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/raid1/www/Hosts/bankrupt/TCR_Public/040621.mbx T R O U B L E D C O M P A N Y R E P O R T E R Monday, June 21, 2004, Vol. 8, No. 124 Headlines ACTUANT CORP: Third Quarter Sales Up 33% to $196.5 Million ADELPHIA: Asks Court to Extend Lease Decision Period to Sept. 14 AGRICORE UNITED: Resumes Trading on Toronto Securities Exchange AIR CANADA: Union Wants Nod on Solvency Pension Funding Protocol AK STEEL: Secures Middletown Emission Control Project Financing AMERCO: Reports $15.8 Million Fiscal 2004 Net Loss ARMSTRONG: Gets Court OK to Expand American Appraisal's Employment ARTEMIS INTERNATIONAL: Closes $9 Million Private Equity Financing BIOGAN INTERNATIONAL: Court Fixes June 30 as Plan Voting Deadline BIMS RENEWABLE: Halts Unauthorized Berlin Stock Exchange Trading BRIDGEPORT: Has Until August 31 to Make Lease-Related Decisions BURNETT COMPANIES: Case Summary & 20 Largest Unsecured Creditors CANYON CAPITAL: S&P Rates $16 Million Class D Notes At BB CAPITAL TRUST: S&P Assigns Low-B Prelim. Ratings to Classes F & G CHURCH & DWIGHT: Elects James R. Craigie as President & CEO CLEAN HARBORS: Commences $270 Million Senior Debt Private Offering CONSOL ENERGY: Reports Coal, Gas & Power Production for May 2004 CORPORATE TRUST: Voluntary Chapter 11 Case Summary CORRPRO COS: Posts $4.9 Million Net Loss in First Quarter 2004 COVANTA ENERGY: Wants Court to Disallow & Expunge Five Big Claims COVANTA TAMPA: Court Sets July 1 as Plan Voting Deadline CREDIT SUISSE: S&P Puts Series 2000-FL1 Classes on Negative Watch CREDIT SUISSE: S&P Gives Low Ratings To 6 Series 2001-FL2 Classes DELTA AIR: Names Paulette Corbin SVP -- In-Flight Service Division DIGITAL IMAGING: Case Summary & 20 Largest Unsecured Creditors DIVERSIFIED CORPORATE: Hires Tax Consultant to Initiate IRS Talks EMAGIN CORP: Emphasizes Continued Growth at 2004 Annual Meeting ENRON: Provides Notice Of Intercompany Pacts Rejection Damages ETEAM USA: Court Sets Public Auction on June 22 ETEAM USA: Court Fixes July 1 as General Claims Bar Date FLEMING COS: Sonitrol Wants Stay Lifted to Continue Colorado Suits GREAT LAKES: Reports Improved May 2004 Traffic Results GRENADA MANUFACTURING: Wants to Hire John Mark King as Accountant HAYES: Inks Stipulation Reaffirming Insurance Policies Obligations HELLER FINANCIAL: Fitch Junks 1999 PH-1 Class M Notes Rating HERKIMER FOREST: Case Summary & 20 Largest Unsecured Creditors HIDDEN POINTE: Asks to Hire Locke Liddel as Special Counsel INTERLINE BRANDS: Promotes William Sanford Chief Operating Officer INT'L STEEL: Establishing $19M+ Trust Fund for Water Treatment INT'L WIRE: Disclosure Statement Hearing Set for June 30 ISLE OF CAPRI: Incurs $4.3MM Net Loss in Quarter Ended April 2004 J.C. PENNEY: Fitch Places Low-B Ratings On Watch Positive JEWETT AVENUE DEVT: Case Summary & 16 Largest Unsecured Creditors JILLIAN'S ENTERTAIMENT: Taps Houlihan Lokey as Financial Advisor KROLL INC: Notes Resale Registration Statement Declared Effective ORION TELECOMM: US Trustee Names 7-Member Creditors' Committee MARKLIN PROPERTIES: Want to Hire Cochran & Dahl as Attorneys MESA AIR: Finalizes Asset Management Agreement with LogisTechs MIRANT CORPORATION: Wants to Reject Owens Brockway Sales Contract MIRANT CORPORATION: Names Curt Morgan as Chief Operating Officer MJ RESEARCH: Taps Cravath Swaine as Special Litigation Counsel MORGAN STANLEY: Fitch Assigns Low-B Ratings to 3 2004-RR Classes NBTY: Posts Lower Sales for Direct Response & Vitamin Operations NETWORK INSTALLATION: Opens New Seattle, WA Sales & Service Unit NRG ENERGY: Names J. Phillip Chesson as Chief Risk Officer PARQUETTE INDUSTRIES: Case Summary & Largest Unsecured Creditors PG&E NATIONAL: NEG Debtors Propose New Tax Sharing Agreement PLAINS EXPLORATION: S&P Rates Proposed $250MM Notes at BB- PROGRESSIVE PIZZA: Case Summary & 20 Largest Unsecured Creditors QUADRAMED CORPORATION: Commences 10% Senior Notes Tender Offer QUADRAMED: Completes $100MM Convertible Preferred Stock Issuance QWEST COMMS: S&P Raises Ratings on Three Related Synthetic Deals RCN CORP: Obtains Authority to Maintain Existing Bank Accounts RIPPLEWOOD PHOSPHORUS: S&P Assigns B+ Rating to Corporate Credit SCHUFF INT'L: S&P Junks Corporate Credit & Senior Debt Ratings SOLECTRON CORPORATION: Reports Improved Third Quarter Results STATER BROS: Subsidiary Secures New $75 Million Credit Facility STRUCTURED ASSET: Fitch Affirms Low-B Ratings on Classes B-4 & B-5 TENET HEALTHCARE: S&P Says B Rating Unaffected By Note Expansion TIMKEN CO: European Subsidiary to Increase Steel Tubing Prices TRANSTECHNOLOGY: March 31 Balance Sheet Insolvent by $3.8 Million TXU GAS: Fitch Maintains Watch Evolving Status on BBB-/BB+ Ratings UAL CORP: Says ATSB Decision on Loan Application is Premature UAL CORP: Flight Attendants Disappointed by ATSB Decision UAL CORP: Wants Court Injunction Against Summers & Lenormand US AIRWAYS: Flight Attendants Waiting for Financial Information VIATICAL LIQUIDITY: Case Summary & 20 Largest Unsecured Creditors WEIRTON STEEL: Outlines Treatment Of Claims Under Liquidation Plan WEIRTON STEEL: Court Sets July 2 as Administrative Claims Bar Date WINDERMERE SCHOOL: Files Liquidating Plan and Discl. Statement WOMEN FIRST HEALTHCARE: Will Hold Public Auction on June 24 * SSG Recapitalizes Fetco Through Creative Deal Structure * BOND PRICING: For the week of June 21 - 25, 2004 ********* ACTUANT CORP: Third Quarter Sales Up 33% to $196.5 Million ---------------------------------------------------------- Actuant Corporation (NYSE:ATU) announced results for its third quarter ended May 31, 2004. Third quarter sales increased approximately 33% to $196.5 million from $147.2 million in the comparable prior year period. Current year results include those from Kwikee Products Company Inc. and Dresco B.V., which were acquired on September 3, 2003 and December 30, 2003, respectively. Excluding the impact of acquisitions and foreign currency exchange rate changes, third quarter sales increased approximately 17%. Third quarter fiscal 2004 net earnings and diluted earnings per share were $7.5 million and $0.30, respectively. These results include the previously announced $9.9 million pre-tax charge ($6.8 million net of tax, or $0.28 per share) attributable to the repurchase of 13% Notes during the quarter. Excluding this refinancing charge, third quarter fiscal 2004 net earnings and diluted EPS were $14.3 million and $0.58, respectively. This compares favorably to prior year third quarter net earnings and diluted EPS of $10.0 million and $0.41, respectively. Fiscal 2003 third quarter results included a $0.8 million pre-tax gain ($0.02 per diluted share) for the favorable settlement of litigation matters for amounts less than previously accrued. Excluding the refinancing charge in the current year and the litigation-related gain in the prior year, third quarter diluted EPS grew 49% from $0.39 to $0.58. Sales for the nine months ended May 31, 2004 were $539.1 million, approximately 23% higher than the $437.1 million in the comparable prior year period. Excluding the impact of acquisitions and foreign currency rate changes, sales for the nine-month period increased 8%. Net earnings for the nine months ended May 31, 2004 were $16.5 million, or $0.67 per diluted share, compared to $18.9 million, or $0.78 per diluted share for the comparable prior year period. The Company recorded net of tax special charges of $1.3 million, or $0.05 per diluted share, in the first nine months of fiscal 2003 related to the early extinguishment of debt and $4.2 million, or $0.17 per diluted share, related to litigation matters associated with divested businesses. The Company recorded net of tax special charges of $9.8 million or $0.40 per diluted share, in the first quarter of fiscal 2004, $1.5 million, or $0.06 per diluted share, in the second quarter and $6.8 million or $0.28 per diluted share in the third quarter, for the early extinguishment of debt. Excluding all of these special charges, net earnings and diluted EPS for the first nine months of fiscal 2004 were $34.6 million and $1.40, compared to $24.4 million and $1.00, respectively, in the comparable prior year period. Commenting on the results, Robert C. Arzbaecher, President and CEO, stated, "Actuant's third quarter results exceeded our expectations in terms of sales, earnings and cash flow. Core sales grew 17% over the prior year due to the continued improvement in the North American economy and the 75% core sales increase in convertible top actuation systems which reflected increased production of newly introduced convertible automobiles. This represents the twelfth consecutive quarter of year-over-year diluted EPS improvement, excluding special items, and reflected higher sales volume and margin expansion in a number of operations, along with the continued benefit of lower interest expense. "Both of this year's acquisitions - Kwikee and Dresco - were accretive to third quarter earnings, and we made progress during the quarter integrating them with existing operations. Additionally, our automotive margins improved during the quarter as had been forecasted due to improved manufacturing efficiencies in our plants in both the U.S. and The Netherlands. "We were also pleased to reduce the 13% Notes outstanding by repurchasing approximately $32 million of notes during the quarter. With only $29 million remaining of the original $200 million 13% Notes issued, the related interest expense has declined further and will help drive future earnings and cash flow growth. Despite the premiums paid to repurchase the 13% Notes during the quarter, cash flow was exceptionally strong, leading to debt reduction of $19 million. "We are three-fourths of the way through fiscal 2004, and Actuant remains on track for record fiscal year sales and earnings, excluding refinancing costs. We are raising our full year sales guidance from $695-705 million to $710-715 million, and our diluted EPS guidance before refinancing charges from $1.75-1.85 per share to $1.85-1.90 per share. The projected full year 30-35% diluted EPS growth exceeds our annual goal of 15-20% due to the combination of significant automotive sales growth and interest expense reduction, which are not expected to improve at the same pace as we move forward. Our preliminary fiscal 2005 guidance is for sales in the $725-750 million range, and diluted EPS in the $2.15-2.25 per share range. The guidance assumes conservative economic growth, continued commodity pricing pressure, increased interest rates, relatively stable foreign currency exchange rates, and no acquisitions or divestitures. We are excited about Actuant's prospects for the future and its chances of delivering 15-20% EPS improvement in fiscal 2005." Fiscal 2004 third quarter sales in the Tools & Supplies segment were $109.9 million, or approximately 20% higher than last year's $91.4 million, due to core sales growth, foreign currency rate changes and the impact of the Dresco acquisition. Excluding foreign currency and acquisition impacts, core Tools & Supplies revenues were up 5% over the prior year, with growth in both the hydraulic high force tools and electrical markets. Third quarter sales in the Engineered Solutions segment increased approximately 55% over the prior year to $86.6 million, reflecting higher shipments in all major markets, the Kwikee acquisition and the favorable impact of foreign currency. Excluding foreign currency rate changes and the Kwikee acquisition, segment sales increased 35%. Actuant's third quarter operating profit increased 30% over the prior year, due to corresponding sales growth. Third quarter operating profit as a percentage of sales declined slightly from 13.2% in the prior year to 12.8% in the current year, primarily the result of higher corporate expenses. Tools & Supplies operating profit margins improved from 15.0% to 16.0% year-over-year due to increased manufacturing absorption and cost reductions. Engineered Solutions operating profit margins declined year-over-year from 13.7% to 13.2%, but improved from the second quarter due to improved manufacturing efficiencies in the automotive business. Total debt was reduced during the quarter as a result of strong operating cash flow, declining to $212 million at May 31, 2004 from $231 million at the beginning of the quarter. Liquidity remains strong with approximately $220 million of availability under the Company's $250 million revolver. Third quarter net financing costs declined 44% due to lower interest rates on funded debt, primarily reflecting fewer 13% Notes outstanding compared to the prior year. About the Company Actuant, headquartered in Milwaukee, Wisconsin, is a diversified industrial company with operations in more than 20 countries. The Actuant businesses are leading companies selling highly engineered position and motion control systems and branded tools. Products are offered under such established brand names as Dresco, Enerpac, Gardner Bender, Kopp, Kwikee, Milwaukee Cylinder, Nielsen Sessions, Power-Packer, and Power Gear. * * * As reported in the Troubled Company Reporter's May 5, 2004 edition, Standard & Poor's Ratings Services assigned its 'BB' rating to the $250 million senior revolving credit facility of Actuant Corp. (BB/Stable/--). Proceeds from the credit facility, maturing Feb. 19, 2009, were used to refinance the company's existing secured revolving credit facility. ADELPHIA: Asks Court to Extend Lease Decision Period to Sept. 14 ---------------------------------------------------------------- Shelley C. Chapman, Esq., at Willkie Farr & Gallagher, LLP, in New York, reports that to date, the Adelphia Communications (ACOM) Debtors have rejected 50 unexpired leases. During the coming months, they will continue to analyze their need for the premises covered by the unexpired leases. For the ACOM Debtors to complete their analysis and to continue to evaluate the need for the lease locations in the context of either a stand-alone reorganization plan or a possible sale of the company, the period within which these leases may be rejected or assumed must be extended. While the dual-track process is already underway, much work remains to be done before the ACOM Debtors can either emerge from Chapter 11 as a stand-alone entity or complete the sale process. Ms. Chapman asserts that to require the ACOM Debtors to make significant business decisions as to which of their unexpired leases will be needed for their reorganized business at this time would be impractical and, more importantly, contrary to the best interests of their estates and all their creditors. Ms. Chapman maintains that the ACOM Debtors should not be forced to choose between losing valuable locations and assuming leases that ultimately should be rejected. Similarly, to require the ACOM Debtors to determine which leases a potential buyer will intend to assume or reject at this time is also impracticable. Accordingly, the ACOM Debtors ask the Court to extend their Lease Decision Period until September 14, 2004. Ms. Chapman assures the Court that the extension would not prejudice the lessors under the unexpired leases because: (1) the ACOM Debtors are substantially current on their postpetition rent obligations; (2) the ACOM Debtors intend to continue to timely perform all of their obligations under the unexpired leases as required by Section 365(d)(3) of the Bankruptcy Code; and (3) in all instances, individual lessors may, for cause shown, ask the Court to fix an earlier date by which the Debtors must assume or reject an unexpired lease. Nonetheless, the ACOM Debtors reserve all of their rights with respect to the unexpired leases, including, but not limited to, the right to determine whether or not the unexpired leases are in fact true leases. (Adelphia Bankruptcy News, Issue No. 61; Bankruptcy Creditors' Service, Inc., 215/945-7000) AGRICORE UNITED: Resumes Trading on Toronto Securities Exchange --------------------------------------------------------------- Agricore United Ltd. (TSX: AU) resumes trading at 2:15 p.m. on June 17, 2004 as ordered by the Toronto Securities Exchange. About the Company Agricore United (S&P, BB Long-Term Corporate Credit and Senior Secured Debt Ratings, Negative Outlook) is one of Canada's leading agri-businesses. The prairie-based company is diversified into sales of crop inputs and services, grain merchandising, livestock production services and financial markets. Agricore United's shares are publicly traded on the Toronto Stock Exchange under the symbol "AU". AIR CANADA: Union Wants Nod on Solvency Pension Funding Protocol ---------------------------------------------------------------- The Union Retiree Representative Committee asks the Court to approve the 10-year Solvency Pension Funding Relief Proposal dated February 18, 2004, as amended, between Air Canada and the Office of the Superintendent of Financial Institutions, as a settlement of the pension funding issues between the Applicants and the pension plan beneficiaries that the Committee represents. The Union Retiree Committee recommends the approval of the OSFI Protocol. The Union Retiree Committee represents union retired and related beneficiaries of the defined benefit pension plans and benefit plans, which have been created or administered by the Applicants in Canada. The Committee has representatives from each of the union groups with retired and related beneficiaries under the defined benefit pension plans and benefit plans, except the retired members of the Air Canada Pilots Association. Susan Ursel, Esq., at Green & Chercover, in Toronto, Ontario, tells the Court that the Union Retiree Committee has actively participated in discussions regarding pension funding and related issues with the Applicants and the other parties in Air Canada's CCAA proceedings. The Committee retained legal counsel and actuarial and financial advisors to provide advice with respect to the discussions with the Applicants. Among others, the OSFI Protocol provides for an increase in the solvency special payments scheduled for 2005 and 2006 by CN$20,000,000, with corresponding pro rata reductions of the payments scheduled for 2009 through 2013. Air Canada will issue CN$346,616,000 in subordinated, secured promissory notes to the trustees of the 10 affected Air Canada pension plans. The Pension Beneficiary Group -- consisting of the International Association of Machinists and Aerospace Workers; the Canadian Union of Public Employees; the National Automobile, Aerospace, Transportation and General Workers Union of Canada; the Air Canada Pilots Association, the Canadian Air Line Dispatchers Association; the Non-Union Retiree Beneficiaries; the Air Canada Pilots Association Retirees; and the Managerial and Administrative Active Employees -- supports the OSFI Protocol. The Union Retiree Committee also asks the Court to authorize its members to provide notice of their consent or opposition to the OSFI Protocol, including as the Protocol may be embodied in a regulation or draft regulation under the Pension Benefits Standards Act, 1985, on or before July 13, 2004. The Notice will be provided on a plan by plan basis by the representative of the applicable plan on the Committee. Headquartered in Saint-Laurent, Quebec Canada, Air Canada -- http://www.aircanada.ca/-- represents Canada's only major domestic and international network airline, providing scheduled and charter air transportation for passengers and cargo. The Company filed for CCAA protection on April 1, 2003 (Ontario Superior Court of Justice, Case No. 03-4932) and Section 304 petition with the U.S. Bankruptcy Court for the Southern District of New York (Case No. 03-11971). Matthew A. Feldman, Esq., and Elizabeth Crispino, Esq., at Willkie Farr & Gallagher serve as the Debtors' U.S. Counsel. When the Debtors filed for protection from its creditors, they listed C$7,816,000,000 in assets and C$9,704,000,000 in liabilities. (Air Canada Bankruptcy News, Issue No. 38; Bankruptcy Creditors' Service, Inc., 215/945-7000) AK STEEL: Secures Middletown Emission Control Project Financing --------------------------------------------------------------- AK Steel (NYSE: AKS) said it had completed a $62 million industrial revenue bond offering issued through the Ohio Air Quality Development Authority (OAQDA). Proceeds from the offering will be used to assist in financing emission control equipment for the company's blast furnace and basic oxygen furnaces at its Middletown Works. The company said the bonds will mature June 1, 2024. AK Steel also said it has applied for a $5 million loan from the Ohio Department of Development to assist in financing the project, which is expected to cost approximately $67 million in total. The equipment is necessary for the company to comply with recently established standards, called Maximum Achievable Control Technology (MACT), under the Clean Air Act. AK Steel said it intends to install the equipment on the blast furnace by May of 2005, a year before the new regulations go into effect. The company intends to complete the installation of MACT controls on its basic oxygen furnaces by May of 2006. "We commend Governor Bob Taft and his administration for providing this vital assistance for a project that will preserve both the environment and important manufacturing jobs in Ohio," said James L. Wainscott, president and CEO of AK Steel. "OAQDA's support is key to moving this project forward, thus helping to preserve jobs at the Middletown Works and the many service sector jobs that are supported by our company in Ohio." About AK Steel Headquartered in Middletown, Ohio, AK Steel -- whose December 31, 2003 balance sheet shows a $52.8 million shareholders' equity deficit -- produces flat-rolled carbon, stainless and electrical steel products for automotive, appliance, construction and manufacturing markets, as well as tubular steel products. AMERCO: Reports $15.8 Million Fiscal 2004 Net Loss -------------------------------------------------- AMERCO (Nasdaq: UHAL), the parent of U-Haul International, Inc., Oxford Life Insurance Company, Republic Western Insurance Company and Amerco Real Estate Company, reported its 2004 financial results. 2004 Financial Results AMERCO and its consolidated entities reported revenues for the fourth quarter and fiscal year ended March 31, 2004 of $457.3 million and $2.17 billion, respectively. This compares with revenues of $449 million and $2.13 billion for the same periods of fiscal 2003. The Company reported a 2004 fourth quarter net loss of $56.2 million, or $2.70 per share, compared with a net loss of $28.4 million, or $1.37 per share for the same period last year. Fiscal 2004 results were a net loss of $15.8 million, or $.76 per share. This compares with a net loss of $37.9 million, or $1.82 per share for the prior fiscal year. Included in these results were non-recurring financial restructuring costs, after-tax, of $27.3 million for fiscal 2004 compared to $4 million for fiscal 2003. Moving and Storage Operations Revenues for U-Haul moving and storage operations were $1.75 billion for fiscal 2004. This represents an increase of 7 percent over fiscal 2003. Earnings from operations were $140.5 million for fiscal 2004 compared with $71 million for the prior fiscal year. A number of factors, including better price realization and improved product mix, had a major impact on the operating profitability of U-Haul moving and storage. Insurance Operations Oxford Life Insurance Company revenues for the year were $166.8 million compared with $175.3 million last year. Earnings from operations were $11.3 million compared with operational losses of $1.4 million last year. Improved investment income was the primary factor for improvement. Republic Western Insurance Company reported revenues of $114.9 million for the year compared with $174.9 million for the prior year. An operating loss of $36 million was recorded for the year compared with an operating loss of $8 million for the prior year. These losses primarily relate to costs associated with discontinued lines of property and casualty insurance of non-U- Haul related entities. SAC Holdings During the fourth quarter, the majority of SAC Holdings was deconsolidated from the financial statements of AMERCO. AMERCO is no longer the primary beneficiary of a majority of its variable interests in SAC Holdings. This deconsolidation has reduced assets and liabilities $472 million and $629 million, respectively, and increased shareholder equity $157 million. Included in fiscal 2004 results for AMERCO are $177.9 million of revenues, $55.2 million of earnings from operations, $67.9 million of interest expenseand a net loss of $9.4 million related to its variable interests in SAC Holdings that are being deconsolidated. The revenues, earnings from operations, interest expense, and net profits/losses representing the majority of the variable interests in SAC Holdings will be excluded from the future financial results of AMERCO. 2005 Outlook "Performance at our core U-Haul moving and storage operations remain strong. Continued growth from increased rentals of trucks, trailers and self-storage rooms as well as increased sales of moving and storage related products and services are significantly improving the Company's operations. Our focus for fiscal 2005 and beyond is to continue to build momentum at our moving and storage and life insurance segments, as well as eliminating losses at our property and casualty business and building long-term value for our shareholders, customers and employees," stated Joe Shoen chairman of AMERCO. AMERCO will hold its investor call for fiscal year 2004 on Wednesday, June 23, 2004, at 10:30 a.m., Pacific Time. The call will broadcast live over the Internet at http://www.amerco.com/ To hear a simulcast of the call, or a replay, visit http://www.amerco.com/ About the Company Headquartered in Reno, Nevada, AMERCO's principal operation is U- Haul International, renting its fleet of 96,000 trucks, 87,000 trailers, and 20,000 tow dollies to do-it-yourself movers through over 1,000 company-owned centers and 15,000 independent dealers located throughout the United States and Canada. The Company filed for chapter 11 protection on June 20, 2003 (Bankr. Nev. Case No. 03-52103). Craig D. Hansen, Esq., Jordan A. Kroop, Esq., Thomas J. Salerno, Esq., and Carey L. Herbert, Esq., at Squire, Sanders & Dempsey LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $1,042,777,000 in total assets and $884,062,000 in liabilities. ARMSTRONG: Gets Court OK to Expand American Appraisal's Employment ------------------------------------------------------------------ Armstrong World Industries, Inc., sought and obtained the Court's permission to expand the services to be provided by American Appraisal Associates, Inc., as independent valuation experts. The Court had previously approved AWI's employment of AAA to adjust the corporate books prepared under GAAP to reflect the fair value of AWI's acquired tangible and intangible assets for the purposes of performing "fresh start" accounting required to be performed by AWI on its emergence from Chapter 11. During the course of that engagement, AWI determined it needed AAA to prepare additional valuation reports to complete the fresh start accounting of AWI's assets -- reports which fall outside the scope of AAA's initial engagement. Broader Valuations As a result of AAA's valuation findings during the first phase of this engagement, AWI determined that a broader sampling of valuation studies, including certain AWI facilities that are more unique in nature -- i.e., metal ceilings and carpet plants -- is warranted to ensure a more reliable valuation. Personal Property Valuation As part of the earlier engagement, AAA performed valuation studies of AWI's personal property to determine the "cost of reproduction new," or replacement cost, to assist it with its insurance/risk management procedures. Before AAA's valuation of AWI's personal property, insurance procedures estimated the value of AWI's personal property based on decades-old indices. The valuation by AAA was initiated in part to obtain a more accurate insurable value of AWI's assets that could be used for insurance and risk management purposes. Stock and Warrant Valuation Because of the long delay in actual confirmation of AWI's Plan, the Effective Date has been delayed, and AWI anticipates that the valuation of its assets in the Plan will no longer be accurate as of the Effective Date when it occurs. Therefore, it is necessary for AWI to employ AAA to update, as of the projected Effective Date, the valuation conducted earlier for the Plan. Enterprise Valuation AWI also expands the previously approved services of AAA to include an enterprise valuation of AWI as of the Effective Date for tax reporting purposes, as required by Treasury Regulation Section 1.468B-3(b)(4). Under the Plan, some of AWI's unsecured creditors will receive distributions of shares of common stock, and AWI's present equity holders will receive distributions of warrants. The Plan also creates a trust to satisfy AWI's obligations to holders of current and future allowed asbestos personal injury claims. This Trust will be funded with, in part, AWI's insurance proceeds, cash and stock in Reorganized AWI. To meet tax reporting requirements under the Internal Revenue Code, AWI expands AAA's services to include valuation of AWI's warrants and stock to be distributed under the Plan, and the stock contributed to the Trust. AWI believes that expanding AAA's retention is the most cost- effective way to comply with its accounting and tax reporting obligations on emergence from Chapter 11. Compensation AAA will continue to be paid in accordance with the rates already approved by the Court. AAA's fees for the completion of the fresh-start accounting are estimated to be between $175,000 to $225,000. For the tax reporting services, AAA's employees will bill at a blended hourly rate of $225. AAA estimates that its fees for completion of the tax reporting services will be $89,000. In total, AAA estimates that the fees for the completion of all services provided to AWI during the course of its Chapter 11 case will be $909,000. AAA's fees are not contingent on the outcome of its valuation of AWI's assets. Disinterestedness Michael Rathburn, Esq., Associate General Counsel with AAA in Milwaukee, Wisconsin, attests that AAA remains disinterested within the meaning of the Bankruptcy Code, and has no changes requiring disclosure at this time. Headquartered in Lancaster, Pennsylvania, Armstrong World Industries, Inc. -- http://www.armstrong.com/-- the major operating subsidiary of Armstrong Holdings, Inc., designs, manufactures and sells interior finishings, most notably floor coverings and ceiling systems, around the world. The Company filed for chapter 11 protection on December 6, 2000 (Bankr. Del. Case No. 00-04469). Stephen Karotkin, Esq., Weil, Gotshal & Manges LLP and Russell C. Silberglied, Esq., at Richards, Layton & Finger, P.A., represent the Debtors in in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $4,032,200,000 in total assets and $3,296,900,000 in liabilities. (Armstrong Bankruptcy News, Issue No. 62; Bankruptcy Creditors' Service, Inc., 215/945-7000) ARTEMIS INTERNATIONAL: Closes $9 Million Private Equity Financing ----------------------------------------------------------------- Artemis International Solutions Corporation (OTCBB:AMSI), a leading global provider of enterprise portfolio, project, and resource management software solutions, announced it has completed a private placement of $9 million of preferred stock. The proceeds from the transaction will be used for working capital, the repayment of debt, and to strengthen the company's balance sheet. In connection with the financing, Artemis issued 4,090,909 shares of preferred stock, priced at $2.20 per share, each of which is convertible into one share of common stock. In addition, the company issued 5-year warrants to purchase 409,090 shares of common stock at an exercise price of $2.64 per share. The investor group includes Emancipation Capital, Trilogy Software Corporation, and Potomac Capital, among others. As part of the transaction, Joe Liemandt, Trilogy's founder and chief executive officer, will join the Artemis board of directors. "Artemis is on the move," said Patrick Ternier, chief executive officer of Artemis. "This transaction is a key component of our restructuring, and is in the interests of both our customers and shareholders. We can now focus on executing our strategy to strengthen our natural position as a leader in the growing market for industry-specific portfolio and project management solutions. We are pleased to have the backing of this group of well-regarded software investors." Neither the shares of preferred stock, the warrants sold to the investors, nor the shares of common stock to be issued upon conversion of the preferred shares or exercise of the warrants have been registered under the Securities Act of 1933. Accordingly, these shares and warrants may not be offered or sold in the United States, except pursuant to an effective registration statement or an applicable exemption from the registration requirements of the Securities Act. Artemis has agreed to file a registration statement covering resale by the investors of the shares of common stock to be issued upon conversion of the preferred shares or exercise of the warrants. This press release shall not constitute an offer to sell or the solicitation of an offer to buy the preferred stock, warrants, or common stock to be issued upon exercise of the warrants. The company will also file a Report on Form 8-K with the Securities and Exchange Commission outlining the terms of the above transaction in more detail. About Artemis International Solutions Corp. Artemis International Solutions Corp. -- whose December 31, 2003 balance sheet shows a stockholders' deficit of $2.5 million -- is one of the world's leading providers of investment planning and control solutions that help organizations execute strategy through effective portfolio and project management. Artemis has refined 30 years experience into a suite of solutions and packaged consulting services that address the specific needs of both industry and the public sector including: IT management, new product development, program management, fleet and asset management, outage management and detailed project management. With a global network covering 44 countries, Artemis is helping thousands of organizations to improve their business performance through better alignment of strategy, investment planning and project execution. For more information visit http://www.aisc.com/ BIOGAN INTERNATIONAL: Court Fixes June 30 as Plan Voting Deadline ----------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware approved the Disclosure Statement with respect to the Chapter 11 plan of Liquidation filed by Biogan International, Inc., and its debtor- affiliates. June 30, 2004 at 4:00 p.m. is the deadline for creditors to cast their ballots accepting or rejecting the plan. All ballots must be returned to: Bankruptcy Services LLC 757 Third Avenue Third Floor New York, NY 10017 Attn: Biogan Balloting Center Objections to confirmation of the plan, if any, must be filed with the Clerk of Court and served on counsel to the Debtors and the office of the U.S. trustee on or before July 2, 2004 at 4:00 p.m. The confirmation hearing will be held on July 9, 2004 before the Honorable Peter J. Walsh at bankruptcy court. Headquartered in Toronto, Ontario, Canada, Biogan International, Inc., was a mineral products smelter and seller. The Company filed for chapter 11 protection on April 15, 2004 (Bankr. Del. Case No. 04-11156). Michael R. Nestor, Esq., at Young Conaway Stargatt & Taylor represents the Debtor. When the Company filed for protection from its creditors, it listed $9,038,612 in total assets and $8,280,792 in total debts. BIMS RENEWABLE: Halts Unauthorized Berlin Stock Exchange Trading ---------------------------------------------------------------- BIMS Renewable Energy, Inc. (OTC Bulletin Board: BIMR) has recently learned that its stock was listed on the Berlin Bremen Stock Exchange since February 27th, 2004. This listing was made without BIMS' authorization or prior knowledge. The management of BIMS did not plan to have its stock listed on the Berlin Bremer Stock Exchange. The Company decided to request its stock be de-listed from the Berlin Bremer Stock Exchange after having made all appropriate verifications and consulted with its attorneys. On June 9, 2004, BIMS received official confirmation that its stock was de-listed as requested. About BIMS Renewable Energy, Inc. BIMS is a progressive company in the field of "environmentally- friendly" or "green" energy production, using as primary material, biomass, used tires and car fluff. BIMS intends to grow its business model by way of acquisitions of technologies and/or corporations with activities that are compatible and synergistic to its own. BIMS' management is in the process of analyzing various business opportunities in order to diversify its activities in the energy and environmental fields. At March 31, 2004, Bims Renewable Energy, Inc.'s balance sheet reflects a stockholders' deficit of $2,269,412. BRIDGEPORT: Has Until August 31 to Make Lease-Related Decisions --------------------------------------------------------------- The Bridgeport Metal Goods Manufacturing Company asks the U.S. Bankruptcy Court for the District of Connecticut for more time to decide what to do with its unexpired nonresidential real property leases. The Debtor points out that the leases are a significant asset of the estate and may be integral to a sale of the business, which the Debtor is in the process of negotiating. In the event a sale of assets does not go forward then the leases may be necessary for any reorganization or to otherwise maximize the value of the Debtor's estate. Accordingly, the Debtor asks the Court to afford it until August 31, 2004 to decide whether to assume, assume and assign, or reject its unexpired nonresidential real property leases. Headquartered in Bridgeport, Connecticut, Bridgeport Metal Goods Manufacturing Co. -- http://www.bmgmfg.com/-- is engaged in the business of manufacturing, decorating and assembling plastic cosmetic containers and packaging products. The Company filed for chapter 11 protection on March 30, 2004 (Bankr. D. Conn. Case No. 04-50412). Irve J. Goldman, Esq., and Jessica Grossarth, Esq., at Pullman & Comley represent the Debtor in their restructuring efforts. When the Company filed for protection from its creditors, it listed both estimated debts and assets of over $10 million. BURNETT COMPANIES: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Burnett Companies LLC 1300 Bristol Street North #200 Newport Beach, California 92660 Bankruptcy Case No.: 04-13837 Chapter 11 Petition Date: June 15, 2004 Court: Central District of California (Santa Ana) Judge: James N. Barr Debtor's Counsel: Todd C. Ringstad, Esq. Law Offices of Todd C. Ringstad 2030 Main Street #1200 Irvine, CA 92614 Tel: 949-851-7450 Estimated Assets: $100,000 to $500,000 Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Thomas LeBeau $875,000 20 Tesoro Newport Coast, CA 92658 Enterprise Counsel Group Attorney's Fees $74,260 Langdon Wilson Trade Debt $22,825 Robert Half Finance & Acctg. Trade Debt $10,667 Sheppard Mullin Attorney's Fees $10,437 Health Net Trade Debt $7,377 Sarnoff Court Reporters Trade Debt $6,388 Squar Milner & Reehl LP Trade Debt $6,328 Adecco N.A. Trade Debt $1,350 Metlife Insurance Company Trade Debt $897 Newcourt Leasing Corp. Trade Debt $832 Franchise Tax Board Taxes $800 Mark Jordan Photography Trade Debt $625 Federal Express Trade Debt $599 McCormick's Plant Designs Trade Debt $520 State Farm Insurance Trade Debt $517 Companies Cit Technology Fin. Serv. Trade Debt $508 Inc. Ricoh Business Systems Inc. Trade Debt $450 AT&T Trade Debt $367 Beneficial Life Insurance Co Trade Debt $366 CANYON CAPITAL: S&P Rates $16 Million Class D Notes At BB --------------------------------------------------------- Standard & Poor's Ratings Services assigned its preliminary ratings to Canyon Capital CLO 2004-1 Ltd.'s $400 million floating- rate notes due 2016. The preliminary ratings are based on information as of June 16, 2004. Subsequent information may result in the assignment of final ratings that differ from the preliminary ratings. The preliminary ratings reflect: -- The expected commensurate level of credit support in the form of subordination to be provided by the notes junior to the respective classes; -- The cash flow structure, which is subject to various stresses requested by Standard & Poor's; -- The experience of the collateral manager; -- The coverage of interest rate risk through a hedge agreement; and -- The legal structure of the transaction, which includes the bankruptcy remoteness of the issuer. Preliminary Ratings Assigned Canyon Capital CLO 2004-1 Ltd. Class Rating Amount (mil. $) A-1-A AAA 100.0 A-1-B AAA 100.0 A-2-A AAA 40.0 A-2-B AAA 40.0 B A+ 36.0 C BBB 29.0 D BB 16.0 Preferred shares N.R. 39.0 N.R.-Not rated. CAPITAL TRUST: S&P Assigns Low-B Prelim. Ratings to Classes F & G ----------------------------------------------------------------- Standard & Poor's Ratings Services assigned its preliminary ratings to Capital Trust RE CDO 2004-1 Ltd.'s $324.1 million CDOs series 2004-1. The preliminary ratings are based on information as of June 17, 2004. Subsequent information may result in the assignment of final ratings that differ from the preliminary ratings. The preliminary ratings reflect the credit support provided by the subordinate classes of certificates, the economics of the mortgage loans, and the geographic and property type diversity of the loans. Standard & Poor's analysis determined that, on a weighted average basis, the pool has debt service coverage of 1.0x, a beginning LTV of 99.5%, and an ending LTV of 97.8%. All of the B notes are subordinate to A notes that are not included in the trust. The DSCs and LTVs reflect the combined economics of the A and B notes. Preliminary Ratings Assigned Capital Trust RE CDO 2004-1 Ltd. Class Rating Amount (mil. $) A-1 AAA 106.944 A-2 AAA 72.917 B AA 29.167 C A- 19.444 D BBB 24.306 E BBB- 3.421 F BB 12.963 G B 6.481 H N.R. 48.611 N.R.-Not rated. CHURCH & DWIGHT: Elects James R. Craigie as President & CEO ----------------------------------------------------------- Church & Dwight Co., Inc. (NYSE:CHD) announced that James R. Craigie, 50, has been elected President, Chief Executive Officer and a member of the Board of Directors, effective July 6, 2004. He succeeds Robert A. Davies, III, 68, who will continue to be employed by the company as an active Chairman of the Board for an extended period. "The Board of Directors is extremely pleased to have Jim Craigie bring his extensive experience and success in consumer marketing and strong leadership talent to Church & Dwight as we continue to grow. Over the past 20 years, Jim has gained a broad background in running diverse consumer products businesses, often in challenging business environments," Mr. Davies said. "I am excited to be joining Church & Dwight to work with Bob Davies and the management team as we continue to build on the company's impressive track record," Mr. Craigie said. Most recently, Mr. Craigie was President and Chief Executive Officer of Spalding Sports Worldwide, where he was recruited by Kohlberg Kravis Roberts & Co. in 1998 to spearhead a turnaround of the athletic equipment manufacturer and marketer. In that post, he led the restructuring and re-positioning of the company, and a number of new product initiatives for its Top-Flite, Strata, Ben Hogan, Etonic and Spalding brands. The company ultimately was sold in late 2003 through three transactions to maximize shareholder value. Prior to that, he had spent 15 years with Kraft Foods/General Foods, Inc. most recently as Executive Vice President and General Manager of its Beverages and Desserts Division, which had sales of $2.5 billion. Before that, Mr. Craigie was Executive Vice President and General Manager of its Beverages Division; and headed the company's Dinners and Enhancers and Polly-O Dairy Products Divisions, following assignments as Marketing Director for several key brands including Maxwell House coffee. Before joining Kraft Foods, Mr. Craigie served six years as a commissioned officer with the U.S. Navy and Department of Energy. During that period he was selected by Admiral Hyman Rickover to be his representative in contract administration and negotiation issues involving design and construction contracts for nuclear powered ships and submarines. He holds an undergraduate degree from the University of Rochester, and an M.B.A. from Harvard University, where he was a Baker Scholar. He and his family will move from Avon, CT to the Princeton, NJ area. Mr. Davies, who re-joined the company in 1995 as President and CEO, and was elected Chairman and CEO in 2001, said that the company's Board of Directors had spent a great amount of time on refining its governance "model," which ultimately resulted in the separation of the Chairman and CEO positions as a move to further strengthen the management structure of the company. Church & Dwight Co., Inc. manufactures and markets a wide range of personal care, household and specialty products, under the ARM & HAMMER brand name and other well-known trademarks. * * * As reported in the Troubled Company Reporter's June 11, 2004 edition, Standard & Poor's Ratings Services affirmed its 'BB' corporate credit rating on Church & Dwight following the closing of the company's new $640 million senior secured bank facility. The facility was used to refinance existing debt and to purchase the remaining 50% of Armkel LLC the company did not already own. Armkel's senior subordinated debt rating was raised to 'B+' from 'B', in line with Church & Dwight's ratings. Armkel's corporate credit rating was withdrawn, as the company is now 100% owned by Church & Dwight. All of Armkel's ratings are removed from CreditWatch, where they were placed May 6, 2004. Approximately $965 million of rated debt is affected by these actions. "The ratings on Princeton, New Jersey-based Church & Dwight Co. Inc. reflect its participation in the highly competitive personal care segment of the consumer products industry, its lack of geographic diversity, and its acquisitive nature," said Standard & Poor's credit analyst Patrick Jeffrey. Partially mitigating these factors are management's expected focus on reducing debt and the successful growth of the company's product portfolio through acquisitions. This strategy has expanded the Arm & Hammer brand name into several household and personal care product lines, such as detergents, toothpaste, cat litter, and deodorant. CLEAN HARBORS: Commences $270 Million Senior Debt Private Offering ------------------------------------------------------------------ Clean Harbors, Inc. (Nasdaq: CLHB), announced the pricing and final terms of transactions to refinance debt outstanding under its existing credit facilities. The refinancing is expected to be completed with proceeds from an institutional private placement and other financings in an aggregate principal amount of approximately $270 million, consisting of: -- $30 million senior secured revolving credit facility maturing in 2009; -- $90 million senior secured synthetic letter of credit facility maturing in 2009; and -- $150 million 11-1/4% senior secured notes due 2012. The Company intends to use the net proceeds of the senior secured note offering, along with approximately $90 million of restricted cash, to retire its outstanding $100 million senior secured revolving credit facility maturing in 2005, its $106 million senior secured term loans maturing in 2005, its $40 million subordinated debt due in 2007, and its $100 million letter of credit facility. In addition, proceeds will be used to redeem the Company's $25 million Series C Convertible Preferred Stock. In connection with such redemption, the Company also anticipates issuing warrants for 2.775 million shares of its common stock, exercisable at $8 per share. The refinancing is expected to close on or about June 30, 2004, subject to customary closing conditions. The senior secured notes will be offered in the United States only to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, and outside the United States pursuant to Regulation S under the Securities Act of 1933. The senior secured notes to be offered have not been registered under the Securities Act of 1933 and may not be offered or sold in the United States absent registration or an applicable exemption from such registration requirements. This press release does not constitute an offer to sell or the solicitation of an offer to buy any of the senior secured notes. Clean Harbors, Inc., with headquarters in Braintree, Massachusetts, is one of the largest providers of environmental services and the largest operator of non-nuclear hazardous waste treatment facilities in North America. The company services a diversified customer base of over 30,000 clients. The company, through its subsidiaries, offers such services as transportation, storage, disposal and remediation of hazardous waste. Its annual revenues are approximately $611 million. * * * As reported in the Troubled Company Reporter's May 12, 2004 edition, Moody's Investors Service confirmed the previous ratings of Clean Harbors, Inc. and its subsidiaries. These are: --Senior Implied rating of B2; --Senior Unsecured Issuer Rating of B3; --$100 million guaranteed senior secured revolving credit facility maturing in 2005 rated B2; --$106 million guaranteed senior secured term loan maturing in 2005 rated B2. Moody's also assigns these prospective ratings to the following proposed debts: --$30 million guaranteed senior secured revolving credit facility maturing in 2009, rated (P)B1; --$95 million guaranteed senior secured letter of credit facility due 2009, rated (P)B2; --$150 million guaranteed senior subordinated notes due 2014, rated (P)Caa1. The outlook is stable. According to Moody's, the company's ability to retain its stable outlook depend on achieving its targeted cash from operations and EBITDA for the second quarter of 2004 and would show a significant improvement over the low first quarter results. If the company does not complete the refinancing of the proposed debt, the ratings would acquire negative pressure from the company's ability to comply with covenants of its existing credit facilities. Existing credit facility ratings will be withdrawn upon completion of the contemplated refinancing. CONSOL ENERGY: Reports Coal, Gas & Power Production for May 2004 ---------------------------------------------------------------- CONSOL Energy Inc. (NYSE: CNX) reports the following production results for the month of May 2004: Coal production declined slightly in the May period-to-period comparison. Increases in production from the Loveridge, Blacksville 2 and Mill Creek mines were offset by lower production at Enlow Fork, Buchanan, Mine 84 and Shoemaker mines. Because additional producing wells were drilled, gross gas production improved nearly 12 percent in the May period-to-period comparison. Electricity production was lower in the period-to- period comparison because of higher natural gas prices in the 2004 period compared with the similar period a year earlier. About the Company CONSOL Energy has 19 bituminous coal mining complexes in seven states. In addition, the company is one of the largest U.S. producers of coalbed methane with daily gas production of approximately 146.2 million cubic feet from wells in Pennsylvania, Virginia and West Virginia. The company also has joint ventures that produce natural gas in Virginia and Tennessee, and the company produces electricity from coalbed methane at a joint- venture generating facility in Virginia. CONSOL Energy Inc. has annual revenues of $2.2 billion. It received the U.S. Department of the Interior's Office of Surface Mining National Award for Excellence in Surface Mining for the company's innovative reclamation practices in 2002 and 2003. Also in 2003, the company was listed in Information Week magazine's "Information Week 500" list for its information technology operations. In 2002, the company received a U.S. Environmental Protection Agency Climate Protection Award. Additional information about the company can be found at its web site: http://www.consolenergy.com * * * As reported in the Troubled Company Reporter's May 4, 2004 edition, Standard & Poor's Rating Services affirmed its 'BB-' corporate credit and Senior unsecured debt ratings on Consol Energy Inc., and removed them from CreditWatch where they were placed on Dec. 5, 2003, with negative implications. The outlook is stable. "The rating action reflects the resolution of investigations into allegations of fraud and malfeasance, which allowed the company to address liquidity concerns, and an expected improvement in the company's financial profile due to improved coal industry conditions and increasing production," said Standard & Poor's credit analyst Dominick D'Ascoli. CORPORATE TRUST: Voluntary Chapter 11 Case Summary -------------------------------------------------- Debtor: Corporate Trust, LLC 500 North Rainbow Boulevard Suite 300 Las Vegas, Nevada 89107 Bankruptcy Case No.: 04-16674 Chapter 11 Petition Date: June 16, 2004 Court: District of Nevada (Las Vegas) Judge: Lloyd King Debtor's Counsel: Andras F. Babero, Esq. 7550 West Alexander Road Las Vegas, NV 89129 Tel: 702-870-4815 Estimated Assets: $0 to $50,000 Estimated Debts: $1 Million to $10 Million The Debtor did not file a list of its 20-largest creditors. CORRPRO COS: Posts $4.9 Million Net Loss in First Quarter 2004 -------------------------------------------------------------- Corrpro Companies, Inc. (Amex: CO), announced results for its fourth quarter and fiscal year ended March 31, 2004. The Company reported revenues from continuing operations for the fourth quarter ended March 31, 2004 of $29.7 million, an increase of $5.0 million, or 20.2%, over the fourth quarter of the previous fiscal year. For the quarter, the Company incurred an operating loss from continuing operations of $1.0 million, an improvement of $1.5 million over the previous fiscal year fourth quarter. The Company reported a net loss of $4.9 million for the quarter ended March 31, 2004 compared to a net loss of $5.2 million in the year- earlier period, an improvement of $0.3 million. The fourth quarter historically has been the Company's weakest business period as weather conditions in the colder climates limit the amount of fieldwork that can be performed, impacting operating efficiencies. In addition, the Company completed its refinancing and recapitalization in the fourth quarter of fiscal 2004. As a result of the refinancing, during the fourth quarter ended March 31, 2004, the Company expensed deferred financing costs associated with the previous lenders of $0.9 million and yield maintenance amounts required under previous debt arrangements of $2.0 million. Also, the Company expensed professional fees and other non- recurring restructuring costs of $0.8 million in the fourth quarter of fiscal 2004. For the fiscal year ended March 31, 2004, the Company reported revenues from continuing operations of $130.1 million, up $12.5 million or 10.6% over the prior year. Operating income from continuing operations was $8.5 million in fiscal year 2004, compared to $2.0 million in the previous fiscal year, an increase of $6.5 million or 335.2%. The Company incurred a loss from continuing operations of $1.6 million in fiscal 2004 compared to a loss of $4.4 million in the previous fiscal year. In the current fiscal year, the Company incurred a net loss from discontinued operations of $3.9 million compared to a net loss of $6.2 million in the previous fiscal year. Including discontinued operations, the net loss for fiscal year 2004 was $5.5 million or $0.65 per fully diluted share compared to a net loss of $28.8 million or $3.43 per fully diluted share in the prior fiscal year. The weighted average number of shares used in calculating loss per share is computed based on the number of common shares issued and outstanding. On March 30, 2004, the Company completed a recapitalization that resulted in the issuance of warrants exercisable for 16.1 million shares of common stock. In accordance with generally accepted accounting principles for "Participating Securities," these warrants will be included in the weighted average shares calculation only in periods in which the Company generates net income available to common shareholders. Net income available to common shareholders represents net income less the annual preferred stock dividend. In the fiscal year ended March 31, 2004, the Company generated higher revenue levels and experienced improved operating efficiencies. The sharply reduced net loss in fiscal year 2004 as compared to fiscal year 2003 is attributable to the improved operating results as well as to a non-cash goodwill impairment charge of $18.2 million resulting from a change in accounting principle reflected in the fiscal year 2003 results. The Company will present additional financial information in its Annual Report on Form 10-K for the period ended March 31, 2004, which is due by June 29, 2004. Commenting on fiscal 2004 results, Joseph P. Lahey, Chief Executive Officer and President, said, "It was a tough year for Corrpro, our shareholders, clients, and employees. We have completed our recapitalization, it is behind us, and we are moving forward with our new financial partners. We are refocusing on performance and delivering high quality services and products to our clients." About the Company Corrpro, headquartered in Medina, Ohio, with over 40 offices worldwide, is the leading provider of corrosion control engineering services, systems and equipment to the infrastructure, environmental and energy markets around the world. Corrpro is the leading provider of cathodic protection systems and engineering services, as well as the leading supplier of corrosion protection services relating to coatings, pipeline integrity and reinforced concrete structures. * * * In its Form 10-Q for the quarterly period ended December 31, 2003 filed with the Securities and Exchange Commission, Corrpro Companies, Inc. reports: Liquidity and Capital Resources "At December 31, 2003, the Company had negative working capital excluding net assets held for sale of $23.8 million compared to negative $28.3 million at March 31, 2003, which was an increase of $4.5 million. This increase in working capital is due to a number of factors. Accounts receivable increased by $6.6 million. The Company experienced an increase over the balance at March 31, 2003, which is normal as the Company begins its seasonally slow time of the year. On March 31, 2003 we sold a non-strategic business unit and recorded a $6.2 million note receivable, which helped increase working capital. Inventory levels slightly increased by approximately $0.8 million due to the slow down of work as the Company begins its seasonally slow time of year. The current portion of long-term debt decreased by $3.5 million. The reduction in debt is primarily the result of cash generated by continuing and discontinued operations as well as the sale of non- strategic businesses. Accounts payable decreased $0.9 million as we enter our seasonally slow time of the year. "On December 15, 2003, the Company entered into the Purchase Agreement with CorrPro Investments, LLC, providing for a $13 million private equity investment as part of a plan of recapitalization and refinancing of the Company. Under the terms of the Purchase Agreement, the Company has agreed to issue and sell to CorrPro Investments, subject to the satisfaction of certain conditions further described below, (i) 13,000 shares of the Company's newly-created Series B Preferred Stock, with an initial liquidation preference of $1,000 per share, and (ii) the Purchaser Warrant to purchase up to a number of shares of the Company's Common Stock, equal to 40% of the Company's fully diluted Common Stock at an exercise price of $0.001 per share. "Simultaneous with the execution of the Purchase Agreement and also as part of the recapitalization and refinancing plan, the Company entered into (i) a commitment letter with CapitalSource, pursuant to which CapitalSource has agreed to provide to the Company, subject to the satisfaction of certain conditions, a $40.0 million senior secured credit facility, consisting of a revolving credit line, a term loan with a five-year maturity and a letter of credit sub-facility, and (ii) a commitment letter with American Capital, pursuant to which American Capital has agreed to provide to the Company, subject to the satisfaction of certain conditions, $14.0 million of senior secured subordinated debt. In addition, American Capital will receive a warrant to purchase up to a number of shares of Common Stock equal to 13.0% of the Company's fully diluted Common Stock at an exercise price of $0.001 per share, not to exceed $100 in the aggregate, and the right to appoint one director to the Board of Directors. "The proceeds of the financings will be used to satisfy the outstanding indebtedness owed under the Revolving Credit Facility and Senior Notes. The Lenders under both the Revolving Credit Facility and Senior Notes have consented to the Company's execution of the Purchase Agreement. "Should the Company fail to obtain shareholder approval of the recapitalization and refinancing transactions, the Company will not be able to consummate the foregoing transactions. In such event, the Revolving Credit Facility will become immediately due and payable, together with a significant portion of the principal of the Senior Notes. As of the date of this report, the Company has no foreseeable means to satisfy these obligations under the foregoing circumstances. Accordingly, if the recapitalization and refinancing transactions are not consummated, the Company may be forced to seek protection under Chapter 11 of the Bankruptcy Code." COVANTA ENERGY: Wants Court to Disallow & Expunge Five Big Claims ----------------------------------------------------------------- The Reorganized Covanta Energy Corporation Debtors ask the Court to disallow and expunge five claims that were filed against the Debtors that remain in bankruptcy. Vogel Brothers Bldg. Co. filed two identical proofs of claim against Covanta Tampa Bay, Inc. -- Claim Nos. 4585 and 4590 -- both for $258,680.12. Subsequent to the filing of Claim Nos. 4585 and 4590, Vogel Brothers received payment on a substantial portion of the Vogel Claims. Christine L. Childers, Esq., at Jenner & Block, in Chicago, Illinois, tells the Court that the Vogel Claims relate to a contract that was assigned to Tampa Bay Water, thus Tampa Bay is now responsible for any of the outstanding amounts due and owing to the Vogel Bros. Ms. Childers estimates that, by July 14, 2004, Vogel Brothers will have received payment of the remainder of the amounts due and owing to the Vogel Claims. Accordingly, the Debtors submit that the Vogel Claims must be disallowed and expunged. Wells Fargo filed numerous claims against the Debtors, including: Claim No. Remaining Debtor Amount --------- ---------------- ------ 2559 Covanta Tampa Bay, Inc. $105,432,034 4403 Covanta Warren Holdings I, Inc. 105,432,034 4404 Covanta Warren Holdings II, Inc. 105,432,034 Under the Debtors' Second Reorganization Plan, all Wells Fargo Claims have been allowed in Subclass 3B, including the Wells Fargo Remaining Debtor Claims. On the Second Reorganization Plan's Effective Date, Wells Fargo received the Secured Subclass 3A and 3B Total Distribution in full settlement, release and discharge of all Wells Fargo Claims. Since the Wells Fargo Claims have all been treated and satisfied under the Second Reorganization Plan, the Debtors assert that the Wells Fargo Remaining Debtor Claims must be disallowed and expunged. Headquartered in Fairfield, New Jersey, Covanta Energy Corporation -- http://www.covantaenergy.com/-- is a publicly traded holding company whose subsidiaries develop, own or operate power generation facilities and water and wastewater facilities in the United States and abroad. The Company filed for Chapter 11 protection on April 1, 2002 (Bankr. S.D.N.Y. Case No. 02-40826). Deborah M. Buell, Esq., and James L. Bromley, Esq., at Cleary, Gottlieb, Steen & Hamilton represent the Debtors in their restructuring efforts. When the Debtors filed for protection from its creditors, they listed $3,280,378,000 in assets and $3,031,462,000 in liabilities. (Covanta Bankruptcy News, Issue No. 58; Bankruptcy Creditors' Service, Inc., 215/945-7000) COVANTA TAMPA: Court Sets July 1 as Plan Voting Deadline -------------------------------------------------------- On May 20, 2004, the U.S. Bankruptcy Court for the Southern District of New York approved the Disclosure Statement with respect to the Joint Plan of Reorganization of Covanta Tampa Bay, Inc. and Covanta Tampa Construction, Inc. July 1, 2004 at 4:00 p.m. is the deadline for creditors to cast their ballots and vote to accept or reject the Plan. All ballots must be delivered to: Bankruptcy Services LLC 757 Third Avenue, Third Floor New York, NY 10017 Objections to confirmation of the plan must be filed by July 1, 2004 at 4:00 p.m. with the Clerk of Court and served on co-counsel of the reorganizing debtor, the Office of the U.S. trustee and counsel to Tampa Bay Water. The confirmation hearing to consider the confirmation of the plan will be held on July 14, 2004 at 2:00 p.m. before the Honorable Cornelius Blackshear at the bankruptcy court. Copies of the plan materials are available with the Clerk of Court or by contacting Bankruptcy Services, LLC. Headquartered in Fairfield, New Jersey, Covanta Energy Corporation -- http://www.covantaenergy.com/-- is a publicly traded holding company whose subsidiaries develop, own or operate power generation facilities and water and wastewater facilities in the United States and abroad. The Company filed for Chapter 11 protection on April 1, 2002 (Bankr. S.D.N.Y. Case No. 02-40826). Deborah M. Buell, Esq., and James L. Bromley, Esq., at Cleary, Gottlieb, Steen & Hamilton represent the Debtors in their restructuring efforts. When the Debtors filed for protection from its creditors, they listed $3,280,378,000 in assets and $3,031,462,000 in liabilities. CREDIT SUISSE: S&P Puts Series 2000-FL1 Classes on Negative Watch ----------------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings on four classes from Credit Suisse First Boston Mortgage Securities Corp. series 2000-FL1 on CreditWatch with negative implications. The CreditWatch placements reflect the continued performance declines in the portfolio, most notably the San Tomas property. The ratings on the classes will remain on CreditWatch negative, pending an evaluation of the San Tomas property, including the leasing of its vacant space and the receipt of a current brokers price opinion. The San Tomas Business Park property ($79.2 million trust balance), which is REO, is secured by an office building in Santa Clara, Calif. The trust has a 66.7% senior interest in San Tomas that participates pari passu with Credit Suisse First Boston Mortgage Securities 2001-Fl2 transaction that has a 16.7% senior interest. A third party holds the remaining junior interest. The borrower defaulted on its loan, which matured in December 2003. In December 2003, the property was appraised at $63.5 million. The property is currently covering its expenses and debt service requirements. The other significant loan in the portfolio is the Crowe portfolio ($30.2 million balance). The Crowe loan is secured by four office buildings located in or near Dallas, Texas. The loan was transferred to special servicing in March 2003 when the borrower requested a loan modification. The property, which is 60% occupied, had 0.88x debt service coverage at Dec. 31, 2003. Together, the San Tomas property and the Crowe portfolio account for 90% of the outstanding pool balance. Ratings Placed On Creditwatch Negative Credit Suisse First Boston Mortgage Securities Corp. Commercial mortgage pass-thru certs series 2000-FL1 Rating Class To From E BBB/Watch Neg BBB F BB/Watch Neg BB G BB-/Watch Neg BB- H B-/Watch Neg B- CREDIT SUISSE: S&P Gives Low Ratings To 6 Series 2001-FL2 Classes ----------------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings on eight classes from Credit Suisse First Boston Mortgage Securities Corp. series 2001-FL2 on CreditWatch with negative implications. The CreditWatch placements reflect the interest shortfalls in five rated classes and the continued performance declines in the portfolio, most notably the 200/300 Main Street and San Tomas properties. The ratings on the classes will remain on CreditWatch negative pending the receipt of an appraisal of 200/300 Main Street and the determination as to the timing of any interest recovery on the shorted classes. According to the special servicer, Archon Group L.P., the property is expected to be marketed for sale in the fourth quarter of 2004. The CreditWatch actions also consider the evaluation of the San Tomas property, including the leasing of vacant space and the receipt of a current brokers price opinion. In December 2003, the property was appraised at $63.5 million. A recent determination by the master servicer, ORIX Capital Markets LLC, as provided in its officer's certificate, stated that any further interest advance on the 200/300 Main Street loan would be nonrecoverable. As a result, six non-investment-grade classes will be shorted interest starting with the June 2004 payment date. The principal balance of the loan is $15.2 million with advances of $4.36 million. The 200/300 Main Street loan consists of a 127,000-sq.-ft. office building in Novi, Michigan. The loan was transferred to special servicing in January 2002 due to a payment default. In June 2002, an appraisal valued the property at $17.75 million. At that time, an appraisal reduction of $545,000 was taken. A recent appraisal, which is to be delivered to the special servicer within the next few weeks, is expected to be materially lower. The San Tomas Business Park asset, which is REO, is secured by an office building in Santa Clara, California. The trust has a 66.7% senior interest in San Tomas that participates pari passu with Credit Suisse First Boston Mortgage Securities 2001-Fl2 transaction that has a 16.7% senior interest. A third party holds the remaining junior interest. The borrower defaulted on its loan, which matured in December 2003. The property is currently covering its expenses and debt service requirements. Ratings Placed On Creditwatch Negative Credit Suisse First Boston Mortgage Securities Corp. Commercial mortgage pass-thru certs series 2001-FL2 Rating Class To From F BBB/Watch Neg BBB G BBB-/Watch Neg BBB- H BB+/Watch Neg BB+ J BB-/Watch Neg BB- K B/Watch Neg B L B-/Watch Neg B- M CCC+/Watch Neg CCC+ N CCC/Watch Neg CCC DELTA AIR: Names Paulette Corbin SVP -- In-Flight Service Division ------------------------------------------------------------------ Delta Air Lines (NYSE: DAL) announced the appointment of Paulette Corbin as senior vice president of its In-Flight Service division. Corbin's previous position was vice president of Airport Customer Service (ACS) for Delta's western region. As the leader of Delta's In-Flight Service division, Corbin will be responsible for leading Delta's flight attendants. "Paulette is a perfect fit to step in and lead the In-Flight team, continuing the hard work that has already begun and looking for key opportunities to help make Delta a stronger competitor in the long-term," said Vicki Escarra, executive vice president and Chief Customer Service Officer. "Paulette's appointment is consistent with our commitment to promote leadership from within Delta." Corbin, 53, began her Delta career in 1973 as a Boston-based flight attendant. She held various management positions of increasing responsibility in In-Flight Service and Reservation Sales before being selected to serve on the team that launched Delta Express. Corbin served as managing director-Delta Express from 1998 to 2000 and was responsible for driving the strategic, financial and operational performance of the unit, as well as marketing and employee programs. As vice president, ACS-West, Corbin played a key role in the transformation of Delta's airports, which provided customers with better, faster and friendlier options for navigating the airport experience. A native of Boardman, Ohio, Corbin graduated from Allegheny College. Sharon Wibben, 50, who preceded Corbin as the leader of Delta's In-Flight Service division, announced her resignation to pursue opportunities outside of Delta. She served as the leader of In-Flight Service for five years, most recently as senior vice president - In-Flight Service, guiding Delta's flight attendants through an unprecedented time of change. Under her leadership, In-Flight introduced revenue-driving initiatives and launched state-of-the-artscheduling technology that will produce significant cost savings for the company and increased flexibility for flight attendants. Delta Air Lines is proud to celebrate its 75th anniversary in 2004. Delta is the world's second largest airline in terms of passengers carried and the leading U.S. carrier across the Atlantic, offering daily flights to 494 destinations in 86 countries on Delta, Song, Delta Shuttle, the Delta Connection carriers and its worldwide partners. Delta's marketing alliances allow customers to earn and redeem frequent flier miles on more than 14,000 flights offered by SkyTeam, Northwest Airlines, Continental Airlines and other partners. Delta is a founding member of SkyTeam, a global airline alliance that provides customers with extensive worldwide destinations, flights and services. For more information, please visit http://delta.com/ * * * 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. DIGITAL IMAGING: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Digital Imaging Services, LLC dba Integrated Imaging Center 508 West 26th Street New York, New York 10001 Bankruptcy Case No.: 04-14181 Type of Business: The Debtor provides print production services. See http://www.iicdirect.com/ Chapter 11 Petition Date: June 17, 2004 Court: Southern District of New York (Manhattan) Judge: Carter Beatty Debtor's Counsel: Sherri D. Lydell, Esq. Platzer, Swergold, Karlin, Levine Goldberg & Jaslow, LLP 1065 Avenue of the Americas, 18th Floor New York, NY 10018 Tel: 212-593-3000 Fax: 212-593-0353 Total Assets: $3,260,173 Total Debts: $5,884,397 Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Amalgamated Lithographers Intl. $308,163 113 University Place New York, NY 10003 Marquardt & Company Inc. $222,884 Richards & Ellis Graphics Grp. $181,027 Harold M. Pitman Company $170,089 J & M Finishing LLC $112,789 First Air Services, Inc. $84,325 Amper, Politziner & Mattia PC $60,620 West Chelsea Building, LLC $54,977 Braverman Die Cutting Co. $53,805 Axis Global Systems, LLC $46,753 H.A. Metzger, Inc. $39,541 Gould Paper Corporation $25,437 RIS Paper Company, Inc. $22,911 Kaback Enterprises $20,731 Superior Printing Ink $19,383 Ellis Graphics Corp. $17,753 Boxer Display $14,265 Con Edison $13,380 Diamond Die Cutting $12,845 E & M Bindery $10,424 DIVERSIFIED CORPORATE: Hires Tax Consultant to Initiate IRS Talks ----------------------------------------------------------------- On June 8, 2004, Diversified Corporate Resources, Inc. (Amex: HIR) announced that it had retained a specialized tax consultant to initiate discussions with the Internal Revenue Service regarding the payment of $2.5 million in unpaid Section 941 taxes owed by the Company for periods during the first and second quarters of 2004. Based on these discussions, the Company will have a time period of at least 120 days to either pay this liability in full or enter into a satisfactory payment plan, if necessary. Currently, the Company has $.6 million in a restricted cash account reserved for payment against this balance reducing the amount of required funds to approximately $1.9 million. The nonpayment of taxes has caused Wells Fargo Business Credit, Inc. to declare, on June 14, 2004, that a default currently exists under the Accounts Purchase Agreement between Datatek Group Corporation, a wholly-owned subsidiary of the Company and Wells Fargo. Previous to this declaration, the Company had initiated discussions with other lenders regarding the payoff of balances due to Wells Fargo. Therefore, although the final outcome is not free from doubt, the Company plans to either complete a financing agreement with one of these lenders, or correct the default event(s) to the satisfaction of Wells Fargo on or before July 30, 2004. In the meantime, Wells Fargo is continuing to purchase accounts receivables from the Company. Pending resolution of the above, the Company will be unable to release the 2003 financial statements, its Proxy Statement for the 2004 Annual Meeting and the filing with the Securities and Exchange Commission of its 2003 Annual Report on Form 10-K, its amended and restated Forms 10-Q for the first three quarters of 2003, and the Quarterly Report on Form 10-Q for the first quarter of 2004. On June 18, 2004, the Company will present to the American Stock Exchange a plan, which would amend a plan previously submitted to the Exchange on May 24, 2004, whereby it would file the required SEC reports and otherwise regain full compliance on or before July 30, 2004, while, in the meantime, the halt in trading currently in effect would continue. The Exchange may or may not accept the amended plan. If such plan is not accepted, the Exchange may initiate delisting proceedings. These proceedings, including the periods set aside for appeals, are likely to take at least sixty days. The Company believes that the proceedings would terminate and its stock would resume trading if the Company filed the SEC reports and otherwise regained full compliance with the listing standards at any time during the pendency of such proceedings. Effective June 10, 2004, W. Brown Glenn, Jr., has resigned as a director and President of the Company. Mr. Glenn did not request publication of any disagreement with the Company in connection with his resignation. The Company will make further announcements as additional information becomes available. About the Company Diversified Corporate Resources, Inc. is a national employment services and consulting firm, servicing Fortune 500 and larger regional companies with permanent recruiting and staff augmentation in the fields of Engineering, Information Technology, Healthcare, BioPharm and Finance and Accounting. The Company currently operates a nationwide network of nine regional offices. EMAGIN CORP: Emphasizes Continued Growth at 2004 Annual Meeting --------------------------------------------------------------- eMagin Corporation (AMEX:EMA), the leading developer of organic light emitting diode (OLED) microdisplay technology, held its Annual Meeting of Shareholders on Tuesday, June 15, at the American Stock Exchange. At the meeting, the company underscored that with its displays now appearing in more than twenty products, and with more products being developed, it is preparing to meet higher demand for its OLED-on-silicon microdisplays and microdisplay systems. "We've made great strides over the last year as customers' products that were in development moved into manufacturing," noted Gary Jones, CEO and president, eMagin Corporation. "And with more people demanding mobile access to data, especially image-rich data, we anticipate even broader markets for our virtual imaging products in the coming years." Mr. Jones also noted that he expects additional near-term announcements of products using eMagin displays. In addition, he reported that the joint development of very small, lower- resolution displays for digital cameras and camcorders undertaken with Rohm Corp. is still on schedule. Summarizing the company's mission "to bring virtual imaging capability to the world in order to enhance human experience and to enable people to become more effective at whatever they do," Mr. Jones noted that the company's achievements in restructuring its debt, improving its supply chain and manufacturing, and developing new products all contributed to a successful 2003 and pointed to continued progress toward fulfilling its mission. Shareholders approved all proposals presented at the meeting, which included the following matters: -- Elected three Class C directors to serve three-year terms: Claude Charles, president of a private international consulting firm; Dr. Jack Goldman, retired senior vice- president for R&D and chief technical officer of the Xerox Corporation; and Dr. Jill Wittels, corporate vice president of business development for L-3 Communications -- Approved 2004 Non-Employee Compensation Plan -- Ratified Eisner LLP as the company's independent auditor Forward-looking statements or additional information provided at the meeting included -- Reconfirmation of the guidance given in their last conference call with analysts that, pending auditor review, the second quarter is expected to see a new high for product sales and that the company is increasingly optimistic about being EBITDA-positive on a monthly basis later this year -- A $4.3 million cash balance at the end of May, which is not significantly less than the cash balance at the end of March, despite an increasing amount of cash that has been going into prepayments to build a growing supply line and efforts to grow a larger inventory of finished goods -- The apparent resolution of the incoming CMOS wafer yield issues that were reported in the first quarter conference call. About eMagin Corporation eMagin is a leader and innovator in near-to-the-eye virtual imaging technologies and products, integrating high-resolution OLED displays (smaller than one inch), magnifying optics, and systems technologies to create a virtual image that appears comparable to that of a computer monitor, a large-screen television, or even a theater-like experience. eMagin's microdisplay systems are expected to enable new mass markets for wearable personal computers, wireless Internet appliances, portable DVD-viewers, digital cameras, and other emerging applications for consumer, industrial, military, and homeland defense applications. The company has developed unique technology for producing high-performance OLED-on-silicon microdisplays and related optical systems. eMagin is the only company to announce, show, and sell full-color active matrix OLED-on-silicon microdisplays, licensing OLED technology from Eastman Kodak Company. The company supplies these displays in commercial quantities to OEMs. In addition, the company sells integrated modules to military, industrial and medical customers. eMagin's corporate headquarters and microdisplay operations are co-located with IBM on its campus in East Fishkill, N.Y. Optics and system design facilities are located at its wholly-owned subsidiary, Virtual Vision, Inc., in Redmond, Wash. For more information, visit http://www.emagin.com/ * * * In its Form 10-QSB for the quarterly period ended March 31, 2004 filed with the Securities and Exchange Commission, eMagin Corporation reports: Liquidity and Capital Resources "We have total liabilities and contractual obligations of $1,217,593 as of March 31, 2004. We currently anticipate that we will continue to experience significant growth in our operating expenses for the foreseeable future and that our operating expenses will be the principal use of our cash. In particular, we expect that salaries for employees engaged in production operations, purchase of inventory and expenses of increased sales and marketing efforts would be the principle uses of cash. We expect that our cash requirements over the next 12 months will be met by a combination of cash on hand which as of May 13 was approximately $4.5 million, additional financing, exercising of outstanding options and warrants, and revenues generated by operations. We expect to continue to devote substantial resources to manufacturing, marketing and selling our products." Risks Related To Financial Results "If we do not obtain additional cash to operate our business, we may not be able to execute our business plan and may not achieve profitability. "In the event that cash flow from operations is less than anticipated and we are unable to secure additional funding to cover these added losses, in order to preserve cash, we would be required to further reduce expenditures and effect further reductions in our corporate infrastructure, either of which could have a material adverse effect on our ability to continue or increase our current level of operations. To the extent that operating expenses increase or we need additional funds to make acquisitions, develop new technologies or acquire strategic assets, the need for additional funding may be accelerated and there can be no assurances that any such additional funding can be obtained on terms acceptable to us, if at all. If we are not able to generate sufficient capital, either from operations or through additional financing, to fund our current operations, we may not be able to continue as a going concern. If we are unable to continue as a going concern, we may be forced to significantly reduce or cease our current operations. This could significantly reduce the value of our securities, which could result in our de- listing from the American Stock Exchange and cause investment losses for our shareholders. ENRON: Provides Notice Of Intercompany Pacts Rejection Damages -------------------------------------------------------------- Brian S. Rosen, Esq., at Weil, Gotshal & Manges, LLP, in New York, notes that the approved Disclosure Statement provides that the Enron Debtors will file a schedule of stipulated rejection damages arising from the Debtors' rejection of intercompany trading contracts and other intercompany contracts. The Debtors have calculated the projected damages arising from the rejection of intercompany trading contracts and other intercompany contracts. The Debtors estimate that: -- damages from one Debtor to another Debtor under the rejected Trading Contracts will total $5,929,762,930; -- damages from one Debtor to another Debtor under the rejected Non-Trading Contracts will total $730,118,170; -- damages from a Debtor to a non-debtor under the rejected Trading Contracts will total $893,481,975; and -- damages from a Debtor to a non-debtor under the rejected Non-Trading Contracts will total $36,531. (Enron Bankruptcy News, Issue No. 112; Bankruptcy Creditors' Service, Inc., 215/945-7000) ETEAM USA: Court Sets Public Auction on June 22 ----------------------------------------------- On May 27, 2004, the U.S. Bankruptcy Court for the District of Delaware approved uniform Sale Procedures proposed by Eteam USA LLC and ETEAM of Philadelphia LLC to Professional Development Team, LLC. Copies of the Asset Purchase Agreement, the Sale Procedures and the Sale Procedures Order may be obtained by contacting mbertsch@ycst.com The court has set June 22, 2004 at 10:00 a.m. as the date and time for a public auction to be held at: Young Conaway Stargatt & taylor LLP The Brandywine Building 1000 West Street 17th Floor P.O. Box 391 Wilmington, DE 19899-0391 for any competing bidder to step forward to top Professional Development Team's $984,000 bid. Eteam of Philadelphia LLC and Eteam USA LLC -- http://www.executrain.com/-- offer training in computer application and technical development, project management, sales performance, team building, leadership development, and customer service skills. The Debtors filed for chapter 11 protection (Bankr. Del. Case Nos. 04-11302 & 04-11303) on May 2, 2004. Joseph A. Malfitano, Esq. of Young, Conaway, Stargatt & Taylor represents the Debtors in their restructuring efforts. As of bankruptcy petition date, assets were estimated at $100,000 to $500,000 while debts were estimated at $1 million to $10 million. ETEAM USA: Court Fixes July 1 as General Claims Bar Date -------------------------------------------------------- On May 27, 2004, the U.S. Bankruptcy Court for the District of Delaware entered an order establishing a general claims bar date -- a deadline by which all creditors must file proofs of any prepetition claim against Eteam USA LLC and ETEAM of Philadelphia LLC that arose prior to May 2, 2004. The court has set July 1, 2004 at 4:00 p.m. as the last day to file proofs of claim. Claim forms must be delivered to: Delaware Claims Agency, LLC ETEAM USA LLC Claims Processing P.O. Box 515 Wilmington, Delaware 19899 Proofs of claim must be filed if the claims are: (a) prepetition claims not listed in the debtor's schedules or (b) claims improperly classified in the schedules For additional information regarding the filing of proofs of claim contact DCA at (302) 658-1067. Eteam of Philadelphia LLC and Eteam USA LLC -- http://www.executrain.com/-- offer training in computer application and technical development, project management, sales performance, team building, leadership development, and customer service skills. The Debtors filed for chapter 11 protection (Bankr. Del. Case Nos. 04-11302 & 04-11303) on May 2, 2004. Joseph A. Malfitano, Esq. of Young, Conaway, Stargatt & Taylor represents the Debtors in their restructuring efforts. As of bankruptcy petition date, assets were estimated at $100,000 to $500,000 while debts were estimated at $1 million to $10 million. FLEMING COS: Sonitrol Wants Stay Lifted to Continue Colorado Suits ------------------------------------------------------------------ Sonitrol Management Corporation, represented by Kimberly E. C. Lawson, Esq., at Reed Smith, LLP, in Wilmington, Delaware, asks Judge Walrath to lift the automatic stay so it can take any actions or invoke any judicial processes against or involving any of the Debtors that Sonitrol deems necessary or appropriate to protect its interest in four related lawsuits, including: -- taking discovery from or involving any of the Debtors; -- prosecuting and liquidating via final judgment, settlement or otherwise any claims, cross-claims, third party claims and setoff claims against any of the Debtors as Sonitrol may have; -- prosecuting appeals and post-judgment reviews, if any, in connection with the lawsuits; and -- allowing Sonitrol to exercise against the Debtors any rights of set-off that may exist under applicable law. Ms. Lawson explains that Core-Mark International contracted under two agreements with Sonitrol's predecessor to install and monitor a burglar alarm in a portion of a warehouse located in Aurora, Colorado, leased by Core-Mark. Sonitrol has been named as a defendant in the four lawsuits pending in Colorado state court based on claims arising from a December 2002 burglary of and fire at the Core-Mark warehouse. As a tenant in the warehouse at the time of the burglary and fire, Core-Mark has been named as a co- defendant in three of the four lawsuits. Fleming Companies, Inc., is also named as a defendant in three of the four suits. Sonitrol intends to assert its set-off rights against the Debtors before confirmation, thus preserving and protecting those rights post-confirmation. The suits, parties and general allegations are: (1) "Lexington Ins. Co. et al. v. Cornerstone Security d/b/a Sonitrol of Denver et al." pending in the District Court of Adams County, Colorado. The Plaintiffs are insurance companies that claim to have paid casualty losses to Core-Mark for fire damages. The plaintiffs allege that Sonitrol's failure to monitor properly a burglar alarm system somehow caused fire loss to Core-Mark. Other plaintiffs have asserted negligence and gross negligence claims against Sonitrol; (2) "Lexington Ins. Co. as subrogee v. Sonitrol, Core-Mark, and Fleming Companies" pending in the District Court of Adams County, Colorado. Lexington is the insurer of the warehouse owner, and asserts negligence and gross negligence claims against Sonitrol; (3) "Bonakemi USA, Inc., v. Sonitrol, Core-Mark, and Fleming Companies et al." pending in the District Court of Adams County, Colorado. Bonakemi is a consignor of property damages in the fire and asserts a claim for willful and wanton negligence against Sonitrol. The state court has granted a summary judgment in favor of Sonitrol dismissing Bonakemi's claims against it, but a final judgment has not yet been entered; and (4) "Product Development Corp. v. Sonitrol, Core-Mark, Fleming Companies, et al." pending in the District Court of Adams County, Colorado. Product Development is a consignor of property damages in the warehouse fire, and asserts claims for willful and wanton negligence against Sonitrol. No Prejudice to Debtors Mr. Lawson argues that the Debtors will not be prejudiced if the suits are allowed to continue. The Debtors will be participating in the lawsuits in much the same way as they would be if the issues were resolved in a claims-estimation proceeding in the Bankruptcy Court. In fact, it is likely that the Debtors will be able to participate at a reduced cost to the estates as compared to a claims-estimation proceeding. In addition, various parties to the suits are located in Colorado, and have already retained Colorado counsel. By contrast, Sonitrol will be substantially prejudiced by continuance of the stay. Sonitrol will be required to litigate the lawsuits in Colorado against non-debtors, while at the same time engaging in a claims-estimation or similar proceeding in the Bankruptcy Court to address its claims against the Debtors. Sonitrol would also face the added logistical burden and costs of initiating a claims-estimation process in the Bankruptcy Court. These added burdens and costs couldn't be ignored. Duplicative litigation would waste judicial resources, both in the Bankruptcy Court and in Colorado. The Colorado state courts have already made significant progress in the lawsuits. For Sonitrol to protect its interests properly in the suits, it may be necessary for it to assert various claims, including cross- claims, third party claims, and set-off claims in Colorado and in Delaware. 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. 36; Bankruptcy Creditors' Service, Inc., 215/945-7000) GREAT LAKES: Reports Improved May 2004 Traffic Results ------------------------------------------------------ Great Lakes Aviation, Ltd. (OTC Bulletin Board: GLUX) announced preliminary passenger traffic results for the month of May. Scheduled service generated 10,398,978 revenue passenger miles (RPM's), a 1.3 percent increase from the same month last year. Available seat miles (ASM's) decreased 3.7 percent to 25,712,913. As a result, load factor increased 1.9 points to 40.4 percent. Passengers carried increased 3.4 percent to 38,000 when compared with May 2003. For the five months ending May 31, 2004 compared to the same five- month period in 2003, revenue passenger miles (RPM's) increased 25.6 percent to 52,947,206 while available seat miles (ASM's) increased 4.0 percent to 137,517,606, resulting in a load factor of 38.5 percent for the year 2004 compared to 31.9 percent for the same five-month period in 2003. The company carried 189,726 revenue passengers for the five-month period ending May 31, 2004, a 22.0 percent increase on a year over year basis. About the Company Great Lakes Aviation, Ltd. is a regional airline operating as an independent carrier and as a code share partner with United Air Lines, Inc. and Frontier Airlines, Inc. As of February 29, 2004, the Company served 36 destinations in ten states to and from Denver, Colorado; three destinations in three states to and from Phoenix, Arizona; and two destinations in one state to and from Minneapolis, Minnesota. The Company is providing scheduled passenger service at 37 airports in ten states with a fleet of Embraer EMB-120 Brasilias and Raytheon/Beech 1900D regional airliners. All scheduled flights are operated under the Great Lakes Airlines marketing identity in conjunction with code-share agreements with United Airlines and Frontier Airlines at the Denver hub. * * * As reported in the Troubled Company Reporter's May 11, 2004 edition, the Company suffered substantial losses during the years 2001 and 2002. These losses produced a significant reduction in the Company's liquidity. As a result, during 2001 and 2002, the Company was in arrears in payments to almost all of the institutions providing lease or debt financing for the Company. On December 31, 2002 and during the second quarter of 2003, the Company was able to negotiate restructured financing agreements with two of the Company's creditors. During 2003, the Company was unable to generate sufficient cash flows to service the Company's outstanding debt and lease payment obligations, including the restructured financing agreements. At December 31, 2003, the Company was in arrears with respect to almost all of the Company's aircraft debt and lease obligations. Therefore, the amount of long-term debt that would otherwise be due after one year is reflected on the Company's balance sheets as long-term obligations classified as current. In addition, the Company cannot determine with a high degree of confidence that it will be able to generate sufficient cash flows during 2004 in order to make the required payments or remain in compliance with its aircraft debt and leases agreements. The Company's liquidity problems, in addition to the Company's dependence on United (which was still in bankruptcy at the end of 2003), raise significant doubts about Great Lakes Aviation Ltd.'s ability to continue as a going concern. Because the Company currently has no financing agreements in place that would allow the Company to secure additional funds, the Company's ability to continue as a going concern will ultimately depend upon the Company's ability to: (i) increase profitability and cash flow or obtain new sources of financing to pay its obligations as such obligations come due; (ii) maintain adequate liquidity; and (iii) achieve sustained profitability. The Company's financial statements have been prepared on a going concern basis that assumes a continuity of operations and the realization of assets and liabilities in the ordinary course of business. The financial statements do not include any adjustments that might result if the Company were forced to discontinue operations. GRENADA MANUFACTURING: Wants to Hire John Mark King as Accountant ----------------------------------------------------------------- Grenada Manufacturing, LLC asks the U.S. Bankruptcy Court for the Northern District of Mississippi for permission to hire John Mark King, CPA, PA as its accountant. Mr. King's services will include: a) assisting with year end adjustments; b) preparing the year end compilation report; and c) preparing the company's federal and state income tax returns. Mr. King estimates his fee to be around $2,500. He assures the Court that he has no connection with the Debtor, its creditors, or other parties in interest of this chapter 11 proceeding. Headquartered in Grenada, Mississippi, Grenada Manufacturing, LLC, filed for chapter 11 protection on April 5, 2004 (Bankr. N.D. Miss. Case No. 04-12077). Craig M. Geno, Esq., at Harris & Geno PLLC represents the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed both estimated debts and assets of over $10 million. HAYES: Inks Stipulation Reaffirming Insurance Policies Obligations ------------------------------------------------------------------ Liberty Mutual Insurance Company filed Claim No. 4885 for $1,085,564, arising from prepetition estimated insurance losses associated with certain workers compensation claims against the Hayes Lemmerz Debtors. Pursuant to certain policies, Liberty and its affiliates provided the Debtors with various insurance coverage, including workers' compensation for claims arising out of prepetition events. Pursuant to three Deductible Policies, represented by Policy No. 4718-00-000103, Liberty is entitled to reimbursement of deductible costs, but not to any adjustment of premium based on a retrospective rating: Workers' Compensation Policies Policy Period ------------------------------ ------------- WAC-64D-004314-0279 02/01/1997 - 02/01/1998 WAC-64D-004314-0289 02/01/1998 - 02/01/1999 WAC-64D-004314-0299 02/01/1999 - 02/01/2000 Three excess Policies, represented by Policy No. 4718-00-000109 have been paid in full, and Liberty is not entitled to any further payments under the Excess Policies: Workers' Compensation Policies Policy Period ------------------------------ ------------- WPC-641-004314-0479 09/01/1997 - 09/01/1998 WPC-641-004314-0489 09/01/1997 - 09/01/1999 WPC-641-004314-0499 09/01/1999 - 02/01/2000 The confirmed Plan provides that: "Upon occurrence of the Effective Date, the Reorganizing Debtors shall continue the Workers' Compensation Programs in accordance with applicable state laws. Nothing in the plan shall be deemed to discharge, release, or relieve the Debtors or Reorganized Debtors from any current or future liability with respect to any of the Workers' Compensation Programs. The Reorganized Debtors shall be responsible for all valid claims for benefits and liabilities under the Workers' Compensation Programs regardless of when the applicable injuries were incurred. Any and all obligations under the Workers' Compensation Programs, including any assessments with respect to the Michigan Workers' Compensation Programs and retrospectively rated premium rate adjustments from the Ohio Bureau of Workers' Compensation, shall be paid in accordance with the terms and conditions of the Workers' Compensation Programs and in accordance with all applicable laws." The Debtors objected to Liberty's claim on the basis that "they continue to administer their worker's compensation program in accordance with the terms and conditions of the applicable worker's compensation program and maintain, as required by contract, a $250,000 loss fund balance." The Parties engaged in discussions regarding the Liberty Claim and the Objection, resulting in a global resolution comprehensively resolving the Liberty Claim. Under a stipulation, the Debtors reaffirm all of their obligations under the Deductible Policies, including the obligation to make timely payments to Liberty on account of all deductibles owing on account of the Deductible Policies. Hence, the Liberty Claim is deemed withdrawn. (Hayes Lemmerz Bankruptcy News, Issue No. 50; Bankruptcy Creditors' Service, Inc., 215/945-7000) HELLER FINANCIAL: Fitch Junks 1999 PH-1 Class M Notes Rating ------------------------------------------------------------ Fitch Ratings downgrades Heller Financial Commercial Mortgage Asset Corp.'s mortgage pass-through certificates, series 1999 PH-1, as follows: --$7.6 million class M to 'CCC' from 'B-'. Fitch also upgrades the following classes: --$53 million class D to 'AAA' from 'A+'; --$12.6 million class E to 'AA' from 'A-'; --$37.9 million class F to 'A' from 'BBB'; --$17.7 million class G to 'A-' from 'BBB-'; --$35.3 million class H to 'BBB-' from 'BB+'. In addition, Fitch affirms the following classes: --$109.7 million class A-1 'AAA'; --$535.6 million class A-2 'AAA'; --Interest-only class X 'AAA'; --$22.7 million class B 'AAA'; --$20.2 million class C 'AAA'; --$20.2 million class J 'BB'; --$7.6 million class K 'BB-'; --$15.1 million class L 'B'. The $18.8 million class N is not rated by Fitch. The downgrade reflects the expected loss with one of the four specially serviced loans (2.5%) in the pool. This loan is the largest of the specially serviced loan (1.7%) and is secured by an office building located in Columbus, OH. The loan transferred to the special servicer as a result of monetary default in February 2003 and is now real estate owned (REO). The special servicer, Lennar Partners, Inc., has since hired new management at the property and is attempting to lease the vacant space. An appraisal reduction of $10.8 million was taken in September 2003. Fitch expects a loss will occur on this loan at the time it is sold from the trust. The upgrades reflect both the increased credit enhancement levels from amortization and subordination levels of similar deals issued today. As of the May 2004 distribution date, the pool's aggregate collateral balance has been reduced 9.5% to $914 million from $1 billion at issuance. Since issuance, the trust has incurred approximately $1.4 million in losses due to the disposition of two assets. Fitch reviewed the performance and underlying collateral of the two credit assessed loans in the pool: South Plains Mall (6.8%) and Station Plaza Office Complex (2.5%). Based on their stable performance, both credit assessments remain investment grade. The South Plains Mall, located in Lubbock, Texas, consists of 1.1 million square feet, of which 1.0 million sf is collateral for the loan. Based on data provided by the master servicer, Wachovia Securities, the year-end 2003 debt service coverage ratio and occupancy levels are unchanged since issuance, with a DSCR of 1.99 times (x), and occupancy at 98%. The Station Plaza Office Complex consists of three office buildings (320,477 sf) located in Trenton, New Jersey. The properties have maintained occupancy levels of 100% since issuance. Based on data supplied by the master servicer, the DSCR has declined negligibly since issuance. HERKIMER FOREST: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Herkimer Forest Products Corporation 110 Glens Street, 2nd Floor Glens Falls, New York 12801 Bankruptcy Case No.: 04-13978 Type of Business: The Debtor is engaged in the business of logging. Chapter 11 Petition Date: June 16, 2004 Court: Northern District of New York (Albany) Judge: Robert E. Littlefield Jr. Debtor's Counsel: Richard H. Weiskopf, Esq. Pasquariello & Weiskopf, LLP One Marcus Boulevard, Suite 200 Albany, NY 12205 Tel: 518-689-0323 Total Assets: $865,000 Total Debts: $1,046,032 Debtor's 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Winston Tower 1988 Inc. Secured Value: $63,658 $425,000 Roy, Pierre $47,552 Materiaux Blanchet $46,548 Clinton County Treasurer $23,534 Bois Francs Kingsey, Inc. $22,293 Winston Tower 1988 Inc. First Mortgage $19,022 Secured Value: $125,000 First Pioneer Farm Credit $18,801 Caterpillar $15,100 Winston Tower 1988, Inc. $12,640 Internal Revenue Service $10,236 Bartlett, Pontiff, Stewart & Rhodes $7,155 Francibois, Inc. $6,372 Internal Revenue Service $4,150 Syracuse Supply $3,635 Brouillette, Eric $2,862 Sechoir Cote $2,725 Wickham Flooring $2,437 MZG Realty $2,400 Curtis, Murphy & Jeffrey $2,175 NYS Dept. of Tax & Finance $2,126 HIDDEN POINTE: Asks to Hire Locke Liddel as Special Counsel ----------------------------------------------------------- Hidden Pointe Properties, LP wants to hire Locke Liddel & Sapp LLP as special counsel in connection with the sale of its primary asset, Hidden Pointe Apartments. The Debtor tells the U.S. Bankruptcy Court for the Northern District of Georgia, Atlanta Division that the attorneys of Locke Liddell are experienced, qualified and competent to represent the Debtor in this matter. The Debtor relates that it has executed and Agreement of Purchase and Sale of Hidden Pointe Apartments to Capital Housing Partners, LLC and will require the expertise of a legal counsel to provide advice and prepare documentation in connection with the closing of the real estate transaction. Lock Liddler's current hourly rates are: Name Designation Billing Rate ---- ----------- ------------ Bast, Cynthia Partner $350 per hour Epps, Jerry Partner $350 per hour Hailey, Jay Partner $395 per hour Hawley, Brad Partner $395 per hour Hubenak, Jeff Partner $375 per hour McDoniel, Mike Partner $350 per hour Morrow, Rick Partner $350 per hour Nguyen, Tini Associate $260 per hour Tran, Tai Associate $230 per hour Headquartered in Dallas, Texas, Hidden Pointe Properties, L.P., is the owner of an apartment project including 440 separate units located in Stone Mountain, Georgia. The Company filed for chapter 11 protection on March 29, 2004 (Bankr. N.D. Ga. Case No. 04- 65132). Carole Thompson Hord, Esq., and John A. Christy, Esq., at Schreeder, Wheeler & Flint, LLP represent the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed both estimated debts and assets of over $10 million. INTERLINE BRANDS: Promotes William Sanford Chief Operating Officer ------------------------------------------------------------------ Interline Brands, Inc. announced that Executive Vice President & Chief Financial Officer William E. Sanford has been promoted to Chief Operating Officer. He will be responsible for all field- based sales and customer service operations, national accounts and new business development activities, as well as the company's acquisition program. Mr. Sanford joined Interline Brands' predecessor company, Wilmar Industries, Inc., as Senior Vice President and Chief Financial Officer in 1999. "Bill Sanford has a deep background in operations and new business development, and has held several key executive positions with leading U.S. industrial distribution companies during his twenty- year career," said Michael Grebe, Interline's President and Chief Executive Officer. "We are very fortunate to have Bill fill this critical role at Interline." The company also announced that it has named Charles Blackmon as Vice President and Chief Financial Officer. Mr. Blackmon comes to Interline Brands after 24 years with Magnatrax Corporation and its predecessor companies, where he served as Chief Financial Officer, Executive Vice President, and Director. While at Magnatrax, Mr. Blackmon led an initial public offering, executed several debt financings, oversaw numerous acquisitions and played a lead role in investor relations and corporate governance policy. Mr. Blackmon is a certified public accountant and is a director and Audit Committee Member of Concurrent Computer Corporation. "We are very pleased to add Charles' experience and leadership to our strong financial team," said Grebe. "His broad experience will be a major asset for Interline Brands." Today's appointments, along with the previously announced appointment of Laurence Howard as Vice President, General Counsel and Secretary, help to further bolster the capability and experience of the senior management team. Interline Brands, Inc. is a leading direct marketing and specialty distribution company with headquarters in Jacksonville, Florida. Interline provides maintenance, repair and operations (MRO) products to professional contractors, facilities maintenance professionals, hardware stores and other customers across North America and Central America. * * * As reported in the Troubled Company Reporter's June 18, 2004 edition, Standard & Poor's Ratings Services placed its 'B+' corporate credit and bank loan ratings and 'B-' subordinated debt rating on Interline Brands Inc. on CreditWatch with positive implications. "The CreditWatch action reflects the potential for lower debt leverage and greater financial flexibility if the company's planned initial public offering of common stock is successful," said Standard & Poor's credit analyst Pamela Rice. INT'L STEEL: Establishing $19M+ Trust Fund for Water Treatment -------------------------------------------------------------- International Steel Group Inc. (NYSE: ISG) announced that it has reached an agreement with the Commonwealth of Pennsylvania and its Department of Environmental Protection (DEP) to create a $19.9 million trust fund, which will be funded over the next several years to finance continual treatment of polluted mine pool discharges in Cambria, Somerset and Butler counties in Pennsylvania. The discharges come from seven underground mines and three coal refuse areas formerly operated by Bethlehem Steel Corp. and its subsidiary, BethEnergy Mines Inc. ISG acquired the mines and substantially all other assets of Bethlehem Steel in 2003. ISG President and CEO Rodney Mott said, "We are very pleased to complete this agreement with Pennsylvania. This agreement protects the environment and provides a cost-effective plan for ISG as the new owner of these sites. This is important in helping to define the role of our substantial Pennsylvania coal reserves in the context of ISG's overall, long-term raw material strategy." State officials had originally estimated the need for a $47 million fund to treat the mine water, but operational improvements and efficiencies recommended by ISG, and endorsed by DEP, reduced the amount to $19.9 million. ISG has already funded about $2.6 million in an escrow account and expects to fund the balance over the next several years. ISG has recognized these amounts in its recorded environmental liabilities. About International Steel Group Inc. International Steel Group Inc. is the largest integrated steel producer in North America, based on steelmaking capacity. The Company has the capacity to cast approximately 21 million tons of steel products annually. It ships a variety of steel products from 12 major steel producing and finishing facilities in seven states, including hot-rolled, cold-rolled and coated sheets, tin mill products, carbon and alloy plates, rail products and semi- finished shapes serving the automotive, construction, pipe and tube, appliance, container and machinery markets. For additional information on ISG, visit http://www.intlsteel.com/ * * * As reported in the Troubled Company Reporter's April 6, 2004 edition, Standard & Poor's Ratings Services assigned its 'BB' rating to Richfield, Ohio-based steel manufacturer International Steel Group Inc.'s (ISG) proposed $600 million senior unsecured notes due 2014. Standard & Poor's at the same time affirmed its 'BB' corporate credit rating and 'BB+' senior secured bank loan rating on the company. The outlook is positive. The ratings on ISG reflect its leading market position in the highly cyclical and competitive North American steel industry, its competitive cost position, and moderate financial policies. ISG was formed through the acquisitions of bankrupt steel companies LTV, Acme, and Bethlehem Steel. Unlike some other unionized steel producers, ISG does not have burdensome legacy costs, or the high number of employees it had before these acquisitions. ISG is expected to fully realize its estimated annual cost savings of $250 million in 2004, because it has reduced headcount at Bethlehem by 3,100. These combined savings provide a meaningful cost advantage compared with competing unionized steel companies in the U.S. that are facing rising labor and legacy costs. ISG's management uses a mini-mill strategy, such as establishing flexible work rules and profit sharing. ISG plans to implement a similar strategy with Weirton, and already has an agreement for a new contract with Weirton's unions similar to its existing contracts, including reducing labor by about one-third, and establishing more flexible work rules and benefits. Nevertheless, although some of its costs have become more variable, this remains a business with a high degree of operating leverage, and requires the company to operate at high levels of capacity utilization to remain profitable. INT'L WIRE: Disclosure Statement Hearing Set for June 30 -------------------------------------------------------- On May 10, 2004, International Wire Group, Inc., and its debtor- affiliates filed a Joint Plan of Reorganization under Chapter 11 and a corresponding proposed disclosure statement. The U.S. Bankruptcy Court for the Southern District of New York will convene a hearing on June 30, 2004 at 10:00 a.m. to consider whether the proposed disclosure statement provides adequate information to creditors when asked to vote on the Company's Plan. The hearing will be held before the Honorable Burton R. Lifland in Manhattan. Objections to the adequacy of the proposed disclosure statement, if any, should be filed not later than June 22, 2004 at 4:00 p.m. and be served on: The Debtors: International Wireless Group, Inc. 101 South Hanley Road, Suite 1075 St. Louis, Missouri 63105 Attn: David J. Webster Chief Restructuring Officer Counsel to the Debtors: Weil, Gotshal & Manges LLP 767 Fifth Avenue New York, New York 10153-0119 Attn: Alan B. Miller, Esq. - and - Weil, Gotshal & Manges LLP 200 Crescent Court, Suite 300 Dallas, Texas 75201-6950 Attn: Stephen A. Youngman, Esq. The U.S. Trustee: Office of the United States Trustee for the Southern District of New York 33 Whitehall Street, 21st Floor New York, New York 10004 Attn: Paul Schwartzberg, Esq. Counsel to the Postpetition Lenders: Schulte Roth & Zabel LLP 919 Third Avenue New York, New York 10022 Attn: Daniel V. Oshinsky, Esq. and Robert Mrofka, Esq. Counsel to the Creditors' Committee: Stroock & Stroock & Lavan LLP 180 Maiden Lane New York, New York, 10038-4982 Attn: Michael J. Sage, Esq. and Kristopher M. Hansen, Esq. Copies of the Proposed Disclosure Statement are available at http://www.nsyb.uscourts.gov International Wire Group, Inc., designs, manufactures and markets bare and tin-plated copper wire and insulated copper wire products for other wire suppliers and original equipment manufacturers. The company filed for chapter 11 protection (Bankr. S.D.N.Y. Case No. 04-11991) on March 24, 2004 before the Honorable Burton R. Lifland. Alan B. Miller, Esq., of Weil, Gotshal & Manges, LLP represents the debtor in its restructuring efforts. When it filed for bankruptcy protection, the debtor listed total assets of $393,000,000 against total debts of $488,000,000. ISLE OF CAPRI: Incurs $4.3MM Net Loss in Quarter Ended April 2004 ----------------------------------------------------------------- Isle of Capri Casinos, Inc. (Nasdaq: ISLE) reported financial results for the fiscal year and fourth quarter ended April 25, 2004. For the fiscal year 2004, the company reported net income of $27.7 million and earnings per diluted common share of $0.91. This compares to net income for the same period in fiscal 2003, of $45.6 million, or $1.50 per diluted share. Net revenues for the fiscal year ended April 25, 2004, were $1.11 billion, up from $1.07 billion for the comparable period in the previous year. Adjusted EBITDA (1) in fiscal 2004 was a record $251.7 million, an increase of $9.4 million, or 4.0 percent, over the prior fiscal year Adjusted EBITDA (1) of $242.3 million. For the fourth quarter, the company reported a net loss of $4.3 million, and loss per diluted common share of $0.15, compared to net income of $18.2 million, or $0.60 per diluted common share for the same quarter last year. For the fourth quarter ended April 25, 2004, the company reported fourth quarter net revenues of $292.6 million, compared to $275.9 million for the same period in fiscal 2003, and Adjusted EBITDA (1) of $66.3 million, compared to $73.6 million for the same period in fiscal 2003. Bernard Goldstein, Isle of Capri Casinos, Inc. chairman and chief executive officer, said, "Like most growing businesses, we experienced a year that presented unique challenges; however, we relied on our strong management team and proven operational approach to produce record annual Adjusted EBITDA. As we continue on our path of growth, we recognize that some short-term challenges will continue, and we are poised to successfully manage them, while remaining focused on goals of expansion and strengthening our existing properties." During the fiscal year and the fourth quarter ended April 25, 2004, the company incurred a loss on early extinguishment of debt in connection with the refinancing of its $390.0 million 8 3/4 percent Senior Subordinated Notes due 2009 and preopening expenses related to the Isle-Our Lucaya and the Blue Chip-Wolverhampton property openings. Fourth Quarter 2004 Developments Fiscal fourth quarter 2004 Adjusted EBITDA was less than expected due to the following factors: * As the company pursued its $94.0 million expansion plan to upgrade and expand its Black Hawk, CO properties, greater than expected construction disruption occurred. This disruption, which resulted in an estimated shortfall of approximately $2.0 million, is expected to continue until the spring of 2005. The company will attempt to mitigate the adverse effects of construction through increased promotional and targeted reactivation efforts and attempting to accelerate the most disruptive elements of the construction process. * The transformation of the Isle-Bossier City to the first full resort property in the Bossier market was completed with the opening of the Palms Spa, Coconut Cay pool and entertainment area during the fourth quarter of fiscal 2004. However, increased competition and slower ramp-up of gaming play than anticipated from the completion of the property's additional 265-room hotel and other amenities resulted in an estimated shortfall of approximately $1.9 million. Based on current results, the company believes the ramp-up to expected levels will continue to be slow due to competitive effects of Native American gaming in Oklahoma and significant capacity additions at Louisiana Downs. * The Isle-Our Lucaya in Freeport, Grand Bahama, which opened in the third quarter of fiscal 2004 as an upscale Isle player incentive, experienced a slower than expected increase of business due to less than anticipated play from high-season occupancy at the resort and the marketing channels' minimal effect due to timing of the opening. These factors resulted in an estimated $1.1 million shortfall. The company is aggressively pursuing its airlift, independent agent and cross-property marketing channels to stimulate additional gaming revenues. * The Blue Chip-Dudley produced less than expected results due to a combination of reduced drop and lower hold percentages than experienced in the third quarter's first six weeks of operation. This yielded results that were less than expected by approximately $0.8 million. During the fourth quarter, Blue Chip-Wolverhampton opened near Birmingham. Isle's strategy with Blue Chip is to pursue strategic locations and licensing, while gaining valuable operating experience in United Kingdom markets. This strategy will position the company for possible expansion upon the expected deregulation of gaming in the United Kingdom. * As new business developments for the company progressed, related expenses exceeded expectations, primarily for the United Kingdom and the St. Louis area. These expenses included legal and design fees of approximately $2 million. The company is positioned to pursue its growth strategy in the United Kingdom, Chicago, St. Louis and other venues. Additional Highlights * The Isle issued $500.0 million of 7 percent Senior Subordinated Notes due in 2014 and used the proceeds to retire $390.0 million of its 8 3/4 percent Senior Subordinated Notes due 2009, including prepayment premiums and accrued interest thereon, $37.5 million of its Senior Secured Term Loan B, $8.0 million of its Senior Secured Revolving Loans, fees and expenses andgeneral corporate purposes. * The company's industry-leading members' club, IsleOne(TM) Players Club, continued to grow in terms of acceptance and loyalty with players. Revenue from club members at the same properties, fourth quarter over the prior year's fourth quarter, increased by approximately 6.3 percent. * The IsleOne Marketing System was upgraded with a promotions module, which allows players to swipe their club card for instant promotion entry and access to promotion information. * The Isle has continued to aggressively pursue the strategy of integrating ticket-in/ticket-out technology and paperless rewards on the casino floor, to enhance customer gaming experiences. * The $15.0 million Grand Palais renovation project at the Isle-Lake Charles continues. The Texas and first deck have been completed and construction is ongoing on the second deck. Substantial completion of the second deck is expected by July 4, with all remaining work completed by September. * The Isle's development in Coventry, England is on schedule. The company expects to spend approximately $19.0 million during fiscal year 2005 on utility and other infrastructure. Timothy M. Hinkley, Isle of Capri Casinos, Inc. president and chief operating officer, said, "We recognize that the business from customers who are not members of our players' club (retail) declined in the fourth quarter, and early results in the Louisiana, Mississippi and Colorado markets indicate that this softness has continued into the first quarter of fiscal 2005. Therefore, to combat this challenge, we are implementing proactive strategies including aggressive promotional programs, targeted efforts to drive increased visitation from deeper within our customer base and the reactivation of customers with decreased visitation patterns. Along with these initiatives, we will remain focused on the enhancement of our core property product to better compete with existing and anticipated new competition." About the Company Isle of Capri Casinos, Inc., a leading developer and owner of gaming and entertainment facilities, operates 18 casinos in 16 locations. The company owns and operates riverboat and dockside casinos in Biloxi, Vicksburg, Lula and Natchez, Mississippi; Bossier City and Lake Charles (2 riverboats), Louisiana; Bettendorf, Davenport and Marquette, Iowa; and Kansas City and Boonville, Missouri. The company also owns a 57 percent interest in and operates land-based casinos in Black Hawk (two casinos) and Cripple Creek, Colorado. Isle of Capri's international gaming interests include a casino that it operates in Freeport, Grand Bahamas, and a two-thirds ownership interest in casinos in Dudley and Wolverhampton, England. The company also owns and operates Pompano Park Harness Racing Track in Pompano Beach, Florida. * * * As reported in the Troubled Company Reporter's March 18, 2004, Edition, Standard & Poor's Ratings Services revised its outlook on Isle of Capri Casinos, Inc. to negative from stable. At the same time, Standard & Poor's affirmed its ratings on the company, including its 'BB-' corporate credit rating. The outlook revision follows Isle's announcement that the company has been selected by the Illinois Gaming Board as the successful bidder for the 10th Illinois gaming license. The company bid $518 million for the license. Subject to final approval by the Illinois Gaming Board and Bankruptcy Court approval, Isle intends to construct a $150 million casino in Rosemont, which will include 40,000 square feet of gaming space and 1,200 gaming positions, with expected completion to occur eight months after construction commences. Given initial capital spending plans, increased debt associated with the Illinois project, and pro forma for Standard & Poor's estimate of cash flow for the Rosemont property's first full year of operation, debt to EBITDA, adjusted for operating leases, will be between 5.0x and 5.5x by the company's fiscal year end in April 2005. The company has not yet disclosed its plans for financing the cost of the license and the new casino. "The ratings reflect Isle's aggressive growth strategy, the second-tier market position of many of its properties, and increased expansion capital spending," said Standard & Poor's credit analyst Peggy Hwan. "These factors are offset by the company's diverse portfolio of casino assets, relatively steady historical operating performance, and credit measures that have historically been maintained in line with the rating." J.C. PENNEY: Fitch Places Low-B Ratings On Watch Positive --------------------------------------------------------- Fitch Ratings has placed J. C. Penney Co., Inc. on Rating Watch Positive reflecting improved operating trends within Penney's department store business together with the expectation for some level of debt reduction from the proceeds of the sale of the Eckerd drugstore business. Fitch rates Penney as follows: --$1.5 billion secured bank facility 'BB+'; --Senior unsecured notes 'BB'; --Convertible subordinated notes 'B+'. Approximately $5.2 billion of debt is currently outstanding. Penney continues to make solid progress in turning around its department stores and catalog/internet business. The segment's comparable store sales increased a strong 9.4% in the four months ended May 2004, and have been positive for three consecutive years. The segment's operating margin improved to 5.7% in the first quarter of 2004 from 2.2% a year earlier, toward a 2005 goal of 6-8%. Penney recently received FTC approval for the sale of Eckerd, which is now expected to close by the end of July, generating net cash proceeds of approximately $3.5 billion. Penney's management has indicated that it will deploy the proceeds from the sale of Eckerd into a combination of debt reduction and share repurchases. The ultimate rating action will depend on the actual proportion of the proceeds used to retire debt, and management's plan for the $3 billion of cash investments on hand as of May 1, 2004. JEWETT AVENUE DEVT: Case Summary & 16 Largest Unsecured Creditors ----------------------------------------------------------------- Debtor: Jewett Avenue Development LLC 273-287 Jewett Avenue Staten Island, New York 10302 Bankruptcy Case No.: 04-18947 Chapter 11 Petition Date: June 16, 2004 Court: Eastern District of New York (Brooklyn) Debtor's Counsel: J. Ted Donovan, Esq. Finkel Goldstein Berzow Rosenbloom Nash 26 Broadway, Suite 711 New York, NY 10004 Tel: 212-344-2929 Fax: 212-422-6836 Total Assets: $129,000 Total Debts: $1,302,218 Debtor's 16 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ J&S Builders of New York, $322,112 Inc. 312 Barbara Street Staten Island, NY 10306 Corporate Contractor Trade debt $240,000 Dinaso & Sons Trade debt $103,535 John V. Mezzacappa, Jr. Trade debt $84,000 Scara Mix Inc. Trade debt $54,150 Richmond Watermain & Sewer Trade debt $50,000 Richmond Plumbing & Heating Trade debt $28,655 Adco Construction Trade debt $15,000 4 Him Construction Company Trade debt $12,000 BLJ Construction Inc. Trade debt $10,000 K&D Frame & Door Corp. Trade debt $8,553 D&C Construction Trade debt $8,300 Taub Floor Covering Trade debt $6,602 Loffreno Landscape Trade debt $6,500 Contracting Corp. Walter Fisher Trade debt $1,800 Richmond Iron & Wire Trade debt $1,011 JILLIAN'S ENTERTAIMENT: Taps Houlihan Lokey as Financial Advisor ---------------------------------------------------------------- Jillian's Entertainment Holdings, Inc., and its debtor-affiliates are asking the U.S. Bankruptcy Court for the Western District of Kentucky, Louisville Division, for permission to employ Houlihan Lokey Howard & Zukin Capital, Inc., as their financial advisor and investment banker. In this engagement, the Debtors expect Houlihan Lokey to: a) advise the Debtors generally of available capital restructuring and financing alternatives, including recommendations of specific courses of action, and assist the Debtors with the design of alternative transaction structures and any debt and equity securities to be issued in connection with a transaction; b) assist the Debtors in their discussions with lenders, noteholders and other interested parties regarding the Debtors' operations and prospects and any potential transaction; c) assist the Debtors with the development, negotiation and implementation of a transaction or transactions, including participation as a representative of the Debtors in negotiations with creditors and other parties involved in a transaction; d) assist the Debtors in valuing the Debtors and/or, as appropriate, valuing the Debtors' assets or operations; provided that any real estate or fixed asset appraisals needed would be executed by outside appraisers; e) provide expert advice and testimony relating to financial matters related to a transaction or transactions, including the feasibility of any transaction and the valuation of any securities issued in connection with a transaction; f) advise the Debtors as to potential mergers or acquisitions, and the sale or other disposition of any of the Debtors' assets or businesses; g) advise the Debtors and act as a placement agent, as to any potential financings, either debt or equity, including debtor-in-possession financing; h) assist the Debtors in preparing proposals to creditors, employees, shareholders and other parties-in-interest in connection with any transaction; i) assist the Debtors' management with presentations made to the Debtors' Board of Directors regarding potential transactions and/or other issues related thereto; j) render such other financial advisory and investment banking services as may be mutually agreed upon by Houlihan and the Debtors. Houlihan Lokey will be paid: a) $50,000 per month; and b) a Transaction Fee equal to $1,000,000, plus 3% of the Aggregate Gross Consideration in excess of $50,000,000; it being agreed that the Minimum Transaction Fee of $1,000,000 will only be paid in respect of the consummation of the first Transaction and that no further transaction fees will be paid until the total Aggregate Gross Consideration exceeds $50,000,000. Headquartered in Louisville, Kentucky, Jillian's Entertainment Holdings, Inc. -- http://www.jillians.com/-- operates more than 40 restaurant and entertainment complexes in about 20 US states. The Company filed for chapter 11 protection on May 23, 2004 (Bankr. W.D. Ky. Case No. 04-33192). Edward M. King, Esq., at Frost Brown Todd LLC and James H.M. Sprayregen, P.C. at Kirkland & Ellis LLP, represent the Debtors in their restructuring efforts. When the Company filed for protection from their creditors, they listed estimated assets of more than $100 million and estimated debts of over $50 million. KROLL INC: Notes Resale Registration Statement Declared Effective ----------------------------------------------------------------- Kroll Inc. (NASDAQ: KROL), the global risk consulting company, announced that on June 16, 2004 the Securities and Exchange Commission declared effective its registration statement on Form S-3 for the resale of $175 million aggregate principal amount of its 1.75% Convertible Subordinated Notes due 2014 and the shares of its common stock into which the notes are convertible. The notes were originally issued in January 2004 in a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended. The notes and the shares of common stock into which the notes are convertible may be offered for resale by the holders listed as selling securityholders in the registration statement. Kroll will not receive any proceeds from any resale by the selling securityholders of the notes or the shares of common stock issuable upon conversion of the notes. About the Company Kroll Inc. (NASDAQ: KROL), the world's leading independent risk consulting company, provides a broad range of investigative, intelligence, financial, security and technology services to help clients reduce risks, solve problems and capitalize on opportunities. Headquartered in New York with more than 60 offices on six continents, Kroll has a multidisciplinary corps of more than 2,600 employees and serves a global clientele of law firms, financial institutions, corporations, non-profit institutions, government agencies and individuals. Kroll has four business groups: (1) Background Screening, which provides employee, mortgage and resident screening, substance abuse testing, and identity theft services; (2) Consulting Services, which provides investigations, intelligence, security, forensic accounting, litigation consulting, and valuation services; (3) Corporate Advisory & Restructuring, which provides corporate restructuring, operational turnaround, strategic advisory services, financial crisis management, and corporate finance services; and (4) Technology Services, which provides data recovery, electronic discovery, and computer forensics services and software. For more information, please visit: http://www.krollworldwide.com/ * * * As reported in the Troubled Company Reporter's May 21, 2004 edition, Standard & Poor's Ratings Services placed its ratings on Kroll Inc., including its 'BB-' corporate credit rating, on CreditWatch with positive implications following Marsh & McLennan Cos.'s (MMC;AA-/Watch Neg/A-1+) announcement that it intends to acquire Kroll for $1.95 billion in cash, with a significant portion to be financed by prospective debt transactions. In resolving the CreditWatch listing for Kroll, Standard & Poor's will review the terms of the transaction, in particular, MMC's intentions with regard to the existing indebtedness of Kroll. ORION TELECOMM: US Trustee Names 7-Member Creditors' Committee -------------------------------------------------------------- The United States Trustee for Region 2 appointed seven creditors to serve on an Official Committee of Unsecured Creditors in Orion Telecommunications Corp.'s Chapter 11 cases: 1. Verizon Global Solutions, Inc. c/o William G. Cu mmings, Director-Special Assets Verizon Communications, Inc. 1095 Avenue of the Americas New York, NY 10036 Tel. No. (212) 395-0802 2. AT&T Corp. One AT&T Way, Room 3A203 Bedminster, New Jersey 07921 Attn: James Grudus, Senior Attorney or Mr. Jason Mastromonaco Tel. No. (732) 805-5790 3. Callipso Corporation 2 MacArthur Place, 6' Floor Santa Ana, CA 92707 Attn: Mr. Rod Rummelsburg Tel. No. (212) 668-4100 4. Telenor Global Services AS N-1331 Fomebu Snaroyveien 30, Building L6D Oslo, Norway Attn: Mr. Per Wien Tel. No. (479) 113-6900 5. Grande Communications Networks, Inc. c/o Doug Brannagan, Comptroller 401 Carlson Circle San Marcos, Texas 78666 Attn: Mark G. Sessions, General Counsel Tel. No. (512) 878-5434 6. Novatel, LTD 11550IH-10 West, Suite 110 San Antonio, TX 78230 Attn: Dina Garcia, Controller Tel. No. (210) 698-8005 7. Belgacom SA of Public Law Bld. du Roi Albert 112713,1030 Brussels, Belgium Attn: Mr. Trushar Patel Tel. No. (322) 202-8209 Official creditors' committees have the right to employ legal and accounting professionals and financial advisors, at the Debtors' expense. They may investigate the Debtors' business and financial affairs. Importantly, official committees serve as fiduciaries to the general population of creditors they represent. Those committees will also attempt to negotiate the terms of a consensual chapter 11 plan -- almost always subject to the terms of strict confidentiality agreements with the Debtors and other core parties-in-interest. If negotiations break down, the Committee may ask the Bankruptcy Court to replace management with an independent trustee. If the Committee concludes reorganization of the Debtors is impossible, the Committee will urge the Bankruptcy Court to convert the Chapter 11 cases to a liquidation proceeding. Headquartered in New York, New York, Orion Telecommunications Corp. -- http://www.oriontelecommunications.com/-- is a market- leading manufacturer and distributor of telecommunication services. The company filed for chapter 11 protection on April 1, 2004 (Bankr. S.D.N.Y. Case No. 04-12203). Frank A. Oswald, Esq., at Togut, Segal & Segal LLP represents the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed $16,347,957 in total assets and $97,588,754 in total debts. MARKLIN PROPERTIES: Want to Hire Cochran & Dahl as Attorneys ------------------------------------------------------------ Marklin Properties, L.L.C., wants the U.S. Bankruptcy Court for the District of Arizona, Tucson Division, to approve it's application to employ Cochran & Dahl, P.C., as its attorney in its chapter 11 case. The Debtor has selected the firm because it has considerable experience in matters of this character. The Debtor anticipates Cochran & Dahl to: a) give Debtor legal advice regarding it powers and duties with respect to continued operation of its business and management of its property; b) advise Debtor on the preparation of a disclosure statement and to assist Debtor to submit a Chapter 11 Plan; c) perform all other legal services for Debtor which may be necessary herein; The firm's current hourly rate are: Professional Designation Billing Rate ------------ ----------- ------------ Jerry L. Cochran Attorney $225 per hour Barbara J. Fullmer Paralegal $85 per hour Headquartered in Scottsdale, Arizona, Marklin Properties LLC filed for chapter 11 protection on May 21, 2004 (Bankr. D. Ariz. Case No. 04-02566). Jerry L. Cochran, Esq., at Cochran & Dahl, PC represents the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed $11,167,619 in total assets and $8,355,012 in debts. MESA AIR: Finalizes Asset Management Agreement with LogisTechs -------------------------------------------------------------- Mesa Air Group, Inc. (Nasdaq: MESA) announced it has finalized an agreement with LogisTechs, Inc., an affiliate of GE Capital Aviation Services (GECAS) for the sale, management, and repair of its CRJ 200 aircraft spare parts inventory. Under the agreement, LogisTechs will purchase approximately $25 million in existing and future spare parts inventory to support Mesa's CRJ 200 fleet. The parties have also agreed to negotiate similar agreements for up to $43 million of spare parts for Mesa's current and to be delivered fleet of Bombardier CRJ 700/900 and current fleet of Embraer 145. LogisTechs will provide asset management planning and support for Mesa's spare part operational requirements and Rockwell Collins will manage associated program repairs through Collins Aviation Services. The agreement announced will cover 54 of Mesa's CRJ 200 regional jets. Mesa currently operates 51 50-seat CRJ 200s, 36 50- seat ERJ145s, 15 64-seat CRJ 700s and 21 86-seat CRJ 900s. The Company has an additional 17 CRJ 900s on firm order which the parties intend to cover under this program. The transaction will be for a period of 10 years. "This agreement will allow Mesa to dramatically reduce the capital we have already committed to our spare parts inventory as well as future amounts required to support our planned regional jet growth," said Jonathan Ornstein, Mesa's Chairman and CEO. "Furthermore, while the agreement provides Mesa with predictable and low costs for the repair and provisioning of our parts inventory, it also guarantees higher levels of service reliability than we experience today." "This marks a new and exciting era for supply chain management in the airline industry and we're very happy that Mesa has chosen LogisTechs to support their inventory needs for the long term," said Craig Ballard, LogisTechs' President and CEO. "It's a very innovative contract and everybody, including Mesa, Rockwell Collins, and GE deserve a lot credit for breaking new ground in an area critical to the success of the airline." Mesa, with projected 2005 revenues in excess of $1 billion, currently operates 174 aircraft with over 1,000 daily system departures to 176 cities, 42 states, the District of Columbia, Canada, Mexico and the Bahamas. It operates in the West and Midwest as America West Express; the Midwest and East as US Airways Express; in West and Midwest as United Express; in Kansas City with Midwest Airlines and in New Mexico and Texas as Mesa Airlines. The Company, which was founded in New Mexico in 1982, has approximately 4,400 employees. Mesa is a member of Regional Aviation Partners and the Regional Aviation Association. MIRANT CORPORATION: Wants to Reject Owens Brockway Sales Contract ----------------------------------------------------------------- Owens Brockway Glass Container, Inc., and Mirant Americas Retail Energy Marketing, LP, are parties to a Retail Electricity Sales Agreement, dated November 7, 2002, pursuant to which: (a) MAREM agreed to deliver to Owens' facility located at 500 Packard Highway, in Charlotte, Michigan, all electric energy and Ancillary Services required by the facility and sufficient to cover transmission and distribution losses; and (b) Owens agreed to pay a Demand Charge and Energy Charge for the Electricity. The Sales Contract expires on May 31, 2005. Michelle C. Campbell, Esq., at White & Case, LLP, in Miami, Florida, informs the Court that the Sales Contract is "out-of- the-money" with respect to the Debtors and provides no benefit to the Mirant Corporation Debtors. Accordingly, the Debtors seek the Court's authority to reject the Sales Contract effective June 25, 2004. 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. 36; Bankruptcy Creditors' Service, Inc., 215/945-7000) MIRANT CORPORATION: Names Curt Morgan as Chief Operating Officer ---------------------------------------------------------------- Mirant (Pink Sheets: MIRKQ) announced the appointment of Curt Morgan, 43, to executive vice president and chief operating officer. Morgan was previously executive vice president of Mirant's North America operations. He joined the company in August 2003. Morgan will oversee all of Mirant's generating plants in the Caribbean, Philippines and U.S., as well as the company's commercial and marketing operations. "The creation of a chief operating officer position supports our ongoing effort to streamline operations, manage costs and create efficiencies," said Marce Fuller, president and chief executive officer. "Consolidating operations under one executive also enables the sharing of operational best-practices with greater ease and efficiency across the company." Added Fuller, "Our aim is to emerge from Chapter 11. Everything we are doing supports that goal." Mirant also announced that it has hired Terry Thompson, 31, as vice president, restructuring. He will report directly to Mirant's chief financial officer, Michele Burns, effective June 21. Thompson will be responsible for managing the day-to-day bankruptcy process and for facilitating the company's preparations for emergence. He will work in conjunction with AlixPartners, LLC, a consulting firm that has been assisting Mirant in its restructuring. Thompson was recently director of treasury and business development at Delta Airlines, Inc. 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. MJ RESEARCH: Taps Cravath Swaine as Special Litigation Counsel -------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Nevada gave its nod of approval to MJ Research, Incorporated to retain Cravath, Swaine & Moore LLP as its special litigation counsel. The Debtor has been engaged in a dispute regarding the licensing of certain intellectual property rights over the past decade against Roche Moleculer Systems. The Debtor believes that the licensing of those rights constituted patent misuse and violated antitrust laws. In early 1998, the Debtor retained Cravath Swaine to prepare a complaint against Roche and Applera. John E. Beerbower, Esq., a partner in Cravath Swaine, is intimately familiar with the Litigation and the Debtor's operations. Mr. Beerbower and his team of associates will: i) try all issues before the Court and a Jury; and ii) coordinate and direct all Phase II related motion practice. The Debtor intends to ensure that Cravath Swaine coordinates its efforts carefully with other counsel and assures the Court that Cravath Swaine has delineated the duties of its professionals to prevent any duplication of effort. Cravath Swaine professional's current hourly rates are: Professional Billing Rate ------------ ------------ John E. Beerbower $670 per hour Jacqueline Bos $240 per hour Radu A. Lelutiu $235 per hour Stephen Middlemas $135 per hour Samara N. Abrams $125 per hour Maria Sturgis $125 per hour Other professionals may render services to the Debtor. Generally, Cravath Swaine's hourly rates range from: Title Billing Rate ----- ------------ Partners $480 to $670 per hour Associates $235 to $415 per hour Legal Assistants/ Paralegals $125 to $140 per hour Headquartered in Reno, Nevada, MJ Research, Incorporated -- http://www.mjr.com/-- is a leading biotechnology company specializing in the instrument and reagent technology needed for modern biological research. The Company filed for chapter 11 protection on March 29, 2004 (Bankr. D. Nev. Case No. 04-50861). Jennifer A. Smith, Esq., at Lionel Sawyer & Collins represents the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed both estimated debts and assets of over $10 million. MORGAN STANLEY: Fitch Assigns Low-B Ratings to 3 2004-RR Classes ---------------------------------------------------------------- Morgan Stanley Capital I Trust 2004-RR, series 2004-RR, commercial mortgage-backed securities pass-through certificates are rated by Fitch Ratings as follows: --$12,300,000 class F-1 'A-'; --$88,230,752 class F-X* 'A-'; --$11,406,000 class F-2 'BBB+'; --$7,241,000 class F-3 'BBB'; --$8,236,000 class F-4 'BBB-'; --$13,613,000 class F-5 'BB+'; --$5,735,000 class F-6 'BB'; --$29,699,752 class F-7 'BB-'. * Notional Amount and Interest-Only All classes are privately placed pursuant to rule 144A of the Securities Act of 1933. The certificates represent beneficial ownership interest in the trust, primary assets of which are $88,230,752 of the class F certificates from Morgan Stanley Capital I Inc., series 1997-RR, which is, in turn, backed by all or a portion of 43 classes of fixed-rate commercial mortgage- backed securities. NBTY: Posts Lower Sales for Direct Response & Vitamin Operations ---------------------------------------------------------------- NBTY, Inc. (NYSE: NTY), a leading manufacturer and marketer of nutritional supplements, announced lower sales for its Direct Response and Vitamin World operations for the two-month period ending May 31, 2004. Sales from Puritan's Pride direct response/e-commerce operations for the two-month period ending May 31, 2004 decreased 12% to $38 million from $43 million for the comparable two-month period a year ago. For the two-month period from April 1, 2004 through May 31, 2004, Vitamin World retail sales decreased 1% from the comparable two- month period a year ago. NBTY Chairman and CEO, Scott Rudolph, said: "We are disappointed in the decline in sales results in two of our operations and expect this slowdown to continue at least through the end of June. While this slowdown in sales will effect our overall results for the fiscal third quarter of 2004, we remain optimistic for the long-term." About NBTY NBTY -- http://www.NBTY.com/-- is a leading vertically integrated manufacturer and distributor of a broad line of high-quality, value-priced nutritional supplements in the United States and throughout the world. The Company markets approximately 1,500 products under several brands, including Nature's Bounty(R), Vitamin World(R), Puritan's Pride(R), Holland & Barrett(R), Rexall(R), Sundown(R), MET-Rx(R), WORLDWIDE Sport Nutrition(R), American Health(R), GNC (UK)(R) and DeTuinen(R). * * * As reported in the Troubled Company Reporter's June 7, 2004 edition, Standard & Poor's Ratings Services revised its outlook on vitamin, mineral, and supplement manufacturer NBTY Inc. to stable from negative. At the same time, Standard & Poor's affirmed its 'BB' corporate credit and senior secured bank loan ratings, as well as its 'B+' subordinated debt rating on the company. The outlook revision reflects NBTY's successful integration of the Rexall Sundown wholesale vitamin business, which it acquired in July 2003. "The ratings on NBTY Inc. reflect its moderate debt leverage, its aggressive growth strategy, and the risk of adverse publicity about vitamin products on its sales," said Standard & Poor's credit analyst Martin S. Kounitz. These factors are somewhat mitigated by the company's strong position and diversified distribution channels in the VMS industry. The ratings assume that Bohemia, New York-based NBTY will not make large debt-financed acquisitions in the intermediate term, but will apply free cash flow to reduce debt. NETWORK INSTALLATION: Opens New Seattle, WA Sales & Service Unit ---------------------------------------------------------------- Network Installation Corp. (OTC Bulletin Board: NWIS) announced that it has opened a new sales and service location in Seattle, Washington. Network Installation CEO Michael Cummings stated, "With the opening of Seattle, we now have most of the major primary markets covered on the West Coast. Our short term goal is to now integrate our new locations and achieve maximum sales growth. We are also continuing to evaluate another potential acquisition which would further accelerate our growth." He added, "I wish to welcome Brandon Relkoff to Network Installation as Branch Sales Manager, Seattle. Brandon's broad industry experience will serve us well." About Network Installation Corp. Network Installation Corp. -- whose March 31, 2004 balance sheet reflects a stockholders' deficit of $1,607,403 -- provides communications solutions to the Fortune 1000, Government Agencies, Municipalities, K-12 and Universities and Multiple Property Owners. These solutions include the design, installation and deployment of data, voice and video networks as well as wireless networks and Wi-Fi. Through its wholly-owned subsidiary Del Mar Systems International, Inc., the Company also provides integrated telecom solutions including Voice over Internet Protocol (VoIP) applications. Network Installation maintains offices in Irvine, Los Angeles, Gold River and San Marcos, CA; Las Vegas, NV and Phoenix, AZ. To find out more about the company, visit http://www.networkinstallationcorp.net/ NRG ENERGY: Names J. Phillip Chesson as Chief Risk Officer ---------------------------------------------------------- NRG Energy, Inc. (NYSE: NRG) has named J. Philip Chesson to the newly created senior management position of Chief Risk Officer. In this role, reporting to the Chief Financial Officer, Mr. Chesson will identify, measure and develop strategies to assist in the management of the Company's risk from a corporate portfolio standpoint and centralize the risk management functions of all business lines. "Philip's strong financial and risk management skills along with his experience in the industry will be instrumental as we continue to improve our comprehensive program for managing risk," said Robert Flexon, NRG Chief Financial Officer. "In addition, this appointment demonstrates NRG's continued commitment to a strong internal control environment and to actively managing risk throughout our business." Mr. Chesson comes to NRG from Williams Companies where he held various executive positions including Vice President, Enterprise Risk Services and Vice President and Risk Control Officer, Energy Services. Prior to joining Williams in 1993, he served as Controller at Nortech Energy Company and from 1986 to 1991 he was a Supervising Senior Accountant at KPMG. Mr. Chesson, a Certified Public Accountant, holds a Bachelor of Science degree in Accounting from Indiana University. NRG Energy, Inc. owns and operates a diverse portfolio of power- generating facilities, primarily in the United States. Its operations include baseload, intermediate, peaking, and cogeneration facilities, thermal energy production and energy resource recovery facilities. The company, along with its affiliates, filed for chapter 11 protection (Bankr. S.D.N.Y. Case No. 03-13024) on May 14, 2003. Debtors' counsel are James H.M. Sprayregen, P.C., Matthew A. Cantor, Esq., and Robbin L. Itkin, Esq. of Kirkland & Ellis. When the company filed for protection from its creditors, it listed total assets of $10,310,000,000 and total liabilities of $9,229,000,000. (NRG Energy Bankruptcy News, Issue No. 29; Bankruptcy Creditors' Service, Inc., 215/945-7000) PARQUETTE INDUSTRIES: Case Summary & Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Parquette Industries, Inc. dba Wesco Trailer Sales 1960 East Main Street Woodland, California 95776-6202 Bankruptcy Case No.: 04-25898 Type of Business: The Debtor is engaged in the business of manufacturing commercial truck trailers. See http://www.wescotrailers.com/ Chapter 11 Petition Date: June 8, 2004 Court: Eastern District Of California (Sacramento) Judge: Jane Dickson McKeag Debtor's Counsel: Robert S. Bardwil, Esq. 555 Capitol Mall #640 Sacramento, CA 95814-4501 Tel: 916-446-5060 Estimated Assets: $500,000 to $1 Million Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ US Wheels $80,489 Hallco Mfg. Co. $78,200 Integris Metals $28,400 Rotek, Inc. $26,500 Western Health Advantage $22,178 Inter-Tel Leasing, Inc. $20,696 Central Steel Service $14,319 SSAB Hardox, Ltd. $10,400 El Du Pont De Nemours & First Chicago $10,155 Keith Mfg., Co. $9,317 Kaiser Aluminum & Chemical $8,632 IOS Capital $7,351 Tempco Steel $6,900 PDM Service Center $6,656 Tandem $6,313 Polyforce $6,095 California Color Source $5,479 Sierra Hydraulics, Inc. $5,216 Quality Trailers Products $4,956 Premier Manufacturing Co. $4,619 PG&E NATIONAL: NEG Debtors Propose New Tax Sharing Agreement ------------------------------------------------------------ The NEG Debtors, including USGen New England, Inc., ask the Court to approve a settlement of issues relating to an existing tax sharing agreement between USGen and its immediate parent, National Energy Generating Company, LLC. The Debtors also ask the Court for permission to enter into a new tax sharing arrangement. Paul M. Nussbaum, Esq., at Whiteford, Taylor & Preston, LLP, in Baltimore, Maryland, relates that in 1998, USGen joined the PG&E Corporation consolidated federal income tax return group. Subsequently, USGen entered into a tax sharing agreement with NEG Generating, where the Existing TSA generally requires USGen to make or alternatively receive payments from NEG Generating, as applicable, with respect to income taxes on an annual basis based on whether USGen and its subsidiaries would incur a tax liability or would be entitled to receive a tax refund. USGen's tax portion was determined for these purposes as if its taxes were calculated on a hypothetical stand-alone basis -- rather than as part of the PG&E Group. The Existing TSA also provides that USGen will be entitled to a payment for its generated tax losses solely to the extent that its losses for a particular tax year actually were utilized within the PG&E Group for that year, assuming that USGen's tax losses were the last losses utilized by the PG&E Group -- the so-called "Stacking Rule". Tax Sharing Arrangement Within the PG&E Group As a matter of practice within the PG&E Group, USGen and certain other members of the PG&E Group received compensation from the PG&E Group for their tax losses, through offsets against tax liabilities otherwise payable, without regard to whether USGen could have separately utilized the losses on a stand-alone basis. Contemplated NEG Consolidated Tax Group USGen incurred $57 million in operating losses in 2003, and is expected to generate a significant amount of taxable income in 2004. USGen will also likely generate a significant amount of tax deductions in connection with the consummation of its reorganization plan. NEG expects to consummate its Plan, which was confirmed on May 3, 2004, in the second quarter of 2004, at which time it is anticipated that USGen will become a member of a newly formed NEG consolidated federal income tax return filing group. Settlement of Existing TSA Issues Due to the uncertainties surrounding both the proper interpretation and legal applicability of the Existing TSA on a going forward basis and the separate bankruptcy cases in which NEG and USGen are involved, Mr. Nussbaum tells the Court that USGen, NEG and certain of its affiliates, and the Official Committee of Unsecured Creditors of USGen have been negotiating a revised tax sharing arrangement, which would define the rights and obligations of NEG and USGen during the periods in which these corporations continue to file consolidated federal income tax returns either as part of: (i) the PG&E Group -- periods before the deconsolidation of NEG and USGen from the PG&E Group as a result of the consummation of the NEG Plan; or (ii) the NEG Group -- periods after the consummation for the NEG Plan, assuming that NEG and its subsidiaries jointly agree to file consolidated federal income tax returns for the periods. According to Mr. Nussbaum, the New TSA is fair and reasonable. As to USGen specifically, in the absence of an agreement with NEG, it is likely that USGen would not be entitled to any compensation for tax losses USGen generates over and above the amount which may be carried back under applicable law and applied against USGen's separate taxable income for the prior periods. For NEG, the New TSA avoids the administrative challenges of deconsolidating from PG&E Corp. without forming a new consolidated group. Moreover, the New TSA gives NEG potential access to additional losses, albeit for a fee, to shelter future income or gain. The New TSA represents a substantial benefit for both estates. Mr. Nussbaum explains that NEG and USGen will deconsolidate from the PG&E Group for federal income tax purposes upon the consummation of NEG's Plan. As a technical matter, USGen -- as a corporate subsidiary of NEG -- could prevent NEG from filing consolidated federal income tax returns with the other members of the NEG Group by failing to join in an election to consolidate with NEG in future tax periods following the deconsolidation. If USGen were to elect not to consolidate with NEG for federal income tax purposes, then USGen's future tax losses, if any, would not generally be utilizable by NEG to offset the taxable income of the other members of the NEG Group. However, Mr. Nussbaum points out that NEG could realize significant tax benefits from its investment in USGen even if it did not enter into an agreement with USGen because: -- NEG could effectively consolidate with its subsidiaries other than USGen by either: (a) converting those other subsidiaries into limited liability companies that would be "transparent" rather than treated as separate entities from NEG for federal income tax purposes -- in which case NEG would consolidate its operations with all of its subsidiaries other than with its sole remaining corporate subsidiary, USGen; or (b) transferring its stock interests in USGen to a foreign corporation or a partnership -- in which event USGen would be eligible to file stand-alone tax returns and NEG would no longer be adversely affected by the failure to obtain the consent of USGen to file consolidated federal income tax returns with its subsidiaries; and -- NEG presently has a significant tax basis -- or cost -- with respect to its investment in USGen stock. As a result, NEG could presumably take a worthless stock deduction with respect to its investment in USGen that would generate a significant tax loss for NEG that it could utilize to offset other income generated by the NEG Group. This worthless stock deduction -- unlike USGen's tax losses, which may be generated if it becomes a member of the NEG Group -- would not require an agreement by USGen to join the NEG Group. Although (i) the alternatives regarding consolidating with USGen may be both time consuming and expensive for NEG, (ii) NEG's ability to obtain a usable loss in respect of the shares of USGen are subject to some uncertainties, and (iii) USGen may potentially be able to temporarily prevent NEG from taking a worthless stock deduction with respect to its USGen investment, USGen believes that NEG would likely be in a position to ultimately obtain significant tax benefits with respect to its investment in USGen regardless of whether USGen were to agree to file consolidated federal income tax returns with NEG. NEG had indicated that: -- it is imperative that the New TSA be negotiated before the NEG Plan Effective Date; and -- if an agreement were not reached with USGen before that time, NEG would cut off negotiations with respect to the New TSA and seek to realize tax benefits from its investment in USGen. Proposed New Tax Sharing Arrangement As currently contemplated, the New TSA will generally provide, among other things, that: (a) USGen and NEG will join in the filing of consolidated federal income tax returns in the periods after the deconsolidation of NEG from the PG&E Group as members of the newly formed NEG Group; and (b) USGen will be entitled to a 100% recovery of tax benefits realized within the PG&E Group before deconsolidation with respect to the utilization of USGen's tax losses, up to an aggregate cap amount equal to the aggregate amount of USGen's net taxable income previously generated by USGen within the PG&E Group through 2002 -- approximately $113 million. The tax benefits associated with the net operating losses will be computed based on a 35% assumed federal income tax rate, and the maximum amount of tax benefits paid will be adjusted to reflect USGen's account payable for income tax due to NEG attributable to income taxes USGen incurred in prior tax years equal to $5.7 million. This approach will provide assurance that USGen will be compensated for its anticipated $57 million of 2003 operating losses -- as reduced to reflect the amount of any net taxable income earned by USGen in the 2004 tax year before its deconsolidation from the PG&E Group -- by NEG in a timely manner, without having to assert any contractual claims under the Existing TSA, or based on the informal existing Tax Sharing Arrangement, against the PG&E Group, which claims would have an uncertain likelihood of success. In addition, the New TSA will provide that USGen will receive 35% of the tax benefits generated by USGen losses utilized within the PG&E Group over and above the Cap Amount. It is not anticipated, however, that there will be any additional USGen tax losses at this time, in that USGen is projected to generate significant taxable income, rather than tax losses, in 2004. More importantly, under the New TSA, USGen will be entitled to 35% of the tax benefits associated with losses that are actually utilized by one or more members of the NEG Group after NEG's deconsolidation from the PG&E Group. For these purposes, USGen's tax losses will be considered to have been utilized only after all other losses generated in the NEG Group have been absorbed, pursuant to a loss "stacking rule" which was applicable under the Existing TSA between the parties. This provision should produce significant payments to USGen based on the large tax deductions, which are contemplated to be generated in connection with the consummation of USGen's reorganization plan that is now anticipated to occur in 2005. Despite this, USGen will be entitled to receive 100%, rather than 35%, of the tax benefits -- up to the amount of tax it actually paid for tax year 2004 -- associated with any net operating losses it generates in 2005 which could have been carried back to offset its taxable income for 2004 if it had filed income tax returns on a hypothetical stand-alone basis. To the extent that USGen were to generate net taxable income for any tax period in which it is a member of the NEG Group, it would be required under the New TSA to make a payment to NEG equal to its tax liability for that period -- which generally would be based on an assumed 35% federal income tax rate, and would also include the amount of its actual state and local income tax liability. For purposes of calculating any tax payments owed by USGen to NEG under the agreement, the amount of USGen's tax liability will be reduced to reflect the utilization of any net operating losses generated by USGen and its subsidiaries in the periods during which it is consolidated with either PG&E Corp. or NEG, as applicable, that could have otherwise been utilized by USGen to offset the taxable income if it filed its income tax returns on a hypothetical stand-alone basis for federal income tax purposes, provided that USGen has not previously been compensated for the losses. USGen also admits that in the event it operates on a stand-alone basis after the consummation of its Plan, any losses it generates by the date of its deconsolidation from NEG would be retained by the NEG Group -- subject to compensation for the use of the losses under the terms of the New TSA. "In light of the fact that USGen, to the extent that it disposes of substantially all of its assets rather than continue to operate as a stand-alone company, would likely realize little or no benefits from its generated losses in the absence of an agreement with NEG, the New TSA is reasonable as a mechanism for USGen to preserve valuable assets (i.e., tax benefits) of its bankruptcy estate," Mr. Nussbaum says. A full-text copy of the Proposed Tax Sharing Term Sheet is available for free at: http://bankrupt.com/misc/NEG_proposed_tax_sharing_term_sheet.pdf Headquartered in Bethesda, Maryland, PG&E National Energy Group, Inc. -- http://www.pge.com/-- develops, builds, owns and operates electric generating and natural gas pipeline facilities and provides energy trading, marketing and risk-management services. The Company filed for Chapter 11 protection on July 8, 2003 (Bankr. D. Md. Case No. 03-30459). Matthew A. Feldman, Esq., Shelley C. Chapman, Esq., and Carollynn H.G. Callari, Esq., at Willkie Farr & Gallagher represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $7,613,000,000 in assets and $9,062,000,000 in debts. (PG&E National Bankruptcy News, Issue No. 23; Bankruptcy Creditors' Service, Inc., 215/945-7000) PLAINS EXPLORATION: S&P Rates Proposed $250MM Notes at BB- ---------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BB-' rating to independent oil and gas exploration and production company Plains Exploration & Production Co.'s (PXP; BB/Stable/--) proposed $250 million senior unsecured notes due 2014. The notes are rated one notch below the corporate credit rating reflecting the existence of secured debt that subordinates unsecured debt holders. The outlook remains stable. Pro forma for the new notes offering and recent asset sales, Texas-based PXP will have about $866 million of debt. "Standard & Poor's recently raised its corporate credit rating on PXP to 'BB' from 'BB-', following the announcement that PXP and Nuevo Energy Co. (NEV; BB/Stable/--) stockholders approved the stock-for-stock acquisition of NEV," noted Standard & Poor's credit analyst Steven K. Nocar. The proceeds of the notes, combined with expected borrowings under PXP's credit facilities, will be used to repay all amounts outstanding under, and then retire, NEV's credit facility. Before the notes offering, the NEV credit facility will be used to redeem NEV's $150 million, 9.375% senior subordinated notes due 2010 and $115 million, 5.75% convertible subordinated debentures due 2026. As a result of these transactions, NEV will have no outstanding debt. The stable outlook reflects the absence of a near- or intermediate-term case for either a ratings upgrade or downgrade. In the near term, PXP is generating excellent operating cash flow and deleveraging. However, no positive ratings actions are likely, as Standard & Poor's expects that the company will likely releverage to pursue growth initiatives. PROGRESSIVE PIZZA: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Progressive Pizza Trends 2049 Century Park East Los Angeles, California 90067 Bankruptcy Case No.: 04-23161 Type of Business: The Debtor operates a restaurant. Chapter 11 Petition Date: June 15, 2004 Court: Central District of California (Los Angeles) Judge: Patrick V. Zurzolo Debtor's Counsel: Daniel J. Weintraub, Esq. Weintraub Law Corporation 12424 Wilshire Boulevard Suite 1120 Los Angeles, CA 90025 Tel: 310-207-1494 Estimated Assets: $0 to $50,000 Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ California Fresh Deli Inc. Trade debt $600,000 c/o Wall Street Deli 2049 Century Park East Century City, CA 90067 State Compensation Insurance Insurance $181,226 Fund 1452 3rd Street Promenade Trade Debt $112,573 Concord Foods, Inc. Trade Debt $90,000 Riko Fresh Produce Company Trade Debt $36,952 Preferred Food Service Co., Trade Debt $21,811 Inc. American Paper & Plastics, Trade Debt $16,684 Inc. Barry Kurtz, PC Trade Debt $16,126 George Elkins Property Mgmt. Trade Debt $9,213 Co. Copy Page Trade Debt $8,212 Department of Industrial Trade Debt $6,384 Relations Advanta Leasing Corp. Trade Debt $6,158 Wave Sound, Inc. Trade Debt $5,280 Lawrence Savings - Trade Debt $4,778 Banker's Cap Ballard, Rosenberg, Golper & Trade Debt $4,554 Savitt LLP The Gas Company Trade Debt $3,589 Verizon California Trade Debt $2,612 Oleg Samsonov Trade Debt $2,500 Larry Brophy Trade Debt $2,206 L.A. DWP Trade Debt $2,080 QUADRAMED CORPORATION: Commences 10% Senior Notes Tender Offer -------------------------------------------------------------- QuadraMed(R) Corporation (OTCBB:QMDC.OB) announced that it is commencing a cash tender offer to purchase any and all of its outstanding 10% Senior Secured Notes due 2008 pursuant to an Offer to Purchase dated June 17, 2004. The offer will expire at 5:00 p.m. EDT, on Friday, July 16, 2004. Settlement will occur promptly after the acceptance of the individual Notes. As of June 15, 2004, the outstanding aggregate principal amount of the Notes was approximately $73.7 million. The Notes were issued in April 2003. As QuadraMed recently announced, it has completed a private, unregistered offering of $100 million of convertible preferred stock to "qualified institutional buyers" pursuant to Rule 144A under the Securities Act of 1933. QuadraMed intends to use the net proceeds of the completed offering to repurchase the Notes, its 5.25% Convertible Debentures due 2005, and general corporate purposes. The total purchase price for each $1,000 principal amount of Notes validly tendered and accepted for repurchase by QuadraMed pursuant to the Offer to Purchase will be $1,050, plus accrued and unpaid interest to, but not including, the date of purchase. This announcement is neither an offer to sell nor a solicitation to buy any Notes. The tender offer is being made solely by the Offer to Purchase. About QuadraMed Corporation QuadraMed is dedicated to improving healthcare delivery by providing innovative healthcare information technology and services. From clinical and patient information management to revenue cycle and health information management, QuadraMed delivers real-world solutions that help healthcare professionals deliver outstanding patient care with optimum efficiency. Behind our products and services is a staff of more than 850 professionals whose experience and dedication to service has earned QuadraMed the trust and loyalty of customers at more than 1,900 healthcare provider facilities. To find out more about QuadraMed, visit http://www.quadramed.com/ At March 31, 2004, QuadraMed Corporation's balance sheet shows a stockholders' deficit of $19,936,000 compared to a deficit of $16,883,000 at December 31, 2003. QUADRAMED: Completes $100MM Convertible Preferred Stock Issuance ---------------------------------------------------------------- QuadraMed(R) Corporation (OTCBB:QMDC.OB) announced that it has completed the issuance of $100 million of Convertible Preferred Stock in a private, unregistered offering to "qualified institutional buyers" pursuant to Rule 144A under the Securities Act of 1933. The Company had previously announced on June 10, 2004 its intention to issue up to $94 million of such Preferred Stock, but the amount sold was increased as a result of strong demand for the shares. The offering was managed by the investment banking firm, Philadelphia Brokerage Corporation, with J. Giordano Securities Group assisting in the placement of the shares. The Preferred Stock was sold for $25 per share; is entitled to quarterly dividends of $0.34 (5.5% per annum); and is convertible into shares of common stock of the Company at a price of $3.40. QuadraMed plans to use approximately $94 million of the net proceeds of the offering to repurchase all of its 10% Senior Secured Notes due 2008, and all of its 5.25% Convertible Debentures due 2005, together with accrued interest, and related redemption premiums and transactions costs; with the remainder being used for general corporate purposes. "Once again, the investment community has given QuadraMed a significant vote of confidence by recognizing the strength and potential of the Company," said QuadraMed Chairman and CEO, Lawrence P. English. "We believe that eliminating the debt from our balance sheet will strengthen our competitive position, and allow us to continue to execute our strategy to increase market share, better serve our customers, and increase shareholder value," he added. Further details with respect to the preferred stock transaction is available in the Company's Form 8-K filed this date with the Securities and Exchange Commission. This announcement is neither an offer to sell nor a solicitation to buy any securities and shall not constitute an offer, solicitation, or sale in any jurisdiction in which such offer, solicitation, or sale is unlawful. The securities have not been registered under the Securities Act of 1933, or any state securities laws, and unless so registered, may not be offered or sold in the United States except pursuant to an exemption from the registration requirements of the Securities Act of 1933 and applicable state laws. About QuadraMed Corporation QuadraMed is dedicated to improving healthcare delivery by providing innovative healthcare information technology and services. From clinical and patient information management to revenue cycle and health information management, QuadraMed delivers real-world solutions that help healthcare professionals deliver outstanding patient care with optimum efficiency. Behind our products and services is a staff of more than 850 professionals whose experience and dedication to service has earned QuadraMed the trust and loyalty of customers at more than 1,900 healthcare provider facilities. To find out more about QuadraMed, visit http://www.quadramed.com/ At March 31, 2004, QuadraMed Corporation's balance sheet shows a stockholders' deficit of $19,936,000 compared to a deficit of $16,883,000 at December 31, 2003. QWEST COMMS: S&P Raises Ratings on Three Related Synthetic Deals ---------------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on three synthetic transactions related to Qwest Communications International Inc. and its related entities. The raised ratings reflect the June 16, 2004, raised long-term corporate credit rating on Qwest Communications International Inc. and the raised senior unsecured debt ratings on Qwest Communications International Inc. and its related entities. PreferredPLUS Trust Series QWS-1 and PreferredPLUS Trust Series QWS-2 are swap-independent synthetic transactions that are weak- linked to the underlying securities, Qwest Capital Funding Inc.'s (formerly U.S. West Capital Funding Inc.) 7.75% notes due Feb. 15, 2031. The raised ratings regarding these two transactions reflect the current credit quality of the underlying securities issued by Qwest Capital Funding Inc., which are guaranteed by Qwest Communications International Inc. CorTS Trust For U.S. West Communication Debentures is a swap- independent synthetic transaction that is weak-linked to the underlying securities, Qwest Corp.'s (formerly U.S. West Communications Inc.) 7.125% debentures due Nov. 15, 2043. The raised rating regarding this transaction reflects the current credit quality of the underlying securities issued by Qwest Corp. Ratings Raised PreferredPLUS Trust Series QWS-1 $40.565 million trust certificates series QWS-1 Rating Class To From Certs B CCC+ PreferredPLUS Trust Series QWS-2 $38.750 million trust certificates series QWS-2 Rating Class To From Certs B CCC+ CorTS Trust For U.S. West Communications Debentures $40.565 million corporate-backed trust securities Rating Class To From Certs BB- B- RCN CORP: Obtains Authority to Maintain Existing Bank Accounts -------------------------------------------------------------- The Court authorizes and directs PNC Bank, N.A., to continue to service and administer the RCN Corp. Debtors' Bank Account, without interruption and in the usual and ordinary course, and to receive, process and honor and pay any and all checks, drafts, wires or automated clearing house transfers drawn on the Bank Account after the Petition Date by the holders or makers these checks, drafts, wires or ACH Transfers, as the case may be. In addition, any checks, drafts, wires or ACH Transfers drawn or issued by the Debtors before the Petition Date will be timely honored by PNC only to the extent necessary to comply with Court orders, if any, authorizing payment of certain prepetition claims, unless PNC is instructed by the Debtors to stop payment on or otherwise dishonor the check, draft, wire or ACH Transfer. The Debtors will cause any checks issued after the Petition Date to be imprinted with a "debtor-in-possession" legend. PNC is also authorized and directed to accept and honor all representations from the Debtors as to which checks, drafts, wires or ACH Transfers should be honored or dishonored consistent with any Court order, whether the checks, drafts, wires or ACH Transfers are dated prior to, on or subsequent to the Petition Date, and whether or not the Bank believes the payment is or is not authorized by any Court order. Except for those checks, drafts, wires or ACH Transfers that must be honored and paid to comply with any Court order authorizing payment of certain prepetition claims, no checks, drafts, wires or ACH Transfers issued on the Bank Account before the Petition Date but presented for payment postpetition, will be honored or paid. PNC is prohibited from offsetting, freezing or otherwise impeding the use or transfer of, or access to, any funds deposited by the Debtors in the Bank Account before or after the Petition Date on account of or by reason of any claim of PNC against the Debtors that arose before the Petition Date, and any checks drawn or issued by the Debtors on the Bank Account after the Petition Date will be timely honored by PNC notwithstanding any claim it may hold against the Debtors; provided, however, that nothing will: (a) prejudice PNC's right or ability to seek protection from the automatic stay to accomplish any of the provisions; or (b) authorize the Debtors' use of any of PNC's cash collateral, if any, except as permitted by the Bankruptcy Code or any Court order. Nothing will prevent the Debtors from opening any bank or investment accounts as they may deem necessary and appropriate, provided that any bank account will be with a bank that is insured with the Federal Deposit Insurance Corporation or the Federal Savings and Loan Insurance Corporation and that is organized under the laws of the United States or any State therein. Headquartered in Princeton, New Jersey, RCN Corporation -- http://www.rcn.com/-- is a provider of bundled Telecommunications services. The Company, along with its affiliates, filed for chapter 11 protection (Bankr. S.D.N.Y. Lead Case No. 04-13638) on May 27, 2004. Frederick D. Morris, Esq., and Jay M. Goffman, Esq., at Skadden Arps Slate Meagher & Flom LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $1,486,782,000 in assets and $1,820,323,000 in liabilities. (RCN Corp. Bankruptcy News, Issue No. 4; Bankruptcy Creditors' Service, Inc., 215/945-7000) RIPPLEWOOD PHOSPHORUS: S&P Assigns B+ Rating to Corporate Credit ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B+' corporate credit rating to specialty chemical manufacturer Ripplewood Phosphorus LLC. The outlook is stable. At the same time, Standard & Poor's assigned its 'B+' bank loan rating and its recovery rating of '4' to the company's proposed $25 million revolving credit facility due 2009 and $140 million amortizing term loan due 2011 based on preliminary terms and conditions. The '4' recovery rating indicates that bank lenders can expect marginal (25%-50%) recovery of principal in the event of a default, but at the upper end of that range. "Proceeds will be used to help fund the acquisition of Ripplewood Phosphorus from Akzo Nobel N.V. (A-/Negative/A-2) in a highly- leveraged transaction," said Standard & Poor's credit analyst Wesley E. Chinn. The ratings on Chicago, Illinois-based Ripplewood Phosphorus reflect a modest sales base, a narrow product line, the cyclicality of end markets, and aggressive debt leverage. These negatives overshadow the company's strong position in the production of organophosphorus flame retardants and expected debt reduction over the intermediate term. Flame retardants are additives used to improve the fire resistant qualities of a variety of end products. Ripplewood Phosphorus' key products are supplied to polyurethane producers for use in furniture, auto interiors and linings, mattresses, and insulation, and to engineering resins producers for electrical and electronic applications. The company also has a leading market position in functional fluids. The overall market for flame retardants is estimated at roughly $2.0 billion, with phosphorus-based chemicals comprising about $500 million. Increasingly stringent fire safety standards are a major driver of flame retardant consumption in the U.S. and Europe. The ongoing shift of the production of end products to Asia and elsewhere will only serve to increase flame retardant opportunities, as fire safety legislation evolves. Phosphorus flame retardants are expected to benefit from environmental and regulatory concerns on the toxicity of certain bromine-based flame retardants, but the extent of substitution is not clear. Ripplewood Phosphorus' competitive position should be sustained by its global, diverse customer base, good proprietary technology, a track record of product innovation, and an ongoing focus on improving its manufacturing cost structure. In addition, customer concentration is moderate. Standard & Poor's assessment of Ripplewood Phosphorus' business profile is tempered by its narrow product line (contributing to a modest sales base of about $230 million to $240 million for 2004), the vulnerability of overall demand for flame retardants to the cyclicality of general economic conditions, especially as it impacts consumer electronics, information technology, and automotive markets; certain much larger competitors having an array of flame retardant offerings; and competition from other types of flame retardants, such as brominated compounds, antimony oxides, and alumina trihydrate, accounting for an estimated 75% of industry sales. SCHUFF INT'L: S&P Junks Corporate Credit & Senior Debt Ratings -------------------------------------------------------------- Standard & Poor's Ratings Service lowered its corporate credit and senior unsecured debt ratings on Schuff International Inc. to 'CCC' from 'B-'. The outlook is negative. The Phoenix, Arizona-based construction company had total debt, including the present value of operating leases, of about $96 million at March 31, 2004. "The downgrade is due to heightened financial risk, with unrestricted cash declining to just $1 million at March 31, 2004, from $7 million at Dec. 31, 2003," said Standard & Poor's credit analyst Heather Henyon. "Should cash generation decline or liquidity become tighter, the ratings will be lowered." Schuff was not in compliance with its financial covenants at year- end 2003 but received a waiver of noncompliance in March 2004. The company had only $6 million of capacity under its $15 million bank credit facility at March 31, 2004, and has annual interest payment obligations of $10 million. Increased liquidity constraints, combined with a declining backlog and extremely high debt leverage (10x total debt to EBITDA), led to the downgrade. SOLECTRON CORPORATION: Reports Improved Third Quarter Results ------------------------------------------------------------- Solectron Corporation (NYSE:SLR), a leading provider of electronics manufacturing and integrated supply chain services, reported sales of $3,040 million in the third quarter of fiscal 2004, up 5.3 percent from $2,887 million in the second quarter and up 29 percent from $2,357 million in the third quarter of last year. The company reported a GAAP net loss from continuing operations in the third quarter of $65 million, or 8 cents per share, compared with a GAAP net loss from continuing operations of $2,686 million, or $3.24 per share, in the year-earlier quarter. Excluding $6 million in restructuring and impairment charges and $72 million in expenses related to the early settlement of its Adjustable Conversion-Rate Equity Security Units (ACES), Solectron had pro forma net income from continuing operations of $13 million, or 1 cent per share, in the third quarter of fiscal 2004. "This was a milestone quarter for Solectron," said Mike Cannon, president and chief executive officer. "We are pleased to have returned the company to profitability after an extended period of losses. We improved our performance across the board and we achieved many of our targets one quarter ahead of our committed timeline. I am proud of the progress our global team has made and I am confident our performance will continue to improve." During the quarter, the company completed the sale of SMART Modular Technologies, Stream International and Kavlico as part of a previously announced plan to divest businesses that are not central to its business strategy. In addition, the company announced a definitive agreement to sell Force Computers. Solectron also continued to strengthen its balance sheet in the quarter, with actions that lowered debt by $1,960 million. The company's debt-to-capitalization ratio at the end of the third quarter was 34 percent, compared with 71 percent at the end of the second quarter. That improvement was achieved through the repurchase of $950 million in zero-coupon senior convertible notes and the early settlement of 94 percent of the company's 7.25 percent ACES. Fourth-Quarter Guidance Fiscal fourth-quarter guidance is for sales of $3,050 million to $3,200 million, and for pro forma EPS from continuing operations, excluding restructuring and impairment and other unusual items, to range from 3 cents to 5 cents. Pro Forma Information In addition to disclosing results determined in accordance with generally accepted accounting principles (GAAP), Solectron also discloses non-GAAP results of operations that exclude certain items. By disclosing this pro forma information, management intends to provide investors with additional information to further analyze the company's performance, core results and underlying trends. Management utilizes a measure of net income and earnings per share on a pro forma basis that excludes certain charges to better assess operating performance. Each excluded item is considered to be of a non-operational nature in the applicable period. Earnings guidance is provided only on a pro forma basis due to the inherent difficulty in forecasting. Consistent with industry practice, management has historically applied these measures when discussing earnings or earnings guidance and intends to continue doing so. Pro forma information is not determined using GAAP; therefore, the information is not necessarily comparable to other companies and should not be used to compare the company's performance over different periods. Pro forma information should not be viewed as a substitute for, or superior to, net income or other data prepared in accordance with GAAP as measures of our profitability or liquidity. Users of this financial information should consider the types of events and transactions for which adjustments have been made. Solectron -- http://www.solectron.com/-- (S&P, B+ Corporate Credit Rating Stable Outlook) provides a full range of worldwide manufacturing and integrated supply chain services to the world's premier high-tech electronics companies. Solectron's offerings include new-product design and introduction services, materials management, high-tech product manufacturing, and product warranty and end-of-life support. The company is based in Milpitas, Calif., and had sales from continuing operations of $9.8 billion in fiscal 2003. STATER BROS: Subsidiary Secures New $75 Million Credit Facility --------------------------------------------------------------- Stater Bros. Holdings Inc. announced that its subsidiary Stater Bros. Markets has entered into an amended and restated credit facility with Bank of America, N.A., as sole and exclusive administrative agent and sole initial lender. The New Facility amends and restates Markets' existing credit facility in its entirety. The new facility consists of a three-year revolving credit facility in a principal amount of up to $75 million, with the right to increase, under certain circumstances, the size of the New Credit Facility to an aggregate principal amount of $100 million. Subject to certain restrictions, the entire amount of the New Credit Facility may be used for loans, letters of credit, or a combination thereof. The New Credit Facility is guaranteed by the Company and all of its existing and future material subsidiaries, and contains customary representations and warranties, covenants and events of default. About the Company 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. * * * As reported in the Troubled Company Reporter's June 1, 2004 edition, 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-'. "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. STRUCTURED ASSET: Fitch Affirms Low-B Ratings on Classes B-4 & B-5 ------------------------------------------------------------------ Fitch Ratings affirms twelve classes of Structured Asset Securities Corp. residential mortgage-backed certificates, as follows: Structured Asset Securities Corp., mortgage pass-through certificates, series 1999-ALS2: --Class A affirmed at 'AAA'; --Class B-1 affirmed at 'AAA'; --Class B-2 affirmed at 'AA+'; --Class B-3 affirmed at 'A+'; --Class B-4 affirmed at 'BB'; --Class B-5 affirmed at 'B'. Structured Asset Securities Corp., mortgage pass-through certificates, series 2002-10H: --Class A affirmed at 'AAA'; --Class B-1 affirmed at 'AA'; --Class B-2 affirmed at 'A'; --Class B-3 affirmed at 'BBB'; --Class B-4 affirmed at 'BB'; --Class B-5 affirmed at 'B' and removed from Rating Watch Negative. The affirmations reflect credit enhancement consistent with future loss expectations. TENET HEALTHCARE: S&P Says B Rating Unaffected By Note Expansion ---------------------------------------------------------------- Standard & Poor's Ratings Services said that the ratings and outlook on Tenet Healthcare Corp. (B/Negative/--) will not be affected by an increase in the size of the company's new senior unsecured note issue due in 2014, to $1 billion from $500 million. Tenet used $450 million of the proceeds to repay debt due in 2006 and 2007, and the balance will be retained in cash reserves. Despite the additional debt and interest costs, Standard & Poor's considers the additional liquidity provided by the cash, as well as the effective extension of maturities, to be offsetting factors. The ratings already consider expectations of weak operating performance and cash flow over the next year while the negative outlook incorporates the risk of ongoing litigation and investigations related to the hospital chain's operations. TIMKEN CO: European Subsidiary to Increase Steel Tubing Prices -------------------------------------------------------------- Timken Alloy Steel Europe Limited, a subsidiary of The Timken Company, announced it would increase base prices on steel tubing by a minimum of 7.5 percent. These price increases apply to all tubing despatched from July 1, 2004. Raw material surcharges will continue to be levied at the rates ruling at date of despatch. About Timken Company The Timken Company (NYSE: TKR) (Moody's, Ba1 Senior Unsecured Debt, Senior Implied and Senior Unsecured Issuer Ratings) -- http://www.timken.com/-- is a leading global manufacturer of highly engineered bearings and alloy steels and a provider of related products and services with operations in 27 countries. A Fortune 500 company, Timken recorded 2003 sales of $3.8 billion and employed approximately 26,000 at year-end. TRANSTECHNOLOGY: March 31 Balance Sheet Insolvent by $3.8 Million ----------------------------------------------------------------- At March 31, 2004, TransTechnology Corporation's balance sheet shows a stockholders' deficit of $3,787,000 compared to a deficit of $3,766,000 at December 28, 2003. TransTechnology Corporation (NYSE:TT) reported that sales from continuing operations for the fiscal year ended March 31, 2004, increased 17% to $64.6 million from $55 million in the prior fiscal year. Operating income increased 71% to $11.9 million from $7.0 million in the prior year. Income from continuing operations for fiscal 2004 was $1.7 million, or $.26 per share, compared to a fiscal 2003 loss from continuing operations of $3.9 million, or $.61 per share. Net income for fiscal 2004 was $1.7 million or $.26 per share. For the prior fiscal year, the company reported net income of $9.2 million, or $1.47 per share, including a gain from discontinued operations of $13.1 million, or $2.08 per share. Income from continuing operations before interest, taxes, depreciation and amortization (EBITDA) rose 52% to $14.2 million from last year's $9.3 million. Interest expense, the largest non- operating use of cash, increased to $10.4 million in fiscal 2004 from the $9.2 million allocated to continuing operations in fiscal 2003. Total interest expense, in fiscal 2003, including that portion allocated to discontinued operations, was $15.4 million. Fiscal fourth-quarter 2004 revenues of $15.5 million were up 13% from $13.7 million in the fourth quarter a year ago. Operating income increased to $2.5 million for the quarter from a loss of $0.3 million in the prior-year period. The loss from continuing operations for the fourth quarter of fiscal 2004 was $0.1 million or $.02 per share, compared to a loss from continuing operations of $3.5 million or $.52 per share in the prior year's fourth quarter. Interest expense in the fourth quarter of fiscal 2003 rose to $2.7 million from the $2.6 million allocated to continuing operations in last year's fourth quarter, even though total interest expense in the quarter declined from $3.7 million in the prior year. The net loss for fiscal 2004's fourth quarter was $0.1 million or $.02 per share. Last year's fourth quarter net income was $16.9 million or $2.55 per share, including a gain from discontinued operations of $20.4 million, primarily from the sale of the Company's Norco business unit. At March 31, 2004, TransTechnology Corporation's balance sheet shows a stockholders' deficit of $3,787,000 compared to a deficit of $3,766,000 at December 28, 2003. New Products and Operating Efficiencies Drive Growth in Continuing Operations An increase in shipments of the HLU-196 Munitions Hoist and the BE-27100 Rescue Hoist to the U.S. Navy resulted in strong sales growth for the fiscal year. Almost 95% of the company's sales in fiscal 2004 were to the U.S. or foreign military or government agencies and over 90% were on a sole-source basis. New orders received during the fourth quarter were $15.3 million, resulting in full fiscal year bookings of $59.4 million compared with $67.3 million in the prior fiscal year and $17.1 million in last year's fourth quarter. The company's book-to-bill ratio for the fourth quarter was 0.99, compared with 1.25 in last year's fourth quarter, while full-year book-to-bill declined to 0.92 for fiscal 2004 from 1.22 in fiscal 2003. The company's backlog remained relatively constant during the final three months of fiscal 2004 at $41.0 million compared to $46.2 million at the end of the prior fiscal year. Robert L. G. White, Chief Executive Officer of the company, said, "Our operations turned in a solid fourth quarter and full year, with revenues and operating income both showing significant growth. Fiscal 2004 was our fifth consecutive year of revenue and operating income growth and once again exceeded our expectations. Improvements in our manufacturing process for both the HLU-196 bomb hoist and the rescue hoists for the U.S. Navy's Seahawk helicopter resulted in a higher gross margin than we had originally budgeted." Mr. White continued, "Corporate office expenses for the fourth quarter were $1.5 million, down substantially from last year. Fourth quarter business unit selling, general and administrative expenses increased significantly from the prior year, primarily due to the recognition of $0.5 million of legal, consulting and other outside costs associated with the procedure and process review of our overhaul and repair operation which was prompted by the investigation by the United States Attorney's office. For the full fiscal year, corporate office expenses were down $2.6 million, reflecting the benefits anticipated from our restructuring program. This reduction was partially offset by the increase in similar expenses at the business unit level of $1.2 million, which included $1.1 million of costs associated with the investigation." Joseph F. Spanier, Vice President and Chief Financial Officer, said, "Cash generation by our business unit remains very strong, as evidenced by the lack of new borrowing we have incurred while reducing our current and other long-term liabilities by more than $12.4 million this fiscal year. We finished the year with a current ratio of 2.6 compared to last year's 1.4, and we had $22.2 million of working capital at year end, up from $11.2 million a year ago and $18.8 million at the end of the third quarter." "The interest rate on our outstanding subordinated debt increased to 19.25% effective April 1, 2004, with cash interest remaining at 13% and the payment in kind (PIK) rate going to 6.25% from 6%. Until the subordinated debt is repaid in full, the PIK rate will increase 0.25% at the end of each quarter. If there is no change from our current credit structure during the year, interest expense for fiscal 2005 could amount to $11.4 million. Accordingly, our biggest financial focus", he continued, "is the refinancing of our subordinated debt and the implementation of new credit facilities for the company at more competitive market rates of interest. That refinancing process has been on hold since the beginning of the investigation in September, although we continue to have on-going discussions with our prospective lenders. While those prospective lenders remain interested in completing the refinancing at terms that will be substantially more favorable to the company than the current credit structure, they have indicated that additional clarity as to the outcome of the investigation must be evident before they will be in a position to actively resume the process." Status of United States Attorney's Office Investigation As previously reported, the company continues to cooperate fully with the investigation of the overhaul and repair operation by the United States Attorney's office and has kept the government informed of the progress of the Company's implementation of our previously announced corrective action program. The investigation has had no impact, and the Company does not expect an impact, on its ability to manufacture and ship products and meet customer delivery schedules. As of this date, the United States Attorney's investigation is continuing and the Company has not been made aware of any specific violations resulting from that investigation. There can be no assurance as to the outcome of the investigation or when any determination by the United States Attorney's Office will be reached. Fiscal 2005 Business Targets Mr. White stated, "Our long-term vision for the future of our company remains unchanged. We believe that TransTechnology will continue to be recognized as the pre-eminent designer, manufacturer and service provider of sophisticated lifting equipment for the Aerospace and Defense markets. The strength of our operating results over the past several years is proof that our business model of market leadership through design, engineering and superior customer service; maintaining operating agility with a focus on cash generation; and keeping our high- quality people challenged, is a successful one." Mr. White continued, "We are entering the new fiscal year with a strong backlog and a full plate of new programs in development. As we work on these new programs, we plan to consolidate our gains from the very strong and rapid growth in our business over the past several years. We have set our sales target at $64 million for fiscal 2005, essentially unchanged from 2004, even though we will see a significant change in the types of products shipped. Because of this shift in products, we expect to see our gross margin also remain steady at this year's 43% level, consistent with the 43-45% range it has been for the past three years. Since we have a $58 million federal net operating loss carry-forward, we will not be required to pay federal income taxes on any fiscal 2005 profits, but we will recognize, for EPS purposes, a full federal and state income tax burden of 38%. Our fiscal 2005 capital spending program, budgeted at $3.1 million, is much higher than in past years as we will begin the installation of a new ERP system early in fiscal 2005 and hope to have it completed by April 2005. The ERP installation will also result in the fiscal 2005 recognition of approximately $0.5 million of non-recurring operating expenses associated with the project. Targeted EBITDA for fiscal 2005 is approximately $14 million, relatively unchanged from fiscal 2004's level. Because of the uncertainty as to the duration and exact nature of the U.S. Attorney's investigation, we have budgeted $1 million for legal and other costs associated with that investigation for fiscal 2005. Resolution of the United States Attorney's investigation into the overhaul and repair operation and completion of the refinancing of our subordinated debt are major priorities for 2005." Mr. White continued, "Our hope and expectation for fiscal 2005 is that we will continue to grow our business as we have done for the past nine years and provide our employees with opportunities for continued success and our owners with an increase in the value of their investment." Non-GAAP Financial Measures In addition to disclosing financial results that are determined in accordance with generally accepted accounting principles (GAAP), the company also discloses operating income (income from continuing operations, before interest and taxes and non-recurring or unusual charges and gains associated with derivatives included in the prior year's results), EBITDA (earnings before interest, taxes, depreciation and amortization) and the book-to-bill ratio (the ratio of new orders to sales) which are non-GAAP measures. Management believes that providing this additional information is useful to investors, as it provides more direct information regarding the company's ability to meet debt service requirements and so that investors may better assess and understand the company's underlying operating performance. The company does not intend for the additional information to be considered in isolation or as a substitute for GAAP measures. A reconciliation of EBITDA to operating income is set forth following the balance sheet information in the financial statements contained in this press release. About the Company TransTechnology Corporation, operating as Breeze-Eastern, is the world's leading designer and manufacturer of sophisticated lifting devices for military and civilian aircraft, including rescue hoist, cargo hooks, and weapons-lifting systems. The company employs approximately 180 people at its facility in Union, New Jersey. TXU GAS: Fitch Maintains Watch Evolving Status on BBB-/BB+ Ratings ------------------------------------------------------------------ Fitch Ratings maintains the Rating Watch Evolving status on the following ratings for TXU Gas Co.: --Senior unsecured debt 'BBB-'; --Preferred stock 'BB+'. TXU Corp. (senior unsecured debt rated 'BBB-'; preferred stock rated 'BB+'; Stable Outlook by Fitch) announced its plans to sell essentially all of the assets of TXU Gas to Atmos Energy for $1.925 billion, which is approximately book value. The transaction requires the review of the Justice Department under the Hart- Scott-Rodino Act and regulatory approvals in Missouri, Virginia, and Iowa. The transaction is expected to close by the end of the year. Atmos Energy will acquire TXU Gas' operations through an entirely cash transaction in which it assumes none of the debt. TXU Corp. plans to use the proceeds to prepay or defease $730 million of TXU Gas' debt and preferred stock. Repayment of the debt will be from cash acquired by the parent from the sale, therefore the debt and preferred stock ratings will be deemed to be equivalent to those of TXU Corp upon closing. As the transaction is subject to a number of regulatory hurdles, TXU Gas' ratings remain on Rating Watch Evolving. TXU Gas Company is engaged in the purchase, transmission, distribution and sale of natural gas in north-central, eastern, and western regions in Texas, and the company also provides energy asset management services. TXU Gas is a wholly owned subsidiary of TXU Corp. UAL CORP: Says ATSB Decision on Loan Application is Premature ------------------------------------------------------------- "We are perplexed by the announcement made by the Air Transportation Stabilization Board (ATSB) Wednesday afternoon," United Airlines said in a statement late last week after its second application for a government loan guarantee was denied. "We have reason to believe we are in the midst of a process with the ATSB to make our application acceptable and that a decision was premature. "We do not believe that the Board was made fully aware of the important modifications United was willing to bring to the table. We are respectfully petitioning the ATSB for reconsideration of our pending loan application." 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. UAL CORP: Flight Attendants Disappointed by ATSB Decision --------------------------------------------------------- United Airlines Flight Attendant Master Executive Council President Greg Davidowitch, of the Association of Flight Attendants-CWA, AFL-CIO, issued the following statement regarding the Air Transportation Stabilization Board's decision to deny United Airlines' application for an ATSB loan guarantee. "United Airlines and its employees have faced many challenges as we struggle to turn this airline around. The ATSB's decision not to extend a loan guarantee is another challenge that will force United to adjust its plans, but not to fail at the ultimate goal of returning our airline to the successful competitor it once was. "The restructuring process has been long and painful for all the employees at United, but now we're at a turning point. The last piece of the puzzle needed for our company to emerge from bankruptcy is the exit financing. While we believe the ATSB loan guarantee was the best option for our airline, it is not the only option. Now United will need to shift focus and raise the equity from other sources. "United flight attendants are committed to the long-term success of this company. We're on the planes every day helping to ensure United's success with our hard work and dedication. And as United's most visible work group, we have played a major part in turning this airline around. "Our flight attendants have made a significant investment in United Airlines -- both personally and financially -- and we intend to ensure that our investment pays off." More than 46,000 Flight Attendants, including the 21,000 flight attendants at United, join together to form AFA, the world's largest flight attendant union. AFA is part of the 700,000 member strong Communications Workers of America, AFL-CIO. Visit us at http://www.unitedafa.org 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. UAL CORP: Wants Court Injunction Against Summers & Lenormand ------------------------------------------------------------ The UAL Corp. Debtors ask the Court to permanently enjoin Jerry K. Summers and George T. Lenormand from continued prosecution of their pending action in the United States District Court for the Northern District of Illinois, Eastern Division. The Debtors want the Court to extend the automatic stay or issue an injunction staying the Summers Complaint. James H.M. Sprayregen, Esq., at Kirkland & Ellis, notes that the Debtors have not been named as defendants in the Summers Complaint, but they face impairment of assets, compelling an extension of the stay or a separate injunction order. On February 28, 2003, Messrs. Summers and Lenormand, individually and on behalf of all others similarly situated, sued the UAL Corporation Employee Stock Ownership Plan, UAL Corporation ESOP Committee, Marty Torres, Barry Wilson, Doug Walsh, Ira Levy, and certain other unidentified members of the ESOP Committee for violation of the ERISA. On March 24, 2003, Messrs. Summers and Lenormand filed an amended class action complaint. Messrs. Summers and Lenormand seek to recover up to $2,000,000,000 for all past members of the UAL ESOP Plan. Messrs. Summers and Lenormand were employees of the Debtors and participants in the UAL ESOP Plan. On July 12, 1994, the UAL ESOP Plan was established as part of a transaction that transferred a majority ownership stake in UAL to its employees. A UAL ESOP Committee was established, which had the rights, duties and obligations of a "Plan Administrator." The ESOP Committee consisted of six members: three from the Air Line Pilots Association, two from the International Association of Machinists and Aerospace Workers, and one from UAL. The Debtors agreed to indemnify the ESOP Committee members. Mr. Sprayregen argues that extension of the stay is warranted because the ESOP Committee member defendants face potential liability, which could lead to a substantial reduction in the Debtors' estates as a result of the indemnification. The liability against the ESOP Committee is a liability against the estates. This also means that Messrs. Summers and Lenormand violate the stay in liquidating a prepetition claim against the Debtors. Without an extension of the stay, the Debtors would be forced to devote considerable personnel who should be negotiating labor contracts and preparing a reorganization plan. Alternatively, if the Court declines to stay the prosecution of the Complaint, the Debtors want a permanent injunction staying the prosecution until the effective date of a plan. Continued prosecution of the Complaint will diminish the Debtors' prospects for successfully confirming their plan and interfere with property of the estate. 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. 50; Bankruptcy Creditors' Service, Inc., 215/945-7000) US AIRWAYS: Flight Attendants Waiting for Financial Information --------------------------------------------------------------- US Airways flight attendants, represented by the Association of Flight Attendants-CWA, AFL-CIO, received a preliminary report from Dan Akins, the union's financial consultant, concerning the US Airways' financial status and transition plan. The full report was put on hold because the airline has failed to provide key pieces of financial information to the union's expert. "We were expecting US Airways to fully cooperate with our financial analyst and turn over all the necessary documents promptly," said AFA US Airways Master Executive Council President Perry Hayes. "Unfortunately, Mr. Akins was unable to give the flight attendant leadership the kind of detailed information we need to consider a third round of concessionary negotiations. We fully expect that US Airways management will immediately provide our analyst with the necessary documentation to complete his work." Also during June 17's meeting, the flight attendant leadership unanimously passed a resolution to take immediate steps to complete the analysis of the airline's business plan and begin preparing an AFA term sheet analyzing cost items in the current flight attendant contract to prepare for possible negotiations with the company. The full text of the resolution appears at the end of this release. "This resolution is not a decision on whether to engage in negotiations," Hayes said. "However, the flight attendant leadership recognizes the need to be prepared whether or not we ultimately decide to begin formal talks with the company." At the end of May, US Airways presented the flight attendant leadership with pieces of the airline's transition plan. Following that meeting, AFA hired Akins to examine the company's financial documents and evaluate the legitimacy of the company's target of $116 million in concessions. In two rounds of concessionary negotiations in 2002, US Airways flight attendants contributed approximately $649 million in cost savings to the airline through 2008. More than 45,000 flight attendants, including the 5,200 flight attendants at US Airways, join together to form AFA, the world's largest flight attendant union. AFA is part of the 700,000 member strong Communications Workers of America, AFL-CIO. * * * AFA US Airways MEC resolution: Whereas, the AFA US Airways MEC recognizes the company's financial situation, and, Whereas, the US Airways flight attendants have made major and difficult contributions to help put our airline on track for a return to profitability, and, Whereas, we are committed to the successful transformation of our airline as a means to preserve and improve our careers, and, Whereas, any transformation of our airline should address flight attendant issues such as reserve, sick leave, outstanding grievances, early retirement/buyout, and other priority items, Therefore, be it resolved that AFA's Negotiating Committee, along with our legal and financial advisors, take immediate steps to complete the analysis of the company's business plan and financial data, and, Be it further resolved that AFA's Negotiating Committee, along with our legal and financial advisors, commence preparation of a preliminary AFA term sheet by analyzing cost items in our current contract so that we are prepared for any negotiations that may take place, and, Be it finally resolved, in any discussions in connection with the company's transformation plan, our Negotiating Committee will start any such discussions with solutions to flight attendant issues that would benefit the flight attendant group in connection with any possible agreement. Let it be noted that should we engage in negotiations with the company, any resulting agreement would have to be ratified by the membership. VIATICAL LIQUIDITY: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------------- Debtor: Viatical Liquidity, LLC 401 West A Street, Suite 2210 San Diego, California 92101 Bankruptcy Case No.: 04-05472 Type of Business: The Debtor is engaged in the insurance industry. Chapter 11 Petition Date: June 18, 2004 Court: Southern District of California (San Diego) Judge: John J. Hargrove Debtor's Counsel: Gary B. Rudolph, Esq. Sparber Rudolph Annen 701 B Street, Suite 1000 San Diego, CA 92101 Tel: 619-239-3600 Fax: 619-239-5601 Total Assets: $119,083,608 Total Debts: $47,538,071 Debtor's 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ John F. Philips Life insurance $1,319,055 808-104 Salem Woods Dr. policies for: Richard Raleigh, NC 27615 Caplan #LN00902580, Carl Kaplan #UL00253013, Robert Levaro #93851-G/548740062 James P. McGonigle Life insurance $1,236,002 1 N. Tuttle Avenue policies for: Tangela Sarasota, FL 34237 Oliver #0000628050 and Carlton Louis #77801991 Jerome M. Laffer Life insurance $1,161,592 Judith A. Laffer policies for: Charles 4894 Hyde Road Turner #N3902671 Manlius, NY 13104 and Louis Woodson #VIFB007211 Philip C. Miller Life insurance $975,000 7501 Haymarket Lane policies for: Laura Raleigh, NC 27615 Berger #1533408, Marvin Berman #2720588, Daymon Bruck #1115534L, Stephen Caccavo #946801302PR Katherine S. Henry Life insurance $932,853 721 West Arapaho, Suite 2 policies for: Peter Richardson, TX 75080 Barbosa #38300291, Gary Beyrouti #B4023271-A, Todd Bennett #5152669, Kent Brown #180035084, Brent Ann G. Buckley Life insurance $781,047 Thomas P. Buckley policies of: William 626 Apache Drive Gibert Garland, TX 75043 #VTL7013/40887, Steven Anderson #3949207, Helen DeLaurentis #60020334, Richard Arthur C. Hawkins Life insurance $780,001 7701 Winter Avenue NE policies for: Arthur Albuquerque, NM 87110 Armstrong #B00160975, Paul Finkel #62-78344963, Larry Jones #60038296, Donald Thurber David Cline Counselor Commission $761,591 5100 Poplar Avenue #720 Memphis, TN 38137-0716 Susan I. Lindquist Life insurance $754,907 20343 Nicol Creek Drive policies for: Dallas Macomb Twp., MI 48044 & Dorothy Lynch #80034903, Bradley Neri #1-000065150, Robert Gold #W77186, Barbara Price #92529535 Raymond Miller Life insurance $745,637 Christie Miller policies for: Adell 1503 East 20th Street Adams #N056, Dean Spokane, WA 99203 Lewis #LL156530732, Donald Island #502685, William Linton #WMH61133 Glenn E. Richardson Life insurance $650,000 Roberta Richardson policies for Gerald 630 Pawnee Drive Altman #5212860, Estes Park, CO 80517 James Carr #TL-43/501189495, Harold Goldstein #4858951, David Jackson Frank J. Greskovich II Life insurance $632,459 Veronica S. Greskovich policies for: Thomas 4320 Montalvo Drive Boatright Pensacola, FL 32504 #1501823785 & #0193110603, Forrest Boyd #U01419003, Wesley Converse #M101170 Dr. David Sacks Multiple life $660,000 Renee M. Sacks insurance policies 999 N. Tustin Avenue, #122 Santa Ana, CA 92705-6505 Charles L. Wagnon Life insurance $587,560 5480 Orange Tree Lane policies for: Richard Midlothian, TX 76065 Battle #27119, Peter Bayham #GG17700, Raymond Biknius #6278330341, Michael Brown #10409367, James Mike Seikel Life insurance $584,189 Jerry L. Seikel policies for: Doanld 6412 Outabounds Court Baptista Oklahoma City, OK 73116 #B4047369/400YC42 074, Victoria Pyzik #MP01953, Evans Menon #CN8800204C Robert W. Winters Life insurance $556,872 Agnete Winters policies for: John 11 East 87th Street #5C Dibelka #74503, New York, NY 10028 Rufus Stokes #919056104PR, Gary Beyrouti #E-694/B4023271-B, Henry Goldberg Pierre A. Rioux Life insurance $523,202 301 1st Avenue SW policies for: Burton Austin, MN 55912 Borovetz #03-L1662/00110004 3/0101001, Adrian Rico #19634610, Joseph Stabilito #5005260960 Debra Slapper Life insurance $520,763 8512 NE Sunnyside Drive policies for: Bryan Vancouver, WA 98662 Kendall #0472485, Erwin Tenes #749317204, Blain Fortunas #67-155-204, Louis Woodson Benny R. Cleveland Life insurance $500,340 Rebecca T. Cleveland policies for: Peter 523 Cordillera Trace Bayham #GG17700, Boerne, TX 78006 David Bridges #7936001, Anthony Cali #G17700, Dean Lewis #LL156530732 Charles G. Harger Life insurance $499,667 Shirley Harger policies for: Bonna 124 Cold Springs Drive Lasher #60037954, Georgetown, TX 78628 Bettye Stevenson #911534119, Jon Block #49690464, Claude Marcoux #106856, Boris WEIRTON STEEL: Outlines Treatment Of Claims Under Liquidation Plan ------------------------------------------------------------------ Mark E. Freedlander, Esq., at McGuireWoods, in Pittsburgh, Pennsylvania, tells the Judge Friend that Weirton's Plan of Liquidation provides for the classification and treatment of Claims and Equity Interests. Weirton and its professionals conducted an analysis of all claims scheduled by Weirton. The Debtor has prepared a good faith estimate based on varying sources of information and there have been more than $2.2 billion in claims filed against the Debtor. The Debtor has estimated administrative, secured, priority unsecured and unsecured claims based on a variety of information sources including its books and records, schedules and statements, reports prepared by Weirton's claims agent regarding claims filed with the Court, reports prepared by Weirton to estimate various claims, actual claims filed with the Court and discussions with its outside advisors. Substantial effort has been made to ensure the accuracy of the estimated information. Anticipated allowed amounts of allowed claims and allowed interests and the projected distributions are subject, however, to the uncertainties of litigation that may occur with respect to certain claims and other factors that may or may not be resolved in the Debtor's favor. Thus, no assurances can be given that the estimated amounts of allowed claim and allowed interests and the projected distribution will be achieved. Class Type of Claim Treatment of Claims ----- ------------- ------------------- N/A Administrative Paid in full in Cash on the later Claims of: (a) the Effective Date of the Plan; or (b) the date on which the Administrative Claim is allowed. Estimated Recovery: 100% Estimated Allowed Amount: $18,800,000 N/A Professional Paid in full in amounts as Fee Claims allowed by the Bankruptcy Court: (a) on the date on which the order relating to any Administrative Expense Claim is entered; or (b) on other terms as may be mutually agreed upon between the holder of the Administrative Expense Claim and the Debtor. Estimated Recovery: 100% Estimated Allowed Amount: $5,000,000 N/A U.S. Trustee Paid on a quarterly basis as Fees required by statute until the Chapter 11 Case is closed. Estimated Recovery: 100% Estimated Allowed Amount: $100,000 N/A Priority Tax Except to the extent that the Claims holder of a Priority Tax Claim agrees to a different treatment, each holder of an Allowed Priority Tax Claim will receive on the Effective Date, or as soon thereafter as is reasonably practicable, after payment of up to $6 million to holders of Class 2 Claims, including the Bonus Pool, the lesser of a Pro Rata Share of all available Cash or an amount in Cash equal to the Allowed Amount of the Claim. Estimated Recovery: 100% Estimated Allowed Amount: $5,000,000 1 Other Secured On or as soon as reasonably Claims practicable after the Effective Date, each holder of an Allowed Other Secured Claim will receive, at the option of the Debtor, and in full satisfaction of the Claim, either: (a) Cash in an amount equal to 100% of the unpaid amount of the Allowed Other Secured Claim; (b) the proceeds of the sale or disposition of the Collateral securing the Allowed Other Secured Claim to the extent of the value of the holder's secured interest in the Allowed Other Secured Claim, net of the costs of disposition of the Collateral; or (c) other distribution as necessary to satisfy the requirements of the Bankruptcy Code. In the event the Debtor treats a Claim under clause (i) or (ii) of Section 4.1 of the Plan, the liens securing the Other Secured Claim will be deemed released. Estimated Recovery: 100% Estimated Allowed Amount: $700,000 Unimpaired 2 Note and Bond In addition to the $30 million paid Claims by the Debtor with respect to Allowed Class 2 Claims on the Closing Date, in accordance with the Settlement and Lockup Agreement, after payment by the Debtor of all Allowed Administrative Expense Claims under Section 2.1, including compensation and reimbursement claims under Section 2.2, and after the Debtor has liquidated all of its remaining assets that are reasonably able to be liquidated, the Debtor will pay the lesser of $6,000,000, less 10% of the recovery by Class 2 claimants between $32 million and $36 million -- the Bonus Pool -- or all remaining assets in the Debtor's Estate, less the Bonus Pool, to the order of J.P. Morgan for the benefit of Class 2 claims. To the extent practical, the Debtor may make earlier distributions consistent with the needs of the Debtor's Estate. Estimated Recovery: 100% Estimated Allowed Amount: $6,000,000 Impaired 3 Priority Non-Tax Except to the extent that a holder Claims of an Allowed Priority Non-Tax Claim against the Debtor agrees to a different treatment of the Claim, on the Effective Date, or as soon thereafter as is reasonably practicable, each holder will receive a Pro Rata Share of all remaining Cash after payment of all Allowed Claims in Sections 2.1, 2.2, 2.3, 4.1 and 4.2 of the Plan, on the Effective Date or as soon thereafter as is practicable. Estimated Recovery: 100% Estimated Allowed Amount: $1,000,000 Impaired 4 General The holders of Allowed General Unsecured Unsecured Claims will receive their Claims Pro Rata Share of all remaining Cash after payment in full of all Allowed Claims in Sections 2.1, 2.2, 2.3, 4.1, 4.2 and 4.3 of the Plan, on the Effective Date or as soon thereafter as is practicable. Estimated Recovery: 0% Estimated Allowed Amount: $1,000,000,000 Impaired 5 Equity Allowed Class 5 Equity Interests Interests will receive no distribution under the Plan, and will be cancelled on the Effective Date. Estimated Recovery: 0% Estimated Allowed Amount: N/A Impaired (Weirton Bankruptcy News, Issue No. 28; Bankruptcy Creditors' Service, Inc., 215/945-7000) WEIRTON STEEL: Court Sets July 2 as Administrative Claims Bar Date ------------------------------------------------------------------ On May 25, 2004, the U.S. Bankruptcy Court for the Northern District of West Virginia entered an order establishing an administrative claims bar date -- a deadline by which creditors selling to Weirton Steel Corporation and its debtor-affiliates post-bankruptcy must file their claims. The court has set July 2, 2004 at 5:00 p.m. as the last day to file an administrative claim. Claim forms must be delivered to: if by U.S. mail if by hand/overnight mail --------------- ------------------------- Donlin, Recano & Company, Inc. Donlin, Recano & Company, Inc. Re: Weirton Steel Corporation Re: Weirton Steel Corporation P.O. Box 2038 419 Park Avenue South New York, NY 10156 New York, NY 10016 Administrative claims need not be filed if the claims are: (a) by professionals retained in the chapter 11 case; (b) all fees payable and unpaid under 28 U.S.C. Section 1930; (c) by members or former members of the Independent; Steelworkers Union or the International Guard Union; (d) by former employee for benefits; (e) for retiree benefits; (f) individual worker's compensation benefits; and (g) already properly filed with the court For additional information regarding the filing of administrative claim forms contact Donlin, Recano & Company, Inc. at (212) 771-1128. Weirton Steel is a major integrated producer of flat rolled carbon steel with principal product lines consisting of tin mill products and sheet products. The company filed for chapter 11 protection (Bankr. W.D. Va. Case No. 03-01802) on May 19, 2003 before the Honrable L. Edward Friend, II. Robert G. Sable, Esq., Mark E. Freedlander, Esq., David I. Swan, Esq., and James H. Joseph, Esq., of McGuireWoods represent the debtor in its restructuring efforts. WINDERMERE SCHOOL: Files Liquidating Plan and Discl. Statement -------------------------------------------------------------- Windermere School Partners, LLLP and Windermere Preparatory School, Inc., filed their Joint Liquidating Chapter 11 Plan and the accompanying Disclosure Statement with the U.S. Bankruptcy Court for the Middle District of Florida, Orlando Division. Full- text copies of the documents are available for a fee at: http://www.researcharchives.com/bin/download?id=040617031240 and http://www.researcharchives.com/bin/download?id=040617031534 The Plan is a liquidating plan. The Debtor will transfer assets, including cash and avoidance actions, to a Liquidating Trust for payment of obligations under the Plan. Both Debtors group creditors into five classes of claims and interest in each case. All Classes of Claims are impaired in both cases. These claims are classified according to their treatment under the Plan. Windermere School Partners, LLLP Claims: Class Treatment ----- --------- 1 - Allowed The Plan extinguishes the rights of holders Interests of limited and general partners, including of Partners any rights to payment under the partnership agreements. 2 - Allowed At Closing, will receive cash in the amount Secured of such claim, receiving all the net Claim of proceeds of the closing from the Sale The Bank of Agreements of at least $6,600,000, from America which Bank of America has agreed to pay. 3 - Allowed Will be paid at Closing. Secured Claim of Earl K. Wood, Orange County Tax Collector 4 - Allowed Will receive nothing in the account of the Secured claim. Claim of The American School Corporation. 5 - Allowed Holders will participate pro rata in the Unsecured LLLP Fund of the WSP Liquidating Trust up Claims to the amount of such Claims; provided that, there will be no distribution on account of such Claims until full payment of Administrative Expenses, Allowed Priority Tax Claims and Allowed Non-Tax Priority Claims. Windermere Preparatory School, Inc., claims: Class Treatment ----- --------- 1 - Allowed The duplications of the treatment of this Secured class and that of LLLP Class II are for Claim of clarity and explanation, and are not The Bank cumulative. At Closing, the holder will of America receive cash in the amount of such claim, receiving all the net proceeds of the closing from the Sale Agreements of at least $6,600,000 2 - Allowed This claim will be paid at the Closing. Secured Claim of Earl K. Wood Orange County Tax Collector 3 - Allowed LLLP shall have an unsecured claim in the Unsecured amount of $1,582,592, calculated as: Claims of prepetition balance of lease obligation LLLP $808,609.57, less setoff of prepetition loan of WPS to LLLP in the amount of $687,293.59, plus lease breach claim limited pursuant to Section 502(b)(6) (monthly rent of $121,773.00 for twelve months). 4 - Allowed Will participate pro rata in the WPS Fund of Unsecured the WSP Liquidating Trust up to the amount Claims of the Claims. 5 - Allowed This class will receive nothing under the Interest of Plan. Shareholders Headquartered in Windermere, Florida, Windermere School Partners L.L.L.P., filed for chapter 11 protection on March 31, 2004 (Bankr. M.D. Fla. Case No. 04-03610). Frank M. Wolff, Esq., at Wolff Hill McFarlin & Herron PA 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. WOMEN FIRST HEALTHCARE: Will Hold Public Auction on June 24 ----------------------------------------------------------- On May 18, 2004, the U.S. Bankruptcy Court for the District of Delaware approved uniform Bidding Procedures proposed by Women First Healthcare, Inc., in connection with the sale of its Vaniqa assets. The bidding Procedures Motion papers are available at no charge at http://www.bmccorp.net/wfhc The court has fixed June 24, 2004 at 10:00 a.m. for a Public Auction to take place at: Young Conaway Stargatt & taylor LLP The Brandywine Building 1000 West Street 17th Floor Wilmington, DE 19899 A Sale Hearing will be held on June 25, 2004 at 10:30 a.m. before the Honorable Mary F. Walrath in Wilmington. The hearing will be held to consider the debtor's motion to authorize the sale of Vaniqa assets, an asset purchase agreement with Skinmedia, Inc. (or any higher bidder emerging at the auction), assumption of executory contracts and unexpired lease, and approving the sale transaction. Headquartered in San Diego, California, Women First HealthCare, Inc. -- http://www.womenfirst.com/-- is a specialty pharmaceutical company dedicated to improve the health and well-being of midlife women. The Company filed for chapter 11 protection on April 29, 2004 (Bankr. Del. Case No. 04-11278). Michael R. Nestor, Esq., and Sean Matthew Beach, Esq., at Young Conaway Stargatt & Taylor represent the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed $49,089,000 in total assets and $73,590,000 in total debts. * SSG Recapitalizes Fetco Through Creative Deal Structure --------------------------------------------------------- Fetco had been adversely impacted over the last few years by the poor upscale retail environment, as well as, decreased margins due to the overall shift of retail sales from small independent gift and photo stores to larger chain department stores, mass merchandisers and specialty stores. Further, Fetco had only recently implemented an operational turnaround to combat inefficiencies in sales and distribution. Near-term liquidity issues required an immediate infusion of capital through either a sale or recapitalization of the Company. SSG Capital Advisors, L.P. went to market to a broad array of lenders, investors and purchasers. Ultimately, SSG delivered a recapitalization that provided liquidity to the existing senior lender, provided incremental capital into the business and allowed the existing owners of the company to maintain a controlling interest. The transaction encompassed bringing in a new lender and concurrently restructuring some of Fetco's existing obligations. About Fetco Home Decor, Inc. Fetco Home Decor, Inc. is a leading designer and wholesaler of upscale picture frames, wall decor and home accent pieces. The Company, headquartered in Randolph, Mass., offers a variety of quality branded frames made primarily from wood, metal, and glass. Products are branded under the proprietary Fetco and Beacon Hill labels, as well as, the licensed Country Living and Trading Spaces labels. SSG Capital Advisors, L.P. With offices in Philadelphia, New York and Cleveland, SSG Capital advisors, L.P. http://www.ssgca.com/-- advises middle market businesses nationwide and in Europe that are undercapitalized and/or facing turnaround situations. With more than 100 investment banking assignments completed in the last five years, the firm is recognized for its expertise in mergers and acquisitions; private placements of debt and equity; complex financial restructurings, and valuations and fairness opinions. In addition, SSG assists institutional and individual limited partners, throughout the country, in selling their private equity fund interests into the secondary market. * BOND PRICING: For the week of June 21 - 25, 2004 -------------------------------------------------- ] Issuer Coupon Maturity Price ------ ------ -------- ----- Adelphia Communications 6.000% 02/15/06 42 American & Foreign Power 5.000% 03/01/30 66 AMR Corp. 10.200% 03/15/20 72 Applied Extrusion 10.750% 07/01/11 63 Burlington Northern 3.200% 01/01/45 53 Burlington Northern 3.800% 01/01/20 74 Calpine Corp. 7.750% 04/15/09 64 Calpine Corp. 7.875% 04/01/08 66 Calpine Corp. 8.500% 02/15/11 65 Calpine Corp. 8.625% 08/15/10 65 Calpine Corp. 8.750% 07/15/07 71 Continental Airlines 4.500% 2/01/07 72 Comcast Corp. 2.000% 10/15/29 39 Cummins Engine 5.650% 03/01/98 69 Delta Air Lines 2.875% 02/18/24 55 Delta Air Lines 7.900% 12/15/09 47 Delta Air Lines 8.000% 06/03/23 49 Delta Air Lines 8.300% 05/15/16 42 Delta Air Lines 9.250% 03/15/22 40 Delta Air Lines 9.750% 05/15/21 40 Delta Air Lines 10.125% 05/15/10 49 Delta Air Lines 10.375% 02/01/11 49 Elwood Energy 8.159% 07/05/26 69 Fibermark Inc 10.750% 04/15/11 58 Goodyear Tire 7.000% 03/15/28 75 Inland Fiber 9.625 11/15/07 50 Level 3 Communications 6.000% 09/15/09 65 Mirant Americas 7.625 05/01/06 74 Missouri Pacific 4.750% 01/01/30 72 Missouri Pacific 5.000% 01/01/45 74 National Vision 12.000% 03/30/09 62 Northern Pacific Railyway 3.000% 01/01/47 52 Northwest Airlines 7.875% 03/15/08 66 Northwest Airlines 8.700% 03/15/07 72 Northwest Airlines 9.875% 03/15/07 76 Northwest Airlines 10.000% 02/02/09 69 Salton Inc 12.250% 04/15/08 74 ********* 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. Monthly Operating Reports are summarized in every Saturday edition of the TCR. 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 ***