continue to serve our customers and honor our obligations to our suppliers and to our employees while we complete our reorganization. I want to express my gratitude for the on-going support we continue to receive from our loyal customers, suppliers, licensors and dedicated associates." Headquartered in Danville, Virginia, Dan River Inc. -- http://www.danriver.com/-- is a designer, manufacturer and and marketer of textile products for the home fashions, apparel fabrics and industrial markets. The Company filed for chapter 11 protection on March 31, 2004 (Bankr. N.D. Ga. Case No. 04-10990). James A. Pardo, Jr., Esq., at King & Spalding represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $441,800,000 in total assets and $371,800,000 in total debts. E.SPIRE: Trustee Wants to Talk to KPMG Partners & Managers ---------------------------------------------------------- Gary Seitz, the Chapter 11 Trustee for E.Spire Communications, Inc., et al., in his pursuit of claims against the Debtors' former officers, directors and professions, asks the U.S. Bankruptcy Court for permission to depose the KPMG Peat Marwick, LLP, engagement partner, audit partner and any managers who worked on E.spire's accounting and auditing team between 1998 and 2001. Mr. Seitz also wants to put his fingers on every piece of E.spire- related paper in KPMG's possession. Judge Venters will review Mr. Seitz's Rule 2004 Application at a hearing on June 8, 2004. E.spire Communications, Inc., is a facilities-based integrated communications provider, offering traditional local and long distance internet access throughout the United States. The Company filed for chapter 11 protection on March 22, 2001 (Bankr. Del. Case No. 01-974). Daniel K. Astin, Esq., at The Bayard Firm, in Wilmington, Del., and Bijan Amini, Esq., at Storch Amini & Munves, P.C., in New York City, represent the Chapter 11 Trustee overseeing E.spire's estate. EL PASO CORP: Provides Financial and Operational Update ------------------------------------------------------- El Paso Corporation (NYSE: EP) is providing a progress report on its long-range plan, financial and operational information for the fourth quarter of 2003 and first quarter of 2004, and an update on the status of the filing of the company's 2003 Form 10-K and first quarter 2004 Form 10-Q. The financial information provided herein with respect to the quarter and year ended December 31, 2003 has not been audited, nor has the financial information for the quarter ended March 31, 2004, been reviewed by its independent auditor. This financial information remains subject to further review by El Paso and its independent auditor and, therefore, is subject to change. "I am pleased to report that El Paso has made meaningful progress against the three key challenges the market identified in our long-range plan," said Doug Foshee, president and chief executive officer of El Paso Corporation. "First, we are well ahead of schedule for our asset sales, and we have received good value for the assets we have sold. Second, we've eliminated between $40 million and $50 million of annual expenses through a reorganization that was completed in the first quarter. Third, we've recruited new leadership for our production business and are aggressively working to restore this business to profitable growth. Taken together, these results represent significant progress toward achieving the goals we laid out for the market last December. In addition, El Paso's first quarter cash flow was higher than anticipated in our plan, and this is helping us further accelerate our debt reduction." Long-Range Plan Update El Paso is ahead of schedule on the goal laid out in its long- range plan to sell $3.3 billion to $3.9 billion of assets by the end of 2005. Since December 1, 2003, the company has announced the sale of or sold approximately $3.5 billion of assets. An asset sales tracker is available on El Paso's Web site at http://www.elpaso.com/investor/ The progress in asset sales has led to a significant reduction in the company's debt. As indicated in the table below, the company's debt, net of cash, was reduced by approximately $2.4 billion between September 30, 2003 and March 31, 2004. El Paso expects its net debt to be approximately $17 billion at year-end 2004 as about $1.9 billion of previously announced asset sales are expected to close by then. The closing of those sales will also result in the elimination of approximately $1 billion of non-recourse debt from the company's balance sheet. This will be partially offset by approximately $275 million of non-recourse financing for the Cheyenne Plains Pipeline as discussed below. Additional asset sales are expected to be announced and completed during 2004. The Western Energy Settlement will become effective in June 2004 as a result of a federal court order received this month. On the effective date, the company will post a minimum of $585 million of collateral in the form of production properties to support its future payment obligations under the settlement. El Paso's liquidity increased to approximately $2.7 billion as of March 31, 2004, consisting of $1.5 billion of readily available cash and $1.2 billion of capacity available under its $3-billion bank facility. The company defines readily available cash as cash on deposit or held in short-term investments that is easily accessible for general corporate purposes. During the second quarter of 2004, El Paso purchased approximately $130 million (face value) of its 7.71 percent Gemstone notes due October 31, 2004 at an average price of 101.6 percent, reducing its debt maturities for the remainder of 2004. El Paso's cash flow generation has been consistent with its long- range plan. The table below updates El Paso's net change in cash for the fourth quarter of 2003, full year 2003 and the first quarter of 2004. Financial and Operational Update The pipeline group's financial and operational performance continues to meet or exceed the assumptions included in the company's long-range plan, and the inventory of expansion opportunities remains solid. The Cheyenne Plains Pipeline project, which has a filed cost estimate of $420 million, has received FERC approval and is currently ahead of schedule with expected completion in early 2005. The company is in advanced discussions to obtain approximately $275 million of the capital required for this project through a non-recourse project financing. A key goal of El Paso's long-range plan is to restore the production business to profitable growth. As part of that process, the company is reviewing all drilling opportunities and establishing a capital allocation process designed to produce more predictable results. In addition, the near- term focus is on a return to leadership in both drilling and operating costs. The company plans to provide a review of this business in June. The average daily production rate for the second quarter of 2004 through May 19, 2004 is estimated to be 823 million cubic feet equivalent per day (MMcfe/d). El Paso's marketing business was profitable in the fourth quarter of 2003 and incurred a minor loss in the first quarter of 2004. The keys to its improved financial performance are cost reduction and improvement in the mark- to-market value for its Cordova tolling arrangement. The marketing business is also making solid progress in reducing the number of contract positions in its trading portfolio, which was comprised of more than 35,000 positions at the end of 2002. El Paso now expects to have fewer than 6,000 positions at year-end 2004. El Paso has made steady progress selling domestic power assets during 2004. In addition, the financial performance of its international power assets has been slightly ahead of the assumptions included in the long-range plan. Status of Form 10-K Filing On May 3, 2004, El Paso announced findings of an independent review concerning revisions to the company's proved oil and natural gas reserves. The independent review supported El Paso's previous assessment that prior years' financial statements for El Paso Corporation, El Paso CGP Company (EPCGP), and El Paso Production Holding Company (EPPH) should be restated. As announced earlier, investors should not rely on previously filed reports for these registrants until further notice from the company. The company is in the process of completing the methodology for such restatements and is working to file a Form 10-K for each entity for 2003 as soon as possible. Each 2003 Form 10-K will include the required restated financial statements for prior periods. Currently, the company expects to restate the financial statements of El Paso Corporation, EPCGP, and EPPH from 1999 through 2003. The first quarter 2004 Form 10-Qs for these registrants will be delayed pending the filing of the Form 10-Ks. Because of the delay in the company's filings, the company and certain of its subsidiaries may not be in compliance with certain of their obligations to file or deliver to relevant parties their SEC reports under their public debt indentures and various other financing arrangements. The delay in filing the 2003 Form 10-Ks does not automatically result in an event of default under the indentures. Instead, the holders of at least 25 percent of the outstanding principal amount of any series of debt securities issued under such indentures would have to provide notice of non- compliance and the company would have between 30 and 90 days to cure the default. El Paso has not received notice from these debt holders. If the default was not cured and an acceleration of debt securities were to occur, the company may be unable to meet its payment obligations with respect to the related indebtedness. As previously disclosed, the company has received waivers from the lenders under its $3-billion credit facility and various other financings to address restatements arising out of revisions to its oil and natural gas reserves and has received an extension on its time to file financial statements through June 15, 2004 to permit continued access to the facility. The company has begun the process required to extend the waivers on the credit facility and will provide an update to the market upon the completion of that process. El Paso Corporation provides natural gas and related energy products in a safe, efficient, dependable manner. The company owns North America's largest natural gas pipeline system and one of North America's largest independent natural gas producers. For more information, visit http://www.elpaso.com/ EL PASO CORP: Annual Stockholders Meeting Set for Sept. 9 in Texas ------------------------------------------------------------------ El Paso Corporation (NYSE: EP) announced that its annual meeting of stockholders will be held on September 9, 2004. El Paso is preparing to hold its 2004 annual meeting of stockholders in Houston, Texas. All holders of record of the outstanding common stock of El Paso Corporation as of July 12, 2004 will be entitled to vote at the annual meeting. The proxy statement of El Paso Corporation circulated to stockholders in connection with its 2003 annual meeting provided that proposals by stockholders that are intended for inclusion in the proxy statement and proxy to be presented at the next annual meeting of stockholders of El Paso Corporation must be received by El Paso Corporation by January 13, 2004 in order to be considered for inclusion in its proxy materials. As a result of the later date established by the Board of Directors of El Paso Corporation for its 2004 annual meeting, El Paso Corporation hereby notifies its stockholders that proposals by stockholders that are intended for inclusion in its proxy statement and proxy to be presented at the 2004 annual meeting must now be received by El Paso Corporation by Wednesday, June 16, 2004, in order to be considered for inclusion in the proxy materials of El Paso Corporation. Such proposals should be addressed to the Corporate Secretary of El Paso Corporation and may be included in the proxy materials for the 2004 annual meeting of El Paso Corporation if they comply with certain rules and regulations of the Securities and Exchange Commission and El Paso Corporation's By-laws governing shareholder proposals. In addition, for all other proposals to be presented at the annual meeting that are not included in the proxy statement and proxy to be timely, a stockholder's notice must be delivered to, or mailed and received at, the principal executive offices of El Paso Corporation no later than Wednesday, June 23, 2004. If a stockholder fails to so notify El Paso Corporation of any such proposal prior to such date, management of El Paso Corporation will be allowed to use their discretionary voting authority with respect to proxies held by management when the proposal is raised at the annual meeting (without any discussion of the matter in its proxy statement). All proposals must be submitted, in writing, by the dates noted above, to: David L. Siddall Corporate Secretary, El Paso Corporation, 1001 Louisiana Street, Houston, Texas 77002 Telephone (713) 420-6195 Facsimile (713) 420-4099 El Paso Corporation provides natural gas and related energy products in a safe, efficient, dependable manner. The company owns North America's largest natural gas pipeline system and one of North America's largest independent natural gas producers. For more information, visit http://www.elpaso.com/ * * * As previously reported, Standard & Poor's Ratings Services lowered its corporate credit rating on natural gas pipeline and production company El Paso Corp. to 'B-' from 'B' to reflect a larger-than- expected write-down of the company's oil and natural gas reserves. The outlook remains negative. ENRON CORPORATION: Court Approves Texaco Settlement Agreement ------------------------------------------------------------- Pursuant to Rule 9019 of the Federal Rules of Bankruptcy Procedure, the Enron Corporation Debtors sought and obtained the Court's approval of a Settlement Agreement among the Debtors and the Texaco Parties -- ChevronTexaco Corporation, Texaco, Inc., Texaco Exploration and Production, Inc., Caltex Trading Pte. Limited, Texaco Natural Gas, Inc., formerly known as Texaco Gas Marketing, Inc., Sabine Pipe Line, LLC, Texaco Limited, Chevron USA, Inc., Chevron Phillips Chemical Company, LP, Texaco Energy Marketing, LP, Sabine Hub Services Company, Enervest San Juan Operating, LLC, Texaco Downstream, LLC, Texaco Aviation Products, LLC, and Fuel and Marine Marking, LLC -- and the Bridgeline Parties -- Bridgeline Holdings, LP, Bridgeline, LLC, Bridgeline Storage Company, LLC, Bridgeline Gas Distribution, LLC, and Bridgeline Gas Marketing, LLC. Edward A. Smith, Esq., at Cadwalader, Wickersham & Taft, LLP, in New York, relates that Enron North America Corporation and certain of the Texaco and Bridgeline Parties entered into numerous transactions involving physical and financial trades of gas, power, liquid fuel and other commodities. Some of these Trading Contracts have been terminated through a valid notice or an automatic termination clause. In other instances, the relevant transactions under the Trading Contracts have expired. According to Mr. Smith, Enron is in-the-money under the Trading Contracts with the Texaco Parties. Enron's largest in-the-money position exists under the ISDA Master Agreement dated April 9, 1998 between Texaco, Inc., and ENA. The ENA ISDA contains a two- way termination payment provision, and the in-the-money marked- to-market position under this contract exceeds $38,000,000. The Bridgeline Business Bridgeline is a natural gas business with operations in Louisiana that ENA, four ENA affiliates, and TEPI formed a joint venture in March 2000. The joint venture was to combine Enron's and Texaco's natural gas pipeline systems and storage facilities in southern Louisiana into one integrated system, with the combined operation expected to create additional value through operational efficiencies and cost savings. According to Mr. Smith, the Bridgeline business operates through a limited liability company, Bridgeline, LLC, and a limited partnership, Bridgeline Holdings, LP. TEPI and ENA are parties to the Amended and Restated Limited Liability Company Agreement of Bridgeline, LLC, dated March 1, 2000. Bridgeline, LLC, is the general partner of Holdings, which was created by the Amended and Restated Limited Partnership Agreement, dated March 1, 2000. The parties to the Partnership Agreement are Bridgeline, LLC, as the general partner and five limited partners: TEPI, and ENA affiliates, Louisiana Resources Company, LRCI, Inc., Louisiana Gas Marketing Company and LGMI, Inc. TEPI has a 60% equity stake and ENA a 40% equity stake in Bridgeline, LLC. Both parties each have a 50% voting stake. Bridgeline, LLC, has a 1% economic interest in the Bridgeline Partnership while the Limited Partners own the remaining 99% of the Bridgeline Partnership, with TEPI holding 59.4%. In connection with the formation of the Bridgeline Partnership, ENA, the Enron Parties, TEPI and BHLP entered into a Contribution Agreement dated February 3, 2000. Pursuant to the Contribution Agreement, ENA and TEPI contributed certain assets to, and caused certain agreements to be delivered to, the Bridgeline Partnership. In addition, the Contribution Agreement specified the number of additional contracts that were to be executed by the Bridgeline Parties, ENA and TEPI to enable the Bridgeline Partnership business to commence and operate. The Lawsuits On February 28, 2003, certain Texaco Parties filed an adversary proceeding against ENA, seeking a declaration affirming the right of Texaco and its affiliates to set off amounts owed to ENT against amounts ENA owed to Texaco and affiliates. ENA moved to dismiss the ENA ISDA Litigation. On March 4, 2003, the Court referred the ENA ISDA Litigation to mediation before Judge Allan Gropper. Mr. Smith notes that the Debtors, the Texaco Parties and the Bridgeline Parties are also parties to several other adversary proceedings, motions and arbitrations arising out of the Contracts and the Formation Documents related to their interests in Bridgeline, LLC, and the Bridgeline Partnership. The Settlement Agreement Mr. Smith reports that after extensive discussions, the Debtors, the Texaco Parties and the Bridgeline Parties have negotiated the Settlement Agreement under which, CVX, on behalf of the Texaco Parties, will pay or cause to be paid to ENA, a settlement payment. Mr. Smith points out that the Settlement Agreement will result in a substantial payment to the Debtors and will avoid future disputes and litigations concerning the setoff rights of the parties in the ENA ISDA Litigation. The Settlement Agreement provides that the parties will exchange mutual releases of claims with respect to the Formation Documents, the Contracts, the Guarantees and the Litigations. However, the mutual releases are subject to these limitations: (i) The parties do not waive, release or discharge each another from any of their obligations under the Settlement Agreement; (ii) The parties do not waive, release or discharge one another from any claims under the Second Amended LLC Agreement, the Second Amended Partnership Agreement, the New IT Services Agreement or any other continuing agreements to which they are parties; and (iii) The releases by the Texaco Parties and the Bridgeline Parties of each other carve out the matters enumerated in Schedule F of the Settlement Agreement. Sale of Bridgeline Interests The Settlement Agreement acknowledges that the Enron Parties are contemplating selling their interests in the General Partner and the Partnership through a multi-stage bidding and auction process. In connection with the sale process, the Enron Parties have agreed to adopt bid procedures that are consistent with the provisions of the Settlement Agreement. Moreover, Mr. Smith informs the Court that the Enron Parties have agreed to consult with the Texaco Parties with respect to the identity of the bidders. However, the Enron Parties are not required to follow the recommendations of the Texaco Parties with respect to bidders, except with respect to Gulf South, Acadian, LIG and Louisiana Gas System, Inc. TEPI has notified the Enron Parties that it will not consent to the sale of the Enron Parties' respective interests in the General Partner or the Partnership to the Agreed No Consent Bidders and the Enron Parties have agreed not to sell any interests to any Agreed No Consent Bidder. In addition, the Enron Parties have agreed that they may not sell their interests in the General Partner and the Partnership to Entergy Corp., unless either (i) the Texaco Parties consent or (ii) an arbitrator selected by agreement of the Texaco Parties and the Enron Parties determines that the Texaco Parties' failure to consent was unreasonable. The Settlement Agreement provides that the Texaco Parties and the Bridgeline Parties, and their Affiliates, will cooperate in the efforts of the Enron Parties to sell their interests in the General Partner and the Partnership. The cooperation will include, but not be limited to, assistance by the Partnership and the other Bridgeline Parties in the preparation of auction materials, including financial results, management presentations, business opportunities, forecasts and growth projections, other assistance in the preparation of materials or provision of information as ENA reasonably deems necessary, and the sharing of materials and information with ENA and TEPI. Under the Settlement Agreement, the Enron Parties will have the right: (i) to consider and to seek the Texaco Parties' consent to the sale of the Enron Parties' interests in the General Partner and the Partnership to any buyer other than the Agreed No Consent Bidders; and (ii) in the event the Texaco Parties do not consent, to seek the Bankruptcy Court's determination of whether the failure to consent is unreasonable. The Texaco Parties are prohibited from objecting, on the ground of financial qualifications, to the Enron Parties' transfer of their interests in the General Partner and the Partnership to any entity with a long-term unsecured investment grade credit rating of no less than BBB- or Baa3 as rated by S&P and Moody's. If the bidder does not have a debt rating, to be conclusively determined to be creditworthy, the bidder must have creditworthiness equivalent to investment grade. Pursuant to the Settlement Agreement, the Enron Parties are obligated to provide to the Texaco Parties the Short List, no later than 10 business days prior to inviting the bidders on the Short List to participate in the second round of bidding, provided that none of the Texaco Parties or their Affiliates is a bidder in the second round. If any of the Texaco Parties or their Affiliates is a finalist for the second round of bidding, the Enron Parties are not required to provide the Texaco Parties the Short List. If Texaco consents to any bidder on the Short List, that bidder will also be designated an Agreed Consent Bidder and Texaco's consent will be binding to the same extent as for the Agreed Consent Bidders in the first round of bidding. Under the Settlement Agreement, the Enron Parties are obligated to disclose to the Texaco Parties the Stalking Horse Bidder no later than two business days before seeking the Court's approval of the Stalking Horse Bidder. If the Texaco Parties fail to consent to the Enron Parties' choice of the Stalking Horse Bidder or the winning buyer, the Enron Parties will nevertheless have the right to seek the Court's determination of whether the Texaco Parties' failure to consent is unreasonable. Pursuant to the Settlement Agreement, in determining whether any failure of consent is unreasonable, the Court will consider whether a hypothetical reasonable investor in TEPI's position in a joint venture similar to Bridgeline would consent to a sale to the proposed buyer. Factors that the Court will consider include the proposed buyer's financial qualifications, past experience in natural gas asset operations, status as a competitor of Bridgeline, ability to perform, reputation and the buyer's overall suitability as a 40% equity partner in Bridgeline. Pursuant to the Settlement Agreement, the Texaco Parties, or any of them, will be permitted to make a bid at any stage of the bidding process and may, if they so choose, bid in the second round of bidding or final auction regardless of the nature or level of their participation in the bidding process or their failure to so participate; provided, however, that the Texaco Parties have no right to make the final bid superior to the right of any other bidder or participant in the auction once the Enron Parties have declared the topping round closed. The Settlement Agreement requires the appropriate Enron Parties to seek to assume the Second Amended Partnership Agreement and the Second Amended LLC Agreement upon the earlier of (i) any motion filed by the Enron Parties seeking the Court's approval of the sale of their interests in the General Partner and the Partnership or (ii) as required by the process for the Court's confirmation of the Enron Parties' plan of reorganization. IT Services Agreement Pursuant to the Settlement Agreement, ENA and BHLP have agreed to replace the existing IT Services Agreement dated March 1, 2000 with a new IT Services Agreement. Withdrawal of Claims and Termination of Litigations The Settlement Agreement provides that each proof of claim filed by or on behalf of a Texaco Party or a Bridgeline Party in connection with the Formation Documents, the Contracts or the Litigations will be deemed irrevocably withdrawn, with prejudice and that, on the Payment Date, the parties will take any and all steps necessary to (1) dismiss with prejudice the Litigations that are adversary proceedings and (2) withdraw with prejudice the Litigations that are motions or arbitrations. Amendment of Bridgeline Agreements The Settlement Agreement provides that, on the Payment Date, the appropriate Enron and Texaco Parties agree to enter into an amended and restated Partnership Agreement and an Amended and Restated LLC Agreement. Indemnification Agreement In connection with the settlement, the parties entered into an Indemnification Agreement, which provides that: * The Individual Indemnitees will not have any liability to the General Partner, the Texaco Parties or the Enron Parties, and the Partnership, the General Partner, the Texaco Partner/Member, by and on behalf of itself and the Texaco Parties, and the Enron Member and the Enron Partners, by and on behalf of themselves and the Enron Parties, agree not to institute any claim or proceeding against the Individual Indemnitees, for any loss sustained or liabilities incurred as a result of any act or omission of the Individual Indemnitees with respect to the cooperation activities contemplated in the Indemnification Agreement if (i) the Individual Indemnitee acted in good faith in a manner he reasonably believed to be in, or not opposed to, the interests of the Partnership, and (ii) the conduct of that Individual Indemnitee did not constitute actual fraud, bad faith or willful misconduct; * The Bridgeline Parties will not have any liability to the Texaco Parties or the Enron Parties, and the Texaco Partner/Member, and the Enron Member and the Enron Partners agree not to institute any claim or proceeding against the Bridgeline Parties for any loss sustained or liabilities incurred as a result of any act or omission of the Bridgeline Parties with respect to the cooperation activities contemplated in the Indemnification Agreement if (i) the Bridgeline Parties acted in good faith in a manner they reasonably believed to be in, or not opposed to, the interests of the Partnership, and (ii) the conduct of the Bridgeline Parties did not constitute actual fraud, bad faith or willful misconduct with respect to the cooperation activities contemplated in the Indemnification Agreement; and * The Partnership and the General Partner will indemnify the Individual Indemnitees from and against any losses, claims damages, liabilities, expenses, judgments, fines, settlements and other amounts arising from any and all claims, demands, actions, suits or proceedings that relate to the Individual Indemnitees' cooperation activities contemplated by the Indemnification Agreement in which the Individual Indemnitees may be involved, or is threatened to be involved, as a party or otherwise, regardless of whether arising from any act or omission which constituted the sole, partial or concurrent negligence of the Individual Indemnitees, if (i) the Individual Indemnitee acted in good faith in a manner he reasonably believed to be in, or not opposed to, the interests of the Partnership, and (ii) the conduct of that Individual Indemnitee did not constitute actual fraud, bad faith or willful misconduct. (Enron Bankruptcy News, Issue No. 108; Bankruptcy Creditors' Service, Inc., 215/945-7000) EXIDE TECHNOLOGIES: U.S. & European Debtors Sign Credit Agreement ----------------------------------------------------------------- On May 5, 2004, Exide Technologies and Exide Global Holding Netherlands C.V. entered into a Credit Agreement for aggregate indebtedness of $445 million and EUR130 million, consisting of a $100 million multi-currency revolving loan, two $172.5 million Dollar-denominated term loans and a EUR130 million Euro- denominated term loan. Credit Suisse First Boston and Fleet Securities, Inc. are syndication agents and Deutsche Bank AG New York Branch is administrative agent of the Credit Agreement. A full-text copy of the Credit Agreement is available for free at: http://www.sec.gov/Archives/edgar/data/813781/000095014404005055/x88815exv10w1.txt 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) FLEMING COMPANIES: Court Sets Solicitation & Tabulation Protocol ---------------------------------------------------------------- A hearing to confirm Fleming Companies, Inc. Debtors' Plan will commence on July 26, 2004. The Confirmation Hearing may be continued from time to time without prior notice. The Court sets May 25, 2004 as the record date for the purpose of determining the creditors entitled to vote on the plan. All Ballots or Master Ballots, as applicable, accepting or rejecting the Plan must be turned over to the Debtors' solicitation agent, Bankruptcy Management Corporation, by July 2, 2004. The deadline to file Plan confirmation objections is July 2, 2004. Confirmation Objections must be served to: * the Debtors and their counsel; * the Office of the U.S. Trustee; * the counsel to the Official Committee of Unsecured Creditors; * the counsel to the Debtors' prepetition lenders; and * the counsel to the Official Committee of Reclamation Creditors. Responses to the Objections are due on July 16, 2004. Claims of professionals not retained by the Debtors or the Committees under Section 327 or 363 of the Bankruptcy Code alleging beneficial or necessary fees towards completion of these cases, or any other party alleging substantial contribution claims under Section 503(b) must be filed no later than June 28, 2004. Claims arising on or before June 1 also must be filed by June 28. Claims arising after June 1 must be filed no later than 45 days after the Plan Effective Date. Headquartered in Lewisville, Texas, Fleming Companies, Inc. -- http://www.fleming.com/-- is the largest multi-tier distributor of consumer package goods in the United States. The Company filed for chapter 11 protection on April 1, 2003 (Bankr. Del. Case No. 03-10945). Richard L. Wynne, Esq., Bennett L. Spiegel, Esq., Shirley Cho, Esq., and Marjon Ghasemi, Esq., at Kirkland & Ellis, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from its creditors, they listed $4,220,500,000 in assets and $3,547,900,000 in liabilities. (Fleming Bankruptcy News, Issue No. 34; Bankruptcy Creditors' Service, Inc., 215/945-7000) FLINTKOTE: Future Claimants Seek to Employ Analysis Research ------------------------------------------------------------ Lawrence Fitzpatrick, as the legal representative for future claimants in The Flintkote Company's chapter 11 case, asks the U.S. Bankruptcy Court for the District of Delaware to retain and employ Analysis Research, and Planning Corporation as his claims evaluation consultants. The Futures Representative anticipates that Analysis Research will render consulting services as needed throughout the course of this chapter 11 case, including: (a) estimation of the number and value of present and future asbestos personal injury claims; (b) development of claims procedures to be used in the development of financial models of payments and assets of a claims resolution trust; (c) analyzing and responding to issues relating to the setting of a bar date regarding the filing of personal injury claims; (d) analyzing and responding to issues relating to providing notice to personal injury claimants and reviewing such notice procedures. Analysis Research's Professionals will bill their services in its current hourly rates of: Designation Billing Rate ----------- ------------ Principals $350-450 per hour Senior Consultants $250-350 per hour Consultants $180-250 per hour Analysts $125-200 per hour Headquartered in San Francisco, California, The Flintkote Company is engaged in the business of manufacturing, processing and distributing building materials. The Company filed for chapter 11 protection on April 30, 2004 (Bankr. Del. Case No. 04-11300). Attorneys at Sidley Austin Brown & Wood LLP serve as lead counsel to the Company. James E. O'Neill, Esq., Laura Davis Jones, Esq., and Sandra G. McLamb, Esq., at Pachulski, Stang, Ziehl, Young & Jones serve as local counsel to the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed both estimated debts and assets of more than $100 million. FOREST OIL: S&P Cuts Corp. & Sr. Debt Ratings to BB- & Lifts Watch ------------------------------------------------------------------ Standard & Poor's Ratings Services said that it lowered its corporate credit and senior unsecured debt ratings on Forest Oil Corp. to 'BB-' from 'BB'. Standard & Poor's also lowered its senior secured bank loan rating on Forest's credit facility due 2005 to 'BB' from 'BB+' and assigned a recovery rating of '1' to the facility. All of the ratings were removed from CreditWatch where they were placed with negative implications on Jan. 27, 2004. The outlook is stable. Pro forma for the recently announced acquisition of The Wiser Oil Co., Standard & Poor's expects Denver, Colo.-based Forest to have about $1.1 billion of total debt outstanding at the close of the transaction. The ratings downgrade on Forest reflects the company's increasing dependence on acquisitions to offset its faltered frontier development strategy, its high operating cost structure relative to its peers, and its debt leverage that is not commensurate with an acquire-and-exploit strategy. "Although we believe that Forest will remain acquisitive, the stable outlook reflects the expectation that the company will continue to fund transactions in a balanced manner and achieve a moderate credit profile," said Standard & Poor's credit analyst Kimberly Stokes. Forest refocused its strategy away from more-risky exploration projects to acquiring less-risky producing properties, concentrating on three core geographic areas of production, the Gulf of Mexico, south Texas/Permian Basin, and Canada. Since the company announced its change in strategy, Forest has made numerous acquisitions, adding 513 billion cubic feet equivalent of reserves and about 174 million cubic feet equivalent per day of production, including the recent Wiser acquisition. The company's reserves, on a pro forma basis, are expected to be approximately 1.5 trillion cubic feet equivalent. GARDEN CITY: Cal Pac Pays 56-Cents-on-the-Dollar for Unsec. Claim ----------------------------------------------------------------- Cal Pac Sonoma, LLC, paid 56-cents-on-the-dollar for an unsecured claim against Garden City, Inc., bankruptcy court records show. Cal Pac purchased a $3,488.75 claim from Southern Wine and Spirits of Northern California for $1,944.50. Cal Pac's filings with the Bankruptcy Court do not indicate its motivation for purchasing the claim. Cal Pac can be contacted at: Michael Owen Cal Pac Sonoma, LLC 6931 Van Nuys Boulevard, 2nd Floor Van Nuys, CA 91311 Telephone (818) 774-9989 Garden City operates a card club, continues to operate, and continues to challenge the legality and application of of San Joes gaming ordinances. Garden City, Inc., filed for chapter 11 protection i(Bankr. N.D. Calif. Case No. 98-55172-MM-11) in 1998. Peter J. Benvenutti, Esq., at Heller Ehrman White & McAuliffe, LLP, serves as counsel to Chapter 11 Trustee Frederick S. Wyle. Michael W. Malter, Esq., at Binder & Malter in Santa Clara, serves a counsel to the Debtor. Michael A. Isaacs, Esq., at Luce, Forward, Hamilton & Scripps LLP in San Francisco represents the Official Committee of Unsecured Creditors. GLOBAL CROSSING: Outlines VoIP Regulatory Vision to FCC ------------------------------------------------------- Global Crossing (Nasdaq: GLBCE), a leading innovator in Voice over IP (VoIP) and other IP-enabled services, filed comments with the Federal Communications Commission (FCC) (Wireline Docket Number 04-36) in response to the FCC's Notice of Proposed Rulemaking (NPRM) concerning the proper regulation of IP telephony. Global Crossing believes that the FCC's recent decision in the Free World Dialup docket compels it to treat all IP-enabled services as information services subject to exclusive federal jurisdiction. "The FCC has already concluded that IP-enabled services offered over pre-existing broadband services are not telecommunications or telecommunications services. Rather than engage in a case-by-case determination as to whether a broadband connection previously existed, the FCC must simply apply the same rules to all IP- enabled services" said John Legere, Global Crossing's chief executive officer. "As we state in our comments, the FCC must establish simple, uniform rules and put an end to the constant gamesmanship that currently plagues the industry." Global Crossing's comments offer a strategic vision for the categorization of IP-enabled services, the applicability of various rules and regulations, the public interest obligations of IP-enabled service providers, regulatory jurisdiction, and inter- carrier compensation. Global Crossing believes the FCC has the opportunity to set a new course for regulation and should do so in a comprehensive manner consistent with Global Crossing's REFORM agenda: Rationalize inter-carrier compensation The FCC must establish a uniform inter-carrier compensation arrangement that not only recognizes that a "minute is a minute," but also that a "packet is a packet." All traffic exchanged between carriers, regardless of jurisdiction or type (voice, data or video) must be exchanged at a uniform rate to be negotiated between individual carriers without the distortion of past regulatory policies. The existing patchwork system of inter- carrier compensation invites arbitrage, distorts investment, and is a source of litigation within the industry. A unified inter- carrier compensation arrangement will eliminate this source of friction for the telecommunications industry. Establish a swift and efficient dispute resolution forum The perpetual litigation surrounding FCC rulemaking efforts is one of the principal issues plaguing the telecommunications industry. The rulemaking process itself is becoming a barrier to entry as only the largest carriers can afford to participate. The FCC must establish a swift and efficient dispute resolution forum that allows carriers to quickly resolve disputes and keep their focus on delivering service to consumers. An arbitration procedure similar to that used in major league baseball whereby each party to a dispute puts forth its "best and final" offer would be ideal. Formulate clear and simple rules and regulations Overly complex or vague rules simply invite litigation and fail to create the certainty and predictability necessary for a stable investment climate. The FCC's experience with unbundled network elements is the most recent example of this. FCC rules must be clear and unambiguous. Overhaul universal service Any comprehensive reform effort must include an overhaul of the current universal service system, which is also a dysfunctional element for the industry. Appropriate modifications can be addressed in existing universal service proceedings currently before the Commission consistent with four guiding principles: * the universal service fund must be sized appropriately so that it only supports universal service objectives; * eligibility criteria must be refined so that the fund is not used as an earnings support mechanism for carriers; * source funding must be broad-based and competitively neutral; and * disbursements from the fund should be keyed to the removal of implicit subsidies embedded in the rates of recipients. Consideration must also be given to alternative universal service funding mechanisms. Redefine public interest obligations Global Crossing supports the VON Coalition's efforts to work with the National Emergency Number Association ("NENA") to develop appropriate solutions for supporting 911/E911 services in an IP environment. However, the FCC needs to recognize that the greatest challenge for 911/E911 service is securing proper funding for the Public Safety Answering Points ("PSAPs"). The industry must explore new ways of working with local municipalities to bring the benefits of IP technology to the public safety sector. Maintain authority over essential bottleneck facilities While IP-enabled services hold great promise for bringing competitive choice to consumers, the FCC must continue to exercise authority over bottleneck facilities and continue to enforce appropriate interconnection and unbundling rules. "The overarching theme of our REFORM vision is that a few simple rules and safeguards will allow the industry to operate in a largely deregulated environment, " added John Legere, Global Crossing's chief executive officer. "Although we recognize the regulation of monopoly services, we strongly believe that the telecommunications industry and consumers would best be served by a free and open arena for IP-enabled services." To learn more about Global Crossing's REFORM vision, the full comments filed with the FCC can be found at http://www.fcc.gov/ "As a leader in IP-services, we have a strong desire to create an industry that is allowed to grow and prosper without the cumbersome restrictions of regulation," Mr. Legere concluded. "By following the tenets of our REFORM vision, the FCC will simplify the regulatory landscape and steer the entire telecommunications industry into a new era of recovery and health." Headquartered in Florham Park, New Jersey, Global Crossing Ltd. -- http://www.globalcrossing.com/-- provides telecommunications solutions over the world's first integrated global IP-based network, which reaches 27 countries and more than 200 major cities around the globe. Global Crossing serves many of the world's largest corporations, providing a full range of managed data and voice products and services. The Company filed for chapter 11 protection on January 28, 2002 (Bankr. S.D.N.Y. Case No. 02-40188). When the Debtors filed for protection from their creditors, they listed $25,511,000,000 in total assets and $15,467,000,000 in total debts. Global Crossing emerged from chapter 11 on Dec. 9, 2003. GOODYEAR TIRE: S&P Lowers Ratings & Removes Watch on Related Notes ------------------------------------------------------------------ Standard & Poor's Ratings Services lowered its rating on Corporate Backed Trust Certificates Goodyear Tire & Rubber Note-Backed Series 2001-34 Trust's class A-1 certificates to 'B-' from 'B' and removed it from CreditWatch, where it was placed with negative implications on Dec. 15, 2003. Corporate Backed Trust Certificates Goodyear Tire & Rubber Note- Backed Series 2001-34 Trust is a swap-independent synthetic transaction that is weak-linked to the underlying securities, Goodyear Tire & Rubber Co.'s 7% notes due March 15, 2028. The rating action follows the recent lowering of the ratings on the underlying securities and their removal from CreditWatch. GSR MORTGAGE: Fitch Ups Series 2003-5F Class B-5 Rating to BB- -------------------------------------------------------------- Fitch Ratings has affirmed 2 and upgraded 5 classes of GSR Mortgage Loan Trust, series 2003-5F. GSR Mortgage Loan Trust, Series 2003-5F Group 1 --Class IA 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 upgraded to 'BBB-' from 'BB'; --Class B-5 upgraded to 'BB-' from 'B'. GSR Mortgage Loan Trust, Series 2003-5F Group 2 --Class IIA affirmed at 'AAA'. The upgrades are being taken as a result of low delinquencies as well as increased credit support. No losses have been incurred since date of issuance. The affirmations on the above classes reflect credit enhancement consistent with future loss expectations. HEALTHSOUTH: Extends Consent Solicitations through June 4, 2004 --------------------------------------------------------------- HealthSouth Corp. (OTC Pink Sheets: HLSH) announced that it is extending its solicitation of consents from holders of its 6.875% Senior Notes due 2005, 7.375% Senior Notes due 2006, 7.000% Senior Notes due 2008, 8.375% Senior Notes due 2011, and 7.625% Senior Notes due 2012 until 11:59 p.m., New York City Time, on June 4, 2004. The Company continues to negotiate with its Noteholders and looks forward to completing these exchange offers on a fair and commercially reasonable basis in order to facilitate its continuing restructuring efforts. The Company has agreed to pay $13.75 per $1,000 principal amount to holders of its 6.875% Senior Notes due 2005, 7.375% Senior Notes due 2006, 7.000% Senior Notes due 2008, 8.375% Senior Notes due 2011 and 7.625% Senior Notes due 2012 who deliver valid and unrevoked consents prior to the expiration of the consent solicitations, subject to the proposed amendments to the indentures becoming operative. Each holder of notes who consents to the proposed amendments will also be waiving all alleged and potential defaults under the indentures arising out of events occurring on or prior to the effectiveness of the proposed amendments. Consents for any series of notes may be revoked at any time prior to the date on which the trustee under the indenture for that series receives evidence that the requisite consents have been obtained. HealthSouth also announced that it has received a notice of technical default on behalf of the requisite holders of its 7.00% Senior Notes due 2008. The default notice relates to HealthSouth's failure to file reports with the Securities and Exchange Commission and with the trustee of its 2008 Senior Notes and, if not cured within 60 days, could permit holders of the 2008 Senior Notes to accelerate their indebtedness. HealthSouth said that the notice of default was delivered in connection with the Company's ongoing litigation with its Noteholders, including holders of its 2008 Senior Notes. As previously noted, in that litigation, HealthSouth is seeking to prevent the acceleration of the indebtedness outstanding under such Notes and is arguing, among other things, that notices of default which previously were served on the Company were inadequate under the terms of the Indentures under which the Notes were issued. Judge Allwin Horn, III of the Circuit Court of Jefferson County, Alabama has set a hearing for HealthSouth's motion for partial summary judgment on this and other issues for June 30, 2004. This news release is not a solicitation of consents with respect to any securities. The consent solicitations are being made only pursuant to the terms and conditions of the consent solicitation statements relating to each series of Notes and the accompanying documents. These documents can be obtained from Innisfree M&A Incorporated, the information agent, at 212-750-5833 (Banks and Brokers Call Collect) or 888-750-5834 (Noteholders Call Toll- Free). Questions regarding the solicitations should be directed to Credit Suisse First Boston, the solicitation agent, at 800-820- 1653. About HealthSouth HealthSouth is the nation's largest provider of outpatient surgery, diagnostic imaging and rehabilitative healthcare services, with nearly 1,700 locations nationwide and abroad. HealthSouth can be found on the Web at http://www.healthsouth.com/ KENNEDY MANUFACTURING: Gets Court Nod to Hire CBIZ as Actuaries --------------------------------------------------------------- Kennedy Manufacturing Company and its debtor-affiliates sought and obtained approval from the U.S. Bankruptcy Court for the Northern District of Ohio, Western Division, to employ and retain CBIZ Benefits & Insurance Services, Inc., as their actuaries. CBIZ is expected to: a) prepare annual reports for the pension plans as required by federal pension laws; b) provide calculations for employees who are starting retirement payments; and c) any other task of an actuarial nature in connection with the pension plan as deemed necessary by the Debtors and as agreed to by CBIZ. The current hourly rates of the professionals who will have primary responsibility for the services to be rendered to the Debtors are: Professional Designation Billing Rate ------------ ----------- ------------ Richard Najjar Manager of Actuarial Consulting $225 per hour Jeff Schapel Actuarial Consultant $110 per hour Headquartered in Van Wert, Ohio, Kennedy Manufacturing Company -- http://www.kennedymfg.com/-- produces and markets industrial tool storage equipment worldwide, including steel tool chests, roller cabinets, stationary and mobile workbenches, modular storage cabinets and specialized tool storage. The Company, together with three of its affiliates, filed for chapter 11 protection on February 12, 2004 (Bankr. N.D. Oh. Case No. 04-30794). Richard L. Ferrell, Esq., Timothy J. Hurley, Esq., and W. Timothy Miller, Esq., at Taft Stettinius & Hollister LLP represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, they listed both estimated debts and assets of over $10 million. LOUDEYE CORP: Resale Registration Statement Declared Effective -------------------------------------------------------------- Loudeye Corp. (Nasdaq: LOUD) announced that the Securities and Exchange Commission declared effective its registration statement on Form S-3 covering resales by certain security holders of up to 12,593,570 shares of common stock. The shares included in the registration statement were related to various transactions, including the Company's February 2004 private equity financing in which the Company raised $20 million in gross proceeds, and the Company's acquisition of Overpeer, Inc. in March 2004. Loudeye will not receive any proceeds from any resale by the selling security holders of the securities registered in the registration statement. About Loudeye Corp. Loudeye is a worldwide leader in business-to-business digital media solutions and the outsourcing provider of choice for companies looking to maximize the return on their digital media investment. Loudeye combines innovative products and services with the world's largest music archive and the industry's leading digital media infrastructure enabling partners to rapidly and cost effectively launch complete, customized digital media stores and services. For more information, visit http://www.loudeye.com/ * * * In its Form 10 Q For the quarterly period ended March 31, 2004 filed with the Securities and Exchange Commission, Loudeye Corp. reports: "We may need to raise additional capital in the future, and if we are unable to secure adequate funds on terms acceptable to us, we may be unable to execute our business plan. If we raise additional capital, current stockholders may experience significant dilution. "As of March 31, 2004, we had approximately $34.8 million in cash and cash equivalents, marketable securities, and restricted investments. In the first quarter of 2004, we completed a private placement that resulted in net proceeds of $18.9 million. We have, however, experienced net losses from operations and net losses are expected to continue into future periods. If our existing cash reserves prove insufficient to fund operating and other expenses, we may find it necessary to secure additional financing, sell assets or reduce expenditures further. In the event additional financing is required, we may not be able to obtain such financing on acceptable terms, or at all. If adequate funds are not available or are not available on acceptable terms, we may not be able to pursue our business objectives. This inability could seriously harm our business, results of operations and financial condition. "If additional funds are raised through the issuance of equity or convertible debt securities, the percentage ownership of our current stockholders will be reduced and these securities may have rights and preferences superior to those of our current stockholders. If we raise capital through debt financing, we may be forced to accept restrictions affecting our liquidity, including restrictions on our ability to incur additional indebtedness or pay dividends. "We have never paid any dividends on our common stock and do not plan to pay dividends on our common stock for the foreseeable future. We currently intend to retain future earnings, if any, to finance operations, capital expenditures and the expansion of our business." MEDIABAY: John Levy Named Acting Chairman as Carl Wolf Resigns -------------------------------------------------------------- MediaBay, Inc. (Nasdaq: MBAY), a leading spoken audio media marketing company, announced the appointment of MediaBay's Executive Vice President and Chief Financial Officer, John F. Levy to the Company's Board of Directors and the appointment of Mr. Levy as Acting Chairman of the Board in addition to his role as Chief Financial Officer. Carl Wolf, the Company's former chairman, resigned as chairman and from the Board of Directors to pursue family interests. Mr. Levy joined MediaBay in November 1997 and has served as Executive Vice President and Chief Financial Officer since January 1998. Prior to joining the Company, Mr. Levy served as Chief Financial Officer of both public and private entertainment and consumer goods companies. He is a Certified Public Accountant with nine years' experience with the national public accounting firms of Ernst & Young, Laventhol & Horwath and Grant Thornton. Mr. Levy is a graduate of the Wharton School of the University of Pennsylvania and received his MBA from St. Joseph's University in Philadelphia. Mr. Levy stated, "I have accepted the additional responsibilities as a Board member and as acting Chairman of the Board because I believe in MediaBay, its products and its people. I have been with the Company more than six years and in that time we have made six acquisitions, raised a considerable amount of money, acquired very valuable assets and established dominant market positions within our industries. "Over the past five months we have raised $12.6 million in new working capital, improved our balance sheet significantly and increased our stockholder equity. I believe that working with our current management team led by CEO Jeffrey Dittus, we can execute our growth strategy and increase shareholder value." Mr. Wolf had served on the MediaBay Board of Directors since March 1998 and assumed the role of Chairman of the Company in May 2003. During Mr. Wolf's tenure as Chairman, the Company increased the quality and stature of its Board of Directors, raised approximately $14 million in new debt and equity and significantly restructured and improved its balance sheet. Mr. Wolf also re- energized the company with many new and innovative marketing proposals. Mr. Wolf stated, "I am sorry to leave MediaBay however, I believe we accomplished a great deal during my tenure. The success of our family business, Hor D'oeuvres Unlimited, has required more and more of my time and I notified the MediaBay Board that I simply could not fulfill the commitment MediaBay deserved. "I have known John Levy for over fifteen years and sincerely believe that John, Jeffrey Dittus and the entire MediaBay team will succeed in growing the business and ultimately increasing shareholder value. I have enjoyed working with the highly talented Board and motivated and energetic employees at MediaBay. Like all goodbyes, there is some sadness, but a greater sense of pride and optimism." "We will all miss Carl's wisdom, insight and creativity. His many accomplishments as Chairman have left us a much stronger and better company. We wish Carl the very best and owe him a great debt of gratitude," added Mr. Levy. 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, visit http://www.MediaBay.com/ * * * As reported in the Troubled Company Reporter's April 23, 2004 edition, MediaBay, Inc. (Nasdaq: MBAY), filed its Annual Report on Form 10-K for the year ended December 31, 2003 with the Securities and Exchange Commission on April 14, 2004. Included in the Company's 10-K filing are consolidated financial statements audited by Amper Politziner & Mattia, independent auditors, as of and for the year ended December 31, 2003. Amper Politziner & Mattia has issued an opinion with respect to the financial statements, which includes an explanatory paragraph that raises substantial doubt about the Company's ability to continue as a going concern. In particular, the auditors' opinion states, "The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has suffered recurring losses from operations and has a working capital deficiency, which raise substantial doubt about its ability to continue as a going concern. Management's plans regarding those matters also are described in Note 1. The financial statements do not include any adjustments that might result from the outcome of the uncertainty." MediaBay CEO Jeffrey Dittus commented, "The Company is exploring various financing alternatives including refinancing and restructuring its debt to meet its obligations, however there can be no assurance that any transactions will be completed." MINORPLANET SYSTEMS: Court Approves Amended Disclosure Statement ---------------------------------------------------------------- Minorplanet Systems USA, Inc. (Nasdaq:MNPQC), a leading provider of telematics-based management solutions for commercial fleets, announced that the company's Second Amended Disclosure Statement was approved by the United States Bankruptcy Court for the Northern District of Texas (Dallas Division) for use to solicit the vote of creditors and equity interest holders on the Second Amended Joint Plan of Reorganization. The Bankruptcy Court also set the record date for purposes of voting on the company's Plan as May 21, 2004, approved the solicitation/voting procedures for the Plan, and set hearing on confirmation of the Plan for 1:30 p.m., June 28, 2004. On May 25, 2004, the company commenced mailing the Disclosure Statement, Plan and Ballots to creditors and equity interest holders to solicit their vote on the company's Plan. All ballots must be returned to the Minorplanet Plan Balloting Agent, Neligan, Tarpley, Andrews & Foley LLP, 1700 Pacific Avenue, Suite 2600, Dallas, Texas, 75201, on or before 5:00 p.m., Central Time on June 24, 2004. The company believes that it has complied with one of the conditions of continued listing as previously required by the Nasdaq Listing Qualifications Panel, having submitted documentation to the Panel evidencing that the hearing before the Bankruptcy Court for the approval of the company's Disclosure Statement was held on May 24, 2004. The company also received a written determination notice from the Nasdaq Listing Qualifications Panel on May 24, 2004, which amended the Panel's May 6, 2004 determination letter, adding the following additional conditional listing exception to the listing of the company's securities on the Nasdaq SmallCap Market: -- On or before August 9, 2004, the company must evidence a market value of publicly held shares of at least $1 million and, immediately thereafter, a market value of publicly held shares of at least $1 million for a minimum of ten consecutive business days. The company currently believes that upon confirmation of its Plan, it will be able to regain compliance with this additional condition. If the company fails to maintain its listing on the Nasdaq Stock Market, the company's securities will not be immediately eligible to trade on the OTC Bulletin Board, since the company is the subject of bankruptcy proceedings. Although the company's securities would not be immediately eligible for quotation on the OTC Bulleting Board, the company's securities may become eligible to trade on the OTC Bulletin Board if a market maker submits an application to register in and quote the company's securities in accordance with SEC Rule 15c2-11, and such application is cleared. About Minorplanet Systems USA, Inc. Headquartered in Richardson, Texas, Minorplanet Systems USA, Inc. -- http://www.minorplanetusa.com/-- develops and implements mobile communications solutions for service vehicle fleets, long- haul truck fleets and other mobile-asset fleets, including integrated voice, data and position location services. The Company filed for chapter 11 protection on February 2, 2004 (Bankr. N.D. Tex. Case No. 04-31200). Omar J. Alaniz, Esq., and Patrick J. Neligan, Jr., Esq., at Neligan, Tarpley, Andrews and Foley represent the Debtors in their restructuring efforts. When the Company filed for protection from their creditors, they listed both estimated debts and assets of over $10 million. MIRANT CORPORATION: Creditors' Committee Retains PA Consulting -------------------------------------------------------------- Prior to the Petition Date, Citibank, N.A., and Credit Suisse First Boston, in their role as agents for Mirant Corporation's prepetition lenders, engaged in restructuring negotiations with the Debtors. In connection with those negotiations and their analysis of the Debtors' businesses, the Agents retained Shearman & Sterling as counsel. In turn, Shearman engaged the energy consulting services of PA Consulting Group, Inc. Monica S. Blacker, Esq., at Andrews & Kurth, LLP, in Dallas, Texas, relates that on March 19, 2004, the Agents sought the Court's authority to share certain prepetition confidential information and analysis prepared by PA Consulting with the Official Committee of Unsecured Creditors of Mirant Corporation, et al. On March 29, 2004, the Debtors asked the Court to enforce the Confidentiality Order to prevent Citibank from sharing confidential committee information with PA Consulting, which continued to serve as Citibank's advisor. At the April 7, 2004 hearing, the Court permitted the Agents to share certain prepetition information developed by PA Consulting with the Mirant Committee. In addition, the Court ruled that Citibank could not share confidential Committee information with professional advisors retained by Citibank as an individual member. In reaching the decision, the Court indicated that it wanted to avoid a situation where there was an imbalance in the information available to the different committee members. However, the Court left open the possibility that the information sharing would be permissible if Citibank agreed to share fully the work product of its advisors with the entire Mirant Committee. The Court also left open the Mirant Committee's option to retain the services of PA Consulting. Ms. Blacker reports that after the April 7 hearing, PA Consulting began to share prepetition information with the Mirant Committee. Based on its review of those materials, the Mirant Committee determine that, notwithstanding the Debtors' assertions that they have been forthcoming with information, PA Consulting appears actually to have had better transparency with respect to the Debtors' financial affairs than the financial advisors retained by the Mirant Committee during the postpetition period -- Risk Capital Management Partners and Huron Consulting Group, LLC. Due to the extent of information and the knowledge base residing with PA Consulting, the Mirant Committee wants the benefit from PA Consulting's services. Accordingly, the Mirant Committee seeks the Court's authority to retain, effective as of April 29, 2004, PA Consulting as its energy industry consultant to replace Risk Capital. Ms. Blacker informs Judge Lynn that Shearman, in consultation with the Agents, has agreed to release PA Consulting so that it may be retained by, and serve as consultant for, the Mirant Committee. The Mirant Committee may require PA Consulting to: * provide strategic advise with respect to energy industry specific issues in these cases; * analyze technical aspects of the Debtors' business plans and models, with a particular emphasis on the Debtors' energy business plans; * analyze the Debtors' energy business strengths, weaknesses and risks from the creditors' viewpoint; * provide advice on restructuring issues and options; * provide power marketing advice and analysis with respect to the Debtors' management, credit policy, hedging contracts and credit support; * provide advice on the Debtors' asset management and business infrastructure; and * provide other services as requested by the Mirant Committee. Ms. Blacker assures the Court that PA Consulting will coordinate with the Mirant Committee's other retained professionals to avoid any unnecessary duplication of services. The Mirant Committee will transition services presently performed by Risk Capital to PA Consulting, and there will be no or minimal duplication of services between the firms. Todd Filsinger, Managing Partner of PA Consulting Group, Inc., assures Judge Lynn that: (i) PA Consulting does not hold or represent any interest adverse to the Mirant Committee, the Debtors and any party-in-interest in the matters for which it is retained; and (ii) PA Consulting is a "disinterested person" as that phrase is defined in Section 101(14) of the Bankruptcy Code. PA Consulting will seek compensation for the services rendered on an hourly basis: Partners $500 - 650 Managing Consultants 380 - 510 Consultants 275 - 450 Principal Consultants 205 - 325 Analysts 185 - 235 PA Consulting will also seek reimbursement of its out-of-pocket expenses. Mr. Filsinger informs the Court that $159,000 remains due and owing by the Agents to PA Consulting in connection with the Consulting Services. To expedite the retention process, the Mirant Committee seeks the Court's authority to retain PA Consulting even though the Consulting Charges have not yet been paid. However, it is the understanding of the Mirant Committee that the Agents will be remitting the Consulting Charges to PA Consulting in the ordinary course and that PA Consulting has already terminated its services to the Agents. Equity Committee Objects Approximately nine months after the Mirant Committee's formation, and contemporaneously with the most recent reconstitution of its membership and the designation of Citibank, N.A., as its new chair, the Mirant Committee seeks to replace one of its two law firms and two of its financial advisors with a whole new set of professionals. Mark C. Taylor, Esq., at Hohmann, Taube & Summers, LLP, in Austin, Texas, notes that the Mirant Committee does so despite having already incurred at least $6,200,000 in professional fees and expenses in connection with the services rendered by the to-be-replaced professionals. Presumably, much of these expenditures flow from the efforts of the professionals to become educated about the Debtors and their complex businesses and capital structure. These costs may well be wasted if the Mirant Committee's request to retain PA Consulting is granted and the firm is allowed to "come up to speed" at the estates' expense, Mr. Taylor remarks. "This inevitable education process is also likely to cause an otherwise unnecessary diversion of management energies as the proposed new professional[] seek[s] necessary background information and detailed operational and other data from the Debtors' management team." The Equity Committee is concerned that PA Consulting may not be "disinterested" as required by Section 328(c) of the Bankruptcy Code because of its long-standing relationship with Citibank. The Equity Committee finds no compelling reason for the Mirant Committee to replace its professionals. Thus, the Equity Committee asks the Court to balance the Mirant Committee's unexplained decision to replace its existing financial advisors with the Bankruptcy Code's disinterestedness requirements. In addition, the Court should authorize a limited discovery, by the Examiner or otherwise, on these and related issues. Debtors Respond Robin Phelan, Esq., at Haynes and Boone, LLP, in Dallas, Texas, relates that with PA Consulting's replacement of Risk Capital, the Mirant Committee should identify what new services PA Consulting will provide and any inadequacy in the performance by Risk Capital of its duties. Mr. Phelan notes that Risk Capital clearly demonstrated that it is capable of ably serving any and all needs of the Mirant Committee. In fact, the Mirant Committee has never expressed concerns or complaints of the services rendered by Risk Capital. Mr. Phelan asserts that more information should be provided as to the extent of PA Consulting's historical relationship to both Citibank and Credit Suisse First Boston, a creditor who has historically had interests adverse to the Mirant Committee. The cursory explanation of PA Consulting's employment by Shearman & Sterling, LLP, for the benefit of Citibank and Credit Suisse fails to disclose the considerable degree of their ties to Citibank and Credit Suisse. Without that disclosure, the Court would be disadvantaged in deciding if the retention of PA Consulting will be in the best interests of the Debtors' estates. 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: Panel Taps Moore Diversified as Accountants ---------------------------------------------------------------- The Official Committee of Unsecured Creditors in the chapter 11 cases of The National Benevolent Association of the Christian Church, wants to employ Moore Diversified Services, Inc., as its consultants, nunc pro tunc to March 10, 2004 Moore Diversified has been providing services to the Committee since March 10, 2004. The Committee asks the approval of the U.S. Bankruptcy Court for the Western District of Texas, San Antonio Division that they need to employ Moore Diversified, specifically, to: a. give advice, counsel and overall consulting services regarding marketing programs and financial results and prospects in continuing care retirement communities (CCRCs); b. provide testimony regarding entrance fees and marketing programs in CCRCs; and c. review and consultation regarding CCRC valuation. Jim Moore, President of Moore Diversified, reports that the firm will bill $300 per hour for its services. 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. NATIONAL CENTURY: Agrees To Allow Amedisys' $7,339,584 Claim ------------------------------------------------------------ In April 2003, Amedisys, Inc., filed Claim Nos. 368, 369 and 370 against the National Century Financial Enterprises, Inc. Debtors in contingent and unliquidated amounts. Amedisys also asserted claims against the Debtors in an adversary proceeding. To resolve their dispute, the Debtors and Amedisys entered into a Court-approved stipulation: (a) The Amedisys Claims are allowed solely for purposes of voting to accept or reject the Plan: (i) Amedisys will have an allowed claim for $3,500,000 in Class C-4 Other Secured Claims, in respect of its alleged set-off rights; and (ii) Amedisys will have an allowed claim for $3,839,584 in Class C-6 General Unsecured Claims; and (b) In the event, as a result of the Amedisys Adversary Proceeding or any other proceeding, it is determined that Amedisys has set-off rights, to that extent Amedisys will be deemed to hold an Allowed Claim in Class C-4 that will be subject to satisfaction through the exercise of the set-off rights as the Court may have then determined exist in favor of Amedisys. Otherwise, the parties fully reserve their rights to assert that Amedisys Claims be allowed in different amounts, disallowed in their entirety or classified in different Classes pursuant to the Plan. 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) NEP INC: S&P Assigns 'B+' Corporate Credit Rating ------------------------------------------------- Standard & Poor's Ratings Services assigned a 'B+' corporate credit rating to NEP Inc. Standard & Poor's also assigned 'B+' ratings and recovery ratings of '4' to NEP subsidiary NEP Supershooters L.P.'s proposed $20 million first lien revolving credit facility and $140 million first lien term loan, indicating expectations of a marginal (25%- 50%) recovery of principal in the event of default. At the same time, a 'B-' rating and a recovery rating of '5' were assigned to the proposed $35 million second lien term loan facility, indicating expectations of a negligible (0%-25%) recovery of principal in the event of default. Borrowings under the proposed facilities are expected to be used to help fund the purchase of NEP. The outlook is negative. The Pittsburgh, Pa.-based national provider of outsourced media services for the delivery of live and broadcast sports and entertainment events had pro forma total debt outstanding of approximately $181 million at April 30, 2004. "The rating on NEP reflects its small cash flow base relative to its debt burden, cash flow concentration in the mobile television production business, potential volatility stemming from contract gains and losses, and a limited track record of operating performance given that two of NEP's three businesses units were acquired since the second half of 2002," said Standard & Poor's credit analyst Alyse Michaelson. These factors are partially offset by the good competitive positions of NEP's businesses, their decent margins, and good conversion of EBITDA into discretionary cash flow. The negative outlook underscores concerns about the limited debt capacity at the 'B+' rating level to absorb EBITDA shortfalls. Additional uncertainty relates to revenue trends in the intermediate term. Maintaining compliance with financial covenants that are expected to tighten towards the end of 2005 will depend on management's execution of its business plan and the company's ability to generate free cash flow that can be used to pay down debt. NORTEL NETWORKS: Export Development Agrees to Waive Unit's Default ------------------------------------------------------------------ Nortel Networks Corporation (NYSE:NT)(TSX:NT) announced that its principal operating subsidiary, Nortel Networks Limited (NNL), has obtained a new waiver from Export Development Canada of certain defaults under the EDC performance-related support facility related to the delay by NNL in meeting its filing obligations with the U.S. Securities and Exchange Commission. With the prior waiver obtained on March 29, 2004, scheduled to expire on Saturday, May 29, 2004, NNL has obtained a new waiver from EDC that during the waiver period maintains the existing uncommitted support available under the EDC Support Facility and reclassifies the previously committed portion of the EDC Support Facility as uncommitted support. The EDC Support Facility provides up to US$750 million in support of which, prior to the new waiver, US$300 million was for committed support and, as of May 28, 2004, approximately US$105 million of such committed support was unused. As of May 28, 2004, there was approximately US$328 million of outstanding support utilized under the EDC Support Facility. The waiver will remain in effect until the earliest of certain events including: -- the date on which both NNL and the Company have filed their respective 2003 Annual Reports on Form 10-K and the Q1 2004 Quarterly Reports on Form 10-Q with the SEC; -- Aug. 30, 2004; or -- at the election of EDC and on no less than one and no more than three business days' written notice to NNL, July 30, 2004. The waiver also applies to certain other breaches by NNL which have arisen or may arise under the EDC Support Facility in relation to the delayed filings and the planned restatements and revisions to 2003 and prior year financial results. There can be no assurance that EDC will provide any additional support under the uncommitted EDC Support Facility. Notwithstanding the new waiver, the Company and NNL are providing no assurance that they will file their respective 2003 Annual Reports and First Quarter Reports within the waiver period or, if they fail to do so, that NNL would receive any further waivers or any extensions of the waiver beyond its scheduled expiry date. If the waiver announced today were terminated or expired prior to the filing of such Annual Reports and First Quarter Reports, EDC would have the right at such time to require NNL to cash collateralize the support outstanding under the EDC Support Facility and to exercise its rights against the collateral under NNL's related security agreements. 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. OMI CORP: Proposed Stelmar Merger Prompts S&P's Negative Watch -------------------------------------------------------------- Standard & Poor's Ratings Services said it placed its ratings, including the 'BB' corporate credit rating, on OMI Corporation on CreditWatch with negative implications. The CreditWatch placement follows OMI's May 17, 2004, proposal to merge with Stelmar Shipping Ltd. OMI has offered Stelmar shareholders approximately 3.1 shares of OMI stock for each share of Stelmar stock, valuing the transaction at approximately $560 million. The offer would give the current Stelmar shareholders 40.5% of the combined company, to be named OMI-Stelmar Corp., based on an all-stock transaction. However, Stelmar's shareholders may have the option to receive up to 25% of the offer price in cash, limited to $175 million. No definitive agreement has yet been reached on the potential transaction, and the proposed terms could change. "OMI Corporation's merger with Athens, Greece-based Stelmar Shipping will approximately double the company's debt burden, particularly if a portion of the purchase price is paid in cash, resulting in a somewhat weaker credit profile," said Standard & Poor's credit analyst Kenneth L. Farer. "However, the transaction increases the company's fleet size significantly with a high proportion of fixed-rate time charters, which generate stable revenues and cash flow." Standard & Poor's will meet with management and assess the potential benefits, risks, and financial effects of the proposed transaction to resolve the CreditWatch. Stamford, Conn.-based OMI had $612 million of lease-adjusted debt at March 31, 2004. Like OMI, Stelmar operates 35 vessels, transporting refined petroleum products and crude oil. According to public filings, Stelmar had total revenues of $172 million and net income of $39 million in 2003. Operating margins after depreciation were over 60% and EBITDA interest coverage was almost 6.0x. However, the company had over $500 million in debt at year-end, resulting in debt to capital of almost 60% and debt to EBITDA of approximately 5.0x, higher total outstanding debt levels and leverage than those of OMI. The combined company would operate a fleet of 73 vessels, the majority of which are double-hulled, with 11 additional vessels under construction. Combined, the two companies would have had revenues of $491 million in 2003. Ratings on OMI Corporation reflect the company's significant, but carefully managed, exposure to the volatile tanker spot markets, an active new vessel construction program, and participation in the competitive, volatile, highly fragmented, and fixed-capital- intensive bulk ocean shipping industry. These negative factors are partly offset by OMI's favorable business position as a leading Suezmax and Product tanker operator with strong market share in the Caribbean, Black Sea, and Mediterranean Sea. In addition, the company's average vessel age is young compared to the world fleet. PACIFIC GAS: Court Issues Opinion On CPUC Holding Company Clause ---------------------------------------------------------------- On May 21, 2004, the California Court of Appeal for the First Appellate District in San Francisco issued an opinion finding that: (a) the California Public Utilities Commission has limited jurisdiction over the parent holding companies of the California investor-owned electric utilities to enforce various conditions imposed by the CPUC when the CPUC authorized the formation of the holding companies; and (b) the CPUC's interim opinion -- adopted on January 9, 2002 after the formation of the holding companies -- interpreting one of these conditions, the capital requirements condition, was not ripe for review by the appellate court. The Appellate Court said that since the CPUC had not yet claimed that any of the holding companies had violated the capital requirements condition, there was no set of facts before the Appellate Court that raised the issue of whether the CPUC's interpretation was valid. Linda Y.H. Cheng, Pacific Gas and Electric Company Corporate Secretary, tells the Securities and Exchange Commission that the capital requirements condition provides that the capital requirements of the utility, as determined to be necessary and prudent to meet the utility's obligation to serve or to operate the utility in a prudent and efficient manner, must be given first priority by the parent holding company. On January 9, 2002, the CPUC decided that the capital requirements condition, at least under certain circumstances, includes the requirement that each of the holding companies "infuse the utility with all types of capital necessary for the utility to fulfill its obligation to serve." The three major California investor-owned electric utilities and their parent holding companies filed petitions for review of this broader interpretation as being inconsistent with the prior understanding of that condition as applying only to maintaining a certain level of capital expenditure or equity investment in the utilities' plant and equipment. Also on January 9, 2002, the CPUC asserted that it maintains jurisdiction to enforce the conditions against PG&E Corporation and similar holding companies. Nevertheless, the CPUC dismissed PG&E Corp. -- without prejudice -- from its investigation, initiated in 2001, into whether the California investor-owned electric utilities, including Pacific Gas and Electric Company, have complied with the holding company conditions, noting that the issue of whether the Utility's original reorganization plan under Chapter 11 by which the Utility proposed to disaggregate its businesses would violate the CPUC's new interpretation of the capital requirements condition would be resolved in the "appropriate judicial forums." The next day, on January 10, 2002, the California Attorney General filed a complaint against PG&E Corp., alleging, among other claims, that the Utility's original Plan and past transfers of money from the Utility to PG&E Corp., and allegedly from PG&E Corp. to its other affiliates, violated various conditions, including the capital requirements condition as interpreted by the CPUC the day before. Similar complaints were filed against PG&E Corp. by the City and County of San Francisco and a private plaintiff. Among other requests, the Attorney General seeks civil penalties of $2,500 per violation against each defendant for a total penalty of not less than $500 million and restitution of assets allegedly wrongfully transferred to PG&E Corp. from the Utility. In October 2003, the U.S. District Court for the Northern District of California found that the Attorney General's and San Francisco's restitution claims belonged to the Utility and were subject to the Bankruptcy Court's jurisdiction. The District Court also determined that the Attorney General's civil penalty and injunctive relief claims could be resolved in state court. The Attorney General and San Francisco have appealed the District Court's ruling. In connection with the implementation of the Utility's Plan on April 12, 2004, the Utility released PG&E Corp. and its directors from any claims that it might have had for restitution. The Bankruptcy Court's order confirming the Plan provides that the Attorney General's claims for civil penalties and injunctive relief were not released in connection with implementation of the Plan. "PG&E Corp. believes that the applicable calculation methodology for civil penalties, if any violations were found, would not result in a material adverse effect on its financial condition or results of operations," Ms. Cheng says. In addition, because the CPUC has agreed to release all claims against PG&E Corp. and the Utility related to past holding company actions during the energy crisis, PG&E Corp. believes that the effect of the appellate court's opinion on the pending CPUC investigation into actions by the California investor-owned utilities and the other parent companies during the energy crisis would not result in a material adverse effect on PG&E Corp.'s financial condition or results of operations. Although PG&E Corp. was dismissed from the CPUC's investigation, Ms. Cheng says, it joined with the two other parent holding companies in petitioning the appellate court for review of the CPUC's assertion of jurisdiction over them in the investigation. Under the December 2003 settlement agreement entered into among the CPUC, PG&E Corp., and the Utility to resolve the Utility's Chapter 11 proceeding, the CPUC agreed that, once the CPUC approval of the settlement agreement is no longer subject to appeal, it will release all claims against PG&E Corp. and the Utility related to past holding company actions during the California energy crisis. According to Ms. Cheng, PG&E Corp. has 40 days in which to determine whether it will appeal the decision to the California Supreme Court. PG&E Corp. is unable to predict how the CPUC will seek to enforce the holding company conditions in the future with respect to PG&E Corp. and what effect the enforcement will have on PG&E Corp.'s cash flow, results of operations, or financial condition. 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 GROUP: Perry's Ice And Friendship Dairies Want Examiner ---------------------------------------------------------------- Friendship Dairies, Inc., and Perry's Ice Cream Company, Inc., ask the Court to appoint an examiner under Section 1104(c) of the Bankruptcy Code in the cases of Parmalat USA Corporation and Farmland Dairies, LLC. Friendship and Perry's want the examiner to investigate the Parmalat collapse, its causes and history, and how the pre-2004 affairs of Parmalat may have involved transactions designed to strip assets from the U.S. Debtors. The examiner should also investigate any potential mismanagement of the Debtors before 2004, including possible interference with the U.S. management by other Parmalat group companies' officers or directors. This inquiry should focus on how and if the apparent improprieties throughout the Parmalat group may have involved the U.S. Debtors, their assets or their management, and how these alleged misdeeds may have damaged the Debtors' estates and their creditors. According to William M. Hawkins, Esq., at Phillips Lytle, LLP, in New York, Friendship and Perry's are parties-in-interest to the U.S. Debtors' cases as contemplated by Section 1104(c). Friendship holds prepetition claims against the Debtors totaling approximately $15,000. Friendship supplied dairy products and their packaging to the Debtors. Perry's purchased raw materials and packaging from the U.S. Debtors, and produced ice cream half-gallons and novelties for them pursuant to a prepetition agreement. Before the Petition Date, Perry's brought a lawsuit before the Supreme Court of the State of New York, County of Erie, against the Debtors for monetary damages in the principal sum of $330,000. Perry's alleged that the Debtors failed to pay invoices for its services and the ice cream products it delivered. The lawsuit remains pending. In a Chapter 11 case where no trustee has been appointed, Section 1104(c)(2) requires the appointment of an examiner on the request of a party-in-interest if "the debtor's fixed, liquidated, unsecured debts, other than debts for goods, services, or taxes, or owing to an insider, exceed $5,000,000." Mr. Hawkins notes that Parmalat USA has listed Comerica, Banca di Roma and Banca Intesa SpA, three banks with no "insider" status, as being owed more than $20,000,000 on an unsecured basis as of the Petition Date, all arising from "bank loans." The Court has not appointed a trustee in the U.S. Debtors' cases. But beyond the mandatory examiner appointment triggered by Section 1104(c)(2), Mr. Hawkins contends that the circumstances in the U.S. Debtors' cases merit an examiner's appointment: (a) On-going investigations have led prosecutors in Italy to accuse Parmalat's pre-2004 management and consultants of financial and investment manipulations involving the group's world-wide companies. How did these alleged violations of fiduciary duties, criminal laws, and creditors' rights affect the U.S. Debtors' assets and creditors? (b) The recent report by the Milan prosecutors' expert, Stefania Chiaruttini, purports to show that Parmalat had $17,000,000,000 in debts as of September, 2003, which were generated by consistent losses since at least 1990. There was no profit in all those years, Chiaruttini concludes, despite Parmalat's consistent audits and reports during those years showing profits had been achieved. At least EUR3,260,000,000 went to acquisitions by Parmalat during this period, while not less than EUR926,000,000 went to the Tanzi family's personal enrichment, according to the Chiaruttini report. Were assets of the U.S. Debtors, or that should have belonged to the Debtors, transferred, wasted, mismanaged, taken, or otherwise removed or withheld from the Debtors to support and fund these alleged losses, and the apparent fraudulent schemes that hid them? (c) The Italian prosecutors' March 2004 indictment of 29 people and three companies for their roles in the alleged looting of Parmalat, together with continuous announcements of other investigation targets, raise a profound concern -- were these U.S. Debtors' estates subject to the asset stripping and frauds allegedly perpetrated over the last 13 years, or to the alleged cover-ups of these crimes? Friendship and Perry's also ask Judge Drain to grant the examiner: 1) authority to protect any documents or other evidence, which may still exist concerning the collapse; and 2) a mandate to investigate how and if, at any time, any person improperly sought to destroy any evidence or otherwise cover-up the misdeeds and improprieties that allegedly plagued Parmalat's -- and, possibly, the U.S. Debtors' -- history. 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) PILLOWTEX CORP: Creditors' Committee Taps Trenwith as Advisor ------------------------------------------------------------- The Official Committee of Unsecured Creditors seeks the Court's authority to retain Trenwith Securities, LLC, as investment banker and advisor, nunc pro tunc to May 1, 2004. The Committee, in conjunction with the Pillowtex Corporation Debtors, is considering a range of strategic alternatives to maximize the realizable value of the estate's assets. The strategic alternatives include joint venture and other forms of equity ownership sharing. The Debtors anticipate a significant amount of net operating loss after a restructuring of its business pursuant to the Court's confirmation of at least one of the Debtors' plan of reorganization. The Debtors, therefore, are in a position to absorb taxable income from any joint venture without contemporaneous cash distributions. Consequently, after-tax cash flows of any venture maybe improved during its initial period. The Committee specifically wants an experienced joint venture partner with financial resources and a financial investor to work in the development of certain of the Debtors' real property and improvements in Kannapolis, North Carolina, and the exploration of other business opportunities. William J. Burnett, Esq., at Blank Rome, LLP, in Wilmington, Delaware, explains that Trenwith will be providing investment banking and related advisory services in connection with identifying a potential Partner or Investor, and in assisting with related negotiations. Trenwith will: (a) identify and contact persons or entities who are, or may become interested in being Partners or Investors; (b) distribute marketing materials to potential Partners or Investors, whether solicited or not; (c) assist with the due diligence process with potential Partners or Investors through the transaction process, and closing with the successful Partner or Investors; (d) assist and advise the Committee and the Debtors of the relative merits of alternative transactions or proposals submitted by potential Partners and Investors, or otherwise in connection with the Development Project; and (e) when necessary, provide testimony in Court on behalf of the Committee and the Debtors. The Committee believes that Trenwith possesses sufficient expertise, and is well qualified to act as investment banker and advisor in the Debtors' cases. According to Mr. Burnett, crucial to the success of the Development Project is the retention of the an investment banking firm such as Trenwith to pursue aggressively the Development Project's marketing efforts. Pursuant to an engagement letter, Trenwith would be entitled to: * a $100,000 advisory fee for the first two months of services rendered starting May 1, 2004; and * a success fee of up to $200,000, payable upon a closing on a Development Project and confirmation of a plan of reorganization. The Engagement Letter lists previously contacted potential developers and Investors: -- Silver Point Capital; -- Oaktree Capital; -- Gibbs International; -- Atlantic American; -- Lingerfelt Association; -- Welton Properties and Rex Welton's associated companies; and -- W.L. Ross and associated companies. If the Committee and the Debtors engage in a Development Project with any of the Previously Contacted Developers and Investors, Trenwith would be entitled to a $160,000 Transaction Fee rather than a $200,000 Fee. The Committee believes that the proposed fee structure is fair, reasonable and appropriately structured to motivate Trenwith to work to complete the Development Project. Mr. Burnett clarifies that the Committee's previous employment of Trenwith in connection with the sale of the assets to GGST, LLC, has been terminated, and Trenwith has received all fees owed pursuant to that engagement. Ron E. Ainsworth, Trenwith's Managing Director, assures the Court that while the Committee retains Trenwith with respect to the Development Project, it will not represent any other entity in any capacity in connection with these cases. In addition, Trenwith does not have any interest adverse to the Committee or the Debtors' estate, and is a disinterested person within the meaning of Section 101(14) of the Bankruptcy Code. 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) QUEBEC CENTER LTD: Case Summary & 6 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Quebec Center Ltd. 3625 Northwest Centre Drive Fort Worth, Texas 76135 Bankruptcy Case No.: 04-45332 Chapter 11 Petition Date: May 28, 2004 Court: Northern District of Texas (Ft. Worth) Debtor's Counsel: Thomas Craig Sheils, Esq. Sheils, Winnubst, Sanford & Bethune 1100 Atrium II 1701 North Collins Boulevard Richardson, TX 75080-1339 Tel: 972-644-8181 Total Assets: $5,010,779 Total Debts: $4,845,022 Debtor's 6 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ SMIC Ltd. $1,720,280 17300 N. Dallas Pkwy., #2040 Dallas, TX 75248 1893 Joint Venture $652,520 17300 N. Dallas Pkwy., #2040 Dallas, TX 75248 Walker & England $14,000 Brusniak McCool & Blackwell, P.C. $6,000 Area Surveying, Inc. $4,000 Hebert Construction Services $2,500 RENAL CARE: Completes National Nephrology Acquisition for $345MM ---------------------------------------------------------------- On April 2, 2004, Renal Care Group, Inc. completed its acquisition of National Nephrology Associates, Inc. in accordance with the terms and conditions of the Agreement and Plan of Merger dated February 2, 2004, between Renal Care Group, Titan Merger Subsidiary, Inc., a wholly-owned subsidiary of Renal Care Group, NNA and certain of the equity holders of NNA. Pursuant to the Merger Agreement, Merger Sub was merged with and into NNA and NNA became a wholly-owned subsidiary of Renal Care Group. The aggregate merger consideration paid by Renal Care Group for NNA was approximately $345 million, which included a cash payment of approximately $167 million to NNA's equity holders and the assumption by Renal Care Group of NNA's outstanding debt, including its $160 million of 9% senior subordinated notes due 2011, and other indebtedness, including capital leases. The merger consideration was determined by arm's length negotiations among the parties and the cash amount of the merger consideration was financed with borrowings under a credit facility entered into by Renal Care Group in February 2004 and cash on hand. Prior to the Merger, approximately 64% of the outstanding capital stock of NNA was owned by J.W. Childs Equity Partners II, L.P. and certain other entities and persons related to JWC. According to Renal Care Group, prior to the Merger, no material relationships existed between the JWC Stockholders and Renal Care Group, any affiliate of Renal Care Group, any director or officer of Renal Care Group or any associate of any such director or officer. Prior to the Merger, NNA provided renal dialysis services and supplies to approximately 5,600 patients and 87 outpatient dialysis facilities in 15 states, as well as acute dialysis services at approximately 55 hospitals. Renal Care Group intends to continue the business of NNA and will now serve almost 28,000 patients at over 370 facilities in 30 states, in addition to providing acute dialysis services at more than 175 hospitals. * * * As reported in the Troubled Company Reporter's April 6, 2004 edition, Standard & Poor's Ratings Services assigned its 'BB-' corporate credit and 'B' subordinated debt ratings to the Nashville, Tennessee-based dialysis provider Renal Care Group Inc., following the company's $345 million acquisition of National Nephrology Associates Inc., another Nashville-based dialysis provider. At the same time, Standard & Poor's withdrew its corporate credit rating on National Nephrology and raised its rating on National Nephrology's existing $160 million 9% subordinated notes due in 2011 to 'B' from 'B-'. Renal Care is expected to initiate an exchange offer that will subsequently change the obligor name on the notes from National Nephrology to Renal Care. National Nephrology's ratings have also been removed from CreditWatch, where they were placed Feb. 2, 2004, when Renal Care announced it would acquire the firm. The rating outlook is positive, reflecting that Standard & Poor's could raise Renal Care's ratings within a couple of years if the company strengthens its financial profile to build additional insulation against competitive risks. Standard & Poor's will also monitor how aggressively Renal Care pursues new investments and share repurchases, actions that could create operating pressures and strain financial resources. RICA FOODS: Second Quarter Net Loss Widens to $1.2 Million ---------------------------------------------------------- Rica Foods, Inc. (Amex: RCF) announced its results of operations for the second fiscal quarter of the fiscal year ending September 30, 2004. The Company's business primarily involves the production and marketing of poultry products and animal feed and the operation of quick service fried chicken restaurants. The Company's two wholly- owned subsidiaries, As de Oros, S.A. and Pipasa, S.A., through which the Company's operations are principally conducted, distribute these products throughout Costa Rica and export mostly within Central America. Results of operations for the three months ended March 31, 2004 compared to the three months ended March 31, 2003. For the three months ended March 31, 2004, the Company generated net loss applicable to common stockholders of $1,206,394 ($0.09 basic loss per share), compared to a net loss applicable to common stockholders of $741,840 ($0.06 basic loss per share) for the three months ended March 31, 2003. For the three months ended March 31, 2004, net sales and cost of sales increased by 7.9% and 13.1%, respectively. The increase in sales is primarily attributable to increases in sales in the exports, by-products and others segment, which increase was partially offset by a decrease in sales in the broiler segment. The increase in the cost of sales was primarily the result of the overall increase in sales and increases in the costs of raw material, such as corn and soybean meal which make up approximately 60% of the total cost of raw material, in addition to the shipping costs associated with obtaining such raw material. For the three months ended March 31, 2004, the cost of corn and soybean meal increased by approximately 12% and 51%, respectively, when compared to the purchase price of such products for the three months ended March 31, 2003. Cost of sales was a greater percentage of sales for the quarter ended March 31, 2004 (74.8%) as compared to the quarter ended March 31, 2003 (71.2%) also primarily due to the increased cost of imported raw material. The Company uses segment profit (loss) margin information to analyze segment performance, which is defined as the ratio between the income or loss from operations associated with a segment and the net sales associated with the subject segment. Broiler sales decreased by 5.4% for the fiscal quarter ended March 31, 2004 when compared with the fiscal quarter ended March 31, 2003, primarily due to an increase in discounts provided to the Company's broiler customers. The volume of broiler products sold did not vary significantly, decreasing by 0.9%, which the Company believes is indicative of a reversal of the decreased volume trend of broiler product sales experienced by the Company in recent years. The profit margin for this segment decreased from 20.6% to 12.9%, primarily due to an increase in the cost of imported raw material. Animal feed sales increased by 4.2% for the fiscal quarter ended March 31, 2004 when compared with the fiscal quarter ended March 31, 2003, mainly attributable to an increase in prices and an increase in the sales of pet food brands, mainly due to the addition of new distribution channels. However, overall volume of animal feed sales decreased by 6.7% mainly due to a decrease in the sale of certain of the Company's less expensive commercial animal feed brands, which was partially offset by increases in the sales of pet food products. The profit margin for the animal feed segment decreased slightly from 8.0% to 7.4%, primarily as a result of an increase in the costs of imported raw material, which was partially offset by variations in the sales mix to more profitable products. By-products sales increased by 18.5% for the fiscal quarter ended March 31, 2004 when compared with the fiscal quarter ended March 31, 2003, mainly due to an increase in the volume of by-product sales by 15.8%. The profit margin for by-products increased from 8.6% to 9.9%, mainly due to an increase in sales of products with higher profit margins, which was partially offset bythe increase in costs of imported raw material. Export sales increased by 80.2% for the fiscal quarter ended March 31, 2004 when compared with the fiscal quarter ended March 31, 2003, mainly due to an increase in the number of pet food and commercial animal feed customers in Central America. In addition, in November 2003, the government of Honduras lifted its restriction on the import of poultry-related products which had been in place since March 2002 and the Company has once again initiated exporting poultry-related products to Honduras. Profit margin increased from 15.4% to 18.8%, mainly due to a variation in the product mix to more profitable products, partially offset by an increase in the cost of imported raw material. Quick service sales increased by 16.5% for the fiscal quarter ended March 31, 2004 when compared with the fiscal quarter ended March 31, 2003, mainly due to an increase in prices and increased marketing efforts of the Company. This segment's profit margin increased from 2.1% to 11.9%, mainly as a result of an increase in the sales price for quick-service products. Sales for the other products segment increased by 45.2% for the fiscal quarter ended March 31, 2004 when compared with the fiscal quarter ended March 31, 2003, mainly due to an increase in the sale of commercial eggs. This segment's profit margin increased from a loss margin of 4.9% to a positive margin of 8.0%, mainly due to an increase in sales prices. Operating expenses decreased by 3.6% or $289,450 for the three months ended March 31, 2004 when compared to the three months ended March 31, 2003. For the three months ended March 31, 2004, selling expenses did not vary significantly, decreasing by $63,355 or 1.3%, when compared to the three months ended March 31, 2003. For the three months ended March 31, 2004, general and administrative expenses decreased by $226,095, or 6.7% when compared to the three months ended March 31, 2003. This decrease in general and administrative expenses is mainly due to a reduction in the Company's rental expenses and a decrease in depreciation and amortization expenses. Operating expenses represented 23.41% and 26.29% of net sales for the three months ended March 31, 2004 and 2003, respectively. As part of pay-roll related charges to the government of Costa Rica, the subsidiaries of the Company, are required to pay to the Instituto Nacional de Aprendizaje ("INA"), a Costa Rican Government institution, a monthly charge which is calculated by multiplying the subsidiaries' total payroll by a percentage determined based upon the classification given to the Company's operational activities (the "Percentage"). Since 1993, pursuant to a law enacted by the Costa Rican Congress, the Ministry of Agriculture has classified the Company's operational activities as agricultural in nature. However, in December 2003, the Company received an administrative petition from the INA, indicating that, in accordance with article 19 of an administrative decree of the INA, for purposes of determining the Percentage, the INA believes the Company's operational activities should be classified as industrial in nature rather than agricultural in nature, and accordingly, should have been applying the Percentage applicable to industrial companies when calculating the INA Charge, instead of the Percentage applicable to agricultural companies. The applicable Percentage for agricultural companies is 0.5% while the applicable Percentage for industrial companies is 2%. The Company has objected to the INA Petition and is currently considering filing a claim with the Costa Rican Constitutional Supreme Court challenging the constitutionality of the article 19 of the Administrative Decree. As there can be no assurances regarding the outcome of any claim the Company may file with the Court, for the three months ended March 31, 2004, the company has recorded a provision in the amount of $416,380 which the Company believes to be management's most reasonable estimate of the amount the Company would be required to pay in the event it was required to comply with the INA Petition based on an analysis of the subsidiaries' payroll. However, the Company believes that the amount of he Company's liability in the event of an unfavorable outcome may be as large as $1 million. In addition to the provision, the Company has also recorded a deferred tax benefit in the amount of $124,914 related to the INA Charge. Other expenses increased by 39.3% for the three months ended March 31, 2004, when compared to the three months ended March 31, 2003, primarily as a result of a decrease in interest income and the provision of the INA Charge. The Company's provision for income tax benefit was $169,647 for the three months ended March 31, 2004, compared to an income tax expense of $63,798 for the three months ended March 31, 2003, mainly due to a downward revision of the estimated income tax for the three months ended December 31, 2003 in addition to an increase in deferred income tax benefit related to the provision recorded for the INA Charge. The revision of the estimated income tax from prior quarter is primarily due to a decrease in taxable income for fiscal year 2004. Effective rates for the fiscal quarters ended March 31, 2004 and 2003 were 12.7% and -10.14%, respectively. Results of operations for the six months ended March 31, 2004 compared to the six months ended March 31, 2003. For the six months ended March 31, 2004, the Company generated net loss applicable to common stockholders of $1,043,149 ($0.08 basic loss per share), compared to a net income applicable to common stockholders of $313,697 ($0.03 basic earnings per share) for the six months ended March 31, 2003. For the six months ended March 31, 2004, net sales increased by 0.9% or $623,212 and cost of sales increased by 5.86% or $2,677,314 when compared to the six months ended March 31, 2003. The increase in overall sales is primarily attributable to an increase in the sales in the exports and others segments, partially offset by a decrease in sales in the broiler segment. For the six months ended March 31, 2004, the cost of imported corn and soybean meal increased by approximately 10% and 44%, respectively, when compared to the cost of such materials for the six months ended March 31, 2003. Cost of sales was a greater percentage of sales for the six months ended March 31, 2004 (72.6%) as compared to the six months ended March 31, 2003 (69.2%) primarily due to increases in the costs of imported raw material. Broiler sales decreased by 6.7% for the six months ended March 31, 2004 when compared with the six months ended March 31, 2003, primarily due to an increase in sales discounts provided to the Company's broiler customers and a decrease in the volume of broiler sales by approximately 3.0%, which the Company believes is indicative of a reversal of the decreased volume trend of broiler product sales experienced by the Company in recent years. The profit margin for this segment decreased from 22.7% to 14.7%, primarily due to an increase in the cost of imported raw material. Animal feed sales did not vary significantly, decreasing 1.25% for the six months ended March 31, 2004 when compared with the six months ended March 31, 2003. However the volume of animal feed sales decreased by 10.7% mainly due to a decrease in the sale of certain of the Company's less expensive commercial animal feed brands, which was partially offset by increases in the sales of pet food products. The profit margin for animal feed increased slightly from 9.3% to 10.0%, primarily as a result of an increase in sales prices and variations in the sales mix to more profitable products, offset by an increase in the costs of imported raw material. By-products sales decreased by 4.4% for the six months ended March 31, 2004 when compared with the six months ended March 31, 2003, mainly due to a decrease in volume of 9.2%. The profit margin for by-products increased from 13.4% to 14.5%, mainly due to an increase in sale of products with higher profitability, partially offset by the increase in costs of imported raw material. Export sales increased by 47.2% for the six months ended March 31, 2004 when compared with the six months ended March 31, 2003, mainly due to an increase in the number of fertile egg, pet food and commercial animal feed customers in Central America. In addition, in November 2003, the government of Honduras lifted its restriction on the import of poultry-related products which had been in place since March 2002 and the Company has once again initiated exporting poultry-related products to Honduras. Profit margin increased from 15.3% to 19.4%, mainly due to a variation in the product mix to more profitable products, partially offset by an increase in the cost of imported raw material. Quick service sales increased by 6.9% for the six months ended March 31, 2004 when compared with the six months ended March 31, 2003 mainly due to an increase in sales prices and marketing efforts. This segment's profit margin increased from 5.8% to 13.0%, mainly as a result of an increase in the sales price for quick-service products. Sales for the other products segment increased by 36.5% for the six months ended March 31, 2004 when compared with the six months ended March 31, 2003, mainly due to an increase in the sale of commercial eggs. This segment's profit margin increased from 5.8% to 10.2%, mainly due to an increase in sales prices. Operating expenses decreased by 4.3% or $706,150 for the six months ended March 31, 2004 when compared to the six months ended March 31, 2003. For the six months ended March 31, 2004, selling expenses decreased by 4.8% or $466,867, when compared to the six months ended March 31, 2003. This decrease in mainly due to a reduction in the Company's vehicle leasing expenditures as a result of the company's purchase of distribution trucks and a decrease in expenditures related to the renting of frozen storage containers as a result of a decrease in the Company's broiler inventory levels. For the six months ended March 31, 2004, general and administrative expenses decreased by 3.6% or $239,283 when compared to the six months ended March 31, 2003. This decrease in general and administrative expenses is mainly due to a reduction in the Company's rental expenses. and a decrease in depreciation and amortization expenses. Operating expenses represented 23.68% and 25.02% of net sales for the six months ended March 31, 2004 and 2003, respectively. Other expenses increased by 23.79% for the six months ended March 31, 2004, when compared to the six months ended March 31, 2003, primarily as a result of an decrease in interest income and the recognition of a pretax charge of $416,000 to provision for the INA Charge during the three months ended March 31, 2004. The Company's provision for income tax benefit was $72,374 for the six months ended March 31, 2004, compared to an income tax expense of $567,959 for the six months ended March 31, 2003, mainly due to an increase in deferred income tax benefit related to the provision recorded for the INA Charge. Effective rates for the six months ended March 31, 2004 and 2003 were 6.98% and 57.67%, respectively. The Company is seeking to address its anticipated short-term funding requirements by various means including, but not limited to, entering into negotiations with certain of its lenders to extend the maturity date on the short-term indebtedness owed to such lenders and seeking to secure long-term financing through the private or public issuance of debt instruments. Although the Company has entered into discussions with certain of its lenders and a number of potential capital sources, there can be no assurances that the Company will be successful in its efforts to secure long-term financing on terms acceptable to the Company. The Company's ability to maintain sufficient liquidity to meet its short-term cash needs is highly dependent on achieving these initiatives. There is no assurances that these initiatives will be successful and failure to successfully complete these initiatives could have a material adverse effect on the Company's liquidity and operations, and could require the Company to consider alternative measures, including, but not limited to, the deferral of planned capital expenditures and the further reduction of discretionary spending. About Rica Foods The Company's operations are largely conducted through its 100% owned subsidiaries, Corporacion Pipasa, S.A. and subsidiaries and Corporacion As de Oros, S.A. and subsidiaries. The Company's subsidiaries' primary business is derived from the production and sale of broiler chickens, processed chicken, beef and pork by- products, commercial eggs, and premixed feed and concentrate for livestock and domestic animals. The Company's subsidiaries own 97 urban and rural outlets throughout Costa Rica, three modern processing plants and four animal feed plants. As de Oros also owns and operates two chains of 28 quick service restaurants in Costa Rica called Restaurantes As de Oros and Kokoroko. Pipasa and As de Oros exportits products to all countries in Central America, Colombia, Dominican Republic and Hong Kong. SAFETY-KLEEN: Creditor Trustee Wants To Amend Trust Agreement ------------------------------------------------------------- Oolenoy Valley Consulting LLC, represented by William H. Sudell, Jr., Esq., at Morris Nichols Arsht & Tunnell in Wilmington, Delaware, asks the Court to approve non-material amendments to the Safety-Kleen Creditor Trust Agreement. Specifically, the Trustee wants to amend the Trust Agreement to: (1) clarify the Agreement to provide that notice of certain matters may be given to Trust beneficiaries through publication on the Trust's Web site, or by mail upon written request of a beneficiary; and (2) consolidate the 2003 with the 2004 annual reporting requirements. The purpose of these amendments is to reduce possible expenses related to the administration of the Trust without prejudicing the right of any interested parties, thereby benefiting the Trust and its beneficiaries. Notice The Trust Agreement arguably requires the Trustee to provide each beneficiary with written reports of certain information concerning the Trust -- although the Trustee does not believe that this would be a correct interpretation of the Trust terms. The beneficiaries of the Trust currently are well over 20,000. The Trustee estimates the cost of mailing written reports to each beneficiary to exceed $5.00 per notice, or more than $100,000 for each mailing. The Trust has established and presently maintains a Web site at http://www.safetykleencreditortrust.comthrough which information concerning the Trust is made available to beneficiaries. To reduce possible mailing costs, the Trustee proposes to amend the Trust to clarify that reports may be made available to beneficiaries through publication on the Web site, or by mail if a beneficiary so requests. Fiscal Consolidation The Trust was established on December 24, 2003. However, the Trust had no reportable income or expenses, and no material transactions, during the seven days of its existence at the end of 2003. The Trust Agreement's required disclosures will be of no material benefit to the Court or the beneficiaries. Therefore, the Trustee proposes to amend the Trust Agreement so it may consolidate the disclosures required for calendar years 2003 and 2004 into a single filing due in 2005 coincident with the filing of the Trust's 2004 federal income tax return. A consolidated 2003/2004 filing due on the date the Trust's federal income tax return is due would provide the Court and beneficiaries with the same information while reducing the expenses which would be incurred with a separate 2003 report. It would also allow the Trustee to make a single mailing of both the report and the Trust's federal income tax information. The Trustee is required to value its assets and provide this information to the Court and the beneficiaries "as soon as reasonably practical after the Effective Date." The unliquidated assets of the Trust consist primarily of lawsuits, valuation of which is speculative at this time. In addition, the number of potential Trust beneficiaries is constantly changing and, therefore, is also currently speculative. As the Court knows, literally thousands of Trust claims are subject to objection or reclassification. The number of beneficiaries with actual, bona fide claims, and the value of the potential recovery in the Trust's lawsuits, will be known with more precision in approximately 12 months. As a result, any attempt to provide a report now based on the value of the Trust assets and the anticipated allocation of that value among Trust beneficiaries would be speculative, and of little or no use to the beneficiaries. (Safety-Kleen Bankruptcy News, Issue No. 78; Bankruptcy Creditors' Service, Inc., 215/945-7000) SCHILS AMERICA: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Schils America Acquisition Corporation RD 2 Box 49C-1 Susquehanna, Pennsylvania 18847 Bankruptcy Case No.: 04-22901 Chapter 11 Petition Date: May 28, 2004 Court: Eastern District of Pennsylvania (Reading) Judge: Thomas M. Twardowski Debtor's Counsel: Stephen M. Packman, Esq. Archer and Greiner, P.C. One Centennial Square Haddonfield, NJ 08033-0968 Tel: 856-795-2121 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Saputo Cheese USA Trade Debt $301,318 25 Tri-State Int'l Off. Center, Ste. 250 Lincolnshire, IL69069 Charles Stube Co. Inc. Trade Debt $266,118 8116 Cazonovia Rd. #7 Manilus, NY 13104 Animix, LLC Trade Debt $237,495 W.W.S., Inc. $227,823 JML Sales, Inc. Trade Debt $104,232 Milk Specialties Company Trade Debt $102,888 Calfrech Corp. Trade Debt $93,801 Nutrac bv Trade Debt $73,173 Northwoods Group Ltd. Trade Debt $70,255 Penske Track Leasing Trade Debt $63,036 Dandy Veal LLC Trade Debt $46,180 Middlefield Mix, Inc. Trade Debt $45,079 Fairway Dairy & Ingredients Trade Debt $41,481 Brewster Cheese Trade Debt $37,961 Freedom Born Specialties Trade Debt $35,870 McGuire Woods LLP Trade Debt $29,268 CRW Pt. Mgmt. Services Trade Debt $27,367 Ethox Chemicals, LLC Trade Debt $25,143 Zook Molasses Company Trade Debt $21,830 United International Ind. $17,597 SEQUOIA MORTGAGE: Fitch Assigns Low-B Ratings to 2 2004-5 Classes ----------------------------------------------------------------- Sequoia Mortgage Trust 2004-5 mortgage pass-through certificates, classes A, X-1, X-2, X-B and A-R ($813,867,000) are rated 'AAA' by Fitch Ratings. In addition, Fitch rates class B-1 ($14,874,000) 'AA', class B-2 ($8,499,000) 'A', class B-3 ($4,674,000) 'BBB', class B-4 ($2,124,000) 'BB', and class B-5 ($2,124,000) 'B'. The class B-6 certificates are not rated by Fitch. The 'AAA' rating on the senior certificates reflects the 4.25% subordination provided by the 1.75% class B-1, the 1.00% class B- 2, the 0.55% class B-3, the 0.25% privately offered class B-4, the 0.25% privately offered class B-5 and the 0.45% privately offered class B-6 certificates. The ratings on the class B-1, B-2, B-3, B- 4, and B-5 certificates are based on their respective subordination. Fitch believes the above credit enhancement will be adequate to support mortgagor defaults as well as bankruptcy, fraud and special hazard losses in limited amounts. The ratings also reflect the quality of the mortgage collateral, the capabilities of Wells Fargo Bank, National Association, as Master Servicer (rated 'RMS1' by Fitch), and Fitch's confidence in the integrity of the legal and financial structure of the transaction. The trust consists of two cross-collateralized groups of adjustable rate mortgage loans, designated as group 1 loans and group 2 loans, with an aggregate principal balance of $849,992,547. The group 1 loans consist of 1,708 fully amortizing 25- and 30- year adjustable rate mortgage loans secured by first liens on one- to four-family residential properties, with an aggregate principal balance of $577,545,771, and a weighted average principal balance of $338,142. All of the loans have interest-only terms of either five or ten years, with principal and interest payments beginning thereafter and adjusting semi-annually based on the six-month LIBOR rate plus a margin. Morgan Stanley Dean Witter Credit Corporation, Greenpoint Mortgage Funding, Inc., and Countrywide Home Loans, Inc., originated 28.77%, 50.74%, and 10.72% of the group 1 mortgage loans, respectively. The remainder of the loans were originated by various mortgage lending institutions. The group 1 mortgage loans have weighted average original loan-to- value ratio (OLTV) of 69.64%, and a weighted average FICO of 731. Second home and investor-occupied properties comprise 6.78% and 1.04% of the loans in group 1, respectively. The states with the largest concentration of mortgage loans are California (32.09%), Florida (10.35%), Arizona (5.73%), and Ohio (5.17%). All other states represent less than 5% of the group 1 pool balance as of the cut-off date. The group 2 loans consist of 728 fully amortizing 25- and 30-year adjustable rate mortgage loans secured by first liens on one- to four-family residential properties, with an aggregate principal balance of $272,446,777, and a weighted average principal balance of $374,240. All of the loans have interest only terms of either five or ten years, with principal and interest payments beginning thereafter and adjusting monthly based on the one-month LIBOR rate plus a margin (55.20% of the loan group) or semi-annually based on the six-month LIBOR rate plus a margin (44.80% of the loan group). Morgan Stanley Dean Witter Credit Corporation, Greenpoint Mortgage Funding, and Countrywide Home Loans, Inc., originated 28.77%, 50.47%, and 10.72% of the group 1 mortgage loans, respectively. The remainder of the loans were originated by various mortgage lending institutions. The group 2 mortgage loans have a weighted average OLTV of 69.71%, and a weighted average FICO of 730. Rate/Term refinance and cash-out refinance loans represent 34.00% and 28.09% of the loan pool, respectively. Second home and investor-occupied properties comprise 11.00% and 1.37% of the loans in group 2, respectively. The states with the largest concentration of mortgage loans are California (30.53%), Florida (11.34%), and Colorado (5.19%). All other states represent less than 5% of the group 1 pool balance as of the cut-off date. None of the mortgage loans are 'high cost' loans as defined under any local, state or federal laws. Sequoia Residential Funding, Inc., a Delaware corporation and indirect wholly owned subsidiary of Redwood Trust, Inc., will assign all its interest in the mortgage loans to the trustee for the benefit of certificate holders. For federal income tax purposes, an election will be made to treat the trust as multiple real estate mortgage investment conduits (REMICs). HSBC Bank USA will act as trustee. SOUTHWEST RECREATIONAL: Atlas Partners Serves Real Estate Agent --------------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of Georgia, Rome Division, gave its stamp of approval to Southwest Recreational Industries, Inc., and its debtor-affiliates request employ Atlas Partners LLC as their real estate agent. Specifically, Atlas Partners will: a) evaluate the Properties to determine the present and future functionality so as to enhance the marketability and value of the Properties and to facilitate an expeditious sale; b) interview and retain real estate brokers, at Atlas' expense, to assist with the marketing and sale of the Properties; c) develop and implement a marketing program with the goal of obtaining a Stalking Horse Offer on each of the Properties. This marketing effort may include newspaper, magazine or journal advertising, letter and/or flyer solicitation, placement of signs, direct telemarketing and web based marketing, and such other marketing methods as may be necessary. Atlas will review all pertinent documents and consult with the Debtors as needed; d) respond and provide information to, negotiate with, and solicit offers from prospective purchasers and make recommendations to the Debtors as to the advisability of accepting particular offers; e) conduct one or two auctions, as necessary, pursuant to Section 363, for each of the properties; f) assist with the implementation of the proposed transaction, review documents, and negotiate and resolve any problems that may arise; and g) if required, appear in court during the term of this retention, to testify or consult with the Debtors or other relevant parties in connection with the marketing and disposition of the properties. Atlas will be paid an 8% success fee of the gross sales price of the Properties. If a Buyer is represented by a third party broker, that broker shall be entitled to 1% of the purchase price, to be paid out of the Success Fee. Biff Ruttenberg in Chicago leads the engagement. Atlas is a third-party real estate strategic advisory services firm offering a focused single-source for property evaluation, strategic planning, implementation or disposition and capital structure. The professionals that will be working on this assignment have years of participation in the commercial real estate development, investment and disposition business, which provides a strong background to effectuate the desired results. Atlas Partners recently provided similar real estate services to Mexican restaurant operator Chevy's, Inc. 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. SPECTRUM PHARMA: Will Present at Friedman's Conference Tomorrow --------------------------------------------------------------- Spectrum Pharmaceuticals, Inc. (Nasdaq: SPPI) announced that Dr. Rajesh C. Shrotriya, Chairman, Chief Executive Officer and President of Spectrum Pharmaceuticals, is scheduled to present at the Friedman Billings Ramsey 8th Annual Growth Investor Conference on Wednesday, June 2, 2004 at 2:50 p.m. Eastern Time at the Millennium Hotel Broadway in New York City, New York. Dr. Shrotriya will provide a corporate overview and an update on Spectrum's oncology portfolio and generic business. The presentation will be webcast live and can be accessed from Spectrum's website, http://www.spectrumpharm.com. A replay of the presentation will also be available at the same site. About Spectrum Pharmaceuticals Spectrum Pharmaceuticals is an oncology-focused pharmaceutical company engaged in the business of acquiring, developing and commercializing proprietary drug products which have a primary focus on the treatment of cancer and related disorders, as well as generic drug products for various indications. The Company's lead drug, satraplatin, is a phase 3 oral, anti-cancer drug being co- developed with GPC Biotech AG, for its initial indication, hormone-refractory prostate cancer. It has been granted fast- track status by the United States Food and Drug Administration (FDA). Elsamitrucin, a phase 2 drug, will initially target non- Hodgkin's lymphoma. EOquin(TM), a phase 2 drug, is being studied in the treatment of superficial bladder cancer. In addition, the Company has filed with the FDA three Abbreviated New Drug Applications for the generic drugs ciprofloxacin, carboplatin and fluconazole. For additional information, including SEC filings, visit the Company's web site at http://www.spectrumpharm.com/ * * * The report of Spectrum Pharmaceuticals' independent public accountants, Arthur Andersen LLP, for the For the fiscal year ended December 31, 2003, contains this paragraph: "The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has suffered recurring losses from operations and has a net capital deficiency that raise substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustments relating to recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result should the Company be unable to continue as a going concern." SPIEGEL GROUP: Court Authorizes $250,000 Expense Reimbursement -------------------------------------------------------------- In recognition of and to induce Spiegel Catalog International Limited's expenditure of time, energy and resources, and to procure the benefits to their estates of securing a "stalking horse" or minimum bid, the Debtors determined that a limited protection for Spiegel Catalog International in the form of an Expense Reimbursement is appropriate, in the event that Spiegel Catalog International is not the Successful Bidder at the Auction. The Debtors sought and obtained the Court's authority to provide Spiegel Catalog International with an Expense Reimbursement for its documented, out-of-pocket expenses reasonably incurred in connection with the transaction contemplated in the Purchase Agreement between the Debtors and Spiegel Catalog International, not to exceed $250,000, if: (a) the Court approves a higher and better bid than that submitted by Spiegel Catalog International; (b) the Debtors withdraw their request to sell the Spiegel Catalog Assets and Spiegel Catalog International is not in material breach of the Purchase Agreement; or (c) notwithstanding the fact that all of their conditions to Closing have been satisfied or waived by the Debtors, and Spiegel Catalog International is not in material breach of the Purchase Agreement, the Debtors refuse to consummate the sale of the Purchased Assets. In addition, if the Debtors become obligated to pay Spiegel Catalog International the Expense Reimbursement, that obligation will survive termination of the Purchase Agreement and, until indefeasibly paid in full in cash, will constitute an administrative expense of the Debtors' bankruptcy estates ranking pari passu with all other administrative expenses of the kind specified in Sections 503(b) and 507(a)(1) of the Bankruptcy Code. The Debtors contend that the Expense Reimbursement provided for in the Purchase Agreement is fair and reasonable and was negotiated by the parties in good faith and at arm's length. 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) SPORTS CLUB COMPANY: U.S. Bank Issues Default Notice ---------------------------------------------------- The Sports Club Company, Inc. (AMEX:SCY) announced that it has received a default notice from U.S. Bank, as Trustee for the holders of the Company's 11-3/8% Senior Secured Notes due in March 2006. As previously reported, the Company has delayed the filing of its annual report on Form 10-K for the year ended December 31, 2003, due to complex issues associated with Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets, and Statement of Financial Accounting Standards No. 144, Accounting for the Impairment and Disposal of Long-Lived Assets. Also, as previously announced, on May 4, 2004, the American Stock Exchange accepted the Company's compliance plan in which the Company outlined the timeframe and the steps being undertaken to ensure the filing of its required financial reports. The letter from the Trustee, dated May 21, 2004, notified the Company that an "event of default" under the Indenture would arise if the Company failed to file its financial reports with the Securities and Exchange Commission within thirty (30) days after the Company's receipt of such notice. While no assurances can be given as to the timing of the Company's filing, the Company continues to make satisfactory progress towards completion of its financial reports and expects to file within the allotted thirty (30) day period, which would constitute a cure and nullify the Trustee's notice. About the Company The Sports Club Company, based in Los Angeles, owns and operates luxury sports and fitness complexes nationwide under the brand name "The Sports Club/LA." STATEN ISLAND: Fitch Downgrades $49.4MM Bond Rating to BB- ---------------------------------------------------------- Fitch Ratings downgrades approximately $49.4 million of Staten Island University Hospital's (SIUH) bonds to 'BB-' from 'BB+'. The Rating Outlook remains Negative. The rating downgrade to 'BB-' is due to significant restatement of the fiscal 2002 and 2003 audited financial statements mainly caused by ongoing investigations by the New York attorney general (AG) and the Office of the Inspector General (OIG). In Fitch's last press release dated March 16, 2004, SIUH presented a draft audit that reported an operating loss of approximately $900,000. Actual losses for fiscal 2003 totaled $41.8 million (negative 7.7% operating margin). Furthermore, fiscal 2002 revenues were negatively adjusted by $76.7 million, expenses were lowered by $52.9 million, and operating income has been decreased to negative $13 million (negative 2.4%) compared to the positive $10.9 million (1.7%) initially presented. A sizable portion of the revenue adjustments were due to the closing of more than 460 Chaps clinics run by SIUH (250 closed in 2002 and the remainder in 2003). As a result of the AG investigation, approximately 25% of expected Medicaid reimbursements were withheld. Moreover, during the investigation, other financial discrepancies were uncovered that ultimately resulted in an investigation by the OIG for issues regarding SIUH's overstatement of graduate medical education funding dating back to 1996. It should be noted that the issues that are being investigated are related to prior management activities. Fitch notes that the current management team, including representatives from the NSLIJ management team, has stated it has been proactive in citing these errors and attempting to fully cooperate with the AG and OIG. The magnitude of the potential financial penalties appears to be much worse than originally anticipated and the final settlement and payment schedule are still unknown. The recent investigations and final version of the audit resulted in major cuts to SIUH's revenues, operating performance, and net assets; however, unrestricted liquidity was not affected by the adjustments. SIUH's already thin liquidity cushion was 33.8 days cash on hand and 35.3% cash to debt at December 31, 2003. Liquidity covenants in the bond documents state that SIUH must maintain at least 30 days cash by 12/31/2004. Debt service coverage, including all restatements and adjustments, is also very low at 1.0 times (x) in 2002 and negative 0.1x in 2003. In the original 2002 audit and the March 2004 draft audit, SIUH reported MADS coverage of 1.9x and 1.4x, respectively. Fitch notes the 2003 results trigger a rate covenant violation and management has stated it is undertaking the necessary remedy, a consultant call- in. A noteworthy credit factor is that SIUH's debt service requirements is heavily front loaded. Debt service begins to decrease from $27.8 million in 2004 to $22.6 million in 2005 and $16 million in 2008. Starting in 2010, debt service further declines steadily from $8.8 million. Not including the expected financial impact of the regulatory investigations, profitability and coverage should improve as annual interest and principal payments will be reduced going forward. Credit positives remain SIUH's strong market share and affiliation with North Shore Long Island Jewish Health System (NSLIJ). SIUH maintains a leading market share of approximately 65%, which has increased from 54% three years ago. Fitch values SIUH's affiliation with NSLIJ (rated 'A-') highly as NSLIJ lends significant resources in terms of managed care contracting, joint planning, group purchasing and insurance. While Fitch believes that SIUH is an important component of NSLIJ's strategic plan, to date NSLIJ has not provided SIUH with any monetary support. Fitch notes that NSLIJ has been more involved with SIUH due to the investigations and has expended significantly more resources in terms of management hours and expertise. NSLIJ's management team has consistently stated that its affiliation to SIUH will not jeopardize its current rating status. While NSLIJ's profitability and debt ratios have improved, liquidity levels are light and below Fitch's 'A' medians. Fitch's Rating Outlook remains Negative due to the uncertainty of the total financial impact and settlement terms of the investigations. Fitch believes that SIUH has the credit fundamentals to be a profitable operation. Through the first quarter of 2004, management has reported positive operating income of approximately $2.4 million on $144 million of total revenue. If there are no further adjustments and the new management team can put these investigations behind them, Fitch believes SIUH should be able to stabilize its financial profile and performance in the next 2-5 years. SIUH is a 694-staffed bed hospital with three campuses located in Staten Island, NY, one of five boroughs comprising New York City. SIUH had total operating revenue of $541.3 million in fiscal 2003. SIUH covenants to provide quarterly disclosure to Fitch and bondholders. Disclosure to Fitch has historically been sufficient; however with the recent events and severe audit adjustments, the final 2003 audit was not received until late May. To date, all debt service payments have been paid in full and on time. Debt service payments are made semiannually. In addition, the debt service reserve fund for each bond issue remains fully funded. Security for the bonds includes a gross revenue pledge and a mortgage. Outstanding debt: -- $17,200,000 New York City Industrial Development Agency Civic Facility Revenue Bonds, (Staten Island University Hospital Project), Series 2002C; -- $12,160,000 New York City Industrial Development Agency Civic Facility Revenue Bonds, (Staten Island University Hospital Project), Series 2001A; -- $20,000,000 New York City Industrial Development Agency Civic Facility Revenue Bonds, (Staten Island University Hospital Project), Series 2001B. STATER BROS.: S&P Upgrades Corporate Debt Rating to BB- from B+ --------------------------------------------------------------- Standard & Poor's Rating Services raised the corporate credit rating on Stater Bros. Holdings Inc. to 'BB-' from 'B+' and raised the rating on the company's 10.75% senior unsecured notes due 2006 to 'B' from 'B-'. In addition, a rating of 'BB-' was assigned to the company's proposed offering (via 144A with future registration rights) of $160 million floating rate senior notes due 2010, and to $525 million senior notes due 2012. Both new issues will be guaranteed by Stater's operating subsidiaries on a senior unsecured basis. Because the existing notes have no such guarantee, they are structurally subordinated and, therefore, are rated two notches below the corporate credit rating. The ratings outlook is stable. "The upgrade reflects the leading Southern California supermarket chain's significantly improved credit protection measures," said Standard & Poor's credit analyst Gerald Hirschberg. A major labor dispute involving three of Stater's principal competitors had a materially positive effect on the company's operations. While this resulted in windfall sales and earnings during the period of the strike (Oct. 11, 2003 through Feb. 28, 2004), sales following the strike have continued to be substantially higher. On a trailing- 12-month basis (ended March 31, 2004), total debt to EBITDA was 2.8x, versus 5.4x at the end of the Sept. 30, 2003 fiscal year. Moreover, EBITDA coverage of interest was 2.9x, compared with 1.7x for the fiscal year, and cash increased by $37 million, to $148 million. Proceeds from the new debt issues will be used to retire the existing $438 million 10.75% senior unsecured debt, to prefund a new $200 million distribution facility in California, and to pay a $45 million dividend to La Cadena Investments, Stater's sole shareholder. After giving effect to the offering and the repayment of the existing notes, debt will increase on an absolute basis. However, Standard & Poor's expects that Stater Bros. will retain at least a small portion of the market share it gained during the strike, and that its sales and EBITDA will be at higher level in the future. The ratings on Stater Bros. reflect the company's leveraged capital structure, relatively thin cash flow coverage of interest, and the impact that an aggressive "everyday low pricing" strategy has on operating margins. These risks are somewhat mitigated by the company's leading regional position in an industry with generally good business characteristics. Stater Bros. has the leading market position in the Inland Empire region of Southern California, which comprises Riverside and San Bernardino counties. Its primary competitors in that region (where Stater has 89 of its 158 supermarkets) are Albertson's Inc., Vons (Safeway Inc.), and Ralph's Grocery Co. (Kroger Co.). Despite the weakened U.S. economy, the company's same-store sales increased 2.8% in fiscal 2003, 5.3% for fiscal 2002, and 4.5% in fiscal 2001. Its lease-adjusted operating margin improved to 4.8% in 2003 from 3.7% in 2000. Stater Bros. was a material beneficiary from the grocery clerk's strike in California, as it had previously agreed to abide by any contract that was signed. As a result, fiscal 2004 first-half sales grew 48% and EBITDA expanded 186%. Sales comparisons have continued to be very positive, and even if Stater were to experience some softening, its credit measures for the fiscal year should still be much improved over historical levels. STERLING FINANCIAL: Completes StoudtAdvisors Acquisition -------------------------------------------------------- Sterling Financial Corporation (Nasdaq: SLFI), a family of financial services organizations, announced that it has completed its acquisition of StoudtAdvisors, a Lancaster-based employee benefits consulting and brokerage firm. Sterling Financial expects the transaction to be accretive in the first full year of operations and financial terms of the transaction were not disclosed. Incorporated in 1989, StoudtAdvisors provides benefit products and benefit consulting services to medium and large-sized businesses in the Central Pennsylvania region. StoudtAdvisors consists of three divisions, StoudtAdvisors (employee benefits insurance consulting and brokerage services), CapRisk (a national entity providing financial protection to employers who self-fund their medical, dental and prescription plans), and the Lancaster Chamber Health Plan (a joint partnership with the Lancaster Chamber of Commerce which includes over 1,200 employer groups in Lancaster County). "The addition of StoudtAdvisors to the Sterling Financial organization is significant," said J. Roger Moyer, Jr., President and Chief Executive Officer of Sterling Financial. "Expanding our insurance services capabilities is an important component in our vision of building a comprehensive financial services organization. Through the service and expertise of StoudtAdvisors, our ability to deliver insurance solutions to our individual and business customers is enhanced." Sterling Financial is anticipating that the reach of StoudtAdvisors will expand into the larger Sterling market. "StoudtAdvisors is currently in the center of our market geographically and they hold a dominant market share position in Lancaster County," said Moyer. "Our goal is to take the StoudtAdvisors platform and expand it to all of our other markets." Added growth and opportunities played a significant role in StoudtAdvisors' decision to join Sterling, according to David Stoudt, President of StoudtAdvisors. "The Sterling footprint is much bigger than ours," said Stoudt. The growth potential for the services we provide is substantial because of Sterling's presence and quality reputation in different markets. We will be able to bring employee benefits solutions to customers who already rely on Sterling for many of their other financial solutions." Stoudt also sees the affiliation with Sterling Financial as beneficial to StoudtAdvisors' customers as well. "What excites us is that we will be able to better serve our clients in the next chapter of employee benefits," said Stoudt. "We believe our customers want a trusted advisor who can handle all of their needs or who can provide the resources to meet their needs. Through our affiliation with Sterling Financial, we believe we can fill that role." Kenneth Stoudt, founder and Chief Executive Officer of StoudtAdvisors, and David Stoudt will play key roles in Sterling Financial's insurance solutions segment. "Ken, Dave and their team bring a wealth of experience in providing insurance solutions to their clients," said Moyer. "Both Ken and Dave will be actively involved in the direction and management of StoudtAdvisors as well as in the overall insurance strategy for Sterling Financial." M&A Advisory Group, LLC acted as financial adviser to Sterling Financial and Shumaker Williams, P.C. acted as its legal counsel. WFG Capital Advisors, LP acted as financial adviser to StoudtAdvisors, and Barley, Snyder, Senft and Cohen, LLC acted as its legal counsel. About the Company Sterling Financial Corporation is a family of financial services organizations that operates 56 banking locations in south central Pennsylvania, northern Maryland, and northern Delaware, through its subsidiary banks, Bank of Lancaster County, N.A., Bank of Hanover and Trust Company, First National Bank of North East, Bank of Lebanon County, PennSterling Bank, and Delaware Sterling Bank. As of March 31, 2004, total assets of Sterling Financial Corporation were over $2.3 billion. In addition to its banking affiliates, Sterling's affiliates include Town and Country Leasing, LLC, Lancaster Insurance Group, LLC, StoudtAdvisors, Equipment Finance LLC, a specialty commercial finance company, Sterling Financial Settlement Services, Sterling Financial Trust Company and Church Capital Management (a Registered Investment Advisor), with combined assets under management of $1.7 billion, and Bainbridge Securities, a securities broker/dealer. * * * As previously reported, Fitch Ratings affirmed its ratings of Sterling Financial Corporation following the company's announcement that it has entered into a definitive agreement to acquire Klamath First Bancorp, Inc. KFBI, with approximately $1.5 billion in assets, is the holding company for Klamath First Federal Savings and Loan Association, a savings and loan operating branches in Oregon and Washington. Ratings Affirmed: Sterling Financial Corporation -- Long-term Issuer 'BB'; -- Short-term Issuer 'B'; -- Individual Rating 'C'; -- Support '5'; -- Rating Outlook Stable. STRATUS SERVICES: Reports Unauthorized Berlin Stock Listing ----------------------------------------------------------- Stratus Services Group, Inc., the SMARTSolutions(TM) Company (OTC Bulletin Board: SERV.OB), announced it has become aware of an unauthorized listing of its common stock on the Berlin Stock Exchange. Officials became suspicious that the company may have been targeted for naked shorting due to the unregulated nature of the Berlin Exchange. After investigation including a determination that several other companies were subjected to the same action, the company began an inquiry and learned of the improper and unauthorized actions this week. Stratus has instituted a plan to address the negative impact of un-regulated naked shorting on the company's reputation and stock price. First, Stratus, through its attorneys, will investigate the source of the listing on the Berlin Stock Exchange to determine who initiated the listing application and whether such actions, without authorization, violated securities laws of the United States and Germany. Second, the company, through its attorneys, will investigate the available remedies within German securities laws as well as the appropriateness of forcing the immediate removal of any listing for sale or purchase of shares of Stratus from the Berlin Stock Exchange. Finally, the company will solicit cooperation with other companies similarly situated and seek a unified effort to protect themselves. About the Company Stratus is a national provider of business productivity consulting and staffing services through a network of twenty-seven offices in seven states. Through its SMARTSolutions(TM) technology, Stratus provides a structured program to monitor and reduce the cost of a customer's labor resources. Through its Stratus Technology Services, LLC joint venture, the Company provides a broad range of information technology staffing and project consulting. As reported in the Troubled Company Reporter's March 25, 2004 edition, at December 31, 2003, Stratus Services Group, Inc. had limited liquid resources. Current liabilities were $23,601,396 and current assets were $15,806,407. The difference of $7,794,989 is a working capital deficit, which is primarily the result of losses incurred during the years ended September 30, 2003, 2002 and 2001. Current liabilities include a cash overdraft of $349,179, which is represented by outstanding checks. These conditions raise substantial doubts about the Company's ability to continue as a going concern. The Company's continuation of existence is dependent upon the continued cooperation of its creditors, its ability to generate sufficient cash flow to meet its continuing obligations on a timely basis, to fund the operating and capital needs, and to obtain additional financing as may be necessary. STRUCTURED ASSET: Fitch Assigns Low-Bs to Two 2004-12H Classes -------------------------------------------------------------- Structured Asset Securities Corporation (SASCO) $168.5 million mortgage pass-through certificates, series 2004-12H classes 1A1, 2A, 1A-IO, 1A-PO, and R certificates are rated 'AAA' by Fitch. The $1.4 million class 1B1 and the $258,000 class 2B1 certificates are rated 'AA', the $1.2 million class 1B2 and the $218,000 2B2 certificates are rated 'A,' and the $956,000 class B3 certificates are rated 'BBB'. Additionally, the $522,000 class B4 certificates are rated 'BB' and the $261,000 class B-5 certificates are rated 'B' by Fitch and are being offered privately. The 'AAA' rating on the Group 1 (1A1, 1A-IO, 1A-PO and R) senior certificates reflects the 3.05% total credit enhancement provided by the 0.95% class 1B1, the 0.80% class 1B2, the 0.55% class B3, the 0.30% privately offered classes B4, the 0.15% privately offered classes B5 and the 0.30% class B6 certificates (not rated by Fitch). The 'AAA' rating on the Group 2 (2A) senior certificates reflects the 3.05% total credit enhancement provided by the 0.95% class 2B1, the 0.80% class 2B2, the 0.55% class B3, the 0.30% privately offered classes B4, the 0.15% privately offered classes B5, and the 0.30% privately offered class B6 certificates (not rated by Fitch). Fitch believes that the amount of credit enhancement will be sufficient to cover credit losses, including limited bankruptcy, fraud and special hazard losses. In addition, the ratings reflect the quality of the mortgage collateral, the strength of the legal and financial structures, and the master servicing capabilities of Aurora Loan Services, Inc., which is rated 'RMS2+' by Fitch. The Group 1 certificates represent ownership interest in a trust fund that consists primarily of a pool of 30 year fixed rate, conventional, first lien, residential mortgage loans. As of the cut-off date (May 1, 2004), the mortgages in Pool 1 have an aggregate principal balance of approximately $146,645,476, a weighted average original loan-to-value ratio (OLTV) of 101.89%, a weighted average coupon (WAC) of 6.619%, a weighted average remaining term (WAM) of 352 months and an average balance of $125,017. The loans are primarily located in Virginia (6.49%), Florida (5.13%), Ohio (4.67%), and Georgia (4.43%). As of the cut- off date, the mortgages in Pool 2 have an aggregate principal balance of approximately $27,194,946, a weighted average OLTV of 102.17%, a WAC of 6.529%, a WAM of 353 months and an average balance of $175,451. The loans are primarily located in Maryland (20.63%), North Carolina (14.16%) and Kansas (5.28%). None of the mortgage loans are 'high cost' loans as defined under any local, state or federal laws. The mortgage loans were originated by various originators or acquired by various originators or their correspondents in accordance with such originator's respective underwriting standards and guidelines. Approximately 94.58% of the mortgage loans in Pool 1 and 10.86% of the mortgage loans in Pool 2 were originated or acquired in accordance with the Borrower Advantage Underwriting Guidelines. Approximately 5.42% of the mortgage loans in Pool 1 and 89.14% of the mortgage loans for Pool 2 were originated or acquired in accordance with the Pro Mortgage Underwriting Guidelines. The largest percentage of servicers for the mortgage loans in Pool 1 is as follows: 30.73% Aurora Loan Services, Inc., 26.80% Wells Fargo Home Mortgage, Inc., and 17.23% Sun Trust Mortgage Inc. The remainder of the Pool 1 mortgage loans will be serviced by various other servicers. Aurora will service all of the Pool 2 mortgage loans. SASCO, a special purpose corporation, deposited the loans in the trust, which issued the certificates. For federal income tax purposes, an election will be made to treat the trust fund as multiple real estate mortgage investment conduits (REMICs). SUPERIOR GALLERIES: Strained Liquidity Raises Going Concern Doubt ----------------------------------------------------------------- Superior Galleries Inc. is primarily a wholesaler, retailer and auctioneer of rare coins. The Company is based in Beverly Hills, California. The Company, from time to time, enters into joint ventures or purchase financing agreements with third parties that include vendors and customers for the purchase and sale of specific rare coins or fine collectibles. These agreements may include profit sharing provisions ranging from 25% to 50% of the gross profit on specific transactions adjusted for agreed upon expenses and interest costs. At any given time, the Company may be involved in up to 10 of these agreements. The Company has sustained recurring operating losses, negative cash flows from operations, significant debt that is callable by the creditor at any time, and has limited working capital. These items raise substantial doubt about the Company's ability to continue as a going concern. Management has indicated that it is currently engaged in reversing or solving these significant issues through the implementation of its turnaround plan. In November 2002, the Company began to execute a plan of exiting the art business with exception of art auctions on a consignment basis to reduce losses in its operations. This plan included the reduction of five employees, which was completed in January 2003, the reduction of sales, marketing and administrative expenses associated with the art business segment and the liquidation of its art inventory by June 30, 2003. With the sale of its art inventory in October 2003, the Company completed its exit of the art business segment. The Company is planning to increase its retail rare coin sales force and has established targeted sales and marketing budgets to assist in growing its retail rare coin business. There can be no assurance that the Company will be successful in growing this part of its business. The Company has reorganized and streamlined its structure in its efforts to return to a profitable state with positive cash flows. Superior consolidated all operations into one corporate entity and eliminated duplicative financial and operational systems to further control and reduce expenditures. These consolidation efforts included the combination of all operations with the exception of retail rare coins sales activities to the Beverly Hills location that occurred in February 24, 2003. In September 2003, the retail rare sales activities were transferred to Beverly Hills and the Newport Beach location was permanently closed. This operational consolidation has resulted in the elimination of duplicated finance, inventory control, administration, sales, marketing and auction activities at the Newport Beach location. Separate information systems for operations and finance were eliminated as part of the consolidation. Effective January 1, 2003 the Company has out- sourced all payroll, employee benefits and human resources administration to a professional employer organization. The Company is exploring opportunities to reduce its occupancy costs at its Newport Beach location prior to the lease termination on September 30, 2004. Both the exit of the art business and the consolidation of operations have reduced related insurance and administrative costs. The consolidation of operations into one location has allowed for enhanced coordination of all business activities and provided better control of costs. The operational consolidation has facilitated the coordination of sales and marketing efforts and expenditures, as the Company is promoting itself as one entity, rather than its parent and subsidiary. Through the renewed focus on both retail and wholesale rare coin sales with an emphasis on increased inventory turns while maintaining solid gross margins, management anticipates these activities will provide some of the liquid capital to fund operations. During the quarter ended March 31, 2004, the Company returned to profitability on a year-to-date basis. At March 31, 2004, Superior Galleries had a working capital deficiency of $552,833. The Company recorded net income of $195,407 and used cash in operating activities of $5,699,727 for the nine month period ending March 31, 2004. Given its March 31, 2004 cash balance of $254,861 and projected operating cash requirements, the Company anticipates that its existing capital resources may not be adequate to satisfy its cash flow requirements through June 30, 2005. The Company may require additional funding. Superior cash flow estimates are based upon achieving certain levels of sales and maintaining operating expenses at current levels. Should sales be less than forecast, expenses be higher than forecast or the liquidity not be available through financings of debt and/or equity, Superior may not have adequate resources to fund operations. The Company was in default under one of its lines of credit until September 30, 2003 when the Company renegotiated the line of credit with its creditor and cured the default. However, the line of credit is callable by the lender on demand, and although Superior is continuing to seek an agreement with the lender for extended payment terms, there is no guarantee the lender will agree to provide such extended terms. Management does not expect future fixed obligations through June 30, 2005 to be paid solely by cash generated from operating activities. The Company intends to satisfy fixed obligations from the following sources, among others: (i) additional debt/equity financings; (ii) extending vendor payments; and (iii)liquidation of inventory. TENET HEALTHCARE: Sells Barcelona Hospital to BC Partners --------------------------------------------------------- Tenet Healthcare Corporation (NYSE:THC) announced that a company subsidiary has sold Centro Medico Teknon, its 257-bed acute care hospital in Barcelona, Spain, and the company's only remaining international facility, to BC Partners Ltd. Net after-tax proceeds from the sale of the shares of New Teknon, S.A., owner of the hospital and related subsidiaries, are approximately $50 million, including an estimated $4.4 million in contingent payments. In addition, the buyer will assume approximately $31 million in long-term debt and other liabilities, and will retain the working capital. The company expects to use the proceeds for general corporate purposes. The Tenet subsidiary has owned and operated Centro Medico Teknon for 10 years. Funds advised by BC Partners Ltd, a United Kingdom- based company, own General Healthcare Group, one of the largest private hospital groups in Europe with 60 hospitals and more than 2,400 beds. The company also owns the leading hospital group in Switzerland, Hirslanden Group. Centro Medico Teknon is its first acquisition in Spain. Centro Medico Teknon was not among the group of 27 domestic hospitals that Tenet announced it was divesting on Jan. 28, 2004 as part of a major company restructuring. The 27 hospitals consist of 19 in California, two in Louisiana, three in Massachusetts, two in Missouri and one in Texas. On May 17, Tenet announced that a company subsidiary has signed a definitive agreement to sell the Texas hospital, Brownsville Medical Center, to Valley Baptist Health System. Negotiations for the sale of 25 of the remaining hospitals are ongoing. One of the California hospitals, a leased facility, is being returned to the hospital district that owns it. About the Company Tenet Healthcare Corporation, through its subsidiaries, owns and operates acute care hospitals and related health care services. Tenet's hospitals aim to provide the best possible care to every patient who comes through their doors, with a clear focus on quality and service. Tenet can be found on the World Wide Web at http://www.tenethealth.com/ * * * As reported in the Troubled Company Reporter's March 15, 2004 edition, Standard & Poor's Ratings Services lowered the corporate credit and senior secured bank loan ratings on health care service provider Tenet Healthcare Corp. to 'B' from 'B+', after the company announced the completion of its expected bank amendment. Tenet's unsecured notes are lowered to 'B-' from 'B+'. The bank loan is rated the same as the corporate credit rating. The ratings are removed from CreditWatch, where they were placed Jan. 28, 2004. The outlook is negative. The unsecured notes are lowered two notches, and are now rated one notch below the corporate credit rating. The two-notch downgrade reflects the structural subordination of the unsecured debt as a result of a guarantee now provided by certain subsidiaries for the credit facility as part of this latest bank amendment. The grant of subsidiary stock as security, though considered weak compared with a guarantee of hard collateral, still disadvantages unsecured creditors relative to bank creditors. "The lower ratings reflect Standard & Poor's reduced confidence in Tenet's prospects for operating performance and cash flow over the next year," said credit analyst David Peknay. "The expectations now incorporate probable credit protection measures commensurate with a lower rating." TESORO PETROLEUM: S&P Rates New $625MM Credit Facilities at BB -------------------------------------------------------------- Standard & Poor's Ratings Services said that it affirmed its 'BB-' corporate credit rating on crude oil refiner and marketer Tesoro Petroleum Corp. Standard & Poor's also assigned its 'BB' senior secured bank loan rating and a recovery rating of '1' to the company's $625 million bank credit facilities. The credit facilities consist of a $525 million three-year revolving credit facility due in June 2007 and a $100 million three-year prefunded letter of credit facility. The 'BB' rating on the credit facilities is one notch higher than the corporate credit rating and the '1' recovery rating indicates a very high expectation of full recovery of principal in the event of a default. The outlook is positive. As of March 31, 2004, the San Antonio, Texas-based company had about $1.6 billion of debt outstanding. "The positive outlook reflects the likelihood Tesoro will be able to substantially reduce its debt burden over the next few quarters," said Standard & Poor's credit analyst John Thieroff. "The ratings on Tesoro will likely be raised if the company achieves $300 million of debt reduction during the near term." The ratings on Tesoro reflect its position as a highly leveraged, independent oil refiner and marketer operating in a very competitive, erratically profitable industry burdened by high fixed costs. These weaknesses are partly offset by strong asset quality, advantaged operating locations, and a limited degree of retail-derived margin stability. Tesoro owns and operates six refineries of varying complexity (total throughput capacity 559,000 barrels per day) and a network of 575 retail gasoline stations and convenience stores in the western U.S. TOWER AIR: Bankruptcy Court Won't Help Ernst & Young Escape ----------------------------------------------------------- The Honorable Joel B. Rosenthal declined Ernst & Young's invitations to disrupt multi-million-dollar litigation brought by Charles A. Stanziale, Jr., serving as the chapter 7 trustee for the bankruptcy estate of Tower Air, Inc., in Maryland state court against the auditing and accounting firm. As previously reported in the Troubled Company Reporter, Mr. Stanziale has sued Ernst & Young in Baltimore -- using the same law firm, in the same court and before the same judge involved in the Merry-Go-Round Trustee's lawsuit a couple of years ago against E&Y. Pursuant to a Bankruptcy Court order dated January 13, 2003 (Docket. No. 1653), Tower Air's Estate participates as a beneficiary together with certain pre-petition creditors of Tower Air, Inc., in the Tower Air, Inc., Litigation Trust. The purpose of the Tower Air, Inc. Litigation Trust was to investigate and pursue possible causes of action concerning certain action and/or inactions of Ernst & Young, LLP, Tower's former independent auditors, financial consultants and tax advisors, to consolidate all claims and, if warranted, to file a lawsuit for damages against E&Y. E&Y asked Judge Rosenthal to revisit Judge Newsome's approval of the Litigation Trust that allowed Mr. Stanziale to join forces with the creditors and provided $350,000 of funding to pursue the litigation. E&Y urges the Bankruptcy Court, on reconsideration, that Mr. Stanziale never obtained standing to pursue the litigation or, just as good, vacate the order approving the Litigation Trust. The reconsideration request, Judge Rosenthal says, is untimely 15 months after the fact. Moreover, Judge Rosenthal says, E&Y brings nothing new to the Bankruptcy Court -- no new fact, no newly discovered evidence and no significant change in the law. The Litigation Trust will remain intact. $412 Million Lawsuit Filed The Tower Air Litigation Trust instituted a lawsuit against E&Y on the basis of fraud, fraudulent concealment, negligence and malpractice and negligent misrepresentation which is pending in the Circuit Court for Baltimore County in the State of Maryland (Case No. C-03-2201). E&Y served as the independent auditor for Tower Air, Inc., almost from the inception of Tower and from time to time served as financial consultant and tax advisor to Tower. The matter is presently scheduled for trial before the Maryland Court in October 2004. The Tower Air Litigation Trust is looking for a judgment totaling: $103,000,000 in compensatory damages; and 309,000,000 in exemplary or punitive damages. ------------ $412,000,000 Pursuant to the terms of the Tower Air, Inc. Litigation Trust, the Debtor's Estate would receive 50% of the net recovery from this action. The Lawsuit Survives E&Y, represented by David H. Botter, Esq., at Akin Gump Strauss Hauer & Feld LLP, isn't preparing to write a check any day soon. E&Y has moved to dismiss the lawsuit in the Baltimore Court, arguing that Mr. Stanziale doesn't have standing to proceed. As the chapter 7 trustee, he is Tower Air for all intent and purpose. The U.S. Supreme Court's teaching in Caplin v. Marine Midland Grace Trust Co., 406 U.S. 416 (1972), E&Y argues, makes it clear that a bankruptcy trustee can't sue third parties on behalf of creditors. Judge Rosenthal says he won't rule on the standing issue. That's for the court in the Baltimore to examine. Tower Air's at Fault E&Y says Tower Air and its directors and officers misled and defrauded it. Because Tower Air was a co-conspirator, E&Y holds contribution claims against the Estate. In order to file a Third Party Complaint against the Estate and the Trustee, E&Y went back to the Bankruptcy Court in Wilmington asking Judge Rosenthal to lift the automatic stay to permit that complaint to be filed. That request, Judge Rosenthal says, is premature. The Trustee may never obtain a judgment so there's no need to put the Trustee in the position of defending against hypothetical claims at this juncture. * * * Tower Air sought chapter 11 protection on February 29, 2000, in the United States Bankruptcy Court for the District of Delaware (Case No. 00-1280). From February 29, 2000 to May 3, 2000, Tower, as a debtor-in-possession, operated as a full-service international and domestic airline carrier until Tower abruptly ceased (without prior notice) scheduled passenger service in early May 2000. Morris Nachtomi, the founder and chief executive officer of Tower continued to operate and manage Tower as a DIP as he did since the inception of Tower. On or about May 3, 2000, the Bankruptcy Court entered an order authorizing the appointment of a chapter 11 trustee. During the DIP phase of the chapter 11, a tremendous amount of chapter 11 administrative debt was incurred by the DIP while operating the Debtor's business and that debt remained unpaid. The DIP never filed Schedules, a Statement of Financial Affairs, nor chapter 11 monthly operating reports. On or about May 5, 2000, Mr. Stanziale was appointed as chapter 11 trustee for Tower. Upon the appointment of the Trustee on or about May 5, 2000, Mr. Nachtomi left the JFK premises of Tower and vacated his position as chief executive officer. The Trustee scaled back the operations of the airline and significantly reduced the workforce. The Trustee maintained a limited amount of flight activity through the charter business and the CRAF program by virtue of the military contracts Tower serviced in order to preserve the value of Tower as a going concern. Additionally, by maintaining limited flight activity, the Trustee attempted to preserve the value of the flight operating certificates in order to pursue a Sec. 363 sale of certain assets of Tower and maximize a recovery to the Debtor's Estate. By September 2000, the primary secured creditor (GMAC Business Credit, LLC) funding Tower in the chapter 11 case was unwilling to fund further flights operations. Consequently, the Trustee ceased all flight activity in mid- September 2000. Effective December 20, 2000, the Debtor's chapter 11 case was converted to a case under chapter 7. The Trustee was selected to serve and remain on as the chapter 7 trustee for Tower. From December 20, 2000 until June 2001, the Trustee operated the chapter 7 case of Tower pursuant to a Sec. 72l order [Docket No. 976] in order to effectuate an orderly liquidation of the Debtor's assets and wind down the affairs of the airline. Effective June 1, 2001, the primary pre-petition secured creditor and post petition financier, GMAC Business Credit, LLC advised the Trustee that it would no longer allow the use of cash collateral to fund the operating chapter 7 case, and the Trustee was forced to terminate the skeleton crew remaining at Tower and close the Debtor's doors at JFK. On June 15, 2001, the Trustee conducted a public auction of the fixtures and furniture of Tower at the JFK location. As of June 30, 2001, the Trustee liquidated all of the hard assets of Tower Air, Inc. that were located at JFK International Airport and vacated the premises of Tower at JFK International Airport. TRANSMONTAIGNE INC: S&P Lowers Ratings to BB- & Removes Watch ------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on terminaling company TransMontaigne Inc. (TMG) to 'BB-' from 'BB' and removed the ratings from CreditWatch with negative implications where they were placed on March 26, 2004. The outlook is now negative. Colorado-based TMG had $385 million of debt as of March 31, 2004. "The rating actions follow a review of TMG's historic and prospective financial performance and its current business model," noted Standard & Poor's credit analyst Paul B. Harvey. "In Standard & Poor's opinion, a rise in refined product prices has led to aggressive borrowing on the company's working-capital facility, weakening TMG's financial flexibility, increasing the capital intensity of the company's business, and raising debt leverage," he continued. Although TMG strengthened its financial profile modestly during the quarter ended March 31, 2004, liquidity and financial performance measures remain well-below Standard & Poor's expectations and are not expected to reach such expectations in the near term. Further increases in debt leverage or a weakening of the company's profitability or cash flow could provoke an additional ratings downgrade. The negative outlook reflects TMG's aggressive debt leverage and weaker-than-expected cash flow coverage measures. A worsening of the company's liquidity or traditional credit measures could lead to further negative rating actions. ULTRA MOTORCYCLE: Trustee Selling Unissued Shares for $15,000 ------------------------------------------------------------- The chapter 7 trustee, overseeing the liquidation of Ultra Motorcycle Co.'s estate, has received a $15,000 cash offer from IMA Advisors, Inc., for all right, title and interest in and to all of the company's authorized but unissued shares of capital stock. The Trustee asks the U.S. Bankruptcy Court to approve the transaction. The Bankruptcy Court will review the offer at a hearing on June 10, 2004, in Riverside, Calif., and the transaction is expected to close on June 16. Ultra Motorcycle Co. was a leading designer, manufacturer and distributor of high-quality, American-made heavyweight cruiser motorcycles. As previously reported in the Troubled Company Reporter, the company filed for chapter 11 protection in 2001 (Bankr. C.D. Calif. Case No. RS01-18794 MG) when its secured creditor, Finova Mezzanine Capital Inc., threatened a foreclosure sale. The chapter 11 filing halted the foreclosure. The case, however, converted to a chapter 7 liquidation proceeding in Nov. 2001. Robert S. Whitmore in Riverside, Calif. (Telephone 909-267- 9292), serves as the Chapter 7 Trustee. SJS Entertainment Corp. purchased substantially all of Ultra's operating assets. UNIFAB INTERNATIONAL: Receives Delisting Notice from Nasdaq Market ------------------------------------------------------------------ UNIFAB International, Inc. (NASDAQ: UFAB) reports that it has received notice that its common stock will be delisted from the NASDAQ SmallCap Market because the company does not comply with NASDAQ's financial requirements for listing. "Our company does not meet the NASDAQ market capitalization requirement, the stockholders' equity requirement or the requirement for net income from operations," said William A. Hines, the principal executive officer of UNIFAB. "We do not anticipate that UNIFAB will meet any of those requirements in time to prevent our delisting from the NASDAQ SmallCap Market. We have been notified that the NASDAQ may take final action on or around June 16, 2004." The Company anticipates that following delisting of its common stock from the Nasdaq SmallCap Market shares of its common stock may be traded from time to time in the over the counter market. About the Company UNIFAB International, Inc. is a custom fabricator of topside facilities, equipment modules and other structures used in the development and production of oil and gas reserves. In addition, the Company designs and manufactures specialized process systems and refurbishes and retrofits existing jackets and decks. As reported in the Troubled Company Reporter's April 7, 2004 edition, UNIFAB International, Inc. (NASDAQ: UFAB) reports, as required by Nasdaq Marketplace Rule 4350(b), that the Company's independent auditor issued its audit report on the Company's financial statements for the year ended December 31, 2003. The report includes a "going concern qualification," which is an explanatory paragraph relating to the Company's ability to continue as a going concern, and states that the Company's recurring losses from operations, negative working capital position, and difficulties in meeting its financial obligations and funding its operations raise substantial doubt about the Company's ability to continue as a going concern. The qualification is due, in part, to the Company's dependence upon Midland Fabricators and Process Systems, LLC, its majority shareholder, for its working capital requirements. Under an informal arrangement with the Company, Midland has agreed to provide financial support and funding for working capital or other needs at Midland's discretion, from time to time. During the year ended December 31, 2003, Midland advanced $5.9 million to the Company for working capital, which is classified as a current liability at December 31, 2003. If Midland does not make available such additional funding to the Company when needed in the future, the Company could be unable to satisfy its working capital requirements and meet its obligations in the ordinary course of business. UNITED AIRLINES: Rejecting N344UA & N345UA Aircraft Leases ---------------------------------------------------------- The United Airlines Inc. Debtors seek the Court's authority to reject the leases for two Boeing 737-322s bearing Tail Nos. N344UA and N345UA. The Debtors signed term sheets with U.S. Bank, as mortgagee, to revise the financing terms for these aircraft. However, the Term Sheets expired and the parties disputed the enforceability of the expirations. Discussions reached an impasse and the Debtors realized that they had an excess supply of this type of aircraft. To facilitate the surrender of the aircraft to U.S. Bank, the Debtors will reject the leases and return all related records, logs and documents. The Debtors will deliver the aircraft to Timco Aviation Services, in Goodyear, Arizona, while maintaining storage, maintenance and insurance programs. U.S. Bank has asserted an administrative expense claim for the Debtors' use of the aircraft after the Petition Date. U.S. Bank agrees that the Claim will be compromised as a prepetition, general, unsecured claim for $14,584,113 per aircraft, or $29,168,226 in total, and includes rejection damages. James H.M. Sprayregen, Esq., at Kirkland & Ellis, explains that the leases are burdensome to the Debtors' estates. The lease rates exceed current market rates for comparable aircraft. The payment obligations outweigh the benefits that the Debtors receive from possessing and using the Aircraft. Moreover, the Debtors and the U.S. Bank have been unable to agree on terms that would allow the retention of the Aircraft on economically agreeable terms. Committee Responds The Official Committee of Unsecured Creditors supports any decision that will enable the Debtors' fleet to fit within the physical and economic structure necessary for a successful reorganization. However, the Committee is opposed to transactions that further the interest of the Chapman Group. Fruman Jacobson, Esq., at Sonnenschein, Nath & Rosenthal, explains that the Committee wants to be sure that its rights are reserved to object to any final agreement with the Chapman Group. 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) WEIGHT LOSS FOREVER: Going Concern Ability is in Doubt ------------------------------------------------------ Weight Loss Forever International, Inc. is a franchisor of weight loss and nutrition retail clinics offering all-natural herbal dietary supplements. It operates through two wholly-owned subsidiaries, Weight Loss Management, Inc. and Beverly Hills Franchising Corp. In the fourth quarter of 2003, the Company made an investment into Tammy Phillips Boot Camp, LLC, acquiring a 50% interest for investment purposes, and its management is still deciding whether or not the investment will be held long term. The Company sells its proprietary Weight Loss Forever and Beverly Hills Weight Loss & Wellness systems to the public through franchised centers and clinics. Its proprietary systems consist of supplementing daily food intake with formulations of specialty herbs developed to produce a gradual but steady and persistent loss of body fat. Its proprietary products are manufactured for the Company to its specifications. The Company also sells food bars, shakes, cereals, puddings and soups that are high in protein. The products are privately labeled for Weight Loss Forever. The Company's franchisees support clients in reaching weight loss goals not only through sale of products, but also through a computerized follow-up program providing weekly (and sometimes daily) personal support by telephone, fax, e-mail or in person at Company centers and clinics. Management believes that personal contact serves to reinforce the commitment to stay on the program, answers questions, and overcomes hurdles by providing first-hand information, experience, menu guidance, analysis of eating habits, and other tips for successful weight loss. The Tammy Phillips Fitness Boot Camp is a program designed around cardio-strength training, flexibility training, and nutritional counseling. The Company's consolidated financial statements have been presented on a going concern basis which contemplates the realization and the satisfaction of liabilities in the normal course of business. The liquidity of the Company has been adversely affected by significant losses from operations. The Company reported net losses of $1,398,289 and $76,310 for the years ended December 31, 2003 and 2002, respectively. Additionally, there is a working capital deficit of $335,685 at December 31, 2003. These conditions raise substantial doubt about the Company's ability to continue as a going concern without additional capital contributions and/or achieving profitable operations. Management's plans are to generate revenue from the sale of new franchises and to raise additional capital through either debt or equity instruments. WORLDCOM INC: Objects to 94 Mechanic's Lien Claims Totaling $21MM+ ------------------------------------------------------------------ The Worldcom Inc. Debtors dispute 94 mechanic's lien claims totaling $21,113,660 for either of these reasons: (a) The Claimant failed to provide adequate Notice/Warning Statement, as required by state law; (b) The Claimant failed to timely file a lien; (c) The Claimant failed to attach sufficient supporting documents; (d) The Claimant failed to timely prosecute a lien; (e) The Claimant does not have lien rights, as supplied services and materials were not incorporated into the job; (f) The Claimant is not entitled to file a lien; (g) The Claimant is not a properly licensed contractor as required by state law; (h) The Claimant failed to identify the alleged collateral securing the debt asserted, does not attach evidence that the alleged secured claim is properly perfected, and does not set forth the value of the alleged collateral; (i) The lien statement is not properly notarized and verified, as required by state law; (j) The lien statement is not sufficiently itemized; (k) The Claimant waived the right to file a lien; (l) The charges asserted in lien are not properly lienable, pursuant to state law; (m) The lien has no value; (n) The lien has been satisfied; (o) The claim is a duplicate claim; (p) The lien is improperly served; (q) The Claimant provided insufficient information in the lien; (r) The lien is not properly recorded; (s) The lien is discharged, pursuant to bond filing in a state action; and (t) The Debtors have no legal or equitable interest in the real property; (u) The Claimant has no valid basis for the claim; and (v) The Debtors dispute the amount asserted in lien. Thus, the Debtors ask the Court to disallow and expunge the Mechanic Lien's Claims in their entirety. * * * Judge Gonzalez expunges 11 claims due to the claimants' failure to respond to the Objection: Claimant Claim No. -------- --------- AC Systems Inc. 22374 Admiral Heating & Ventilating Inc. 9951 CMT Construction Management 17002 Construction Remedies Corp 7749 Douglas Roofing Co. 16022 Interior Systems, Inc. 11202 Manuel Brothers d/b/a Renaissance Center 28791 Midwest Mechanical Contractors 13407 OWP&P Engineers Inc. 31647 The Poole & Kent Company 15931 West-Fair Electric Contractors, Inc. 1496 Furthermore, 10 proofs of claim are also expunged: Claimant Claim No. -------- --------- Centerline Electric, Inc. 16601 16603 The Dailey Company 7759 7771 7783 7770 7769 7787 Merlyn Contractors, Inc. 16567 WH Canon, Inc. 11164 The Debtors have settled these claims: A. Pursuant to a letter agreement September 18, 2003, Amber Electrical Contractors and the Debtors agree that: (a) Amber's Claim No. 3034 for $37,022 will be allowed as a secured claim; and (b) Amber will release any and all liens related to the property located at One Main Place, 1201 Main Street, in Dallas, Texas. B. Pursuant to a letter agreement dated October 2, 2003, Aztech's Claim No. 7869 will be allowed as a secured claim for $219,509. Aztech agrees to release any and all liens related to the property located at 6906 South 204th Street, in Kent, Washington, when the Debtors have paid the claim. C. Pursuant to a letter agreement dated October 7, 2003, Bergelectric Corporation and the Debtors agree that: (a) Bergelectric's Claim No. 11255 for $17,881 will be allowed as a secured claim; (b) Bergelectric will withdraw Claim No. 33989; and (c) Bergelectric will release any and all liens related to the property located at 1501 Francisco Street, in Los Angeles, California. D. Pursuant to a letter agreement dated October 7, 2003, Communication Contractors, Inc., and the Debtors agree that: (a) Communication's Claim No. 16778 will be allowed as a secured claim for $104,842 and as a general unsecured claim for $25,974; and (b) Communication will release any and all liens related to the property located at 35 and 36 East 136th Street, in Riverdale, Illinois. E. Pursuant to letter agreements dated October 1 and 9, 2003, the Debtors agree to allow Claim No. 11458 by DPR Construction, Inc., as a secured claim for $31,252. DPR's Claim No. 11456 for $78,350 will be reclassified as a general unsecured claim. DPR agree to release any and all lien interest related to the properties located at 903 113th Street, in Arlington, Texas, and at 3701 East Columbia, in Tucson, Arizona. F. Gowan, Inc., and the Debtors agree that Gowan's Claim Nos. 4728 and 4727 will be reclassified as general unsecured claims. Gowan will release any and all liens related to the properties located at Two Shell Plaza, Level 23, in Houston, Texas, and at 1701 Lyons, in Houston, Texas. G. Pursuant to a letter agreement dated October 7, 2003, Graco Mechanical and the Debtors agree that Graco's Claim No. 9423 for $39,370 will be allowed as a secured claim. Graco's Claim No. 9344 for $38,563 will also be allowed as a secured claim. Graco will also release any and all liens related to property located at 600 Travis, in Houston, Texas and property located at 5444 West Heimer, in Houston, Texas. H. J. Fletcher Creamer & Son, Inc., and the Debtors agree that Fletcher's Claim No. 3723 for $18,825 will be reclassified as a general unsecured claim for $18,825. Fletcher's Claim No. 3724 for $37,985 will also be reclassified as a general unsecured claim for $37,985. Fletcher will release any and all liens related to the properties located in: (a) Jersey City, New Jersey, on a right-of-way or easement located at Henderson Avenue between 18th Street and the railroad tracks, south of Observer Boulevard; and (b) Linden, New Jersey. I. Pursuant to a letter agreement dated September 22, 2003, Johnson Controls, Inc., and the Debtors agree that: (a) Johnson Control's Claim No. 31986 will be reclassified as a general unsecured claim for $57,586; (b) Claim Nos. 31983, 31984, 31985, 13424, 13423, and 13422 will be expunged and disallowed by the Debtors; and (c) Johnson Controls will release any and all liens related to the claims. J. Pursuant to a letter agreement dated October 7, 2003, the Debtors agree that Claim No. 11694 filed by M.A. Mortenson Co. for $100,877 will be allowed as a secured claim for $100,000. Mortenson will waive the remaining $877. Mortenson will release any and all liens related to the property at 1150 West 3rd Street, in Cleveland, Ohio. K. McLaughlin Construction Co. and the Debtors agree that McLaughlin's Claim No. 3819 for $147,831 will be allowed as a secured claim. McLaughlin will release any and all liens related to the property located at 4110 1/2 West Sam Houston Parkway, in Houston, Texas. L. Murphy Company and the Debtors agree that: (a) Murphy's Claim No. 3306 for $18,594 will be allowed as a secured claim for $16,437 with the remaining balance being waived by Murphy; (b) The allowance of Claim No. 3306 is contingent on Hoffman Construction Co.'s Claim No. 12332 being reduced by $18,594. The parties acknowledge that Claim No. 12332 includes the Murphy claim for $18,594; (c) Murphy will release any and all liens related to the property in Overland, Missouri; (d) Murphy's Claim No. 16594 for $18,185 will be allowed as a secured claim for $17,418 with the remaining amount of the claim being waived by Murphy; (e) Claim No. 16594 will only be paid to the extent that IFCM's Claim No. 4507 is reduced by $18,185. Claim No. 4507 includes the amount being asserted by Murphy in Claim No. 16594; and (f) Murphy will release any and all liens related to the property located on I-25 Frontage Road, Terry Bison Ranch, in Carr, Colorado. M. Sach Electric Company and the Debtors stipulate that: (a) Sach's Claim No. 23136 for $79,385 will be allowed as a secured claim for $70,240; (b) The $9,145 remaining amount of the claim will be waived; (c) Sach will release any and all liens related to the property at 720 Olive Street, in St. Louis, Missouri. N. Pursuant to a letter agreement dated September 4, 2003, T & K Roofing and Sheet Metal Co. and the Debtors agree that: (a) T & K Roofing's Claim No. 4569 for $22,885 will be allowed as a secured claim; and (b) T&K Roofing will release any and all liens related to the property at 185 SE 50th Avenue, in Cedar Rapids, Iowa. O. Alliance Fire Protection, Inc., and the Debtors agree that: (a) Alliance's Claim No. 16762 for $35,762 will be allowed as a secured claim; and (b) Alliance will release any and all liens related to the property in Willow Springs, Illinois and the property in Downer's Grove, Illinois. P. The Debtors' objections to Teng & Associates, Inc.'s Claim Nos. 600 and 601 are resolved. Q. Tishman Technologies Corp. and the Debtors agree to stipulate as to the claim treatment of Tishman's Claim No. 6548. The Joint Stipulation and Agreed Order will be submitted to the Court at a later date. The Debtors settled these claims pursuant to Joint Stipulation and Agreed Orders approved by the Court: Claimant Claim No. -------- --------- WH Canon, Inc. 11107 Albert Arno, Inc. 15628 West Star Electrical 19046 19047 19048 19049 19050 19051 19052 19053 19054 19055 The Debtors reserve their rights to object to 17 Claims. The hearing to consider the continued claims is adjourned to June 1, 2004: Claimant Claim No. -------- --------- Adco Electrical Corp. 15060 15061 Point to Point Communications 28386 28385 28384 28424 28426 28152 28148 28286 28912 28911 28910 28156 Thorne Associates, Inc. 22516 22517 Dynamic Cable Construction, LP 12222 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) * John D. Bond III to Lead Bradley Arant's New Charlotte Office --------------------------------------------------------------- Bradley Arant Rose & White LLP, headquartered in Birmingham, Alabama and the city's oldest and largest law firm, is opening an office in Charlotte, NC, one of the region's fastest-growing markets. Situated on the 26th floor of the Bank of America Corporate Center in downtown Charlotte, Bradley Arant's sixth office will be anchored by John D. Bond III, former President and General Counsel of J.A. Jones Construction. Bradley Arant's new Charlotte office will build upon one of the firm's key strengths - its Construction and Procurement Practice Group - which is well-known throughout the industry and which has a national and international reputation. Bradley Arant currently represents many of the top construction companies in the United States as ranked by Engineering News Record, including BE&K; Brasfield & Gorrie; Caddell Construction; Chicago Bridge & Iron; Clark Construction Group; B.L. Harbert International; Hoar Construction; Kvaerner Power, Inc.; Kvaerner U.S. Inc.; Robins & Morton, and Washington Group, International. Clients also include leading owners, developers, construction lenders and managers, subcontractors, architects, engineers and sureties. In addition to clients in the construction industry, corporate clients include SouthTrust Bank, apparel maker Russell Corporation, and Vulcan Materials Company, the largest producer of construction aggregates in the United States. Today, Bradley Arant's diverse client base includes nearly 100 of the Fortune 500 companies. "Charlotte is the next step in our strategic plan to enhance our regional presence," said Beau Grenier, Chairman of Bradley Arant's Executive Committee. "Charlotte is a vibrant, growing market, and we look forward to building our presence in the Carolinas around John Bond's considerable experience and extensive network of business relationships. In addition to our core construction strengths, Bradley Arant will also be bringing to Charlotte broad experience in many other practice areas," Grenier added. "We are delighted to have John Bond on our team and we could not have chosen a better cornerstone upon which to build this office." A native of Alabama, Bond is a former partner in the Washington, DC law firm of Spriggs & Hollingsworth, where he maintained a national and international practice in construction and procurement law. He later served J. A. Jones Construction first as Senior Vice President and General Counsel, and then as President. He returned to the private practice of law last October when he joined Bradley Arant's main office in Birmingham. A member of the Associated General Contractors' National Contractors Committee, Bond also serves on the board of directors of the American Arbitration Association and as a member of its National Panel of Arbitrators for complex cases. "Bradley Arant is one of the most highly respected law firms in the South," said John Bond. "In my view, it has one of the most experienced construction law practices in America. It is a great honor for me to be associated with Bradley Arant and to bring all the resources of this distinguished firm to Charlotte." About Bradley Arant Founded in 1871, Bradley Arant has long been recognized in national and international legal circles. Four of the firm's attorneys are former clerks to justices of the U. S. Supreme Court, and 48 Bradley Arant partners - nearly half of the entire partnership - are listed in The Best Lawyers in America. Twenty- four Bradley Arant partners have been elected by their peers across the country to professional organizations comprised of the preeminent practitioners in their respective areas, including the American Colleges of Trial Lawyers, Tax Counsel, Construction Counsel, Real Estate Lawyers, Trust & Estate Counsel, Labor & Employment Lawyers, Bond Counsel, and Bankruptcy Counsel. The 2004-2005 edition of Chambers USA - America's Leading Business Lawyers ranks Bradley Arant as Alabama's number one firm in all four categories surveyed, i.e., 1) corporate/mergers & acquisitions; 2) employment and labor law; 3) commercial litigation; and 4) real estate law. Chambers also ranked Wayne Drinkwater, who is a partner in Bradley Arant's Jackson office, as the top litigation attorney in Mississippi. With approximately 200 lawyers and offices in Birmingham, Montgomery and Huntsville, AL, as well as Jackson, MS, Washington, DC, and now Charlotte, NC, Bradley Arant maintains a diversified civil practice. Practice areas in addition to construction include banking, bankruptcy and creditor rights, employment benefits, energy, environmental law, estate planning, general corporate, governmental affairs, health care, intellectual property and antitrust, international, labor and employment, litigation, mergers and acquisitions, municipal finance, partnership and business entity law, real estate, securities, tax, telecommunications, trade regulation and white collar criminal defense. The firm represents a broad spectrum of clients from across the U.S. and abroad. For more information on Bradley Arant Rose & White LLP, please visit our website at http://www.bradleyarant.com/ * Large Companies with Insolvent Balance Sheets ----------------------------------------------- Total Shareholders Total Working Equity Assets Capital Company Ticker ($MM) ($MM) ($MM) ------- ------ ------------ ------- -------- Airgate PCS Inc. PCSAD (293) 574 (364) Alliance Imaging AIQ (40) 683 44 Akamai Technologies AKAM (175) 279 140 Amazon.com AMZN (1,036) 2,162 568 Blount International BLT (397) 400 83 Blue NLE Inc. NILE (27) 62 16 Cell Therapeutic CTIC (83) 146 72 Centennial Comm CYCL (579) 1,447 (99) Choice Hotels CHH (118) 267 (42) Cincinnati Bell CBB (640) 2,073 (47) Cubist Pharmaceuticals CBST (18) 223 91 Delta Air Lines DAL (384) 26,356 (1,657) Deluxe Corp DLX (298) 563 (309) Diagnostic Imag DIAM 0 20 (3) Echostar Comm DISH (1,033) 7,585 1,601 Graftech International GTI (97) 967 94 Imax Corporation IMAX (51) 246 (11) Imclone Systems IMCL (271) 382 (3) Kinetic Concepts KCI (246) 665 228 Lodgenet Entertainment LNET (129) 283 (6) Lucent Technologies LU (3,371) 15,765 2,818 Memberworks Inc. MBRS (20) 248 (89) Millennium Chem. MCH (45) 2,398 637 McDermott International MDR (363) 1,249 (24) McMoRan Exploration MMR (31) 72 5 Northwest Airlines NWAC (1,775) 14,154 (297) Nextel Partner NXTP (13) 1,889 277 ON Semiconductor ONNN (499) 1,161 213 Pinnacle Airline PNCL (48) 128 13 Primus Telecomm PRTL (96) 751 (26) Per-Se Tech Inc. PSTI (21) 171 (1) Qwest Communications Q (1,016) 26,216 (1,132) Sepracor Inc SEPR (619) 1,020 256 St. John Knits Int'l SJKI (65) 234 69 I-Stat Corporation STAT (1) 64 33 Syntroleum Corp. SYNM (2) 47 14 Triton PCS Holdings TPC (180) 1,519 52 UST Inc. UST (115) 1,726 727 Valence Tech VLNC (18) 36 4 Vector Group Ltd. VGR (3) 628 142 Western Wireless WWCA (224) 2,522 15 ********* 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. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR subscription rate is $675 for 6 months delivered via e- mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 240/629-3300. *** End of Transmission ***