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/raid1/www/Hosts/bankrupt/TCR_Public/040729.mbx T R O U B L E D C O M P A N Y R E P O R T E R Thursday, July 29, 2004, Vol. 8, No. 157 Headlines 360NETWORKS: Creditors Committee Adds Defendants to Tishman Suit AFFINITY TECHNOLOGY: Verdict in Temple Ligon Trial is Set Aside AIR CANADA: French Court Won't Upset Paris Airport Terminal Change ALICE'S WONDERLAND: List of 18 Largest Unsecured Creditors ANC RENTAL: Wants Court Nod to Employ R.I. Heller as Claims Agent ARCHIBALD CANDY: Canada & U.S. Courts Approve Laura Secord Sale AVAYA INC: Reports $61 Mil Net Income for FY '04 Third Quarter AVAYA INC: Unveils New Converged Mobility Products BIG FLASH: Board Dismisses Independent Accountant & Hires New Firm CABO RESTAURANTS: Case Summary & 20 Largest Unsecured Creditors CALCITECH: Will File Delayed Annual Financials Next Week CALYPSO FINANCIAL: Board Dismisses Accountant & Hires New Firm CAPITAL ENVIRONMENTAL: Will Become Waste Services Subsidiary CATHOLIC CHURCH: U.S. Trustee Appoints Tort Claimants Committee CHARTER COMMS: Inks Settlement Pact with SEC on Investigation CENTURY/ML: Court Nixes 12 Objectionable Claims Totaling $5 Mil. CHESAPEAKE ENERGY: Fitch Holds BB Rating on Senior Unsecured Notes CHESAPEAKE ENERGY: S&P Rates $300M Senior Unsecured Notes at BB- COMMERCIAL MORTGAGE: Fitch Upgrades Class H to BBB- from BB+ COMMERCIAL MORTGAGE: S&P Upgrades Low B-Ratings on Classes F, G, H CP KELCO: S&P Places B Ratings on CreditWatch Positive CREDIT SUISSE: Fitch Affirms Low B-Ratings on Six Classes DIBENS ENTERPRISES: Voluntary Chapter 11 Case Summary DII INDUSTRIES: S&P Says Plan Confirmation Favorable for Ratings DII/KBR: Continues U.S. Navy Services Under CONCAP Contract DIGIBLUE MEDIA: Reuben to Act as Independent Chartered Accountant DIRECTVIEW INC: Executes Letter of Intent to Acquire Option Data DOMAN IND: Western Forest Succeeds Company After Restructuring DYKESWILL LTD: Case Summary & 20 Largest Unsecured Creditors ENTERPRISE PRODUCTS: Updates Distribution Declaration EQUIFIN INC: Common Stock Trading Moved to OTC Bulletin Board EXIDE TECH: Akin Gump Wants to Collect $6,618,407 Final Fees FACEPRINT GLOBAL: Dismisses Pritchet as Independent Accountants FEDERAL-MOGUL: Court Approves Disclosure Statement FEDERAL-MOGUL: Resolves Large Claims Asserted by Nippon Piston FINOVA GROUP: Will Prepay 7.5% Senior Secured Notes Due 2009 FOG CUTTER: Declares $0.13 Per Share 3rd Quarter Cash Dividend FOREST OIL: Will Release 2nd Quarter '04 Results on August 4 GENCORP INC: S&P Affirms BB- Corporate Credit Rating GMAC COMM: Fitch Affirms Low Ratings for 8 Classes; Junks 1 Class GOOD YEAR: S&P Gives B+ Secured Debt & Corporate Credit Ratings GREAT PLAINS: Q2'04 Results Driven by Strong Wholesale Performance HORIZON PCS: Subsidiary Completes $125 Million Sr. Debt Offering HOST MARRIOTT: S&P Assigns B+ Rating to Proposed $350M Sr. Notes IN-TOUCH: Springboard Corp Withdraws $750,000 Financing Commitment INTERSTATE BAKERIES: SEC Begins Formal Investigation INTERWAVE COMMS: Alvarion Offers $56 Million to Acquire Company IPIX CORP: Armanino McKenna Replaces PwC as Independent Auditors KAISER ALUMINUM: Gets Court Nod on QAL Sale Bidding Procedures KING PHARMACEUTICALS: S&P's Low Ratings on CreditWatch Positive KINGDOM VENTURES: Board Dismisses Wrinkle as Public Accountants KMART CORP: Objects to 142 Tax-Related Claims for $36.7 Million LB-UBS COMMERCIAL: Fitch Affirms Low Ratings on Three Classes LEGEND INT'L: Ends Client-Auditor Relationship with Clyde Bailey LOEWEN GROUP: Alderwoods Offers to Repurchase Sr. Notes Due 2009 MAGIC LANTERN: Hires Normandeau as Senior VP Educational Relations MATERIAL TECH: Former Auditors Comment on Financial Statements NANOGEN INC: Will Release 2004 2nd Quarter Results on August 3 NAT'L ENERGY: Agrees to Sell Equity Interests in 12 Power Plants NORTEL NETWORKS: Files Prelim Unaudited 1st & 2nd Quarter Results NSTEIN TECH: Inks 2 Software Solution Contracts with Time, Inc. OGLEBAY NORTON: Judge Indicates He'll Approve Disclosure Statement PEGASUS SATELLITE: Court Partly Grants Employee Retention Program PLAINS ALL: Adds Capobianco to Board After Plains Resources Sale PROXIM CORP: Board Approves Succession Plan for New CEO PROXIM CORP: Inks Debt Conversion & Bridge Loan Pacts RELIANCE GROUP: Bank Committee Wants Court to Nix Six Big Claims RENAL CARE: Reports Q2 Results & Acquires Nevada Dialysis Program RF MICRO: To Redeem $100 Mil. Outstanding 3.75% Convertible Bonds SECURED DIVERSIFIED: Names Kabani as New Independent Accountants SONIC ENVIRONMENTAL: Signs First Commercial Clean-up Contract TAHERA DIAMOND: Equity Deficit Narrows to CDN$1.3 Mil at June 30 TELTRONICS INC: Ernst & Young Resigns as Independent Accountants TEMBEC: Signs Working Protocol and Pact with Ktunaxa Nation TENECO AUTOMOTIVE: Fitch Rates New Senior Subordinated Debt B- TENNECO AUTOMATIVE: Will Not Proceed with $500M Private Placement THERMADYNE HOLDINGS: 2nd Quarter Conference Call Set for Aug. 9 TOWNHOUSE INC: Case Summary & 2 Largest Unsecured Creditors UAL CORP: ACA Wants $3 Million Monthly Payment Paid in Full US AIRWAYS: Reports $34 Million Profit in Strongest 2nd Quarter USG CORP: Posts Record $1.1 Billion Net Sales in Second Quarter UGS PLM: Inks $600,000 Pact with Fereng on Teamcenter(R) Use VANGUARD HEALTH: Commences Solicitation for $300M Senior Notes W.R. GRACE: Wants Court Nod to Expand Nelson Mullins' Services WESTERN FOREST: Tricap Acquires 4.5M Shares Pursuant to CCAA Plan WILSONS LEATHER: To Release 2nd Quarter Results on Aug. 17 WINMAX TRADING GROUP: Goldstein Replaces Stark Winter as Auditors WOOD PRODUCTS: Three Officers & Directors Resign WORLDCOM: Court OK Stipulation Resolving Kael Contract Disputes * Fitch Sets Aug 3 Teleconference to Discuss Report on Health Care ********* 360NETWORKS: Creditors Committee Adds Defendants to Tishman Suit ---------------------------------------------------------------- The Official Committee of Unsecured Creditors in 360networks, Inc.'s chapter 11 proceeding has amended its lawsuit against Tishman Construction Corporation of D.C. to include six additional defendants: (a) Baltimore Door & Frame, Inc., (b) Ceilings & Partitions, Inc., (c) Freestate Electrical Construction Company, (d) Hunt & Walsh, Inc., (e) Jarvis Steel & Lumber Company, Inc., and (f) Tyler Mechanical Contracting, Inc. Aside from its intent to recover $1,024,825 from Tishman, the Committee, in the alternative, seeks a Court judgment to avoid and recover these preferential transfers: Preferential Payment Defendant -------------------- --------- $247,959 Tishman 4,249 Baltimore Door 20,985 Ceilings 221,850 Freestate 2,160 Hunt 97,848 Jarvis 429,773 Tyler Norman N. Kinel, Esq., at Sidley Austin Brown & Wood, LLP, in New York, relates that on March 28, 2002, the Debtors demanded Tishman to return the Alternative Transfers. Tishman failed to return the Alternative Transfers. Mr. Kinel contends that: (a) each Alternative Transfer was made to the Transferees for on account of an antecedent debt the Debtors owe before each Alternative Transfer was made; (b) each Transferee was a creditor at the time of the Alternative Transfers; (c) the Alternative Transfers were made by the Debtors during the 90-day period preceding the Petition Date, while they were insolvent; and (d) by reason of the Alternative Transfers, the Transferees were able to receive more than they would receive if: -- these cases were cases under Chapter 7 of the Bankruptcy Code; -- the Alternative Transfers had not been made; and -- the Transferees received payment of the debts in the Chapter 7 proceedings. Accordingly, the Alternative Transfers are avoidable and the Committee is entitled to recover the Alternative Transfers pursuant to Sections 547(b) and 550 of the Bankruptcy Code, the Plan and the Confirmation Order. Headquartered in Vancouver, British Columbia, 360networks, Inc. -- http://www.360.net/-- is a leading independent provider of fiber optic communications network products and services worldwide. The Company filed for chapter 11 protection on June 28, 2001 (Bankr. S.D.N.Y. Case No. 01-13721), obtained confirmation of a plan on October 1, 2002, and emerged from chapter 11 on November 12, 2002. Alan J. Lipkin, Esq., and Shelley C. Chapman, Esq., at Willkie Farr & Gallagher, represent the Company before the Bankruptcy Court. When the Debtors filed for protection from its creditors, they listed $6,326,000,000 in assets and $3,597,000,000 in liabilities. (360 Bankruptcy News, Issue No. 72; Bankruptcy Creditors' Service, Inc., 215/945-7000) AFFINITY TECHNOLOGY: Verdict in Temple Ligon Trial is Set Aside --------------------------------------------------------------- Affinity Technology Group, Inc. (OTCBB:AFFI) said the trial court had ruled on the Company's post-trial motions made in connection with the Temple Ligon trial. In its motions the Company claimed, among other things, that the jury verdict of $382,148 awarded against the Company in January 2004 should be set aside. The trial judge granted the Company's motion, set aside the jury verdict and ordered entry of a judgment in favor of the Company. Mr. Ligon had claimed that Affinity had breached an agreement to give him a 1% equity interest in the Company in consideration of services he claimed to have performed in 1993 and 1994. Joe Boyle, Affinity's President and Chief Executive Officer, stated, "We are pleased with this ruling. Although we do not know if Mr. Ligon will contest the ruling, we hope that the judge's decision will bring this longstanding dispute to a close." In other news, Affinity confirmed that it is continuing to attempt to negotiate the extension of its convertible notes which were due in June. About Affinity Technology Group, Inc. Through its subsidiary, decisioning.com, Inc., Affinity Technology Group, Inc. -- whose March 31, 2004 balance sheet shows a stockholders' deficit of $1,452,569 -- owns a portfolio of patents that cover the automated processing and establishment of loans, financial accounts and credit accounts through an applicant- directed remote interface, such as a personal computer or terminal touch screen. Affinity's patent portfolio includes U. S. Patent No. 5,870,721 C1, No. 5,940,811, and No. 6,105,007. AIR CANADA: French Court Won't Upset Paris Airport Terminal Change ------------------------------------------------------------------ An administrative court in Cergy-Pontoise in Paris, France, denied Air Canada's request to return to its regular terminal at Charles de Gaulle International Airport after the airline was forced to move its operations out when the terminal collapsed in May 2004, the Associated Press reports. According to Agence France-Press, Aeroports de Paris asked Air Canada to leave an undamaged Terminal 2A to make room for Air France, whose long-haul flights were disrupted by the collapse of the boarding and waiting section of the ultra-modern Terminal 2E. Air Canada had to transfer its operations to the older and more distant Terminal 1. The transfer was "unacceptable" to Air Canada, which invested EUR2,000,000 to help renovate Terminal 2A. 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. 42; Bankruptcy Creditors' Service, Inc., 215/945-7000) ALICE'S WONDERLAND: List of 18 Largest Unsecured Creditors ---------------------------------------------------------- Alice's Wonderland released a list of 18 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Advanta Bank Corp. Business Debt $26,754 Wells Fargo Business Debt $24,467 MBNA AMERICA Business Debt $20,364 Discover Bank Business Debt $16,109 Bank One Business Debt $13,281 Fleet Business Debt $10,036 Peoples Bank Business Debt $8,261 American Express Business Debt $7,496 Sam's Club Business Debt $6,915 Office Max Credit Business Debt $3,392 Home Depot Credit Services Business Debt $2,868 Recovery Together Co. Business Debt $750 Headquartered in Casa Grande, Arizona, Alice's Wonderland -- http://www.aliceswonderland.org/-- specializes in the treatment of drug dependency and alcoholism. The Company filed for chapter 11 protection (Bankr. D. Ariz. Case No. 04-03576) on July 19, 2004. Dennis J. Wortman, Esq., at Dennis J. Wortman, P.C., represents the Company in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed both estimated debts and assets of over $1 million. ANC RENTAL: Wants Court Nod to Employ R.I. Heller as Claims Agent ----------------------------------------------------------------- ANC Rental Corporation and its debtor-affiliates ask the Court to employ R.I. Heller & Company, LLC, as substitute claims and noticing agent for the Clerk of the Bankruptcy Court. Thomas G. Whalen, Jr., Esq., at Stevens & Lee, in Wilmington, Delaware, relates that R.I. Heller is in the business of providing operational and financial advisory services, including restructuring services. As substitute claims and noticing agent of the Bankruptcy Court Clerk's Office for the District of Delaware, R.I. Heller will: (a) prepare and serve required notices in the Debtors' Chapter 11 cases, including: (1) notice of objections to claims; and (2) other miscellaneous notices as the Debtors or the Court may deem necessary or appropriate for an orderly administration of ANC's Chapter 11 cases; (b) file with the Clerk's Office an affidavit of service, within five business days after the service of a particular notice, which includes: (1) a copy of the notice served; (2) an alphabetical list of persons on whom the notice was served, along with their addresses; and (3) the date and manner of service. (c) maintain copies of all proofs of claim and proofs of interest in ANC's Chapter 11 cases; (d) maintain official claims registers in ANC's cases by docketing all proofs of claim and proofs of interest in a claims database that includes these information for each claim or interest asserted: (1) The name and address of claimant or interest holder and any agent, if the proof of claim or proof of interest was filed by an agent; (2) The date the proof of claim or proof of interest was received by R.I. Heller or the Court; (3) The claim number assigned to the proof of claim or proof of interest; and (4) The asserted amount and classification of the claim; (e) implement necessary security measures to ensure the completeness and integrity of the claims registers; (f) transmit to the Clerk's Office a copy of the claims registers on a monthly basis, unless requested by the Clerk's Office on a more or less frequent basis; (g) maintain a current mailing list for all entities that have filed proofs of claim or proofs of interest and make the list available to the Clerk's Office or any party-in- interest upon written request; (h) provide access to copies of the proofs of claim or proofs of interest filed in these cases without charge during regular business hours; (i) record all transfers of claims pursuant to Rule 3001(e) of the Federal Rules of Bankruptcy Procedure and provide notice of the transfers as required by Bankruptcy Rule 3001(e); (j) comply with applicable federal, state, municipal and local statutes, ordinances, rules, regulations, orders and other requirements; (k) provide temporary employees to process claims, as necessary; (l) promptly comply with further conditions and requirements as the Clerk's Office or the Court may at any time prescribe; and (m) provide other claims processing, noticing and related administrative services as may be requested from time to time by the Debtors. William N. Plamondon, III, President and CEO of R.I. Heller, represents that by accepting employment in the Debtors' Chapter 11 cases, R.I. Heller waives any rights to receive compensation from the United States government. In its capacity as the Claims and Noticing Agent in ANC's Chapter 11 cases, R.I. Heller will not be an agent of the United States and will not act on behalf of the United States. Furthermore, R.I. Heller will not employ any past or present employees of the Debtors in connection with its work as the Claims and Noticing Agent other than existing R.I. Heller employees who worked for the Debtors prior to October 2003. Mr. Plamondon assures the Court that neither R.I. Heller nor any of its employees has any connection with the Debtors, their creditors or any other party-in-interest except that he did contract work for the Debtors prior to the Petition Date. Neither R.I. Heller nor any employee represents any interest adverse to the Debtors' estates with respect to the matters on which R.I. Heller is to be engaged. Heller will charge a flat monthly compensation rate of $5,000. Mr. Whalen points out that the flat rate is more favorable than the prices charged by the prior claims agent, Donlin, Recano & Company, Inc., and is consistent with prices charged by other practitioners retained in Chapter 11 cases to perform similar services. Headquartered in Fort Lauderdale, Florida, ANC Rental Corporation, is the world's third-largest publicly traded car rental company. The Company filed for chapter 11 protection on November 13, 2001 (Bankr. Del. Case No. 01-11200). On April 15, 2004, Judge Walrath confirmed the Debtors' 3rd amended Chapter 11 Liquidation Plan, in accordance with Section 1129(a) and (b) of the Bankruptcy Code. Upon confirmation, Blank Rome, LLP, and Fried, Frank, Harris, Shriver & Jacobson, LLP, withdrew as the Debtors' counsel. Gazes & Associates, LLP, and Stevens & Lee, PC, serve as substitute counsel to represent the debtors' post-confirmation interests. When the Company filed for protection from their creditors, they listed $6,497,541,000 in assets and $5,953,612,000 in liabilities. (ANC Rental Bankruptcy News, Issue No. 57; Bankruptcy Creditors' Service, Inc., 215/945-7000) ARCHIBALD CANDY: Canada & U.S. Courts Approve Laura Secord Sale --------------------------------------------------------------- In a cross-border hearing conducted by video conference, Courts in Canada and the United States approved the sale of Laura Secord to Gordon Brothers Group LLC. The transaction is expected to close on August 9, 2004. The hearing follows the announcement by Archibald Candy Corporation and Archibald Candy (Canada) Corporation on July 23, 2004 that Gordon Brothers had been chosen the successful bidder for the assets of Laura Secord at an auction conducted that day. As previously reported in the Troubled Company Reporter, Gordon Brothers delivered the highest and best bid for Laura Secord's assets -- approximately C$27.6 million. Founded in 1903, Gordon Brothers Group, LLC -- http://www.gordonbrothers.com/-- provides global advisory, operating and financial services to companies at times of growth or restructuring. Through its GB Palladin Capital division, Gordon Brothers takes a hands-on approach to investing, using its capital, industry knowledge and expertise to help companies and managers achieve their goals. The principals of Gordon Brothers and GB Palladin have served as active investors, directors and executives in numerous public and private corporations. As such, they are in a unique position to work with managers on growth or brand repositioning through improved merchandising and marketing, more efficient operations and financial management. Founded in 1913, Laura Secord operates 160 retail shops, distributes its products in more than 2,000 third party retail outlets across Canada and has 1,600 employees. Laura Secord's business is conducted by Archibald Candy (Canada) Corporation, a wholly owned subsidiary of Laura Secord Holdings Corporation, which is a wholly owned subsidiary of Archibald U.S. Archibald Candy (Canada) Corporation is not a direct party to Archibald U.S.'s bankruptcy proceeding. Additional information on Laura Secord can be found at http://www.laurasecord.ca/ AVAYA INC: Reports $61 Mil Net Income for FY '04 Third Quarter -------------------------------------------------------------- Avaya Inc., (NYSE: AV) a leading global provider of business communications software, systems and services, reported income from continuing operations of $58 million or earnings of 12 cents per diluted share in the third fiscal quarter. Included in the 12 cents was a four cents per diluted share charge for the repurchase of senior secured notes in the third fiscal quarter. The company reported its sixth straight year-over-year increase in quarterly operating income, an increase driven by profitable results from all three business segments. In the same quarter last year, the company said it reported a loss from continuing operations of $3 million or a loss of one cent per diluted share. Included in those results was a three cent per diluted share gain from the extinguishment of debt and a gain on an asset sale. Third fiscal quarter 2004 revenues increased nine percent to $1.016 billion compared to $929 million in the same period last year. The company noted higher revenues and gross margin, coupled with lower selling general and administrative (SG&A) expenses contributed to a 53 percent sequential increase to $92 million in operating income, bringing operating margin to nine percent of sales. This is up from break even operating income a year ago. Operating cash flow from continuing operations in the quarter was $215 million. Gross margin increased year-over-year to 48 percent from 43 percent, and SG&A expenses were 30 percent of sales, down two percentage points from the second fiscal quarter of 2004. The company said including results from discontinued operations, net income for the third fiscal quarter of 2004 was $61 million or 13 cents per diluted share compared to net income of $8 million or two cents per diluted share in the third fiscal quarter of 2003. Avaya said discontinued operations includes its former Connectivity Solutions segment, substantially all of which had been completely divested as of June 30, 2004, and the segments of the Expanets business it had divested. CEO Comments "Avaya's performance this quarter demonstrates our ability to execute against our strategy," said Don Peterson, chairman and CEO, Avaya. "Our revenues grew significantly over last year, and we're seeing increasing signs that customers are migrating to IP telephony to help them improve their business processes. Product sales rose 11 percent year-over-year driven by rising demand for gateways and IP Office." Year-To-Date Results Revenues for the first nine months of fiscal 2004 were $2.993 billion, an increase of six percent compared to revenues of $2.825 billion for the first nine months of fiscal 2003. Avaya earned $191 million or 42 cents per diluted share from continuing operations in the first nine months of fiscal 2004, compared to a loss from continuing operations of $183 million or a loss of 49 cents per diluted share in the first nine months of fiscal 2003. Avaya noted, including results from discontinued operations, it earned $196 million or 43 cents per diluted share in the first nine months of fiscal 2004 compared to a net loss of $154 million or a net loss of 41 cents per diluted share in the same period of fiscal 2003. CFO Comments "We continue to transform Avaya to drive profitable growth and position the company to take advantage of opportunities in the marketplace," said Garry K. McGuire, chief financial officer and senior vice president, corporate development, Avaya. "We generated $215 million in operating cash flow this quarter, our cash increased by 81 percent year-over-year to $1.5 billion, and net cash rose 19 percent sequentially to $939 million. We made a voluntary contribution to our pension plan this quarter increasing our financial flexibility going forward, and we have reduced debt year-over-year by 41 percent to $584 million. We continue to make substantial progress to deleverage the balance sheet and further improve our financial strength." Outlook The company noted its fourth fiscal quarter is typically its strongest quarter of the year in terms of revenue and operating income. Even though there remain many uncertainties in the marketplace, along with concerns around economic growth and inflation, total employment levels, a key indicator historically for the company's growth prospects remain strong. Therefore the company remains cautiously optimistic that its fourth fiscal quarter will be consistent with historical patterns. The company believes its gross margin improvements are largely sustainable, although gross margin may fluctuate from quarter to quarter depending on the mix of overall revenue, the mix of products sold, and direct and indirect channel mix. Avaya said it is committed to controlling costs and improving its expense profile and will maintain this approach going forward. It expects, however, to see higher sales expenses in the fourth fiscal quarter resulting from normal year-end increases in sales commission payments and a modest increase in marketing expenses as it drives to increase market share and strengthen brand positioning. Highlights From The Quarter Avaya made several announcements since the last quarter which highlight how the company helps its customers use IP telephony to improve their business processes: * Earlier on June 27, Avaya introduced new converged mobility products that extend IP telephony to wireless networks and deliver the benefits of desktop communications to employees wherever they are in a building. These products, the Avaya W310 Gateway and Avaya W110 WLAN Access Points, make wireless calls on a company's network more secure with better sound quality, and have less chance of fading as workers move about a building. The products play a critical role in the converged Wi-Fi and cellular solution architecture the company is developing with Motorola and Proxim. * Toshiba Corporation chose Avaya to deploy a 12,000-person SIP (Session Initiation Protocol)-enabled IP telephony system for its Tokyo headquarters. When completed in early 2005, Toshiba will host one of the largest SIP-enabled IP telephony implementations in the world. SIP is an industry standard that enables users to conduct multimedia communications sessions that can incorporate voice, video and chat, or more. Key factors for Toshiba in selecting Avaya are the high voice quality and scalability that Avaya IP telephony solutions can deliver. * Lund University in Sweden also chose Avaya to provide converged infrastructure, communications applications and services. Lund University is one of Northern Europe's largest educational institutions with 38,000 students. When complete in 2005, the system will be one of the largest SIP- enabled IP telephony implementations in Northern Europe. The new Avaya network will provide telephony services for its 7,000 employees, each with their own IP extension, allowing them to easily transfer calls around the university's 230 locations across four cities. * MetLife Mexico, with more than five million customers, is the largest financial services life insurance company in Mexico. After a 2003 merger, Avaya helped MetLife Mexico integrate the communications networks of two companies into one converged voice and data network that help the company reduce costs while improving customer service. More than 1,500 employees are connected to the network. Users in MetLife's headquarters can connect to the company's network from anywhere in the building without the need of calling technical support. Employees can also work remotely with the same features and functionalities that they have at the office. * Avaya implemented a multimedia contact center system for ebookers plc, a leading pan-European online travel agency. The new contact center system links 1,000 agents located in 38 sites in 11 countries across the UK, mainland Europe and India, to create one of the world's largest 'virtual' contact centers. The Avaya system enables agents to seamlessly handle all Web, phone, fax and e-mail-based customer communications. Agents are provided with a single integrated- view of previous customer contact across all channels, allowing them to complete transactions and resolve enquiries faster and more effectively. * The company announced an agreement with Microsoft enabling it to license Microsoft(R) Business Solutions CRM (Microsoft CRM) and develop an "all in one" application suite by embedding it with the Avaya IP Office family. With the suite, Avaya enables small and medium businesses to use service and support applications to manage and improve their customer contact functions. The agreement also includes co- marketing and lead generation to enable Microsoft Partners and Avaya BusinessPartners to sell the solution. About Avaya Avaya Inc. designs, builds and manages communications networks for more than one million businesses worldwide, including more than 90 percent of the FORTUNE 500(R). Focused on businesses large to small, Avaya is a world leader in secure and reliable Internet Protocol (IP) telephony systems and communications software applications and services. Driving the convergence of voice and data communications with business applications -- and distinguished by comprehensive worldwide services -- Avaya helps customers leverage existing and new networks to achieve superior business results. For more information visit the Avaya website: http://www.avaya.com * * * As reported in the Troubled Company Reporter's May 4, 2004 edition, Standard & Poor's Rating's Services revised its outlook on the rating of Avaya Inc. to positive from stable. The 'B+' corporate credit and senior secured debt and 'B' senior unsecured debt ratings were affirmed. The outlook revision reflects improved profitability in recent quarters combined with reduced debt, improving debt protection metrics and increased balance sheet liquidity. AVAYA INC: Unveils New Converged Mobility Products -------------------------------------------------- Avaya (NYSE: AV), a leading global provider of business communications software, systems and services, unveiled new converged mobility products that help extend the key advantages of office communications to employees traveling throughout -- and beyond -- an enterprise. These products play a critical role in the converged Wi-Fi and cellular solution architecture Avaya is developing with Motorola and Proxim. Avaya's new products seamlessly extend IP telephony -- a software-based technology that uses voice over Internet protocol (VoIP) to transmit voice over a data network -- to wireless networks. The new products are designed to improve the delivery of IP applications and voice communications for a mobile workforce, driving enhanced productivity, new cost efficiencies and greater security in enterprise wireless communications. The new products -- the Avaya W310 WLAN Gateway and Avaya W110 WLAN Access Points -- incorporate co-developed technologies from Avaya and Proxim. The gateway and access points, along with Avaya's award-winning IP telephony software, Communication Manager, deliver a voice over wireless LAN (VoWLAN) solution that will support the Motorola CN620, a new dual-network Mobile Office Device announced on July 27 by Motorola. Avaya has been collaborating with Motorola and Proxim on the creation of an enterprise seamless mobility solution, which supports continuous communications to users across business wireless networks and public cellular networks. This enterprise seamless mobility solution helps organizations boost productivity by enabling employees to use the Motorola dual- network device to conduct wireless conversations that will not fade or drop as they move to various locations throughout a work campus, as well as away from their office building. Users of the enterprise mobility solution will also have seamless access to advanced IP capabilities, such as listening to e-mail, accessing corporate directories and overseeing multi-party teleconferences, as they move across a WLAN and onto public cellular networks. Seamless mobility can also drive greater cost-efficiency for enterprises through device consolidation and centralized management of an organization's LAN infrastructure. For example, highly mobile employees who switch between office phones, cell phones or other devices for communications can now use one Motorola dual-network device to make VoIP-based calls as they travel within an enterprise or to an outside destination. The Avaya W310 Wireless LAN Gateway and W110 Access Points also let information technology (IT) administrators centrally manage and monitor an enterprise's wireless networking capabilities from one location, resulting in lower labor and administration costs. "By delivering improved, seamless access to IP applications over wireless networks, the key advantages employees have in their offices are extended to them as they move within an enterprise, and outside office walls," said Micky Tsui, vice president and general manager for Avaya's communications systems division. "Our collaboration with Motorola and Proxim will help businesses take the next step in deploying advanced wireless solutions that meet the needs of a highly mobile workforce." The seamless mobility solution from Avaya, Motorola and Proxim is in the final stages of development and currently undergoing trials in several enterprises throughout North America. Commercial availability of the solution is expected later this year. Users of the Avaya W310 WLAN Gateway and W110 Access Points, which are now available to enterprises globally, will also gain wireless communications with greater security, improved reliability and enhanced voice quality and functionality within the enterprise network. This is made possible through standards-based technologies and the architecture of the Avaya WLAN gateway and access points. The Avaya gateway and access points deliver greater security by placing the critical access point intelligence and security policy provisioning into a single gateway. This helps enterprises to detect vulnerabilities in a WLAN -- caused by the placement of "rogue access points" -- and stop hackers or unauthorized parties from accessing a business network. In addition, the Wi-Fi Protected Access standard encrypts communications over a wireless IP network in order to keep conversations confidential. Avaya's converged mobility products deliver in-enterprise wireless communications that enable mobile workers to have wireless conversations anywhere within the network with the equivalent reliability and voice quality of a desktop office phone. The gateway and access points are designed to ensure that network users' conversations do not drop or experience gaps, regardless of their location. Increased Quality of Service (QoS), which is based on Wireless Multimedia Extensions (WME) standards, facilitates clear IP-based voice communications over 802.11 Wi-Fi networks. "Voice over Wireless LAN is clearly the 'killer app' for wireless networks, and Avaya's new converged mobility products deliver the critical infrastructure necessary to rapidly accelerate the deployment of IP wireless," said Nick Lippis, president, Lippis Enterprises. "By introducing better security, voice quality and reliability in VoWLAN, Avaya is driving the natural evolution of enterprise wireless communications." With these new mobility products, Avaya provides a VoWLAN foundation for companies of all sizes, including Columbia, South Carolina-based SCANA Corporation, a Fortune 500 energy company that uses Avaya's new WLAN gateway and access points, as well as its flagship IP telephony software. With a large percentage of its electric generating plant workers, line workers and other employees requiring mobile capabilities, SCANA chose the Avaya solution to deliver improved wireless access to its business network, driving enhanced collaboration and productivity. "Avaya enabled us to introduce voice over wireless LAN solutions that help our employees make faster decisions and be more productive," said Tim Ritter, communications manager for the SCANA Corporation. "In our business, we need to remain instantly accessible and in close contact with colleagues and customers while on the go -- in and around our facilities. This makes for more productive employee interactions and delivers capabilities that are absolutely essential to our business." Avaya Inc. designs, builds and manages communications networks for more than one million businesses worldwide, including more than 90 percent of the FORTUNE 500(R). Focused on businesses large to small, Avaya is a world leader in secure and reliable Internet Protocol (IP) telephony systems and communications software applications and services. Driving the convergence of voice and data communications with business applications -- and distinguished by comprehensive worldwide services -- Avaya helps customers leverage existing and new networks to achieve superior business results. For more information visit the Avaya website: http://www.avaya.com * * * As reported in the Troubled Company Reporter's May 4, 2004 edition, Standard & Poor's Rating's Services revised its outlook on the rating of Avaya Inc. to positive from stable. The 'B+' corporate credit and senior secured debt and 'B' senior unsecured debt ratings were affirmed. The outlook revision reflects improved profitability in recent quarters combined with reduced debt, improving debt protection metrics and increased balance sheet liquidity. BIG FLASH: Board Dismisses Independent Accountant & Hires New Firm ------------------------------------------------------------------ On June 7, 2004, Big Flash Corporation's Board of Directors unanimously approved a resolution to dismiss Jack F. Burke, Jr., Certified Public Accountant, from his position as independent certifying accountant. The audit report of Jack F. Burke, Jr. for the period ended July 31, 2000, contained a modification expressing substantial doubt as to Company's ability to continue as a going concern. The audit report contained no other adverse opinion, disclaimer of opinion or modification as to uncertainty, audit scope or accounting principle. In connection with his audit from July 27, 1999, the date of inception, through July 31, 2000, review of unaudited financial statements through July 31, 2000, and through the date of dismissal on June 7, 2004, there have been no disagreements with Jack F. Burke, Jr. on any matters of accounting principles or practices, financial statement disclosure, or auditing scope or procedures, which if not resolved to the satisfaction of Jack F. Burke, Jr., would have caused them to make reference thereto on the financial statements. New Auditing Firm On Board Also on June 7, 2004, the Board of Directors unanimously approved a resolution to engage Chisholm, Bierwolf & Nilson, Certified Public Accountants, to audit the Company's financial statements for the fiscal years ended December 31, 2000, 2001, 2002 and 2003. Also on June 7, 2004, the Board clarified that Big Flash's fiscal year end is December 31. The Board further resolved to cause to be prepared and filed with the SEC as soon as practical all annual and periodic reports from September 30, 2000 to the present. Big Flash Corporation was incorporated on July 27, 1999 under the laws of the State of Delaware, for the purpose of acquiring assets or shares of an entity actively engaged in business which generates revenues, in exchange for Big Flash Corporation securities. Big Flash Corporation's president, Edward F. Cowle, also serves as president for Calypso Financial Services Inc. Calypso disclosed making the identical change of accounting firms. CABO RESTAURANTS: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Cabo Restaurants, LP aka Cabo Mix Mex Grill aka Cabo aka Cabo Travis 419 Travis Houston, Texas 77002 Bankruptcy Case No.: 04-40445 Type of Business: The Debtor operates a restaurant. See http://www.cabomixmex.com/ Chapter 11 Petition Date: July 26, 2004 Court: Southern District of Texas (Houston) Judge: Karen K. Brown Debtor's Counsel: Bennett G. Fisher, Esq. Fisher and Associates PC 1800 Two Houston Center 909 Fannin St. Houston, TX 77010 Tel: 713-223-8400 Fax: 713-609-7766 Total Assets: $177,092 Total Debts: $2,463,523 Debtor's 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Amresco Commercial Finance, Value of Collateral: $1,200,000 Inc. $101,883 412 E. Parkcenter Blvd., Unsecured: Suite 300 $1,200,000 Boise, ID 83706 Kensinger Properties Limited $350,000 C/O John Dunne 2400 Two Houston Center, 909 Fannin Houston, TX 77010 IDine Restaurant Group Trade debt $365,612 16910 N. Dallas Parkway, Value of Collateral: Suite 200 $123,300 Dallas, TX 75248 Unsecured: $293,932 Internal Revenue Service $93,616 Power Equities Inc. Loan $75,000 Sysco Food Services of $73,197 Houston Wells Fargo Bank loan $60,000 Bill Malone, Jr., Trust Trade debt $24,939 Account Kathleen T. Tangney $12,130 Cain, Buche & Lacroiox, PC $12,130 Cappellen & Associates $12,072 State Treasurer $11,800 State Treasurer $9,888 Dimare Fresh, Inc. - Houston $9,297 Nextel Communications $8,635 Super Lopez Tortilla Company $6,513 Bill Malone, Jr. Trust $6,143 Account Inside Houston Magazine Inc. $5,774 Entergy Solutions LTD. $5,623 Stone Wood Steel $4,126 CALCITECH: Will File Delayed Annual Financials Next Week -------------------------------------------------------- CalciTech, Ltd., confirms that it expects to file its annual financials to February 29, 2004 with British Columbia Securities Commission, Alberta Securities Commission and TSX Venture Exchange early next week. Following filing delays last year due to the adoption of the new rules under the Sarbanes-Oxley Act in meeting United States filing deadlines under Unites States GAAP, CalciTech made a change of auditors late in the year to a smaller international firm more appropriate to a small cap company. The new auditors, MRI Moores Rowland LLP, have now largely completed their work for the last year. These filings will shortly be followed by the annual filing of Form 20F with the Securities Exchange Commission. CalciTech has developed a revolutionary new and patented environmental technology for the conversion of industrial lime waste and carbon dioxide into synthetic calcium carbonate (SCC), a commercially valuable, high value added specialty mineral aimed predominantly at the huge paper industry. CalciTech's SCC is set to revolutionise the paper coatings industry through its superior properties, new applications, cost effectiveness and environmental qualities. Due to its unique characteristics, SCC has many potential applications outside the paper industry, such as the pharmaceutical, food, plastic, rubber, sealants and adhesives industries. At November 30, 2003, Calcitech's stockholders' deficit widened to $3,701,000, compared to a $1,963,000 deficit at November 30, 2002. CALYPSO FINANCIAL: Board Dismisses Accountant & Hires New Firm -------------------------------------------------------------- On June 7, 2004, Calypso Financial Services Inc.'s Board of Directors unanimously approved a resolution to dismiss Jack F. Burke, Jr., Certified Public Accountant, from his position as independent certifying accountant. The audit report of Jack F. Burke, Jr. for the period ended July 31, 2000, contained a modification expressing substantial doubt as to Company's ability to continue as a going concern. New Auditor Hired Also on June 7, 2004, the Company's Board of Directors unanimously approved a resolution to engage Chisholm, Bierwolf & Nilson, Certified Public Accountants, to audit the Company's financial statements for the fiscal years ended December 31, 2000, 2001, 2002 and 2003. Calypso Financial Services was incorporated on July 27, 1999 under the laws of the State of Delaware, for the purpose of acquiring assets or shares of an entity actively engaged in business which generates revenues, in exchange for Calypso Financial Services securities. Also on June 7, 2004, Calypso's Board clarified that the Company's fiscal year end is December 31. The Board further resolved to cause to be prepared and filed with the SEC as soon as practical all annual and periodic reports from September 30, 2000 to the present. Calypso Financial Services Inc.'s president, Edward F. Cowle, also serves as president for Big Flash Corporation. Big Flash disclosed making the identical change of accounting firms. CAPITAL ENVIRONMENTAL: Will Become Waste Services Subsidiary ------------------------------------------------------------ Capital Environmental Resource Inc. (Nasdaq: CERI) shareholders have approved the proposed plan of arrangement pursuant to which Capital will become a subsidiary of Waste Services, Inc., a Delaware corporation. Capital's name will also be changed to Waste Services (CA) Inc. The hearing for the final approval order of the Ontario Superior Court of Justice will take place on July 30, 2004. Capital also stated that it will continue to accept elections from non-U.S. resident shareholders to receive exchangeable shares of Capital under the arrangement until 5:00 p.m. today, July 29, 2004. Capital Environmental Resource Inc. is a multi-regional integrated solid waste services company that provides collection, transfer, disposal and recycling services in the United States and Canada. The Company's web site is http://www.capitalenvironmental.com/ Waste Services has over 1.2 million residential customers and approximately 70,000 commercial and industrial costumers. Customer concentration is low, with no single customer or contract accounting for more than 2% of pro forma revenue for the year ended Dec. 31, 2003. Commercial, residential, and industrial services account for 33%, 30%, and 25% of total revenues, respectively, although landfill revenue should increase substantially in future. CATHOLIC CHURCH: U.S. Trustee Appoints Tort Claimants Committee --------------------------------------------------------------- Pamela J. Griffith, the Assistant United States Trustee for Region 18, appointed a seven-member Official Committee of Tort Claimants in the Archdiocese of Portland in Oregon's Chapter 11 case: (1) Mr. Donn Christiansen c/o Michael Morey, Attorney Michael Morey P.C. 8 N State Street #301 Lake Oswego, Oregon 97034 Ph: (503) 636-6001 Fax: (503) 636-8512 E-mail: morey@msmoreylawfirm.com (2) Mr. Matthew J. Clemens c/o Gary Basaccio, Attorney 2125 SW 4th Avenue, Suite 600 Portland, Oregon 97201 Ph: (503) 222-2600 Fax: (503) 222-5405 E-mail: garyabisaccio@americaonline.com (3) Mr. Curtis S. Grecco c/o Dan Gatti, Attorney Gatti, Gatti and Maier 1781 Liberty Street Salem, Oregon 97302 Ph: (503) 363-3443 Fax: (503) 371-2482 E-mail: rsj@gattilaw.com (4) Mr. Stephen T. Walsh c/o David Slader, Attorney 806 SW Broadway, Suite 400 Portland, Oregon 97205 Ph: (503) 243-6336 Fax: (503) 242-0958 E-mail: dslader@spiritone.com (5) Mr. Bob Catkins c/o Kevin Strever, Attorney Barton & Stever P.C. 214 SW Coast Hwy. Newport, Oregon 97365 Ph: (541) 265-5377 Fax: (541) 265-5614 E-mail: attorneys@bartonstrever.com (6) Mr. Peter F. Carlich c/o Scott Beckstead, Attorney PO Box 700 Waldport, Oregon 97394 Ph: (541) 563-5447 Fax: (541) 563-5497 E-mail: beckatt@pioneer.net (7) Mr. Thomas Ryan c/o Kelly Clark, Attorney O'Donnell & Clark LLP 1706 NW Glisan, Suite 6 Portland, Oregon 97035 Ph: (503) 306-0224 Fax: (503) 306-0257 E-mail: kellyc@oandc.com The Archdiocese of Portland in Oregon filed for chapter 11 protection (Bankr. Ore. Case No. 04-37154) on July 6, 2004. Thomas W. Stilley, Esq. and William N. Stiles, Esq. of Sussman Shank LLP represent the debtor in its restructuring efforts. When the debtor filed for chapter 11 protection, it listed estimated assets of $10,000,000 to $50,000,000 and estimated debts of $25,000,000 to $50,000,000. The freshly appointed Official Committee of Tort Claimants has hired: Albert N. Kennedy, Esq. Timothy J. Conway, Esq. Michael W. Fletcher, Esq. F. Jackson Lewis, Esq. Tonkon Torp, LLP 1600 Pioneer Tower 888 SW Fifth Avenue Portland Oregon 97204 Telephone (503) 221-1440 Fax (503) 274-8779 as its general bankruptcy Counsel. (Catholic Church Bankruptcy News, Issue No. 3; Bankruptcy Creditors' Service, Inc., 215/945- 7000) CHARTER COMMS: Inks Settlement Pact with SEC on Investigation ------------------------------------------------------------- The United States Securities and Exchange Commission (SEC) has concluded its enforcement action against Charter Communications, Inc. (NASDAQ:CHTR), enabling the Company to focus fully on growing revenues and serving its customers. The SEC and Charter have reached a final agreement to settle the investigation, pursuant to which Charter agreed to entry of an administrative order prohibiting any future violations of United States securities laws. In the Settlement Agreement and Cease and Desist Order, Charter neither admitted nor denied any wrongdoing, and the SEC assessed no fine against the company. "We are very pleased to put this issue from the past behind us," said Carl Vogel, Charter President and Chief Executive Officer. "We are a new company, and bringing this issue to closure allows to focus on serving our customers." Mr. Vogel said that Charter cooperated fully with the SEC in its 20-month investigation and was committed to implementing the institutional changes requested by the SEC. The SEC's investigation generally concerned the Company's determination of the number of its customers, various accounting practices and procedures concerning capitalization of certain expenses and dealings with certain vendors, including programmers and digital set-top terminal suppliers. Charter had conducted an internal review of its business practices both before and during the SEC's investigation. The Company has put in place a new management structure, which includes leadership consisting of well-regarded, independent industry professionals. The Company promoted other key individuals with proven abilities to elevated positions of responsibility. Charter also implemented a comprehensive Company-wide corporate compliance program designed to ensure that its employees comply fully with applicable laws and regulations and perform their job duties with integrity and accountability. In addition, the company has instituted new procedures intended to increase the transparency of its financial results to its shareholders and the public. In July 2003, four former officers of the company were indicted by a federal grand jury as part of an investigation into business practices at Charter during 2000 and 2001. Charter's financial results for 2000 and 2001 were re-audited by KPMG, which took over Charter's audit responsibilities in April 2002 from Arthur Andersen. Related financial statements were fully restated to reflect the company's financial position and results of operations. The Company stands behind those restated results. Charter, which cooperated fully with the Department of Justice in its investigation and was not charged, was praised by both the United States Attorney and by then Deputy Attorney General Larry D. Thompson for its "extraordinary" cooperation with the Government. Neither Charter nor any of its current officers or directors is a target of that inquiry. About Charter Charter Communications, Inc., a broadband communications company, provides a full range of advanced broadband services to the home, including cable television on an advanced digital video programming platform via Charter Digital(TM) and Charter High- Speed Internet Service(TM). Charter also provides business to business video, data and Internet protocol (IP) solutions through Charter Business Division. Advertising sales and production services are sold under the Charter Media(R) brand. More information about Charter can be found at http://www.charter.com/ * * * As reported in the Troubled Company Reporter's May 26, 2004 edition, Standard & Poor's Ratings Services revised its outlook on Charter Communications Inc. and subsidiaries to positive from developing. All ratings, including the 'CCC+' corporate credit rating, were affirmed. "The outlook revision is based largely on the company's improved maturity profile following the April 2004 refinancing," explained Standard & Poor's credit analyst Eric Geil. "Operating improvement, including a slowing rate of basic subscriber loss, also factored into the outlook revision." Nevertheless, the ratings are still dominated by very high financial risk from elevated leverage, negative discretionary cash flow, and pressure from rising debt maturities, including $588 million in convertible debt due in 2005. Repayment of this debt could depend on access to external financing, which will hinge on Charter's demonstration of sustainable positive operating momentum. Performance could be challenged by intense competition for video customers from satellite TV companies, which have recently increased promotional spending. CENTURY/ML: Court Nixes 12 Objectionable Claims Totaling $5 Mil. ---------------------------------------------------------------- At Century/ML Cable Venture's request, Judge Gerber disallows and expunges 12 claims filed in its Chapter 11 case: * Nine Claims were wrongly filed against Century/ML: Claimant Claim No. Claim Amount -------- --------- ------------ At Home General Unsecured 1 $1,378,315 Creditors Liquidating Trust Christeen R. Knolle 10 150,000 City of Hermosa Beach 8 50,000 Discovery Latin America, LLC 14 367,942 J.A. Miller Utility Contractor 24 40,173 Karen L. Engard 7 58,880 Mary Ellen Onderko 4 14,778 Mikeical and Susan Kimpel 3 3,300,000 William B. Hahn and Eva B. Little 23 500 * Three Claims were not reflected in Century/ML's books and records. The Claims also failed to provide sufficient information to support their validity: Claimant Claim No. Claim Amount -------- --------- ------------ Irma Baez Hernaiz 22 None provided Linda and Richard Boyle 5 250,000 Mercedes Nunez 6 100,000 Century/ML Cable Venture filed for Chapter 11 protection on September 30, 2002 (Bankr. S.D.N.Y. Case No. 02-14838). Century/ML Cable Venture is a New York joint venture of Century Communications Corporation, a wholly owned indirect subsidiary of Adelphia Communications Corporation, and ML Media Partners, LP. It holds the the cable franchise in Leviton, Puerto Rico. Adelphia Communications Corporation and its more than 200 affiliates filed for Chapter 11 protection in the Southern District of New York on June 25, 2002. Those cases are jointly administered under case number 02-41729. Willkie Farr & Gallagher represents the Century and ACOM Debtors. (Adelphia Bankruptcy News, Issue No. 64; Bankruptcy Creditors' Service, Inc., 215/945- 7000) CHESAPEAKE ENERGY: Fitch Holds BB Rating on Senior Unsecured Notes ------------------------------------------------------------------ Fitch Ratings maintains its rating of Chesapeake Energy's senior unsecured notes at 'BB', its senior secured bank facility rating at 'BBB-', and its convertible preferred stock rating at 'B+' following the announcement that Chesapeake has entered into three transactions to purchase assets valued at approximately $591.5 million. The Rating Outlook for Chesapeake remains Stable. Chesapeake was acquiring assets from Tulsa-based Bravo Natural Resources, Inc. and Houston-based Legend Natural Gas, L.P., and a much smaller acquisition from Oklahoma City-based Tilford-Pinson Exploration, Inc. The $335 million Bravo acquisition consists of 204 billion cubic feet equivalent (bcfe) of proved reserves located in the Anadarko Basin area of the Mid-Continent. Current production is 25 million cubic feet equivalent (mmcfe) per day. Through the $235 million Legend acquisition, Cheasapeake will acquire 87 bcfe of proved reserves located in Zapata County Texas, very near the successfully acquired Laredo assets. Current production from the Legend assets is 27 mmcfe per day. Both the Bravo and Legend transactions are expected to close in August. The $21.5 million Tilford-Pinson transaction, which recently closed will add about 19 bcfe of proved reserves. Similar to recent Chesapeake transactions, the company expects to finance these acquisitions with a combination of approximately $300 million in new common stock issuance (before a 15% over- allotment option), and $300 million of new 10-year senior unsecured notes. Pro forma, Chesapeake will have 4.1 trillion cubic feet equivalent (tcfe) of proved reserves and total debt after completion of the proposed offering will be about $2.7 billion, providing debt of approximately $0.66 per mcfe and debt of $0.93 per PDP mcfe. In addition to Chesapeake's recent growth performance, the rating is based on the company's low risk reserve profile and the conservative funding strategy employed to finance the growth. Its 4.1 tcfe of reserves have a reserve life of nearly 12 years. Approximately 71% of its reserves are proven developed producing (PDP) with a reserve life of more than eight years. Approximately 80% of its reserves are in the very familiar Mid-Continent region and 10% are in the Permian Basin. Furthermore, 74% of Chesapeake's reserves were externally prepared by third party engineers, mitigating the potential for aggressive reserve bookings. While the latest acquisitions are predominantly proven undeveloped (PUD), the overall reserve profile for Chesapeake remains relatively low risk. Equally important as the risk profile of Chesapeake's reserves is how it has funded its aggressive growth strategy. Two-thirds of Chesapeake's reserve growth in the past three years has come through acquisitions. Notably, it has funded these acquisitions in a relatively balanced manner through internally generated cash flow as well as equity and debt issuances. Since 2001, Chesapeake raised more than $1 billion of equity (common and preferred) while issuing slightly more than $1 billion of debt. Chesapeake's reserve replacement success, credit profile and increased dividend payments were also considered in the rating. Chesapeake's reserve replacement over the last three years was more than 400% and its organic replacement during the same period was about 141%, demonstrating the company's ability to grow through the drill-bit. While the latest acquisitions will no doubt raise Chesapeake's average finding, development and acquisition costs to more than $1.70 per mcfe, the low lifting costs associated with those properties partially offset Fitch's concern. Chesapeake's latest twelve months (LTM) adjusted interest coverage exceeds 5.5 times (x) and adjusted debt-to- EBITDA was less than 2.0x. In a mid cycle price environment ($3.50 per mcf natural gas and $21 per barrel oil), Fitch is confident that Chesapeake could generate adjusted interest coverage greater than 4.0x and adjusted debt-to-EBITDA of less than 3.0x. Fitch also recognizes that Chesapeake will have additional dividend requirements in 2004 due to the recent convertible preferred offerings. However, significant positive free cash flow along with likely conversion of the 6.75% convertible preferred stock in November of 2004 should allow the company to easily make the dividend payments through internally generated cash flow. The Stable Rating Outlook is based on several factors including a continued conservative funding strategy for future acquisitions, a relatively unchanged risk profile with regards to its reserves and stable lifting and finding costs. CHESAPEAKE ENERGY: S&P Rates $300M Senior Unsecured Notes at BB- ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BB-' rating to oil and gas exploration company Chesapeake Energy Corp.'s (BB-/Positive/--) $300 million senior unsecured notes maturing 2014. The issue is a Rule 144A private placement with registration rights. The outlook is positive. As of June 30, 2004, Oklahoma City, Oklahoma-based Chesapeake had about $2.4 billion of long-term debt. Pro forma for its recently announced acquisitions, Standard & Poor's expects Chesapeake to have about $2.7 billion of long-term debt. Proceeds from the $300 million senior note offering, together with proceeds from the company's recently announced common stock sale (about $300 million), will be used to fund its acquisitions of Bravo Natural Resources Inc., Legend Natural Gas L.P., and Tilford Pinson Exploration Inc. for a total consideration of about $590 million. "The acquisitions are consistent with Chesapeake's stated policy to fund its growth program in a balanced manner," said Standard & Poor's credit analyst Kimberly Stokes. "Furthermore, we expect the company to continue the balanced funding of its acquisition program in the future." The positive outlook on Chesapeake is supported in large part by the company's extensive hedging program. Management must consistently demonstrate both the ability and willingness to apply excess cash flow to meaningfully reduce debt. The acquired properties are expected to add 310 billion cubic feet equivalent (bcfe) of proved reserves and 453 bcfe of probable and possible reserves. The properties are located in the Mid-Continent (Anadarko and Arkoma Basins) and South Texas (Zapata County), within Chesapeake's core areas of production. COMMERCIAL MORTGAGE: Fitch Upgrades Class H to BBB- from BB+ ------------------------------------------------------------ Fitch upgrades Commercial Mortgage Acceptance Corporation's (CMAC) commercial mortgage pass-through certificates, series 1999-C1: -- $33 million class B to 'AAA' from 'AA+'; -- $34.9 million class C to 'AAA' from 'AA+'; -- $11 million class D to 'AA' from 'A'; -- $23.8 million class E to 'A' from 'BBB+'; -- $12.8 million class F to 'A-' from 'BBB'; -- $12.8 million class H to 'BBB-' from 'BB+'. In addition, Fitch affirms these classes: -- $60.1 million class A-1 'AAA'; -- $409.5 million class A-2 'AAA'; -- Interest-only class X 'AAA'. Fitch does not rate these classes: -- $1.8 million class G; -- $20.2 million class J; -- $5.5 million class K; -- $7.3 million class L; -- $9.2 million class M; -- $5.5 million class N; -- $3.7 million class O; -- $9.2 million class P. The upgrades reflect increased credit enhancement levels from loan payoffs and amortization since issuance. As of the July 2004 distribution date, the pool's aggregate collateral balance has been reduced by approximately 9.3% to $660.5 million from $733.8 million since issuance. Three loans in the pool (4.1%) have been fully defeased. Midland, the master servicer, has collected year-end (YE) 2003 financials for 93.3% of the loans in the pool, excluding the defeased loans. The YE 2003 comparable weighted debt service coverage ratio (DSCR) was 1.55 times (x), a decrease from 1.63x at YE 2002. However, the YE 2003 performance has increased since the 1.49x reported at issuance for the same loans. Loans with YE 2003 DSCRs less than 1.0x comprise 7.7% of the pool. Six loans, comprising 3% of the pool are currently in special servicing. The largest specially serviced loans (1.6%) are secured by three cross-collateralized and cross-defaulted industrial properties located in or near Chicago, IL. The properties have occupancy issues, as well as upcoming lease rollover. Midland, the special servicer, is currently evaluating workout options, including a forbearance agreement which will schedule specific property performance. The next largest (0.57%) loan in special servicing is secured by a 60,000 square foot (sf) of office property in Durham, NC. The property has been 100% vacant for a year and the borrower is offering a deed-in-lieu of foreclosure. The next largest specially serviced loan (0.55%) is secured by a 121,000 sf office property in Pittsburgh, PA. The special servicer did not accept a deed-in- lieu agreement and is considering alternative workout options. The next largest loan in special servicing (0.26%) is secured by a multifamily property located in Sherman, TX. The loan transferred after the borrower requested debt service relief. Midland is evaluating workout options. Although losses are expected upon the disposition of some of these assets, upgrades are warranted due to the increased credit enhancement. COMMERCIAL MORTGAGE: S&P Upgrades Low B-Ratings on Classes F, G, H ------------------------------------------------------------------ Standard & Poor's Ratings Services raised its ratings on seven classes of Commercial Mortgage Asset Trust's commercial mortgage pass through certificates from series 1999-C1. Concurrently, ratings on five other classes from the same transaction are affirmed. The raised and affirmed ratings reflect credit enhancement levels that adequately support the ratings, seasoning, and the improved operating performance of much of the trust collateral. As of July 17, 2004, the trust collateral consisted of 230 loans with an aggregate outstanding balance of $2.2 billion, down from 234 loans totaling $2.4 billion at issuance. Wachovia Securities N.A. provided 2003 net cash flow debt service coverage (DSC) figures for 93.5% of the pool. Based on this information, Standard & Poor's computed a weighted average DSC of 1.49x, up from 1.46x at issuance. These figures exclude six defeased loans ($23.4 million, or 1%) and 16 credit tenant lease (CTL) loans (118.0 million, 5.3%). The trust has experienced four losses to date amounting to $21.0 million. The top 10 loans have an aggregate outstanding balance of $869.0 million, and reported a 2003 weighted average DSC of 1.57x, up from 1.54x at issuance. This calculation excludes the 10th largest loan, which is a CTL. Additionally, five of the top 10 loans (totaling $428.6 million, 19.3%) are pari passu loans and the DSC figures used throughout the analysis reflect the DSC of the entire loan, not just the allocated portion that is included in the trust. None of the top 10 loans are in special servicing, but the third-largest loan is on the servicer's watchlist. There are 12 assets with the special servicer, Lennar Partners Inc. (Lennar), that have an aggregate outstanding balance of $95.3 million. Three of these assets are REO, four loans are 90-plus days delinquent, and one loan is 30-plus days delinquent. The three largest specially serviced assets are: -- The largest loan with Lennar is 90-plus days delinquent and is secured by a 245,000-sq.-ft. office building in Cleveland, Ohio with an outstanding balance of $27.7 million and an additional $1.1 million in servicer advances. The borrower has recently signed a discounted payoff (DPO) agreement for $23.5 million, which will occur in the near future. -- The second largest loan in special servicing is 90-plus days delinquent and is secured by a 503,000-sq.-ft. office/warehouse in Warminster, Pennsylvania with a principal balance of $21.5 million and $1.1 million in additional servicer advances. The largest tenant had occupied 440,000 sq. ft., but recently paid $5.6 million to exercise a termination option, and now only occupies 120,000 sq. ft. in the building. The borrower used a portion of the termination option fee to reconfigure the vacated space, and the balance of the funds is in a reserve account to pay for future tenant improvements and commissions. An appraisal is not available, but an appraisal reduction amount (ARA) of $6.5 million on the loan is in effect. In the absence of an appraisal, the pooling and servicing agreement requires an ARA equal to 30.0% of the unpaid principal balance. The borrower is negotiating a DPO and Lennar continues to move forward on the foreclosure process. In either scenario, Standard & Poor's anticipates a loss that is less severe than the ARA value would indicate. -- The third largest loan with Lennar is also 90-plus days delinquent. It is secured by a 226,000-sq.-ft. office property in Albuquerque, New Mexico, and has a balance of $8.9 million and $0.3 million in additional advances. This property reported occupancy of 36.0% in May 2004 due to the departure of several government tenants. Another government tenant's lease for 10.0% of the space expires at the end of the year. Based on the recent flight of tenants, soft market conditions, and draft appraisal values, Standard & Poor's anticipates a significant loss upon disposition. The remaining specially serviced assets amount to $37.2 million and have balances less than $7.0 million. Standard & Poor's anticipates substantial losses on the multifamily property in Wyoming, Michigan, the office building in Amarillo, Texas, and the industrial facility in Streator, Illinois, which have balances of $3.9 million, $3.5 million, and $2.8 million. Wachovia's watchlist consists of 60 loans with an outstanding balance of $393.9 million. Only one top 10 loan, the third- largest loan in the portfolio, appears on the watchlist. This loan is secured by a 521,00-sq.-ft. mall in Westbury, N.Y. with a balance of $124.0 million. The property generated a DSC of 1.28x in 2003 and is on the watchlist because the DSC has decreased 26.5% since issuance. However, the DSC has increased steadily since 2001 and no large tenants have imminent lease expirations. The second-largest loan is secured by a 195,000-sq.-ft. office property in Crystal City, Virginia with an outstanding balance of $28.2 million. This property reported a 92.5% occupancy in 2003, but only a 0.87x DSC during the same period. However, the DSC figure is skewed downward because one tenant that occupied 53,000 sq. ft. beginning in January 2003 had a five-month rent abatement. The same tenant leased an additional 10,000 sq. ft. in October 2003, but did not begin to pay rent for this space until January 2004. An athletic club in Chicago, Illinois, with an outstanding balance of $26.5 million, secures the third-largest loan on the watchlist. This loan reported a DSC of 1.16x in 2003, down 30.1% since issuance. The remaining loans on the watchlist have balances of less than $25.0 million and appear on the watchlist primarily due to DSC or occupancy issues. The trust collateral is located across 42 states and is concentrated in California (19.3%), Michigan (11.4%), and New York (8.4%). Property type concentrations can be found in retail (44.4%), office (25.8%), and multifamily (14.3%) assets. Standard & Poor's stressed the specially serviced assets, loans that appear on the watchlist, and other loans with credit issues, when appropriate, in its analysis. The resultant credit enhancement levels support the raised and affirmed ratings. Ratings Raised Commercial Mortgage Asset Trust Commercial mortgage pass-thru certs series 1999-C1 Rating Class To From Credit Enhancement B AAA AA 24.7% C AA+ A 18.8% D A BBB 12.7% E BBB+ BBB- 11.1% F BBB BB+ 8.7% G BB+ BB 6.0% H BB BB- 4.9% Ratings Affirmed Commercial Mortgage Asset Trust Commercial mortgage pass-thru certs series 1999-C1 Class Rating Credit Enhancement A-1 AAA 29.5% A-2 AAA 29.5% A-3 AAA 29.5% A-4 AAA 29.5% X AAA N.A. CP KELCO: S&P Places B Ratings on CreditWatch Positive ------------------------------------------------------ Standard & Poor's Ratings Services placed its 'B' ratings on hydrocolloids producer CP Kelco ApS on CreditWatch with positive implications. Wilmington, Delaware-based CP Kelco has about $680 million of total debt outstanding. The CreditWatch placement follows the public announcement that J.M. Huber Corp. will purchase CP Kelco from majority owner Lehman Brothers Merchant Banking Partners. "While the details of the transaction, which is expected to close in the fourth quarter of 2004 pending regulatory approval, were not disclosed, the acquisition of CP Kelco by Huber is expected to relieve CP Kelco's near-term liquidity concerns," said Standard & Poor's credit analyst Franco DiMartino. In addition, Standard & Poor's would expect that CP Kelco's existing bank debt would be refinanced upon a material change of control. Standard & Poor's will continue to monitor developments and will resolve the CreditWatch listing as more information is made available. CP Kelco, with more than $400 million in annual sales, is a leading producer of hydrocolloids, which are used as thickeners, suspension agents, texturizers, binders, and stabilizers in an array of industrial applications. CREDIT SUISSE: Fitch Affirms Low B-Ratings on Six Classes --------------------------------------------------------- Fitch Ratings upgrades Credit Suisse First Boston's commercial mortgage pass-through certificates, series 2002-CP3, as follows: -- $34.7 million class B to 'AAA' from 'AA'; -- $40.3 million class C to 'A+' from 'A'; -- $9 million class D to 'A' from 'A-'; -- $10.1 million class E to 'A-' from 'BBB+': -- $14.6 million class F to 'BBB+' from 'BBB'. In addition, Fitch affirms the following classes: -- $30.8 million class A-1 'AAA'; -- $127.9 million class A-2 'AAA'; -- $521.9 million class A-3 'AAA'; -- Interest-only classes A-SP and A-X 'AAA'; -- $15.7 million class G 'BBB-'; -- $11.2 million class H 'BB+'; -- $17.9 million class J 'BB'; -- $6.7 million class K 'BB-'; -- $4.5 million class L 'B+'; -- $11.2 million class M 'B'; -- $4.8 million class N 'B-'. Fitch does not rate the $15.7 million class O certificate. The upgrades are due to an increase in credit enhancement since issuance and levels, which are in line with the subordination levels of deals issued on July 27 having similar characteristics. Midland Loan Services, the master servicer, collected year-end (YE) 2003 financials for 96% of the transaction. Based on the information provided the resulting YE 2003 weighted average debt service coverage ratio (DSCR) increased to 1.78 times (x) from 1.49x at issuance for the same loans. Currently, one loan (0.34%) is in special servicing. The loan is secured by a 112-unit multifamily property in Austin, TX and is currently real estate owned (REO). Occupancy at the property decreased as a result of severe water damage. The special servicer has repaired the roof and improved the property's drainage system. Five loans (1.5%) reported YE 2003 DSCRs below 1.00x. One of the loans (0.69%), Timmaron Ridge Apartments, is located in Dallas, TX. The loan's performance has deteriorated due to a decline in rents at the property. Fitch reviewed the credit assessment of the Westfarms Mall loan (8.8%), a 600,148 square foot (sf) retail mall located in Farmington, Connecticut. The note is divided into two pari passu A notes. One note is held in this transaction. The DSCR for the loan is calculated using borrower provided net operating income less required reserves divided by debt service payments based on the current balance using a Fitch stressed refinance constant. The YE 2003 Fitch stressed DSCR is 1.86x, versus a YE 2002 Fitch stressed DSCR of 1.87x. Based on its stable performance, the loan maintains its investment grade credit assessment. DIBENS ENTERPRISES: Voluntary Chapter 11 Case Summary ----------------------------------------------------- Debtor: Dibens Enterprises, LLC dba Glee Vending 917 Crosstimbers Houston, Texas 77022 Bankruptcy Case No.: 04-40418 Type of Business: The Debtor operates a vending and coffee service business in and around Houston, Texas. Chapter 11 Petition Date: July 23, 2004 Court: Southern District of Texas (Houston) Judge: Marvin Isgur Debtor's Counsel: Peter Johnson, Esq. Law Offices of Peter Johnson Eleven Greenway Plaza 2820 Summit Tower Houston, TX 77046 Tel: 713-552-0025 Fax: 713-552-1433 Total Assets: $1,458,238 Total Debts: $1,479,206 The Debtor did not file a list of its 20-largest creditors. DII INDUSTRIES: S&P Says Plan Confirmation Favorable for Ratings ---------------------------------------------------------------- Standard & Poor's Ratings Services said that the approval by U.S. Bankruptcy Court in Pittsburgh of several Halliburton Co.'s subsidiaries' Chapter 11 reorganization plans is modestly favorable for the ratings on Halliburton (BBB/Watch Dev/A-3). The approval is another step toward finalizing the settlement and funding the asbestos and silica trusts. The plan must still get district court approval and wait a month for any appeals. Standard & Poor's will resolve the CreditWatch listing for Halliburton when a final nonappealable settlement to the asbestos litigation process is reached. Therefore, the ratings remain on CreditWatch with developing implications, indicating that the ratings could rise or fall depending on the resolution of its asbestos litigation, as well as pressure on financial performance and credit measures due to the challenges associated with its government services operations in Iraq. Headquartered in Houston, Texas, Kellogg, Brown & Root is engaged in the engineering and construction business, providing a wide range of services to energy and industrial customers and government entities in over 100 countries. DII has no business operations. The Company filed for chapter 11 protection on December 16, 2003 (Bankr. W.D. Pa. Case No. 02-12152). Jeffrey N. Rich, Esq., Michael G. Zanic, Esq., and Eric T. Moser, Esq., at Kirkpatrick & Lockhart LLP, represent the Debtors in their restructuring efforts. (DII & KBR Bankruptcy News, Issue No. 16; Bankruptcy Creditors' Service, Inc., 215/945-7000) DII/KBR: Continues U.S. Navy Services Under CONCAP Contract ----------------------------------------------------------- KBR has been selected to continue providing private sector construction and related services to the U.S. Navy and other Department of Defense agencies and missions worldwide under the competitively awarded CONCAP (construction capabilities) contract from the Naval Facilities Engineering Command, Atlantic Division. KBR is the engineering, construction and services subsidiary of Halliburton (NYSE:HAL). The total amount of the contract, one base year and four one-year options, is not to exceed $500 million. Under the CONCAP contract, the U.S. Navy could direct KBR to provide the following services: program planning, scheduling, design, engineering, transportation, construction management and quality control, as well as the personnel, equipment, materials, labor, travel and everything needed to give the Navy a quick response for civilian construction contract capability. "KBR's work for the U.S. Navy dates back to the early 1940s when we were contracted to build NAS Corpus Christi in Texas," said Bruce Stanski, Senior Vice President of Government Operations, KBR. "Our relationship with the Navy has continued through the years and includes many projects. Under the previous CONCAP contract awarded in 2001, KBR performed repairs following a typhoon in Guam; constructed detention facilities in Guantanamo Bay, Cuba; constructed and repaired airfield runways in Italy and Spain; constructed and repaired a breakwater facility in Azores; and constructed military and civilian facilities in Kuwait and Iraq." Headquartered in Houston, Texas, Kellogg, Brown & Root is engaged in the engineering and construction business, providing a wide range of services to energy and industrial customers and government entities in over 100 countries. DII has no business operations. The Company filed for chapter 11 protection on December 16, 2003 (Bankr. W.D. Pa. Case No. 02-12152). Jeffrey N. Rich, Esq., Michael G. Zanic, Esq., and Eric T. Moser, Esq., at Kirkpatrick & Lockhart LLP, represent the Debtors in their restructuring efforts. DIGIBLUE MEDIA: Reuben to Act as Independent Chartered Accountant ----------------------------------------------------------------- Effective May 12, 2004, Digiblue Media, Inc., dismissed Stonefield Josephson, Inc., which audited the Company's financial statements for the fiscal years ended December 31, 2003 and 2002, with Jonathon P. Reuben, CPA, to act as the Company's independent chartered accountants. Stonefield Josephson's reports for these fiscal years expressed uncertainty as to Digiblue Media's ability to continue as a going concern. Digiblue Media's unaudited financial statements for the quarter ended March 31, 2004, will be reviewed by Jonathon P. Reuben, CPA. Stonefield Josephson, Inc. was not involved in any way with the review of the unaudited financial statements for the quarter ended March 31, 2004. The Company has authorized Stonefield Josephson, Inc. to discuss any matter relating to Digiblue Media and its operations with Jonathon P. Reuben, CPA. The change in the Company's auditors was recommended and approved by the Board of Directors of the Company since the Company does not have an audit committee. DIRECTVIEW INC: Executes Letter of Intent to Acquire Option Data ---------------------------------------------------------------- DirectView, Inc. (OTCBB:DRVW) have executed a Letter of Intent to acquire Option Data, Inc. Option Data, Inc., based in Dallas, Texas was founded in 1998. Option Data is a videoconferencing equipment and service provider founded by Mr. Tracy Strunk. Mr. Strunk has over 15 years experience in the voice, data and videoconferencing arena. Mr. Strunk will become DirectView's Central Regional Manager. Mr. Jeff Clem, Option Data's VP of Sales, will become the Vice President of Sales for DirectView, Inc. Mr. Clem has over 12 years of successful senior management experience, specifically in the videoconferencing marketplace. Mr. Clem was the former co-founder and President of NuVision Technologies, Inc. a videoconference equipment and service provider. Mr. Clem led NuVision Technologies to become the nations leading provider of PictureTel videoconferencing equipment realizing over $10,000,000 in revenues in just 4 years before selling the company to Tandberg. Michele Ralston, Chairman of the Board commented, "I am delighted to welcome Option Data to DirectView. The successful management experience Mr. Strunk and Mr. Clem bring to the table will be a great addition to the company. Based on the initial due diligence we expect this acquisition to add significantly to the revenues of DirectView." Tracy Strunk stated, "Jeff and I are happy to be adding our team to the DirectView team. We are very excited to be joining DirectView in building toward becoming the global leader in the videoconferencing marketplace. The addition of the Dallas, Texas office will offer the company new exposure and add to the national footprint of the company." About Option Data, Inc. Option Data, Inc., founded in 1998, is a videoconferencing equipment and service provider founded by Mr. Tracy Strunk based in Dallas, Texas. Option Data has been recognized as one of the nation's leading value added providers of new and refurbished videoconferencing equipment and services. About DirectView, Inc. DirectView Inc., http://www.DirectViewInc.com,is a full-service provider of high-quality, cost efficient videoconferencing technologies and services. DirectView provides multipoint videoconferencing, network integration services, custom room design, staffing, document conferencing and IP / Webconferencing services to businesses and organizations in the United States and around the world. DirectView conferencing services enable our clients to cost-effectively, instantaneously conduct remote meetings by linking participants in geographically dispersed locations. At March 31, 2004, DirectView Inc.'s balance sheet shows a stockholders' deficit of $836,453 compared to a deficit of $824,995 at December 31, 2003. DOMAN IND: Western Forest Succeeds Company After Restructuring -------------------------------------------------------------- Doman Industries Limited and Western Forest Products Inc. reports that, in connection with the Plan of Compromise and Arrangement in respect of Doman and certain of its subsidiaries under the Companies' Creditors Arrangement Act, the transactions contemplated by the Plan were completed on July 27, 2004 and the Plan was implemented. The stay of proceedings under the CCAA was set to be lifted yesterday, July 28, 2004, at 11:59 p.m. "This has been a long and complex process which I am pleased to see is now at an end," says Rick Doman, President and Chief Executive Officer of Western Forest. "For the last 20 months we have focused on restructuring the company, and now that we have done so it is time to move forward and optimize operations to take full advantage of the efficiencies we have implemented and strong market prices. Throughout this difficult time our employees, customers, suppliers, and communities have stood by us with patience. I thank them for their strong support and confidence." Under the Plan, Western Forest becomes the successor business to Doman. A total of 25,635,931 Common Shares of Western Forest and US$221 million principal amount of Secured Bonds of Western Forest (issued at a price of US$950 per US$1,000 principal amount) were distributed under the Plan to former creditors of Doman and certain standby purchasers. The Toronto Stock Exchange has conditionally approved the Western Forest Common Shares for listing under the symbol "WEF", subject to meeting the Exchange's customary listing requirements. It is expected that the Western Forest Common Shares will commence trading on the Toronto Stock Exchange at the opening on August 3, 2004. A total of 19,226,931 Common Shares were distributed to the group of former unsecured noteholders and trade creditors of Doman and certain of its subsidiaries. A total of 2,890,053 Common Shares and US$99,657,000 principal amount of Secured Bonds were issued upon the exercise of Class A and B Warrants of Western Forest distributed by Western Forest on June 29, 2004 to that group. As noted in Doman's press release issued on July 19, 2004, in excess of 90% of the Class A and B Warrants were exercised. Certain standby purchasers were required under a standby commitment to subscribe for and take up the Common Shares and Secured Bonds not acquired pursuant to the exercise of the Class A and B Warrants. A total of 3,518,947 Common Shares and US$121,343,000 principal amount of Secured Bonds were issued to the standby purchasers pursuant to that commitment and a concurrent private placement. The proceeds received from the exercise of the warrants, the standby commitment and the private placement were used by Doman primarily to repay US$160,000,000 of 12% series A and series B secured notes and related costs and to fund its CCAA exist costs. The Plan did not provide for any distributions to Doman shareholders other than Class C Warrants of Western Forest. Certificates for the Class C Warrant are expected to be mailed to Doman shareholders shortly, although due to the requirement to round down all fractional Class C Warrants Doman shareholders holding fewer than 67 shares will not receive any Class C Warrants. Each Class C Warrant entitles the holder to purchase one common share of Western Forest, is non-transferable and has a five-year term, subject to certain early termination provisions. The Class C Warrants will not be listed. The holders of Class A and B Shares of Doman are entitled to receive on a pro rata basis, in the aggregate, 45% of the Class C Warrants. The holders of the Class A Preferred Shares of Doman are entitled to receive on a pro rata basis, in the aggregate, 55% of the Class C Warrants. The Class C Warrants are to be issued effective today in three tranches exercisable for an aggregate of up to 569,630, 854,446 and 1,424,076 Common Shares at exercise prices of Cdn$16.28, Cdn$26.03 and Cdn$33.83. Western Forest has adopted an incentive stock option plan for its directors, officers, employees and consultants and has reserved 2,500,000 Common Shares for issuance thereunder. Finally, as a condition to the implementation to the Plan, Western Forest and certain of its post-Plan implementation subsidiaries have entered into a credit agreement with CIT Business Credit Canada, Inc., to establish a working capital facility of Cdn$100 million to replace an existing working capital facility between CIT and Doman. The Toronto Stock Exchange halted trading in the Doman Class A and B Shares on July 27, 2004, and it is expected that the halt will not be lifted until the stay of proceedings is lifted. At that time, the Doman Class A and B Shares are expected to be de listed from the Toronto Stock Exchange. The officers of Western Forest are: Jaspaul (Rick) H. Doman President and Chief Executive Office Philip G. Hosier Vice-President, Finance and Corporate Secretary Stephen Ward Controller and Assistant Secretary Effective upon implementation of the Plan, John Lacey, John McIntyre, John Newman, James Arthurs, Peter Gordon, Lee Doney and Derek Brown joined Mr. Rick Doman as directors of Western Forest. Mr. Brown subsequently resigned, and the board of directors expects to appoint another director in his stead shortly. Mr. Rick Doman resigned as a director and officer of Doman and all remaining subsidiaries of Doman effective upon implementation of the Plan, as did Mr. Hosier and the other officers of those entities. About Western Forest Following implementation of the Plan, Western Forest becomes an integrated Canadian forest products company and the second largest coastal woodland operator in British Columbia. Principal activities conducted by Western Forest and its post-Plan implementation subsidiaries include timber harvesting, reforestation, sawmilling logs into lumber and wood chips, value- added remanufacturing and producing NBSK pulp. All of Western Forest's operations, employees and corporate facilities are located in the coastal region of British Columbia and its products are sold in 30 countries worldwide. About Doman Following implementation of the Plan, Doman will no longer carry on any active business or hold any material assets. DYKESWILL LTD: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Dykeswill, Ltd. dba Dykeswill Motors dba Dykeswill Aviation 555 South Shoreline Boulevard, Suite 106 Corpus Christi, Texas 78401 Bankruptcy Case No.: 04-20974 Chapter 11 Petition Date: July 26, 2004 Court: Southern District of Texas (Corpus Christi) Judge: Richard S. Schmidt Debtor's Counsel: Harlin C. Womble, Jr, Esq. Jordan Hyden Womble and Culbreth 500 N. Shoreline Blvd., Ste. 900 Corpus Christi, TX 78471 Tel: 361-884-5678 Fax: 361-888-5555 Estimated Assets: $10 Million to $50 Million Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Williams, Everett C. Loans to the $700,000 6229 Denain partnership Corpus Christi, TX 78414 Bachor, Basilio Claims alleged in $575,000 2330 Pearse Street Cause No. 04-61311-1 Corpus Christi, TX 78415 styled Basilio Bachor vs. Dykeswill, Ltd. and Everett C. Williams pending in County Court at Law No. 1 Hodge, Samimah Aziz Hodge Claims alleged in $400,000 c/o Michael H. Hummell Cause No. 04-1808-F Huseman & Pletcher styled Samimah Aziz 600 Leopard St., Suite 2100 Hodge v. Everett Corpus Christi, TX 78473 Williams aka Chuck Williams d/b/a Dykeswill Ltd. And Minit Mortgage Wilson, Wonda Y. Claims in Cause No. $80,000 00-61643-1, styled Wonda Y. Wilson v. Everett C. Williams/Wil & Wil Investments, Inc. Cotton, Ellen Default Judgment $33,605 entered in Cause No. 99-60481-00-0-2, styled Ellen Cotton v. Wil & Will Investment, Inc., et al in County Court at Law No. 2, Nueces J&C Williams, LLC Payments pursuant $24,000 to Employment Contracts with Everett C. Williams, Claudia Dykes Williams and Craig Williams The Citizens National Bank Defiency on loan $23,207 after sale of Cessna N8097M Thomas, Rick Returned Check for $13,000 Construction contracting services Jasik, George Claims alleged in $11,000 Cause No. 04-61114-2, styled George Jasik v. Dykeswil, Ltd. And its general partner, J&C Williams, LLC pending in County Bank of America, N.A. Overdrawn Account $6,270 Wallace & Wheeler, LLP Legal Services $4,270 Nextel Communications Cellular Telephone $3,865 Service Wes Thomas Associates Fees for real $3,250 property survey Accredited Appraisers Professional Services $2,750 Humana Insurance Company Health Insurance $2,307 Premiums Nueces County Personal Property $2,281 Taxes on Mercury Aircraft 1956 Cessna 310 S/N 35272 Office Depot Credit Plan Goods and/or $1,636 Services CPL Retail Energy Utility Service $1,542 CPL Retail Energy Utility Service - $1,366 3377 Ocean Drive BFI Waste Systems of America Goods and/or Services $1,011 ENTERPRISE PRODUCTS: Updates Distribution Declaration ----------------------------------------------------- Enterprise Products Partners L.P. (NYSE:EPD) has updated its quarterly distribution declaration of $0.3725 per common unit, which is $1.49 per unit on an annual basis to unitholders of record at the close of business on July 30, 2004. The cash distribution payment date has been changed from Aug. 11, 2004 to Aug. 6, 2004. About the Company Enterprise Products Partners L.P. is the second largest publicly- traded midstream energy partnership with an enterprise value of over $7 billion. Enterprise is a leading North American provider of midstream energy services to producers and consumers of natural gas and natural gas liquids. The Company's services include natural gas transportation, processing and storage and NGL fractionation (or separation), transportation, storage and import/export terminaling. * * * As reported in the Troubled Company Reporter's May 20, 2004 edition, Standard & Poor's Rating Services lowered its corporate credit ratings on Enterprise Products Partners L.P. and Enterprise Products Operating L.P. to 'BB+' from 'BBB-' and removed the ratings from CreditWatch with negative implications. The outlook is stable. The ratings were originally placed on CreditWatch on Dec. 15, 2003 as a result of the announcement of the merger between Enterprise Products and GulfTerra Energy Partners L.P. (BB+/Watch Neg/--). The rating action is based upon an assessment that the credit rating on Enterprise Products will be 'BB+' whether or not the proposed merger with GulfTerra takes place. "On a stand-alone basis, Enterprise Products' creditworthiness has deteriorated over the past year," said Standard & Poor's credit analyst Peter Otersen. EQUIFIN INC: Common Stock Trading Moved to OTC Bulletin Board ------------------------------------------------------------- As an update to its stockholders, EquiFin Inc. (OTC BB:EQUI) reported that the trading of its common stock had, at the end of last week, been moved from the over-the-counter pink sheets to the over-the-counter, bulletin board market. In addition, in response to stockholder inquiries over the past few weeks, Mr. Craig, EquiFin's Chairman and President, reported that the Company is evaluating opportunities which would enable the Company to continue its development as a commercial finance company through the combination of other assets with the Company's assets, or to reduce its indebtedness and realize cash through the sale of certain assets of the Company that have value to other commercial finance companies. "There has been no decision on which alternative opportunity we will attempt to secure, but we have ongoing negotiations in these directions, and since we currently have a commitment from an investor to provide operating capital for us, we have the ability to continue our internal efforts to build assets, while determining which strategic opportunity is best for the Company given all circumstances." EquiFin, Inc., (AMEX:II AND II,WS) an early stage, commercial finance company provides a range of capital solutions to small and mid-size business enterprises. * * * In its Form 10-KSB for fiscal year ended December 31, 2003 filed with the Securities and Exchange Commission, Equifin, Inc. reports: Liquidity and Capital Resources "Cash used in operating activities amounted to $916,000 for the year ended December 31, 2003. Investing activities required cash of $6,904,000, which included $7,474,000 for development of the loan portfolio which was offset to an extent by $250,000 received from the sale of a participation. Financing activities provided $8,510,000 in cash, which included $6,066,000 in borrowings and $2,880,000 from the sale of convertible notes. The result of these activities was a net increase in cash of $690,000 which increased cash to $1,078,000 at year-end December 31, 2003. "In December 2001, Equinox Business Credit Corp., an 81% owned subsidiary of the Company, entered into a Loan and Security Agreement with Wells Fargo Foothill, which provided for the initiation of a $20,000,000 revolving credit facility. The agreement provides for interest at the prime rate plus 1.25% (equal to 5.25% at December 31, 2003). Equinox is permitted to borrow under the Credit Facility at up to 85% of the borrowing base, which consists of eligible notes receivable, as defined in the Agreement. Under the terms of the Agreement, as amended, Equinox must maintain tangible net worth (including subordinated debt) of $3,000,000 from December 31, 2003 through February 29, 2004; $3,050,000 through May 31, 2004; $3,100,000 through August 31, 2004 and $3,150,000 thereafter; a leverage ratio, as defined, of not more than 5 to 1 and an interest coverage ratio of not less than 1.1 to 1, increasing to 1.25 to 1 beginning April 2004. Equinox did not maintain the tangible net worth requirement for December 31, 2002, January 31, 2003, February 28, 2003 and June 30, 2003 and the interest coverage ratio at September 30, 2003. Through amendments to the Agreement, the lender waived the defaults for those periods. "During 2004, Equinox is also required to realize, for each fiscal quarter in 2004, 75% of its projected revenues and projected earnings before tax based on projections previously furnished to Foothill. All the assets and the capital stock of Equinox are pledged to secure the Credit Facility, which is also guaranteed by the Company. There was $9,839,000 outstanding on the Credit Facility at December 31, 2003. The Agreement matures December 19, 2004 and the lender has informed the Company that it does not currently intend to renew the agreement. "The Company will seek to replace the credit facility prior to maturity, however there can be no assurance that such efforts will be successful. If our current facility is not replaced, we might negotiate a sale of our portfolio, apply all cash flow generated by the loans securing the facility to pay down our borrowings thereby adversely effecting our liquidity position. In this situation, we may not be able to satisfy our outstanding loan commitments, originate new loans or continue to fund our operations." Also, the report of Equifin Inc.'s independent public accountants includes this paragraph: "The Company incurred net losses and negative cash flows from its operating activities during 2003 and 2002. As of March 12, 2004, the Company did not have any other source of funds to replace the funds provided by the credit facility when it expires in December 2004. Such matters raise substantial doubt about the Company's ability to continue as a going concern." EXIDE TECH: Akin Gump Wants to Collect $6,618,407 Final Fees ------------------------------------------------------------ Akin Gump Strauss Hauer & Feld, LLP, co-counsel to the Official Committee of Unsecured Creditors, asks the Court to approve: (a) the final allowance of compensation for professional services rendered from April 29, 2002 to April 16, 2004 amounting to $6,618,407, which amount represents 16,737.7 hours in professional services and 2,216.35 hours for law clerk and paraprofessional services: Project Category Total Hours Amount ---------------- ----------- ------ General Case Administration 1,278.05 $358,702 Fee App/Monthly Billing Reports 425.90 112,585 Analysis/Review of other Fee Apps 237.00 58,460 Retention of Professionals 204.10 67,584 Creditors Committee Meeting 707.30 321,621 Court Hearings 695.80 281,980 Financial Reports and Analysis 124.80 49,634 DIP and Exit Financing 678.70 274,827 Executory Contracts/Licenses 600.90 233,246 General Claims Analysis/Objections 2,149.90 687,036 Review of Schedules and Statements 68.30 14,115 Analysis of Prepetition Transactions 2,793.65 948,035 Adversary Proceedings/Litigation 724.20 249,301 Exclusivity 146.80 60,550 Plan and Disclosure Statement 6,350.70 2,326,428 Asset Sales/Business Liquidations 176.50 65,590 Travel (Billed at hourly rate) 281.80 76,501 Analysis of Secured Claims 434.00 126,738 Labor Issues/Employee Benefits 626.90 220,644 Real Estate Issues/Leases 29.60 5,294 Tax Issues 145.80 59,017 Lift Stay Litigation 4.85 1,410 Bank Investigation 68.50 27,911 Voluntary Reductions (8,802) (b) the final allowance of $696,646 for reimbursement of actual and necessary expenses incurred: Category Expense -------- ------- Courier/Messenger/Postage $5,548 Telephonic Charges 88,763 Duplicating Costs 111,277 Meals 36,543 Telecopy/Fax 8,276 Travel 99,370 Computerized Research Expenses 137,693 Overtime - Administrative Staff 1,632 Deposition 13,994 Document Retrieval 1,080 Contract Labor 9,104 Corporate Service Fee 40 Miscellaneous 666 Outside Professional Fees 136,594 Reference Material 3,469 Transcript 46,234 Filing Fees 15 Parking-General (Non Travel) 10 Bank Investigation 1,273 Voluntary Reductions (4,935) (c) the final allowance of compensation for the professional services rendered for the pre-Committee period from April 15, 2002 to April 29, 2002 amounting to $41,565, which represents 89.9 hours in professional services and half an hour for paraprofessional services, and reimbursement of $694 for actual and necessary expenses incurred; and (d) a $750,000 premium payment for its services rendered in the Debtors' Chapter 11 cases. Headquartered in Princeton, New Jersey, Exide Technologies is the world-wide leading manufacturer and distributor of lead acid batteries and other related electrical energy storage products. The Company filed for chapter 11 protection on April 14, 2002 (Bankr. Del. Case No. 02-11125). Matthew N. Kleiman, Esq., and Kirk A. Kennedy, Esq., at Kirkland & Ellis, represent the Debtors in their restructuring efforts. On April 14, 2002, the Debtors listed $2,073,238,000 in assets and $2,524,448,000 in debts. (Exide Bankruptcy News, Issue No. 50; Bankruptcy Creditors' Service, Inc., 215/945-7000) FACEPRINT GLOBAL: Dismisses Pritchet as Independent Accountants --------------------------------------------------------------- On June 3, 2004, Faceprint Global Soltuions Inc. dismissed Pritchett, Siler, & Hardy, P.C. as its independent accountants. The decision to dismiss Pritchett, Siler, & Hardy was recommended by the Company's Board of Directors; the Company has no audit committee. Except for an explanatory paragraph concerning the Company's ability to continue as a going concern, the accountant's report on Faceprint's financial statements for the period from inception on January 30, 2003 to March 31, 2003 did not contain an adverse opinion or disclaimer of opinion, nor were the opinions modified as to uncertainty, audit scope or accounting principles. On June 3, 2004 Faceprint Global Solutions appointed Malone & Bailey, PLLC as its new independent accountants. About the Company Faceprint Global Solutions is a software-development company engaged in facial recognition and facial imagery. Its mission is to become a world leader in the field of biometrics and developing high accuracy products in facial recognition technology. The Company addresses the critical needs in facial recognition related to identity verification in crime-prevention and worldwide efforts against terrorism. At March 31, 2004, Faceprint Global's balance sheet showed a stockholders' deficit of $438,619. FEDERAL-MOGUL: Court Approves Disclosure Statement -------------------------------------------------- The United States Bankruptcy Court for the District of Delaware has approved the Disclosure Statement respecting the Third Amended Joint Plan of Reorganization for Federal-Mogul Corporation and certain of its affiliated companies. Approval of the Disclosure Statement and its related materials authorizes the Debtors to begin soliciting votes from creditors and interest holders on the Plan. The Bankruptcy Court has set November 3, 2004 at 4:00 p.m. prevailing Eastern Time as the deadline by which votes to accept or reject the Plan must be received. Anyone with claims against or interests in the Debtors, including asbestos personal injury or wrongful death claims, may vote on the Plan. Claimants are encouraged to read the Plan and Disclosure Statement carefully for details about how this Chapter 11 reorganization may affect their rights. The Bankruptcy Court will consider whether to confirm the Plan at a hearing on December 9, 2004. Key Parts of the Plan The Plan provides for the payment of claims against and interests in the Debtors. The Plan further proposes a Trust to pay asbestos personal injury and wrongful death claims that relate to exposure to asbestos or asbestos- containing products manufactured, distributed, sold or possessed by any of the Debtors. If the Plan is confirmed, all asbestos personal injury and wrongful death claims will be permanently channeled to the Trust. Anyone with asbestos-related claims will then be forever barred from asserting their claims directly against any of the Debtors. How to Vote on or Object to the Plan The deadline to vote on the Plan is November 3, 2004 at 4:00 p.m. (prevailing Eastern Time). To be counted, a ballot voting on the Plan must be received by the Voting Agent by that date and time at the following address: The Garden City Group, Inc., Voting Agent for Federal-Mogul, PO Box 8872, Melville, New York 11747-8872. The Plan may affect claimants' legal rights regardless of whether they vote on the Plan. Federal-Mogul Corporation and T&N Limited are two of 157 affiliated companies in the Federal-Mogul reorganization proceedings. One hundred thirty-four (134) of the companies are incorporated under the laws of the United Kingdom, and are parties to Administration proceedings in that country. A vote to accept or reject the Plan will also be a proxy on certain matters in the United Kingdom administration proceedings. Any objections to the Plan must be submitted in writing and received by November 3, 2004 at 4:00 p.m. (prevailing Eastern Time) to be considered. Objections should be sent to the Clerk of the Bankruptcy Court, United States Bankruptcy Court for the District of Delaware, 824 Market Street, 3rd Floor, Wilmington, Delaware 19801. Asbestos Personal Injury and Wrongful Death Claims Proof of an asbestos personal injury or wrongful death claim does not have to be filed with the Bankruptcy Court at this time. The Bankruptcy Court has established special procedures for holders of asbestos personal injury or wrongful death claims to vote on the Plan. Lawyers for holders of these claims may vote on the Plan on behalf of their clients if authorized by their client. The Hearing on the Plan The Bankruptcy Court will hold a hearing to confirm the Plan on December 9, 2004 at 10:00 a.m. (prevailing Eastern Time) before the Honorable Raymond T. Lyons, United States Bankruptcy Judge, at the Clarkson S. Fisher U.S. Courthouse, 402 East State Street, Courtroom 4, Trenton, New Jersey 08608. Claimants may attend the hearing, but are not required to do so. Additional Information A detailed notice describing the Plan, called the Disclosure Statement, together with a copy of the Plan itself and voting materials, called a Solicitation Package, is being mailed to known holders of claims against the Debtors or their lawyers. Additional information (including copies of the Plan and Disclosure Statement) can be obtained by calling the Debtors' Voting Agent at 1-888-212-5571, or by visiting the Federal-Mogul Reorganization Website at http://www.fmoplan.com/A complete list of the companies involved in the Chapter 11 reorganization is also available at the website. Headquartered in Southfield, Michigan, Federal-Mogul Corporation -- http://www.federal-mogul.com/-- is one of the world's largest automotive parts companies with worldwide revenue of some $6 billion. The Company filed for chapter 11 protection on Oct. 1, 2001 (Bankr. Del. Case No. 01-10582). Lawrence J. Nyhan, Esq., James F. Conlan, Esq., and Kevin T. Lantry, Esq., at Sidley Austin Brown & Wood and Laura Davis Jones, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from its creditors, they listed $10.15 billion in assets and $8.86 billion in liabilities. FEDERAL-MOGUL: Resolves Large Claims Asserted by Nippon Piston -------------------------------------------------------------- Before March 3, 2003, Nippon Piston Ring Co. filed four separate proofs of claim and one proof of interest against Federal-Mogul and its debtor-affiliates alleging, violations and breach of the Joint Venture Agreement and the License Agreement, including the termination of Nippon Piston's equity interests in Federal-Mogul Piston Rings, Inc.: Claim No. Claim Amount Liable Debtor --------- ------------ ------------- 5285 $107,086 F-M Piston Rings 5286 19,007,100 F-M Powertrain 5287 19,007,100 F-M Corporation 5284 19,007,100 F-M Powertrain Nippon Piston filed Proof of Interest No. 05291, seeking recovery on account of 862 shares of non-convertible Class B Common Stock against Federal-Mogul Piston Rings. Nippon Piston also asserted claims aggregating $89,000 against the Debtors' affiliate, Federal-Mogul Aftermarket U.K., Ltd., which is currently subject to an insolvency proceeding in Great Britain. To resolve their disputes and avoid further costs, expense, uncertainty and delay, Nippon Piston and the Debtors signed a settlement agreement with these terms and conditions: A. Resolution of NPR Claims and Interests (a) The Prepetition Royalty Claim No. 5285 will remain unaltered, survive the settlement and constitute an allowed general unsecured non-priority claim for $107,086; (b) Claim Nos. 5284 and 5286 will be deemed withdrawn, with prejudice; (c) Claim No. 5287 is reduced to $1,500,000, and will be allowed as a general unsecured, non-priority claim; (d) Proof of Interest No. 5291 will be deemed disallowed in its entirety. To the extent that Section 502(j) may apply to the Proof of Interest, Nippon Piston waives any rights or remedies arising under Section 502(j); and (e) All of Nippon Piston's Claims against Federal-Mogul Aftermarket U.K. will be deemed reduced to and allowed for $45,000. The reduction and allowance of the Claims will be implemented in a procedural manner as determined in the discretion of the U.K. Debtors and the U.K. Administrators. B. Postpetition Royalties In accordance with the terms, conditions and Royalty Rate stated in the License Agreement, the Debtors will pay to Nippon Piston all royalties accruing to Nippon Piston from the Petition Date through the date the Court approves the settlement, resulting from the Debtors' utilization of property licensed to them under the License Agreement. C. Termination of Stockholders Agreement and License Agreement (a) The Second Stockholders Agreement and the License Agreement will be terminated, and neither Agreement will be enforceable. The reciprocal non-competition agreements contained in the Second Stockholders Agreement, and any other restrictions or competition between the parties, if any, will terminate and each of the parties and their affiliates will be entitled to compete with one another in or outside the Territory without restriction; (b) The Debtors will not be required to file a separate motion to assume or reject the Second Stockholders Agreement or the License Agreement; (c) Federal-Mogul Piston Rings will be entitled to utilize Nippon Piston's Know-How and other property described in the License Agreement, on a non-exclusive basis, for the production of products by Federal-Mogul Piston Rings for the engine models currently in production. Federal-Mogul Piston Rings' post-termination license will have a term commencing on the approval of the settlement, and terminating on the later of: (i) the date on which all automotive engines described in the Settlement Agreement are discontinued or no longer in production; and (ii) the date as of which there is no longer any demand by the certain engine manufacturers for parts for the engines, the manufacture and production of which would require utilization of Nippon Piston's Know-How or other certain property described in the License Agreement. "Demand" for parts for the designated engine will be deemed to have ceased, and the post-termination license will expire, at such time as the Debtors no longer hold an outstanding and operative purchase order that has been issued by the relevant engine manufacturer, which includes parts for the engine, and for a period of 60 days after the expiration of the purchase order, unless during the 60-day period the relevant purchase order is renewed or replaced; and (d) Notwithstanding the termination of the License Agreement: (i) Federal-Mogul Piston Rings will pay royalties to Nippon Piston calculated according to the applicable Royalty Rate and payable at certain schedules specified in the License Agreement, on account of the utilization of Nippon Piston's Know-How or other property; (ii) The Debtors will continue to package and label products as previously required under the License Agreement; and (iii) The Debtors will continue to issue royalty statements to Nippon Piston based on the custom and practice that previously existed under the License Agreement. D. Nippon Piston's Adversary Proceeding Nippon Piston's adversary complaint, together with any and all claims alleged in the adversary proceeding, will be dismissed with prejudice. Similarly, all of the Debtors' answers and counterclaims will be dismissed, with prejudice. Each of the parties will bear their own costs and expenses incurred in connection with the adversary proceeding. E. Mutual Releases The Debtors and United Piston Rings, Inc., and Nippon Piston, will exchange mutual, general releases covering all known and unknown claims, except only claims or obligations which are expressly stated to survive, or are confirmed by the terms of the Settlement Agreement. F. Plan of Reorganization The settlement is not contingent on the confirmation of the Debtors' Third Amended Plan of Reorganization, or any modification to the Plan. Nippon Piston agrees to support the Plan and not object to confirmation of the Plan or any modified Plan, so long as Nippon Piston's claims as allowed under the Settlement Agreement are classified together with, and treated the same as, the general unsecured claims of the particular Debtor entity. Pursuant to Section 363 and Rule 9019 of the Federal Rules of Bankruptcy Procedure, the Debtors ask the Court to approve the Settlement Agreement with Nippon Piston. Headquartered in Southfield, Michigan, Federal-Mogul Corporation -- http://www.federal-mogul.com/-- is one of the world's largest automotive parts companies with worldwide revenue of some $6 billion. The Company filed for chapter 11 protection on Oct. 1, 2001 (Bankr. Del. Case No. 01-10582). Lawrence J. Nyhan, Esq., James F. Conlan, Esq., and Kevin T. Lantry, Esq., at Sidley Austin Brown & Wood and Laura Davis Jones, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from its creditors, they listed $10.15 billion in assets and $8.86 billion in liabilities. (Federal-Mogul Bankruptcy News, Issue No. 60; Bankruptcy Creditors' Service, Inc., 215/945-7000) FINOVA GROUP: Will Prepay 7.5% Senior Secured Notes Due 2009 ------------------------------------------------------------ On July 6, 2004, The FINOVA Group, Inc., advised The Bank of New York, the Trustee for the 7.5% Senior Secured Notes Due 2009 with Contingent Interest Due 2016, that it would make a voluntary partial prepayment of principal on the Notes effective August 16, 2004. The partial principal prepayment is $326,410,310, together with accrued interest up to but excluding that date. In a regulatory filing with the Securities and Exchange Commission on July 8, 2004, Richard Lieberman, Senior Vice President, General Counsel and Secretary of FINOVA, said that during 2004, FINOVA will have prepaid, including the August prepayment, 19% of the $2,967,949,000 principal amount outstanding as of December 31, 2003. (Finova Bankruptcy News, Issue No. 49; Bankruptcy Creditors' Service, Inc., 215/945-7000) FOG CUTTER: Declares $0.13 Per Share 3rd Quarter Cash Dividend -------------------------------------------------------------- Fog Cutter Capital Group Inc. (Nasdaq:FCCG) has declared a $0.13 per share third quarter cash dividend on the Company's common stock. The dividend is payable on September 1, 2004 to stockholders of record on August 18, 2004. The business strategy of Fog Cutter Capital Group consists of developing, strengthening and expanding its restaurant and commercial real estate mortgage brokerage operations and continuing to identify and acquire real estate investments with favorable risk-adjusted returns. The Company also seeks to identify and acquire controlling interests in other operating businesses in which it can add value. The Company's operating segments consist of (i) restaurant operations conducted through Fatburger Holdings, Inc., (ii) commercial real estate mortgage brokerage activities conducted through George Elkins Mortgage Banking Company and (iii) real estate, merchant banking and financing activities. * * * Liquidity and Capital Resources In its Form 10-K/A for the year ended December 31, 2003, filed with the Securities and Exchange Commission, Fog Cutter Capital Group reports: "Liquidity is a measurement of our ability to meet potential cash requirements, including ongoing commitments to repay borrowings, fund business operations and acquisitions, engage in loan acquisition and lending activities, meet collateral calls and for other general business purposes. The primary sources of funds for liquidity during the year ended December 31, 2003 consisted of net cash provided by investing activities, including cash repayments related to our mortgage-backed securities portfolio, cash distributions from BEP and the sale of mortgage-backed securities. "If our existing liquidity position were to prove insufficient, and we were unable to fund additional collateral requirements or to repay, renew or replace maturing indebtedness on terms reasonably satisfactory to us, we may be required to sell (potentially on short notice) a portion of our assets, and could incur losses as a result. Furthermore, since from time to time there is extremely limited liquidity in the market for subordinated and residual interests in mortgage-related securities, there can be no assurance that we will be able to dispose of such securities promptly for fair value in such situations. "We consider the sale of assets to be a normal, recurring part of our operations and we are currently generating positive cash flow as a result of these transactions. However, excluding the sale of assets from time to time, we are currently operating with negative cash flow, since many of our assets do not generate current cash flows sufficient to cover current operating expenses. We believe that our existing sources of funds will be adequate for purposes of meeting our liquidity needs; however, there can be no assurance that this will be the case. Material increases in interest expense from variable-rate funding sources, collateral calls, or material decreases in monthly cash receipts, generally would negatively impact our liquidity. On the other hand, material decreases in interest expense from variable-rate funding sources or an increase in market value of our mark-to-market financial assets generally would positively affect our liquidity." FOREST OIL: Will Release 2nd Quarter '04 Results on August 4 ------------------------------------------------------------ Forest Oil Corporation (NYSE:FST) has scheduled its second quarter 2004 earnings release to be issued after the close of trading on the New York Stock Exchange on Wednesday, August 4, 2004. A conference call is scheduled for Thursday, August 5, 2004, at 12:00 pm MT (2:00 pm ET) to discuss the release. You may access the call by dialing toll free 800.399.6298 (for U.S./Canada) or 706.634.0924 (for International) and request the Forest Oil teleconference. A Q&A period will follow. A replay will be available from Thursday, August 5, 2004, through Friday, August 13, 2004. You may access the replay by dialing toll free 800.642.1687 (for U.S./Canada) or 706.645.9291 (for International), reservation #8990099. Please note that the reservation number is not needed to access the teleconference, only the replay. Forest Oil Corporation is engaged in the acquisition, exploration, development, and production of natural gas and liquids in North America and selected international locations. Forest's principal reserves and producing properties are located in the United States in the Gulf of Mexico, Texas, Louisiana, Oklahoma, Utah, Wyoming and Alaska, and in Canada. Forest's common stock trades on the New York Stock Exchange under the symbol FST. For more information about Forest, please visit our website at http://www.forestoil.com/ * * * As reported in the Troubled Company Reporter's June 1, 2004 edition, Standard & Poor's Ratings Services said that it lowered its corporate credit and senior unsecured debt ratings on Forest Oil Corp. to 'BB-' from 'BB'. Standard & Poor's also lowered its senior secured bank loan rating on Forest's credit facility due 2005 to 'BB' from 'BB+' and assigned a recovery rating of '1' to the facility. All of the ratings were removed from CreditWatch where they were placed with negative implications on Jan. 27, 2004. The outlook is stable. The ratings downgrade on Forest reflects the company's increasing dependence on acquisitions to offset its faltered frontier development strategy, its high operating cost structure relative to its peers, and its debt leverage that is not commensurate with an acquire-and-exploit strategy. GENCORP INC: S&P Affirms BB- Corporate Credit Rating ---------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on GenCorp Inc. to developing from stable. At the same time, Standard & Poor's affirmed its ratings, including the 'BB-' corporate credit rating, on the company. GenCorp currently has around $600 million in debt outstanding. "The outlook revision reflects a range of possible outcomes following GenCorp's announcement that it has reached a definitive agreement to sell its GDX Automotive unit to Cerebus Capital for $147 million," said Standard & Poor's credit analyst Christopher DeNicolo. The company also announced that it will be suspending its dividend, saving $5 million a year. GenCorp will be a significantly smaller company after the divestiture, as GDX currently comprises around 60% of revenue. However, management will be able to focus on the core propulsion business, which has better long-term prospects than the auto parts market. Intended uses of the proceeds were not disclosed, but it is likely that GenCorp will pursue acquisitions in aerospace and defense. Any change in the ratings will depend on the use of the GDX proceeds, which could include acquisitions or debt repayment, the earnings contribution and financing of any acquisition targets, other strategic initiatives (including the possible sale of the fine chemicals unit), the sale or development of real estate holdings, and the performance of the remaining operations. GenCorp was required to take a $261 million pretax charge to equity in the second quarter of 2004 (ended May 31, 2004) to adjust the carrying value of GDX to its likely sale price, which increased debt to capital to more than 85% from 58% at Nov. 30, 2003. GDX's results are now classified as discontinued operations. In the first half of 2004, the unit's revenues declined 4% and had a $14 million operating loss (before the charge) due to lower volumes, pricing concessions, new product start-up costs, increased material costs, and higher pension expense. GDX is a leading provider of automotive vehicle sealing systems. GenCorp has attempted to improve profitability at GDX by replacing management and closing a plant in France, but the benefits of these steps were unlikely to be fully realized in 2004. Also, further investment to reduce capacity, as well as moving production to low cost countries, was likely necessary to restore acceptable profitability. The ratings on Sacramento, California-based GenCorp reflect a weak financial profile, poor results in the soon to be divested automotive segment, and an active, debt-financed acquisition program, offset somewhat by leading positions in aerospace propulsion and significant real estate holdings. Following the divestiture, GenCorp's business will be organized into three segments: Aerojet (almost 90% of continuing revenues), Aerojet Fine Chemicals (AFC, 10%), and real estate. The ratings on GenCorp could be raised, lowered, or affirmed depending on the use of proceeds from the GDX divestiture and other strategic initiatives. If the proceeds were used to fund an acquisition, the direction of any ratings change would be affected by the strategic significance and earnings contribution of the target and any additional financing, if required. GMAC COMM: Fitch Affirms Low Ratings for 8 Classes; Junks 1 Class ----------------------------------------------------------------- Fitch Ratings affirms GMAC Commercial Mortgage Securities, Inc.'s mortgage pass-through certificates, series 2000-C3 as follows: -- $100.3 million class A-1 'AAA'; -- $851.4 million class A-2 'AAA'; -- Interest-only class X 'AAA'; -- $54.0 million class B 'AA+'; -- $57.1 million class C 'A+'; -- $12.1 million class D 'A'; -- $35.1 million class E 'BBB'; -- $19.1 million class F 'BBB-'; -- $8.0 million class G 'BBB-'; -- $9.9 million class H 'BB+'; -- $25.5 million class J 'BB'; -- $4.5 million class K 'BB-'; -- $9.6 million class L 'B+'; -- $15.9 million class M 'B'; -- $3.2 million class N 'B-'; -- $3.2 million class O 'CCC'; -- $13.1 million class S-MAC-1 'A-'; -- $9.2 million class S-MAC-2 'BBB'; -- $5.6 million class S-MAC-3 'BB+'; -- $14.6 million class S-MAC-4 'BB'. Fitch does not rate classes P and S-AM. Class S-AM represents the interest in the trust fund corresponding to the junior portion of the AmeriSuites loan. Classes S-MAC-1, S-MAC-2, S-MAC-3, and S- MAC-4 represent the interest in the trust fund corresponding to the junior portion of the MacArthur Center loan. The rating affirmations reflect the consistent loan performance and the minimal reduction of the pool collateral balance since issuance. As of the July 2004 distribution date, the pool's collateral balance has decreased by 3.99% to $1.22 billion from $1.27 billion at issuance. GMAC Commercial Mortgage Corp., the master servicer, collected YE 2003 financials for 82% of the pool balance. The YE 2003 weighted average debt service coverage ratio DSCR is 1.31 times (x), compared to 1.37x at YE 2002 and 1.49x at issuance. Currently, there are seven specially serviced loans (1.6%) in this transaction. The largest specially serviced loan (0.47%) is a limited-service hotel located in Round Rock, TX and is 90+ days delinquent. The property has experienced a decline in performance as a result of increased competition and a decrease in occupancy levels. Based on a recent appraisal of the property, Fitch expects the trust to realize a loss on this loan. Fitch reviewed the transaction's three credit assessed loans and their underlying collateral. The Fitch stressed DSCRs for the loans were calculated using the borrowers reported net operating income adjusted by Fitch underwriting guidelines, reserves, and a stressed debt service. The Arizona Mills loan (11.18%) is secured by a 1.23 million square feet (sf) regional mall located in Tempe, AZ. Major tenants include JCPenney, Saks Off-Fifth Ave., and Neiman Marcus. The year-end (YE) 2003 DSCR for the loan was 1.72x versus 1.63x as of YE 2002 and 1.38x at issuance. Occupancy as of YE 2003 is 96.0% compared to 97.9% as of YE 2002 and 98.0% at issuance. The MacArthur Center loan (7.7%) is secured by 528,846 sf in a 942,662 sf regional mall in Norfolk, Virginia. The property is the dominant upscale mall serving the Hampton Roads MSA. The YE 2003 DSCR for the A note of this loan is 1.68x compared to 1.69x as of trailing twelve months (TTM) June 2003 and 1.79x at issuance. Occupancy as of YE 2003 is 89% compared to 92% at issuance. Occupancy has increased significantly from 79% in 2002. The AmeriSuites loan (2.3%) is secured by eight limited service, cross-collateralized, cross-defaulted hotels located in eight states. The DSCR as of YE 2003 for the A note of this loan is 1.67x compared to 1.70x at TTM June 2003 and 1.75x at issuance. As of YE 2003, the occupancy is 78%, compared to 72% as of YE 2002, and 69.3% at issuance. Although occupancy and revenue per available room (RevPar) have increased since issuance, increased expenses and reduced income from food and beverage and telephone revenue have contributed to a decrease in net cash flow. GOOD YEAR: S&P Gives B+ Secured Debt & Corporate Credit Ratings --------------------------------------------------------------- Standard & Poor's Ratings Services assigned a 'B+' secured debt rating and a '2' recovery rating to The Goodyear Tire & Rubber Co.'s proposed $500 million senior secured funded credit facility. The senior secured and recovery ratings indicate a strong likelihood of substantial recovery of principal (80% to 100%) in the event of a default or bankruptcy. At the same time, Standard & Poor's affirmed the 'B+' corporate credit rating on Akron, Ohio-based Goodyear. The company has total debt of about $6 billion (including operating leases and sold accounts receivable) and underfunded employee benefit obligations of $5.8 billion. The outlook is stable. The new facility will replace Goodyear's existing $680 million revolving credit facility and will have the same collateral package. The facility will be used primarily to support outstanding letters of credit, but Goodyear will also have the option to use the proceeds for general corporate purposes. The facility will mature in September 2007 and will conclude the financing requirements of Goodyear's union agreements. "The ratings on Goodyear reflect the company's very weak financial profile, characterized by weak cash flow generation, poor earnings, onerous debt maturities, and heavy underfunded employee benefit liabilities," said Standard & Poor's credit analyst Martin King. "These factors more than offset the company's business strengths, including its position as one of the three largest global tire manufacturers, with good geographic diversity, strong distribution, and a well-recognized brand name." Goodyear has a below-average business profile, which reflects the challenges of the global tire industry and the company's poor operating performance in recent years. The industry is characterized by excess production capacity, high manufacturing costs, heavy fixed-capital and R&D requirements, intense competition from diversified global players and more-focused local competitors, somewhat cyclical demand, and exposure to volatile raw-material prices. The operating performance of Goodyear has deteriorated sharply in the past few years, caused by overcapacity; weak demand; increased competition from low-cost foreign manufacturers; reduced market share; and high medical, pension, energy, and raw-material costs. The performance of the company's North American tire operations, accounting for about half of total sales, has been especially poor, with the unit reporting operating losses totaling $186 million in 2002-2003 and $32 million in the first quarter of 2004. During 2003, Goodyear initiated a comprehensive plan to reduce global costs by $1 billion-$1.5 billion by 2005, which is beginning to show results. The company is expected to realize meaningful savings during 2004 from plant closures, headcount reductions, and other benefits stemming from its 2003 labor union contract covering most North American operations. Standard & Poor's expects that incremental benefits beyond 2004, however, will be more modest. Although Goodyear expects its North American tire business to report positive operating income in the second quarter of 2004, operating performance is likely to remain subpar for the next few years. Even as the market environment for tires has improved -- with both demand and tire prices increasing so far this year -- the substantial burden of higher raw-material costs is likely to offset much of the benefits from Goodyear's cost-cutting actions. The company expects its raw-material costs, primarily natural and synthetic rubber, to increase 5%-7% in 2004 from already-elevated 2003 levels. If recent high oil prices are sustained, however, the negative impact on the company's operations could be even greater. Goodyear's international tire operations and its chemicals and engineered products businesses have shown improved results during the past two years, somewhat offsetting the weak performance in North America. GREAT PLAINS: Q2'04 Results Driven by Strong Wholesale Performance ------------------------------------------------------------------ Great Plains Energy Incorporated (NYSE:GXP) reported second quarter 2004 earnings of $41.2 million. Second quarter earnings were off 18% compared to earnings in the same period in 2003 of $50.5 million, due to a $17.8 million contribution in 2003 from unusual items including a $25.9 million contribution related to DTI Holdings, Inc. Ongoing earnings for the second quarter of 2004, defined as Generally Accepted Accounting Principles (GAAP) earnings adjusted for certain unusual items, were $41.0 million, up 26% compared to $32.7 million in the second quarter of 2003. For the six months ended June 30, 2004, earnings were $68.1 million, up approximately 5% compared to earnings for the same period last year of $64.6 million. The Company's ongoing earnings for the first six months were $70.1 million, up 29% compared to 2003 ongoing earnings for the same period of $54.3 million. The increases in quarterly and year-to-date ongoing earnings compared to the same periods in 2003 were driven primarily by higher wholesale revenues and favorable weather at Kansas City Power & Light (KCP&L). These factors were partially offset by increased pension expenses and increased holding company expenses. In addition to these items, earnings for the year-to-date period were reduced by a first quarter write down of the KLT Gas portfolio, impacting earnings by $1.2 million. KLT Gas operating losses over the six-month period were approximately $0.8 million. Earnings for the first six months of 2003 also reflect a $10.3 million contribution from unusual items. For 2004, the Company affirms ongoing earnings guidance to be in the range of $2.23 to $2.35 per share. Second Quarter Highlights: -- Great Plains Energy reported ongoing earnings up 26% -- KCP&L reported second quarter wholesale revenues up 54% -- Strategic Energy reported MWhs delivered up 32% -- Great Plains Energy issued $313.6 million in common stock and FELINE PRIDES(SM) to retire debt. Commenting on the results, Chairman Michael Chesser said, "Availability and capacity at KCP&L's fleet continues to be very strong, resulting in substantial wholesale revenues." He continued: "We are benefiting from the diversity in having regulated and competitive businesses. The persistently high price of natural gas has created a challenging environment for Strategic Energy, yet has produced higher wholesale revenues at the utility." Great Plains Energy Strategic Intent Great Plains Energy also unveiled its long-range strategic intent. The comprehensive plan includes several key strategies: -- To be among the industry leaders in supplying and delivering electricity to customers. The regulated and competitive businesses will provide collaborative and innovative energy solutions. While the utility business fulfills its responsibility to serve a growing base of customers, the competitive business will capitalize on growth opportunities in markets that have choice. -- To form an "energy partnership" with our customers using technologies and programs that allow us to better understand our customers and to better manage the flow of information and energy between us. This approach will create a future delivery system for our utility customers and innovative products and services for our retail customers. -- To manage the generation of electricity with a diverse portfolio of options to ensure the right balance of affordable and reliable power with environmental stewardship. -- To do our part in protecting the well being of the residents and businesses in our region by adopting new technologies that reduces power plant emissions impacting air quality and investing in continuous environmental improvements. -- To be collaborative partners in working with everyone who has a vested interest in our business and be known as a company that listens, thinks ahead, delivers extraordinary service, and is passionate about developing solutions that benefit customers, communities and our Company. Mr. Chesser said: "The plan continues to build on the Company's foundation towards a culture that emphasizes greater innovation and collaboration with all stakeholders in identifying solutions for long-term challenges. We are committed to balancing and delivering attractive shareholder results with economic and environmental vitality for our communities, personal and professional growth for our employees, and affordable and reliable electricity for our customers." For more information concerning the strategic intent, refer to http://www.greatplainsenergy.com/ Kansas City Power & Light KCP&L, an integrated, regulated electric utility, earned $32.6 million, up 46% in the second quarter of 2004 compared to $22.3 million in the same period last year. Second quarter 2004 revenues were $274.7 million, up 11% compared to $247.3 million in the same quarter last year. Compared to the second quarter last year, wholesale revenues increased 54% due to the combination of 37% higher market prices and 21% more MWhs sold. Fewer planned and unplanned plant outages led to availability and capacity gains in the coal base load fleet and an increased volume of MWhs available to sell wholesale. Equivalent availability and the capacity factor for the coal base load fleet were 79% and 75%, respectively, in the second quarter of this year compared to 72% and 66%, respectively, in last year's quarter. Retail revenues were 4% higher than the same quarter last year, but up 2% excluding the affects of weather. KCP&L's second quarter 2004 earnings were negatively affected by increased pension expense of $1.3 million. For the six months ended June 30, 2004, KCP&L's earnings were $54.2 million, up 52% compared to $35.7 million in the same period last year. Year-to-date wholesale revenues increased to $103.6 million, up 32% over last year's period. These results reflect an 11% increase in average wholesale power prices and an 18% increase in MWhs sold compared to the same period last year. Equivalent availability and the capacity factor for the coal base load fleet were 81% and 78%, respectively, for the first six months of this year compared to 74% and 69%, respectively, in last year's period. KCP&L's 2004 year-to-date earnings were impacted by increased pension expense of $1.9 million and by $8.0 million of other operational expenses including transmission and storm related expenses. Strategic Energy Strategic Energy, a competitive electricity provider, continued its solid performance in competitive markets. Second quarter revenues were $338.5 million, up 33% driven by a 32% increase in MWhs delivered compared to the same period last year. Earnings for the second quarter were $9.3 million compared to earnings of $9.6 million in the same quarter last year. The higher revenues were slightly more than offset by an 18% decline in gross margin per MWh to approximately $6.20 compared to $7.60 in the same period last year, and by a 31% increase in operating expenses driven mainly by the addition of new sales and operating personnel. For the first two quarters of 2004, Strategic Energy's earnings were $18.6 million compared to earnings of $19.4 million for the same period in 2003. Year-to-date revenues were up 31% driven by 24% higher MWhs delivered to $633.0 million compared to $484.4 million in the same period of 2003. The higher revenues were slightly more than offset by a 15% decline in gross margin per MWh to approximately $6.50 compared to $7.65 in the same period last year, and by a 28% increase in operating expenses driven mainly by new sales and operating personnel. The moderate decline in quarterly earnings was driven primarily by reduced gross margin per MWh of approximately $6.20 in the quarter compared to $7.60 in the same period last year. In addition to the expected roll-off of older, higher margin contracts, the persistent environment of relatively high wholesale electricity prices and increased competition impacted average margins on new customers. Higher wholesale energy prices have reduced savings available to customers in some markets compared to prevailing utility rates creating more customer price sensitivity and reducing average contract lengths and the rate of backlog growth. Due to these factors, Strategic Energy's average gross margin for the year is expected to be at the lower end of the $6.20-$6.50 projection, and earnings per share is also expected to be at the lower end of the $0.57-$0.60 segment guidance. Strategic Energy made modest progress on building future backlog for deliveries in the quarter due primarily to the difficult current environment in competitive supply. At June 30, the combination of MWhs delivered and contracted backlog for 2004 was approximately 19.3 million MWhs, compared to 18.1 million at the end of last quarter. This figure is already within the 2004 target of 19-21 million MWhs delivered. Backlog for 2005 was approximately 12.8 million MWhs compared to 12.0 million MWhs at the end of the first quarter. Commenting on the subsidiary, Mr. Chesser said: "Strategic Energy has responded to changing customer requirements by providing a broader mix of flexible products to help customers manage their needs in a higher price environment. We continue to focus on our niche of small to mid-sized customers." Commenting further: "When reviewing the long-term opportunities for this company, we have confidence in the business due to our potential market growth and outstanding track record." Great Plains Energy Incorporated (NYSE:GXP), headquartered in Kansas City, MO, is the holding company for Kansas City Power & Light Company, a leading regulated provider of electricity in the Midwest; and Strategic Energy LLC, a competitive electricity supplier. The Company's Web site is http://www.greatplainsenergy.com/ * * * As reported in the Troubled Company Reporter's June 8, 2004 edition, Standard & Poor's Ratings Services assigned its preliminary rating of 'BBB-' to Great Plains Energy Inc.'s senior and subordinated unsecured debt securities, and 'BB+' to the trust-preferred securities filed by the energy holding company under a $648.2 million shelf registration filed with the SEC on April 15, 2004. At the same time, Standard & Poor's affirmed the company's ratings, including the 'BBB' corporate credit rating. The affirmation incorporates the expectation that a significant portion of any debt issuance under the shelf will be used for debt refinancing or repayment. The outlook is stable. HORIZON PCS: Subsidiary Completes $125 Million Sr. Debt Offering ---------------------------------------------------------------- On July 19, 2004, Horizon PCS Escrow Company, a recently formed, wholly owned, indirect subsidiary of Horizon PCS, Inc., completed an offering of $125 million aggregate principal amount of 11-3/8% senior notes due 2012. Upon confirmation and effectiveness of Horizon PCS, Inc.'s plan of reorganization under Chapter 11 of the Bankruptcy Code, Horizon PCS Escrow Company will be merged with and into Horizon PCS, Inc., and Horizon PCS, Inc., will then be an obligor under the notes. The proceeds of the offering were placed in escrow pending confirmation and effectiveness of the plan, and the satisfaction of related terms and conditions. The Company intends to apply the net proceeds principally to repay remaining outstanding senior secured indebtedness. If the plan of reorganization has not been consummated, or if Horizon PCS Escrow Company elects a special mandatory redemption, in each case on or prior to November 16, 2004, then Horizon PCS Escrow Company will redeem all of the senior notes at a price equal to 100% of the original issue price of the senior notes, plus accrued interest. The offering of the notes was made within the United States only to qualified institutional buyers and outside the United States to non-U.S. investors. The notes were not registered under the Securities Act of 1933, as amended, or applicable state securities laws and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act and applicable state laws. This announcement is neither an offer to sell nor a solicitation of an offer to buy any of these securities. About Horizon PCS Horizon PCS is a PCS Affiliate of Sprint, with the exclusive right to market Sprint wireless mobility communications network products and services to a total population of approximately 7.5 million in portions of 11 contiguous states. Its markets are located between Sprint's Chicago, New York and Knoxville markets and connect or are adjacent to 12 major Sprint markets. As a PCS Affiliate of Sprint, Horizon markets wireless mobile communications network products and services under the Sprint and Sprint PCS brand names. HOST MARRIOTT: S&P Assigns B+ Rating to Proposed $350M Sr. Notes ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B+' rating to Host Marriott L.P.'s proposed $350 million senior notes due 2012. The notes are expected to be issued to qualified institutional buyers pursuant to Rule 144A of the Securities Act of 1933. Proceeds from the notes will be used to redeem a portion of Host Marriott L.P.'s existing 7.875% senior notes due 2008. Concurrently, Standard & Poor's affirmed its ratings, including its 'B+' corporate credit rating, on Host Marriott Corp. The outlook is stable. Approximately $5.6 billion in debt (including approximately $500 million of Convertible Quarterly Income Preferred Securities) was outstanding on June 18, 2004. Bethesda, Maryland-based Host Marriott L.P. is a limited partnership, whose sole general partner is Host Marriott Corp. (jointly Host) The proposed notes will be senior obligations of Host Marriott L.P., ranking pari passu in right of payment with any of its other outstanding or future unsubordinated indebtedness, including its existing senior notes and its credit facility. The proposed notes will be guaranteed by all those subsidiaries that have also guaranteed Host Marriott L.P.'s existing senior notes and credit facility. "Although credit measures are weak for the current ratings, Host is expected to benefit from strengthening of the lodging industry and the ongoing repayment of debt," said Standard & Poor's credit analyst Sherry Cai. "A positive outlook may be considered over the intermediate term if Host meets its goal of selling noncore assets and meaningfully improve credit measures." IN-TOUCH: Springboard Corp Withdraws $750,000 Financing Commitment ------------------------------------------------------------------ Springboard Corporation advised In-Touch Survey Systems Ltd. that it will not be proceeding with the financing in the form of a non- revolving secured credit facility in the maximum principal amount of $750,000, as previously disclosed in our news release dated June 29, 2004. In-Touch Survey Systems is now looking at various alternative solutions. In-Touch is also in breach of certain covenants contained in its lending agreements with its bankers. In-Touch is working with its bankers to address these breaches. About Springboard Corporation Springboard Corporation is a private equity firm providing both capital and strategic business counsel to firms that it can add value to in circumstances which it considers to be opportunistic. About In-Touch Survey Systems Ltd. In-Touch Survey Systems Ltd. -- http://www.intouchsurvey.com-- provides customer satisfaction and market research data collection and reporting solutions. Using a suite of peerless technologies (kiosk, clipboard, on-line/web, and IVR), we offer our clients the option of pure data collection or data collection accompanied by customized analytical reporting. In-Touch excels at multi- location program logistics, managing all the critical elements of our clients' customer satisfaction and market research data collection requirements. In-Touch has been implementing these solutions for Fortune 1000 companies across North America since 1992. In-Touch is publicly traded on the TSX Venture Exchange under the symbol INT. INTERSTATE BAKERIES: SEC Begins Formal Investigation ---------------------------------------------------- Interstate Bakeries Corporation (NYSE:IBC), the nation's largest baker and distributor of fresh baked bread and sweet goods, disclosed this week that it received notice from the Securities and Exchange Commission that the SEC is conducting an informal inquiry following the Company's announcement that the Audit Committee of its Board of Directors had retained the law firm of Skadden, Arps, Slate, Meagher & Flom LLP to investigate the Company's manner for setting its workers' compensation reserves and other reserves. The notice states that the SEC has not determined that any violation of law has occurred, and advises that the notice does not reflect adversely on any person or entity or on the Company's securities. The Company says it intends to cooperate fully in the inquiry. Earlier this month, Interstate Bakeries named Ronald B. Hutchison as its new Executive Vice President and Chief Financial Officer. Mr. Hutchison reports directly to CEO James Elsesser and will work closely with Mr. Elsesser and other members of senior management to consolidate operations and improve profitability. IBC's former CFO retired in May of 2003. In June, 2004, IBC disclosed irregularities in its accounting for workers' compensation reserves. At that time, IBC said it would increase those reserves by 40% and take record a $40 million pretax charge. That charge necessitated changes to the leverage and interest coverage covenants imposed under the Company's senior secured credit facility. The Company indicated it was looking for a new lender. Interstate Bakeries Corporation is the largest baker and distributor of fresh baked bread and sweet goods in the U.S., under various national brand names including Wonder, Hostess and Home Pride, as well as regional brand names such as Butternut, Dolly Madison, Drake's and Merita. The Company, with 55 bread and cake bakeries and more than 1,000 distribution centers located in strategic markets from coast-to-coast, is headquartered in Kansas City, Missouri. INTERWAVE COMMS: Alvarion Offers $56 Million to Acquire Company --------------------------------------------------------------- Alvarion Ltd. (Nasdaq: ALVR) and interWAVE(R) Communications International, Ltd. (Nasdaq: IWAV) entered into a definitive agreement which calls for Alvarion to acquire interWAVE for $5.75 per share in an all-cash transaction valued at approximately $56 million. interWAVE is a leading provider of compact mobile GSM and CDMA network equipment and services, primarily aimed at low density markets in developing regions, as well as specialty vertical applications. Alvarion is the worldwide leader in wireless broadband solutions and is focused on leading the market to widespread adoption of standards-based products through its prominent work in the WiMAX Forum(TM). "We are excited about this transaction for several reasons," said Zvi Slonimsky, CEO of Alvarion. "First, it immediately provides an outstanding cost-effective fixed and mobile cellular solution to complement our eMGW residential voice and data solution serving regions of the world where wireline infrastructure is missing or inadequate. The addition of interWAVE expands our served market to include a rapidly growing segment of the mobile equipment market, broadens our customer base with additional top-tier operators, and leverages both our strong channel relationships and our global sales and customer support capabilities. "Second, interWAVE's technical expertise in cellular systems design and extensive experience in providing complete mobile networks will accelerate the development of our next generation portable/mobile WiMAX offering. We are well-positioned to continue leading this last-mile revolution as WiMAX moves from fixed-only solutions to include both fixed and mobile capabilities." interWAVE provides economical and distributed cellular networks that scale from a few thousand to 100,000 subscribers, enabling operators to minimize capital expenditures while accelerating revenue generation. The company's solutions are deployed in over 50 countries by more than 100 operators, mainly local and regional cellular operators. Headquartered in Mountain View, California, interWAVE's trailing 12-month revenue for the period ended March 31, 2004 (unaudited) was $39.4 million. interWAVE is a global company. Its primary activities such as research and development, operations, sales and marketing take place in the United States, providing a Silicon Valley presence, with engineering facilities in China and Ireland and additional sales and marketing facilities in other locations around the world. "We believe that Alvarion's market recognition as a leader, its financial strength and global presence will support rapid growth of compact mobile networks and enable ongoing support and the ability to handle large scale, country-wide expansions. We consider interWAVE as one of Alvarion's growth engines for the future," Mr. Slonimsky added. Erwin Leichtle, CEO of interWAVE, will join Alvarion's management team and will lead the mobile unit. Mr. Leichtle is a telecom veteran with more than 30 years experience in senior management positions, primarily at Ericsson, in various international markets and the United States. "The combined strengths of Alvarion and interWAVE will be a tremendous benefit to wireless broadband access, and will create large new revenue opportunities for Alvarion," added Mr. Leichtle. "We believe that Alvarion's global reach and strong balance sheet will accelerate the growth of our advanced GSM and CDMA 2000 1XRTT compact network products. We are excited about the opportunity to contribute to the next generation of portable/mobile WiMAX solutions through our years of experience with mobile networks and our mobility management technology." The transaction will be effected through the Amalgamation of interWAVE, and a wholly owned subsidiary of Alvarion. The transaction is subject to and contingent upon the approval of interWAVE's stockholders. The boards of directors of both companies have approved the transaction and interWAVE's board of directors has unanimously agreed to recommend that the company's stockholders vote in favor of approving the transaction. The acquisition is expected to be completed by the end of the third quarter of 2004. Based on this timing, it is expected to have minimal impact on Alvarion's Q3 earnings, excluding any acquisition-related charges, to be minimally dilutive in Q4 and Q1 of 2005, and to be accretive beginning in the second quarter of 2005. About Alvarion With more than 2 million units deployed in 130 countries, Alvarion is the worldwide leader in wireless broadband providing systems to carriers, ISPs and private network operators. Leading the WiMAX revolution, Alvarion has the most extensive deployments and proven product portfolio in the industry covering the full range of frequency bands. Alvarion's products enable the delivery of business and residential broadband access, corporate VPNs, toll quality telephony, mobile base station feeding, Hotspot coverage extension, community interconnection, and public safety communications. Alvarion works with several top OEM providers and over 200 local partners to support its diverse global customer base in solving their last-mile challenges. As a wireless broadband pioneer, Alvarion has been driving and delivering innovations for over 10 years from core technology developments to creating and promoting industry standards. Leveraging its key roles in the IEEE and HiperMAN standards committees and experience deploying OFDM-based systems, the company's prominent work in the WiMAX Forum(TM) is focused on increasing widespread adoption of standards-based products in the wireless broadband market. For more information, visit Alvarion's World Wide Web site at http://www.alvarion.com. About interWAVE interWAVE Communications International, Ltd. (Nasdaq: IWAV) is a global provider of compact network solutions and services that offer innovative, cost-effective and scalable networks allowing operators to "reach the unreached." interWAVE solutions provide economical, distributed networks intended to minimize capital expenditures while accelerating customers' revenue generation. These solutions feature a product suite for the rapid and simple deployment of end-to-end compact cellular systems. interWAVE's portable, mobile cellular networks provide vital and reliable wireless communications capabilities for customers in over 50 countries. The Company's U.S. subsidiary is headquartered at 2495 Leghorn Street, Mountain View, California, and can be contacted at http://www.iwv.com/ * * * In its Form 10-Q for the quarter ended December 31, 2003 filed with the Securities and Exchange Commission, interWAVE Communications International Ltd. also states: Summary of Liquidity "We cannot assure you that our existing cash and cash equivalents plus short-term investments will be sufficient to meet our liquidity requirements. We have had recurring net losses for the past three fiscal years. Management is executing plans with the intent of increasing revenues and margins, reducing spending and raising additional amounts of cash through the issuance of debt or equity securities, asset sales or through other means such as customer prepayments. If additional funds are raised through the sale of our assets, we may be limited in the type of business we can carry on in the future. If additional funds are raised through the issuance of preferred equity securities or debt securities, these securities could have rights, preferences and privileges senior to holders of common shares, and the terms of any debt could impose restrictions on our operations. The sale of additional equity or convertible debt securities could result in dilution to our shareholders, and we may not be able to obtain additional financing on acceptable terms, if at all. If we are unable to successfully execute such plans, we may be required to reduce the scope of our planned operations or even cease our operations. We cannot assure you that we will be successful in the execution of our plans." IPIX CORP: Armanino McKenna Replaces PwC as Independent Auditors ---------------------------------------------------------------- On June 11, 2004, the Audit Committee of the Board of Directors of IPIX Corporation dismissed PricewaterhouseCoopers LLP as its independent auditors. On June 11, 2004, the Audit Committee approved the engagement of Armanino McKenna LLP as its independent auditors to replace the firm of PricewaterhouseCoopers LLP for the Company's fiscal year ending December 31, 2004. PricewaterhouseCoopers' report on the Company's consolidated financial statements for the year ended December 31, 2003 expressed substantial doubt regarding IPIX Corporation's ability to continue as a going concern. About IPIX IPIX Corporation -- http://www.ipix.com/-- is a leader in mission-critical imaging solutions for three core markets: 360- degree panoramic photography and movies; government and commercial video security; and self service on-line and off-line advertising. IPIX's extensive intellectual property covers patents for immersive imaging, video and surveillance applications. IPIX is headquartered in Oak Ridge, Tennessee, with co-headquarters in San Ramon, California. KAISER ALUMINUM: Gets Court Nod on QAL Sale Bidding Procedures -------------------------------------------------------------- Jack A. Hockema, Kaiser Aluminum Corporation President and Chief Executive Officer, reports that the Court approved the bidding procedures for the potential sale of Kaiser's interest in the QAL alumina refinery in Australia. Approximately $525 million is set as the minimum bid. The bid deadline is August 10. The auction will be held on August 16. "Under this scenario, the Court could be in a position to rule on the sale at the next regularly scheduled hearing -- on August 23," Mr. Hockema relates in a Monthly Update to Customers, Employees, Suppliers, and Friends of Kaiser Aluminum. The monthly update is available at: http://www.mwwclients2.com/kaiser/html/body_update.html Headquartered in Houston, Texas, Kaiser Aluminum Corporation operates in all principal aspects of the aluminum industry, including mining bauxite; refining bauxite into alumina; production of primary aluminum from alumina; and manufacturing fabricated and semi-fabricated aluminum products. The Company filed for chapter 11 protection on February 12, 2002 (Bankr. Del. Case No. 02-10429). Corinne Ball, Esq., at Jones, Day, Reavis & Pogue, represent the Debtors in their restructuring efforts. On September 30, 2001, the Company listed $3,364,300,000 in assets and $3,129,400,000 in debts. (Kaiser Bankruptcy News, Issue No. 46; Bankruptcy Creditors' Service, Inc., 215/945-7000) KING PHARMACEUTICALS: S&P's Low Ratings on CreditWatch Positive --------------------------------------------------------------- Standard & Poor's Ratings Services placed its 'BB' corporate credit, 'BB' senior secured, and 'BB-' senior unsecured ratings on Bristol, Tennessee-based King Pharmaceuticals Inc. on CreditWatch positive. The placement follows the announcement that King would be acquired by unrated Mylan Laboratories for about $4 billion in Mylan stock. "The acquisition would meaningfully diversify Mylan's generic drug business, boosting its branded pharmaceuticals segment with King's specialty drug products," said Standard & Poor's credit analyst Arthur Wong. Mylan has no debt, and the combined firm should benefit from a broader product and cash flow base, suggesting moderate improvements in credit measures from those for King alone: Estimated funds from operations to total debt could increase to almost 80% from about 70%. Given a moderate debt level at the combined company, the benefits of a broader product portfolio could lead to a ratings upgrade. However, there is a possibility that ratings will be withdrawn. Mylan has not used any significant debt financing and has $800 million in cash and short-term investments as of June 30, 2004. Also, King's one public issue is convertible to common stock and will likely be repaid as a result of this merger. If Mylan utilizes its cash resources for this repayment, ratings will be withdrawn. Resolution of the CreditWatch listing will depend on the clarification of these issues. KINGDOM VENTURES: Board Dismisses Wrinkle as Public Accountants --------------------------------------------------------------- On June 3, 2004, the Board of Directors of Kingdom Ventures, Inc. unanimously approved the dismissal of Wrinkle, Gardner & Company, P.C. as its independent public accountants. On June 4, 2004, the Company notified WGC that it was terminating WGC's services. Also on June 4, 2004, the Company received notice that WGC resigned as its independent public accountants, effective May 27, 2004. On June 3, 2004, the Company engaged the firm of Kabani & Company, Inc., to serve as its independent public accountants for the fiscal year ending January 31, 2005. During the last two fiscal years ended January 31, 2004 and January 31, 2003 and through June 3, 2004, WGC's reports on the Company's financial statements were modified to include an explanatory paragraph wherein they expressed substantial doubt about the Company's ability to continue as a going concern. Kingdom Ventures is a media communications and product company helping churches and their people to grow and impact our world for Christ. The Company's primary media property is Christian Times Today, a nationally impacting monthly newspaper distributed by and to churches, leaders, and business settings across the country. Current circulation is in excess of 300,000. Iexalt.com provides a variety of chat groups and news information in an electronic format. Our Product Activities are focused on JoBasic, an Internet Charity Shopping Network (scheduled for full public release in July 2004). JoBasic provides e-commerce fundraising potential for every non-profit group in America (called "Organizations with Cause" in the JoBasic community). Kingdom Ventures also owns Mr. Roy Productions, Inc. a Northern Nevada silk screen, embroidery, and production facility that serves a local clientele and provides product support for each of the Company's other activities, including the distribution of "Yahwear," a line of Christian clothing sold in e-commerce, direct mail, and at selected Christian music festivals. KMART CORP: Objects to 142 Tax-Related Claims for $36.7 Million --------------------------------------------------------------- Reorganized Kmart Corporation ask the U.S. Bankruptcy Court to expunge 142 tax-related claims, aggregating $36,772,276: Type of Claim Claim Amount ------------- ------------ Secured Claims $2,076,780 Administrative Claims 20,062,739 Priority Claims 11,905,232 Unsecured Claims 2,727,525 The Debtors are not liable for the Tax Claims because the Claims seek payment of taxes: -- that are not yet due; -- that the Debtors have already paid; or -- for which a third party is responsible. (Kmart Bankruptcy News, Issue No. 77; Bankruptcy Creditors' Service, Inc., 215/945-7000) LB-UBS COMMERCIAL: Fitch Affirms Low Ratings on Three Classes ------------------------------------------------------------- Fitch Ratings upgrades LB-UBS Commercial Mortgage, series 2000-C3, commercial mortgage pass-through certificates: -- $71.8 million class B to 'AA+' from 'AA'; -- $48.9 million class C to 'A+' from 'A'; -- $19.5 million class D to 'A' from 'A-'; -- $13.0 million class E to 'A-' from 'BBB+'. In addition Fitch affirms these classes: -- $342.5 million class A-1 at 'AAA'; -- $641.2 million class A-2 at 'AAA'; -- $13.0 million class F at 'BBB'; -- $11.7 million class G at 'BBB-'; -- $20.9 million class H at 'BB+'; -- $16.3 million class J at 'BB'; -- $9.7 million class K at 'BB-'; -- Interest only class X at 'AAA'. The $10.4 million class L, $11.7 million class M, $3.9 million class N, and $11.9 million class P certificates are not rated by Fitch. Fitch's upgrades are the result of the transaction's stable performance and credit enhancement levels of deals with similar characteristics issued on July 27, 2004. Wachovia, as master servicer, collected year-end (YE) 2003 operating statements for 90% of the portfolio by balance. The weighted average debt service coverage ratio (DSCR) of the portfolio is 1.49 times (x) compared to 1.64x YE 2002 and 1.36x at issuance. There are currently seven loans in special servicing representing 2.10% of the transaction. The largest loan, Foshay Tower (.83%), is located in Minneapolis, Minnesota. The loan transferred to the special servicer due to a technical default when the borrower cancelled a letter of credit, which secured its obligation to perform required repairs at the property. The special servicer is working with the borrower to correct the technical default. The loan remains current and losses are not expected at this time. Fitch reviewed the performance of the Cherry Creek (11.70%), Annapolis Mall (9.36%), Westfield Portfolio (7.53%), and Sangertown Square Mall (4.76%) loans, which have investment grade credit assessments. The loans have a YE 2003 Fitch stressed DSCR of 2.23x, 1.99x, 1.74x, and 1.73x respectively and reported occupancies above 95%. The Fitch stressed DSCR for each loan is calculated using servicer provided net operating income less reserves divided by a Fitch stressed debt service payment. LEGEND INT'L: Ends Client-Auditor Relationship with Clyde Bailey ---------------------------------------------------------------- Legend International Holdings, Inc. received a letter dated May 17, 2004, from Clyde Bailey, P.C., its auditors, confirming that their client-auditor relationship ceased. The report of Clyde Bailey on the Company's financial statements for the fiscal year ended December 31, 2003 was modified to include a going concern issue. This change in accountants was not recommended or approved by Legend's Board of Directors or an audit or similar committee. On June 7, 2004 Child, Sullivan & Company, in Kaysville, Utah, was appointed as the Company's new certifying accountant. Legend International Holdings, Inc. was incorporated in the State of Delaware on January 5, 2001, under the name Sundew International, Inc., to engage in the business of selling compatible inkjet cartridges and refill kits on the Internet. Legend's current business plan calls for the creation of a national sales, distribution and service network largely through the acquisition of existing local and regional independent contract sales and distribution organizations representing manufacturers of specialty medical products. These independent sales and distribution companies contracts with specialty medical product manufacturers to provide outsourcing of the sales, marketing, distribution and customer service functions for all or certain of their product lines, thereby eliminating the manufacturers' need to develop and maintain their own sales force or rely on a number of independent local and regional distributors to achieve national coverage. LOEWEN GROUP: Alderwoods Offers to Repurchase Sr. Notes Due 2009 ---------------------------------------------------------------- Alderwoods Group, Inc. (NASDAQ:AWGI) has commenced a cash tender offer and consent solicitation for any and all of its $320,752,500 outstanding principal amount of 12-1/4% Senior Notes due 2009 (CUSIP No. 014383AC7 and ISIN No. US014383AC79). The total consideration to be paid for each $1,000 principal amount of Notes validly tendered in the offer will be based on a fixed spread of 50 basis points over the yield to maturity on the price determination date of the 1-3/4% U.S. Treasury Note due December 31, 2004, and accrued and unpaid interest up to, but not including, the date of payment for the Notes will also be paid. The price determination date will be August 5, 2004, unless the Company extends the Expiration Time, prior to August 5, 2004 or extends the Expiration Time after August 5, 2004 by more than three business days, in which case the new price determination date will be the tenth business day immediately preceding the Expiration Time as so extended but no earlier than the first business day after public announcement of such extension. In connection with the Tender Offer, Alderwoods Group is soliciting consents to certain proposed amendments to eliminate substantially all of the restrictive covenants in the indenture governing the Notes. Alderwoods Group is offering to make a consent payment (which is included in the total consideration) of $30.00 per $1,000 principal amount of Notes to holders who validly tender their Notes and deliver their consents at or prior to 5:00 p.m., New York City time, on August 4, 2004, unless extended. Holders may not tender their Notes without delivering consents or deliver consents without tendering their Notes. As of 2:00 p.m., New York City time, on July 22, 2004, the reference treasury yield was 1.64% and, based on such yield, plus the fixed spread of 50 basis points, the total consideration for the Notes, which includes the consent payment but not accrued interest, would be $1,099.06, assuming a settlement date of August 19, 2004. The Offer is scheduled to expire at midnight, New York City time, on August 18, 2004, unless extended or earlier terminated. However, no consent payments will be made in respect of Notes tendered after the Consent Payment Deadline. Tendered Notes may not be withdrawn and consents may not be revoked after 5:00 p. m., New York City time on August 4, 2004. Any extension, delay, termination or amendment of the Offer will be followed as promptly as practicable by a public announcement. The Offer is subject to the satisfaction of certain conditions, including the receipt of financing and the receipt of consents of Holders representing a majority in principal amount of the outstanding Notes. The terms of the Offer are described in the Offer to Purchase and Consent Solicitation Statement dated July 22, 2004, copies of which may be obtained from Global Bondholder Services Corporation, the information agent for the Offer, at (866) 294-2200 (US toll free) and (212) 430-3774 (collect). Alderwoods Group has engaged Banc of America Securities LLC to act as the exclusive dealer manager and solicitation agent in connection with the Offer. Questions regarding the Offer may be directed to Banc of America Securities LLC, High Yield Special Products, at (888) 292-0070 (US toll-free) and (704) 388-4813 (collect). (Loewen Bankruptcy News, Issue No. 86; Bankruptcy Creditors' Service, Inc., 215/945-7000) MAGIC LANTERN: Hires Normandeau as Senior VP Educational Relations ------------------------------------------------------------------ Magic Lantern Group, Inc. (Amex: GML), a leading North American licensor and distributor of educational content and e-learning delivery systems, appoints Leo Normandeau as the Company's Senior Vice President of Educational Relations in charge of Business Development. In a career spanning more than 30 years, Mr. Normandeau is a noted Ontario educator, honored by Queen Elizabeth II for his contribution to Canadian Education. A recipient of the Queen's Golden Jubilee Medal, Leo is also a Fellow of the Ontario Teachers' Federation and holds a Life Membership in the Ontario English Catholic Teachers' Association. As a teacher and principal, Leo was very much involved in teacher recruitment, curriculum design and teacher professional development. His leadership qualities were recognized by his peers when he was elected President of one of Canada's largest teacher associations. In that capacity he served as Canadian representative to the World Confederation of the Teaching Profession in Singapore. As the former President of Active Learning Solutions, Leo provided senior-level consulting for the "The Learning Library," a comprehensive state-of-the-art website for personal and professional continuing educational development. Magic Lantern Group President and CEO Bob Goddard stated, "Leo has a history of achievement within the educational sector, including an outstanding track record of developing key industry relationships, both at a strategic and tactical level. In addition to traditional education, Leo has been directly involved in bringing third-generation, digital technologies to market. Leo has the expertise to plan, execute and manage our new business development initiatives. We are extremely pleased to welcome Leo to Magic Lantern Group." Magic Lantern Group Senior Vice President of Educational Relations Leo Normandeau stated, "I am honored to be joining Magic Lantern Group, a leading brand name in education, during an exciting time in their corporate growth. I look forward to working closely with the team of professionals at Magic Lantern Group in identifying and executing new growth strategies for their products, which include bringing digital, third-generation content solutions to market, globally." Prior to joining Magic Lantern Group, Mr. Normandeau spent more than 15 years as Principal of Essex County Roman Catholic Separate School Board and President of the Principals' Committee of the Board, where he was involved in strategic long-term planning. While with the Board, Mr. Normandeau took a leave of absence to serve as President of the Ontario English Catholic Teachers' Association (OECTA), a 35,000-plus member organization. During his tenure at OECTA, Mr. Normandeau managed a $30 million annual budget and is credited with developing a widespread North American network of educators and educational associations. About Magic Lantern Group Magic Lantern Group, Inc. is a leading, global distributor of learning videos serving more than 10,000 schools, libraries and social agencies in North American and international markets. With 40,000 programs from 300 world-renowned producers including Disney Educational Media, Schlessinger, Annenberg/CPB and Dorling Kindersley, the Company's educational products include: Magic Lantern InSite(TM), a digital streaming video product for schools, libraries and universities and TutorBuddy(TM), an at-home e- learning product for students and teachers. Leveraging its position as one of the most highly respected brands in video educational delivery, the Company is pursuing multiple sales verticals to maximize total revenues. Magic Lantern Group operates three complementary subsidiaries: Magic Lantern Communications, a global distributor of video content to schools, universities and libraries; Magic Vision Media, an emerging provider of on-demand health, sports and business digitized content; and Sonoptic Technologies, a leading provider of online, next-generation technology solutions. For more information, visit the Company's websites: http://www.magiclanterngroup.com http://www.tutorbuddy.com,and http://www.magiclanterninsite.com. * * * As reported in the Troubled Company Reported April 23, 2004 edition, included in the Company's Form 10-K are financial statements audited by Mahoney Cohen & Company, CPA, P.C. independent auditors, as of and for the year December 31, 2003. Mahoney Cohen & Company has issued an opinion with respect to the financial statements that includes a qualification as to the company's ability to continue as a going concern. For the year ended December 31, 2003, Magic Lantern Group reported revenues of $2.9 million compared to revenues of $386,000 for the year ended December 31, 2002. All revenues were derived from the Company's education and distribution business. Significant events during the year included the launch of TutorBuddy(TM), a state-of- the-art, e-learning system for home use by students and parents. TutorBuddy has more than 1,600 learning video programs, indexed into over 12,000 virtual clips of whole video programs. Targeting the institutional market, in October, the Company launched Magic Lantern InSite(TM) as an e-learning video service. In November, Magic Lantern Group sold its media dubbing operations, Image Media, Inc., which has streamlined operations and divested Magic Lantern Group from analog duplications services, a market the Company deems as saturated and shrinking. Magic Lantern Group President and CEO Bob Goddard stated, "As broadband infrastructure to schools and homes continues to swell, Magic Lantern Group and our digital products are strategically positioned to capitalize on the tremendous, emerging demand for quality online educational content. On the heels of our successful launch of TutorBuddy and InSite in Canada, we are focused on expanding our products into the high-growth, digital streaming video market in under-served international regions and the estimated $400 million U.S. market. Intensive marketing and promotional programs, along with distribution partnerships in the U.S. and abroad, are currently underway in order to drive a strong, recurring revenue stream for the Company. We expect to report an extremely strong first quarter of 2004, with our preliminary revenues increasing by 75% compared to last year." Goddard concluded, "Magic Lantern Group is in final negotiations with investors to provide financing to cover the working capital deficit which led to the going concern qualification. In addition, we are pursuing a merger and acquisition strategy and diversifying into non-educational, next-generation content delivery." MATERIAL TECH: Former Auditors Comment on Financial Statements -------------------------------------------------------------- On June 7, 2004, Material Technologies Inc., received a copy of a letter sent by Gumbiner, Savett, Finkel, Fingleson & Rose, Inc., its Certified Public Accountants, to the Securities and Exchange Commission. The letter says the Auditing Firm disagrees with certain of the Company's statements included in the second paragraph under Item 4 of its Form 8-K filed on filed on June 3, 2004. The Auditing Firm disagreed with the Company's statements that: * Material Technologies advised the Firm that it would no longer serve as the company's independent public accountants. The Auditing Firm makes it clear that it performed no services for Material Technologies, Inc., subsequent to April 8, 2004, and did no work related to the three-month period ended March 31, 2004. * the Company's financial statements for the year ended December 31, 2003, included an explanatory paragraph indicating there was substantial doubt about Material Technologies, Inc.'s ability to continue as a going concern. "We did not audit the financial statements of Material Technologies, Inc. for its year ended December 31, 2002," the Auditing Firm tells the Commission. New Auditing Firm Hired The Company engaged Farber & Haas, LLP as the principal accountant to audit the Company's financial statements effective as of June 3, 2004. The Company, as of the effective date of Farber's engagement, did not have discussions with Farber regarding the application of accounting principles to specified transactions, the type of audit opinion to be rendered or any matters that were the subject of disagreement or a reportable event. NANOGEN INC: Will Release 2004 2nd Quarter Results on August 3 -------------------------------------------------------------- Nanogen, Inc. (Nasdaq: NGEN) will host a conference call on Tuesday, August 3, 2004, at 4:30 p.m. Eastern time (1:30 p.m. Pacific time) to discuss 2004 second quarter financial results. The financial results press release will be issued at close of market on August 3. An audio recording of management's presentation will be available via live webcast for a 90-day period on the investor relations section of Nanogen's corporate website at http://www.nanogen.com A digital recording of the call will also be available for 48 hours, beginning two hours after the completion of the conference call on August 3, and can be accessed via telephone at (877) 519-4471 for US/Canada participants, and (973) 341-3080 for international participants. The conference ID, 4974258, will be required to listen to the playback. About Nanogen Nanogen, Inc. develops and commercializes products for the molecular and point-of-care diagnostics markets. The company seeks to establish the unique, open-architecture NanoChip(R) Molecular Biology Workstation and NanoChip(R) Cartridge as the standard platform for the prediction, diagnosis and treatment of genetic and infectious diseases. Nanogen offers Analyte Specific Reagents and related products to research and clinical reference labs for the development of tests for the detection of genetic mutations associated with a variety of diseases, such as cystic fibrosis, Alzheimer's disease, and cardiovascular disease. The company's ten years of research involving nanotechnology may also have future applications in medical diagnostics, biowarfare and other industries. Nanogen's business unit, SynX Pharma, leverages proteomic and biomarker research to offer a line of point-of-care diagnostic tests. For additional information, visit Nanogen's website at http://www.nanogen.com. * * * In its Form 10-K For the fiscal year ended December 31, 2003, Nanogen Inc, reports: "We expect that our existing capital resources, combined with $33.7 million in gross proceeds from the sale of the Company's common stock in March 2004, and anticipated revenues from potential product sales, reagent rentals, leases or other types of acquisition programs for the NanoChip System, sponsored research agreements, contracts and grants will be sufficient to support our planned operations, including an estimated investment of approximately $6-8 million related to the pending acquisition of SynX and wind down costs related to our joint venture, Nanogen Recognomics, through at least the next eighteen months. This estimate of the period for which we expect our available sources of liquidity to be sufficient to meet our capital requirements is a forward-looking statement that involves risks and uncertainties, and actual results may differ materially. "Our future liquidity and capital funding requirements will depend on numerous factors including, but not limited to, commercial success of our products, or lack thereof, the extent to which our products under development are successfully developed and gain market acceptance, the timing of regulatory actions regarding our potential products, the costs and timing of expansion of sales, marketing and manufacturing activities, prosecution and enforcement of patents important to our business and any litigation related thereto, the results of clinical trials, competitive developments, and our ability to maintain existing collaborations and to enter into additional collaborative arrangements. "We have incurred negative cash flow from operations since inception and do not expect to generate positive cash flow to fund our operations for at least the next several years. We may need to raise additional capital to fund our research and development programs, to scale-up manufacturing activities and expand our sales and marketing efforts to support the commercialization of our products under development. Additional capital may not be available on terms acceptable to us, or at all. If adequate funds are not available, we may be required to curtail our operations significantly or to obtain funds through entering into collaborative agreements or other arrangements on unfavorable terms. Our failure to raise capital on acceptable terms when needed could have a material adverse effect on our business, financial condition or results of operations." NAT'L ENERGY: Agrees to Sell Equity Interests in 12 Power Plants ---------------------------------------------------------------- National Energy & Gas Transmission, Inc. (NEGT), ArcLight Capital Partners, LLC and Caithness Energy, LLC entered a definitive agreement for Denali Power, LLC, a company formed by affiliates of ArcLight and Caithness, to acquire NEGT's equity interests in 12 power plants and a natural gas pipeline for approximately $558 million, subject to certain post-closing adjustments as specified in the definitive agreement. The power plants are located throughout the country and have a combined generating capacity of more than 2,500 megawatts. They include: the Carneys Point and Logan Generating plants located in New Jersey; the Selkirk and Madison Wind Generating plants located in New York; the Scrubgrass, Northampton and Panther Creek Generating plants located in Pennsylvania; the Cedar Bay and Indiantown plants located in Florida; the Hermiston plant, located in Oregon; the MASSPOWER plant, located in Massachusetts, and the Plains End Generating plant, located in Colorado. The plants are fueled primarily by natural gas and coal and most of the electricity they generate is sold under long-term contracts. In addition to selling its interests in these facilities, NEGT is selling its ownership stake in the Iroquois Gas Transmission System, a 375-mile interstate pipeline, which provides gas transportation service to local gas distribution companies, electric utilities and electric power generators, directly or indirectly through exchanges and interconnecting pipelines in New York and Connecticut. NEGT voluntarily filed for protection under Chapter 11 of the U.S. Bankruptcy Code in July 2003. As a result, the sale of equity interests described above will be subject to bankruptcy court approval, and will include a court-sanctioned auction process in accordance with customary bidding procedures approved by the bankruptcy court. Under a court-sanctioned auction, NEGT will seek offers that are higher or otherwise better than that which has been negotiated with Denali Power. As part of its agreement, Denali Power is granted certain protections, subject to court approval, most notably a break-up fee and expense reimbursement if another bid is accepted. Denali Power also retains the right to amend its offer should NEGT receive an offer which is superior to its existing agreement with Denali Power. The transaction is expected to close in the first quarter of 2005 and is subject to regulatory and third party approvals. Lazard served as exclusive financial advisor to NEGT in connection with this transaction. ArcLight Capital Partners, LLC is one of the world's leading energy infrastructure investing firms with more than $2.5 billion under management. ArcLight invests throughout the energy industry value chain in hard assets that produce high current income and capital appreciation. Founded in 2001, ArcLight has its headquarters in Boston and an office in New York City. ArcLight has 24 investment professionals and is led by Managing Partner Daniel R. Revers and Senior Partner Robb E. Turner. With more than 200 years combined energy investment experience, ArcLight's principals have deep energy investing expertise, relationships and asset level knowledge. More information about ArcLight can be found at http://www.arclightcapital.com/ Caithness Energy, LLC, which is headquartered in New York, NY, is one of the largest privately held independent power producers in the United States. The primary focus of Caithness Energy for over 25 years has been the development, acquisition, operation and management of independent power projects which utilize traditional fossil fuels as well as geothermal, wind, hydro and solar power. Having experienced rapid growth since 1999, Caithness Energy currently has interests in 34 power projects generating in excess of 3,000 MW located in California, Colorado, Minnesota, Florida, Maine, Washington, Nevada, South Carolina, New York, Texas, and Wyoming. More information about Caithness can be found at http://www.caithnessenergy.com/ Headquartered in Bethesda, Md., NEGT received bankruptcy court approval on its reorganization plan in May 2004 and anticipates emerging from bankruptcy shortly. NORTEL NETWORKS: Files Prelim Unaudited 1st & 2nd Quarter Results ----------------------------------------------------------------- Nortel Networks Corporation (NYSE:NT)(TSX:NT) and its principal operating subsidiary, Nortel Networks Limited, provided a status update pursuant to the alternative information guidelines of the Ontario Securities Commission. These guidelines contemplate that the Company and NNL will normally provide bi-weekly updates on their affairs until such time as they are current with their filing obligations under Canadian securities laws. The Company and NNL reported that there have been no material developments in the matters reported in their status updates of June 2, 2004, June 29, 2004 and July 13, 2004, with the exception of the matters described below. "As previously announced, I continue to be focused on Nortel Networks strategic direction and the improvements and efficiencies that we will need to put in place to drive financial performance," said Bill Owens, president and chief executive officer, Nortel Networks. "I remain pleased with Nortel Networks market momentum and continue to expect our revenues in 2004 to grow faster than the market (which we expect will grow in the low to mid single digits). However, as we move through 2004 and based on the work to date on our financial results, it is clear that our business model is not achieving our targeted operating cost (SG&A and R&D) performance of below 40% of overall revenues and our targeted gross margin percent of mid 40's. In conjunction with the release of our limited preliminary unaudited results for the first and second quarters of 2004 in mid August 2004, I will provide a further update on the performance of our business and the actions that we will be taking to put into place an improved cost structure to optimize our financial performance." The Company and NNL continue to dedicate significant resources to the process to complete their financial statements as soon as practicable. As previously announced, the Company and NNL continue to work on the restatement of their financial results for each fiscal quarter in 2003 and for earlier periods including 2002 and 2001, and the preparation of their financial statements for the full year 2003 and the first and second quarters of 2004. The Company continues to expect to be in a position to announce limited preliminary unaudited results for the first and second quarters of 2004, and to provide an update on the restatement impacts, in mid August 2004. The Company continues to expect to file, in the third quarter of 2004, financial statements for the year 2003 and the first and second quarters of 2004 and related periodic reports, and follow thereafter, as soon as practicable, with any required amendments to periodic reports for prior periods. The Company's expectations as to the timing of events, including the availability of limited preliminary unaudited results for the first and second quarters of 2004 and the filing of financial statements, and the performance of the Company's business model in 2004, are subject to change and are subject to a number of limitations. Specifically, these limitations include the completion of the Company's work (including the final determination of the impacts of adjustments arising from events subsequent to year end 2003 on the Company's results of operations or financial position), the related audits and reviews of results by the Company's and NNL's independent auditors, and the completion and results of the previously announced independent review being undertaken by the Nortel Networks Audit Committee. About Nortel Networks Nortel Networks is an industry leader and innovator focused on transforming how the world communicates and exchanges information. The Company is supplying its service provider and enterprise customers with communications technology and infrastructure to enable value-added IP data, voice and multimedia services spanning Wireless Networks, Wireline Networks, Enterprise Networks, and Optical Networks. As a global company, Nortel Networks does business in more than 150 countries. More information about Nortel Networks can be found on the Web at www.nortelnetworks.com/ or http://www.nortelnetworks.com/media_center * * * As reported in the Troubled Company Reporter's June 25, 2004 edition, Standard & Poor's Ratings Services said that its long- term corporate credit rating and other long-term ratings on Nortel Networks Corp. and Nortel Networks Ltd. remain on CreditWatch with developing implications, where they were placed April 28, 2004. As previously reported Standard & Poor's lowered its 'B' long- term corporate credit rating and other long-term ratings on Nortel Networks Corp. and Nortel Networks Ltd. to 'B-'. NSTEIN TECH: Inks 2 Software Solution Contracts with Time, Inc. --------------------------------------------------------------- Nstein Technologies Inc. (TSX-V: EIN) signed two agreements with Time Inc. for software solutions and professional services that will provide a master taxonomy and data categorization of the Time Inc. editorial archive. Time Inc. is a subsidiary of Time Warner Inc. and the publisher of several well-known magazines including Time, Fortune and Sports Illustrated. "Nstein solutions will be a component of the ongoing development and organization of our master archive. Their products and services will help us deliver accurate and useful search results," said Time Inc.'s Mitchell Klaif, VP of Global Magazine and Internet Technology. "We are very proud to have been selected by Time Inc. after a thorough selection process," said Mario Girard, Chairman and CEO of Nstein. "Both agreements are significant business opportunities for Nstein to provide Time Inc. with the potential to leverage Nstein's software solutions and professional services." About Time Inc. A subsidiary of Time Warner Inc., Time Inc. is the leading magazine publisher in the world. Its more than 134 magazines reach a total audience of more than 300 million. One in two U.S. adults reads a Time Inc. magazine each month. Time Inc. has a rich heritage of journalistic excellence and integrity dating back to the founding of Time magazine in 1923. Time Warner Inc. is a leading media and entertainment company, whose businesses include interactive services, cable systems, filmed entertainment, television networks and publishing. About Nstein Technologies Inc. Nstein Technologies, (TSX-V: EIN), an innovative software development company, provides large corporations and organizations with a Global Intelligent Information Management (GIIM) platform for structured and unstructured multilingual data sources. This flexible platform assimilates, organizes, analyzes (text mining), shares and disseminates all information essential to operational and decision-making processes. Nstein's GIIM-based solutions provide decision-makers with highly pertinent information and transform reactive decision-making into a proactive and even predictive process. Nstein offers new Business Intelligence solutions that create a new level of global knowledge, accessible at any time, particularly suited to e-publishing, finance, legal, government and homeland security markets. Nstein is based in Montreal, Canada with a customer-facing presence in Boston, San Francisco, Washington D.C. and New York. For more information, visit http://www.nstein.com At March 31, 2004, Nstein Technologies' stockholders' deficit widens to $18,333,613 from a $17,513,995 deficit at December 31, 2003. OGLEBAY NORTON: Judge Indicates He'll Approve Disclosure Statement ------------------------------------------------------------------ In a hearing Tuesday, July 27, 2004, United States Bankruptcy Judge Joel B. Rosenthal of the U.S. Bankruptcy Court for the District of Delaware in Wilmington indicated that he would approve the disclosure statement of Oglebay Norton Company (Other OTC: OGLEQ) upon final review and approval of certain modifications to the document. Oglebay intends to submit the requested modifications to the Court as soon as possible. Upon the Court's review and approval of the modifications, the Company may commence the solicitation of creditor votes for approval of the plan, an important next step toward the conclusion of the chapter 11 process. Court approval of the disclosure statement affirms that the document contains adequate information for creditors to evaluate the proposed plan of reorganization. In the hearing, the judge also approved the Company's request to extend to August 21 its exclusive period to file a reorganization plan and set the date for the plan of reorganization confirmation hearing for September 29. Oglebay Norton Company, a Cleveland, Ohio-based company, provides essential minerals and aggregates to a broad range of markets, from building materials and home improvement to the environmental, energy and metallurgical industries. The Company has approximately 1,770 full-time and part-time hourly and salaried employees in 13 states. On February 23, 2004, the Company and its wholly owned subsidiaries filed voluntary petitions under chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware in Wilmington to complete the financial restructuring of its long-term debt. PEGASUS SATELLITE: Court Partly Grants Employee Retention Program ----------------------------------------------------------------- Pursuant to a Fourth Amended and Restated Credit Agreement dated as of October 22, 2003, certain senior secured lenders formed a steering committee. The Senior Secured Lenders have consented to Pegasus and its debtor-affiliates' use of cash collateral to fund their operations, provided that the lenders are afforded adequate protection. Pursuant to the final order authorizing the Debtors' use of the Cash Collateral, the Debtors may only use the Cash Collateral to satisfy their ongoing business expenses in a manner consistent with the budget, as supplemented by certain cash forecasts filed with the Cash Collateral Order. Benjamin E. Marcus, Esq., at Drummond Woodsum & MacMahon, in Portland, Maine, contends that the amounts requested by the Debtors to implement the Employee Retention Plan are not set forth in any budget submitted to the Steering Committee. Accordingly, the Steering Committee objects to the use of its cash collateral to fund the Employee Retention Plan. * * * Judge Haines grants the Debtors' request in part. Specifically, the terms and conditions of the Employee Retention Plan are approved and authorized under Sections 363(b) and 105(a) of the Bankruptcy Code subject to these modifications: (a) The employee participants in the Employee Retention Plan will consist of employees who bear the title of manager, director or vice president with responsibilities relating to the Debtors' Satellite division. As of July 1, 2004, the Covered Employees include: -- 49 managers, -- 33 directors, and -- nine vice presidents. The Debtors agree that a net increase in the amount of Covered Employees will be made in consultation with: * the Official Committee of Unsecured Creditors, * the Steering Committee, and * Wilmington Trust Company, as agent on behalf of the lenders under the Amended and Restated Term Loan Agreement, dated as of August 1, 2003; and (b) As of July 1, 2004, the Covered Employees include 17 employees of Pegasus Communications Management Corporation, a non-debtor affiliate of the Debtors. The allocation of the costs of the Employee Retention Plan with respect to the PCMC Employees is addressed in the Debtors' Motion to Continue Performing Under a Support Services Agreement between the Operating Affiliates and PCMC filed on June 2, 2004. The hearing with respect the remaining issues will be continued July 22, 2004. Headquartered in Bala Cynwyd, Pennsylvania, Pegasus Satellite Communications, Inc. -- http://www.pgtv.com/-- is a leading independent provider of direct broadcast satellite (DBS) television. The Company, along with its affiliates, filed for chapter 11 protection (Bankr. D. Me. Lead Case No. 04-20889) on June 2, 2004. Leonard M. Gulino, Esq., and Robert J. Keach, Esq., at Bernstein, Shur, Sawyer & Nelson, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $1,762,883,000 in assets and $1,878,195,000 in liabilities. (Pegasus Bankruptcy News, Issue No. 7; Bankruptcy Creditors' Service, Inc., 215/945-7000) PLAINS ALL: Adds Capobianco to Board After Plains Resources Sale ---------------------------------------------------------------- Plains All American Pipeline, L.P. (NYSE: PAA) reports that the Board of Directors of its general partner, Plains All American GP LLC, has been expanded from seven members to eight. Following completion of its acquisition of Plains Resources Inc., Vulcan Energy Corporation has designated Mr. David N. Capobianco to serve as its representative on the board. Mr. J. Taft Symonds, an existing member of the board, will continue to serve as a director, filling the vacancy created by the expansion of the board. "After several months of uncertainty, the ownership of Plains Resources' investment in PAA has finally been resolved," said Greg L. Armstrong, Chairman and Chief Executive Officer of the Partnership. "We are pleased to welcome Vulcan to the PAA family and David to our board of directors. Paul Allen's Vulcan Capital organization is one of the premier private investment firms in the nation, overseeing a multibillion-dollar portfolio across diverse industry sectors and asset classes. We believe Vulcan will be a solid long-term partner and a valuable resource in the continued execution of our business plan. In that regard, we have already witnessed their willingness to commit capital to help us grow. In April 2004, Vulcan committed $40 million of equity as part of a $100 million private placement to help fund the acquisition of the North American crude oil and pipeline operations of Link Energy LLC." Mr. Capobianco is a director of Vulcan Energy Corporation and a Managing Director of Vulcan Capital, an affiliate of Vulcan Inc., where he has been employed since April 2003. Previously, he served as a Vice President of Greenhill Capital from July 2001 to April 2003 and a Vice President of Harvest Partners from July 1995 to January 2001. Mr. Capobianco holds a BA in economics from Duke University and an MBA from Harvard Business School. Plains All American Pipeline, L.P. (PAA, BBB-/Watch Neg/--; BB+ Senior Unsecured Rating) is engaged in interstate and intrastate crude oil transportation, and crude oil gathering, marketing, terminalling and storage, as well as the marketing and storage of liquefied petroleum gas and other petroleum products, primarily in Texas, California, Oklahoma, Louisiana and the Canadian Provinces of Alberta and Saskatchewan. The Partnership's common units are traded on the New York Stock Exchange under the symbol "PAA". The Partnership is headquartered in Houston, Texas. PROXIM CORP: Board Approves Succession Plan for New CEO ------------------------------------------------------- Proxim Corp.'s Board of Directors has approved a succession plan, whereby Kevin Duffy, Chief Operating Officer at Proxim, will assume the role of Chief Executive Officer in January 2005. Effective immediately, Duffy will assume the role of President and continue to serve as Chief Operating Officer. Frank Plastina remains Chairman and Chief Executive Officer, and commencing January 2005, will continue as full-time Executive Chairman of the Board, focusing on strategic relationships, both in the industry and financial communities. "Kevin Duffy is a talented executive with more than 20 years of experience in the wireless industry," said Mr. Plastina. "Proxim's Board has full confidence in his ability to lead Proxim and take advantage of our opportunities. I look forward to continuing my work with Proxim, including closing several strategic partnership opportunities that Proxim has before it." "I am appreciative of the opportunity to lead Proxim, and am thankful for the vote of confidence from Proxim's Board," said Kevin Duffy, President and Chief Operating Officer at Proxim. "Proxim has a unique opportunity to address the Wi-Fi and WiMAX markets, and I am looking forward to the expanded challenge." In Duffy's current role, he is responsible for all of Proxim's current product lines and future product development, as well as Proxim's global sales and marketing, operations and customer service organizations. Prior to joining Proxim, Mr. Duffy was vice president of Home Networking at Siemens Information & Communications Mobile, where he was responsible for channel development, strategic partnerships and customer acquisition, as well as for creating and managing global business processes. Prior to Siemens, Mr. Duffy held positions with Northern Telecom and Tracor Aerospace. Duffy began his career as a non-commissioned officer serving as Avionics Nav/Com technician in the United States Air Force. About Proxim Proxim Corporation is a global leader in wireless networking equipment for Wi-Fi and broadband wireless networks. The company is providing its enterprise and service provider customers with wireless solutions for the mobile enterprise, security and surveillance, last mile access, voice and data backhaul, public hot spots, and metropolitan area networks. More information about Proxim can be found on the Web at http://www.proxim.com/ * * * As reported in the Troubled Company Reporter's March 24, 2004 edition, Proxim Corporation's financial statements for the year ended December 31, 2003, issued on March 11, 2004 and filed on March 15, 2004 with the Securities and Exchange Commission in the Company's Annual Report on Form 10-K, contained a going concern qualification from its auditors. PROXIM CORP: Inks Debt Conversion & Bridge Loan Pacts ----------------------------------------------------- Proxim Corporation (Nasdaq: PROX), a global leader in wireless networking equipment for Wi-Fi and broadband wireless, has signed an agreement with its strategic investors, Warburg Pincus and Broadview Capital Partners, to restructure their equity and debt holdings in Proxim. The arrangement is intended to simplify Proxim's capital structure and provides additional funding so that the company can continue to aggressively pursue high-growth WiMAX and WiFi wireless networking market opportunities. Under terms of the agreement signed on July 27, 2004, Warburg Pincus and Broadview Capital Partners have agreed to convert the $49 million in aggregate principal amount of the secured convertible promissory notes, which includes accrued but unpaid interest, into shares of Series B convertible preferred stock, in accordance with the existing terms and conditions of the secured convertible promissory notes. The exchange relieves the Company from the need to retire the notes at their September 30th maturity. As part of this agreement, Proxim will also receive a $10 million bridge loan from Warburg Pincus and Broadview capital partners in exchange for a new convertible bridge note. The convertible bridge loan will bear interest at 15 percent per annum from the date of issuance and become due on June 30, 2005. Pursuant to the terms of the agreement, the convertible bridge loan will convert to common stock prior to June 30, 2005, at the same price and upon the same terms and conditions offered to other investors, if Proxim closes a financing transaction with gross proceeds of $20 million or more through a sale of its common stock and/or warrants to purchase common stock. Subject to shareholder approval, Warburg Pincus and Broadview Capital Partners also have agreed to surrender all of their Series A convertible preferred stock, all of their Series B convertible preferred stock and all of their warrants to purchase our common stock in exchange for an aggregate of 164,000,000 shares of common stock and 400,000 shares of our newly issued Series C preferred stock. The Series C preferred stock to be issued to Warburg Pincus and Broadview Capital Partners will be a mandatorily redeemable and nonvoting security and will not be convertible into common stock. As a result of the common stock issuance in the exchange, Warburg Pincus will own approximately 49.45 percent of Proxim and Broadview Capital Partners will own approximately 7.6 percent of Proxim. At issuance, the Series C preferred stock will have liquidation preference of $100 per share, or $40 million in aggregate. The liquidation preference on the Series C preferred stock will accrete at 8.75 percent per annum, compounded quarterly, and will be required to be repaid by Proxim at the fully accreted value of approximately $80 million after the Series C preferred stock has been outstanding for eight years. In addition, the Series C preferred stock shall be automatically redeemed at its fully accreted value in the event of an earlier change in control of Proxim. The terms of the agreement also provide that Proxim may redeem the Series C preferred stock at any time within the first three years after the date of issuance at its then accreted liquidation preference if the market price of Proxim's common stock on the Nasdaq National Market remains above $2.25 for a period of 45 consecutive trading days. After the third anniversary of the date of issuance, Proxim may redeem the Series C preferred stock at any time at its then accreted liquidation preference, if the market price of Proxim's common stock on the Nasdaq National Market remains above $2.00 for a period of 45 consecutive trading days. At their fully accreted value, the outstanding shares of Series A convertible preferred stock and Series B convertible preferred stock held by Warburg Pincus and Broadview Capital Partners would have converted into a total of approximately 163 million shares of common stock. Additionally, the warrants held by Warburg Pincus and Broadview Capital Partners could be converted into approximately 42 million common shares of common stock at specified exercise prices. By agreeing to surrender their Series A convertible preferred stock, Series B convertible preferred stock and common stock warrants in exchange for common stock and nonconvertible Series C preferred stock, Warburg Pincus and Broadview Capital Partners have agreed to waive their rights to further accretion and the liquidation preference on their present holdings. Because Proxim's Series C preferred stock offers a significantly lower liquidation preference than our outstanding Series A convertible preferred stock and Series B convertible preferred stock, Warburg Pincus and Broadview Capital Partners have essentially agreed to waive their right to approximately $148 million in liquidation preference in exchange for a greater percentage of ownership today and more closely align their interests with the other common holders. "These are very important developments that will better position the company for further financing, simplify Proxim's capital structure, and enable the company to pursue its opportunities and take advantage of our WiFi and WiMAX market opportunities," said Frank Plastina, Chairman and Chief Executive Officer at Proxim. "We are pleased with the continued strong support from Warburg Pincus and Broadview Capital Partners, who both recognize Proxim's unique wireless portfolio and market potential." About Proxim Proxim Corporation is a global leader in wireless networking equipment for Wi-Fi and broadband wireless networks. The company is providing its enterprise and service provider customers with wireless solutions for the mobile enterprise, security and surveillance, last mile access, voice and data backhaul, public hot spots, and metropolitan area networks. More information about Proxim can be found on the Web at http://www.proxim.com/ * * * As reported in the Troubled Company Reporter's March 24, 2004 edition, Proxim Corporation's financial statements for the year ended December 31, 2003, issued on March 11, 2004 and filed on March 15, 2004 with the Securities and Exchange Commission in the Company's Annual Report on Form 10-K, contained a going concern qualification from its auditors. RELIANCE GROUP: Bank Committee Wants Court to Nix Six Big Claims ---------------------------------------------------------------- On behalf of the Official Unsecured Bank Committee, Andrew P. DeNatale, Esq., at White & Case, in New York City, asks Judge Gonzalez to disallow the claims filed by: (1) Hartford Fire Insurance Hartford Fire Insurance filed Claim No. 373, allegedly based on an insurance coverage claim, for an undisclosed amount. Mr. DeNatale states that Hartford's Claim was filed on April 12, 2002, almost four months after the Bar Date. In addition, Hartford failed to state an amount or attach documentation supporting its Claim. The Claim was filed as contingent and unliquidated, and does not specify Reliance Financial Services Corporation's obligation. (2) South Carolina Department of Health The South Carolina Department of Health and Environmental Control filed Claim No. 308 for $80,059,623. The Health Department asserts the Claim "for the Cleanup and/or Environmental Impairment Restoration Obligations as set forth in Reliance Insurance Company Policy No. NTL1632418 and Reliance Insurance Company Policy No. NTL1632417." Mr. DeNatale tells the Court that the Claim asserts amounts due under an insurance policy issued by Reliance Insurance Company of Illinois, a former subsidiary that was merged into RIC. However, the Claim should be disallowed because neither the proof of claim nor the supporting documentation specifies an obligation on the part of RFSC to the Health Department. (3) Colonial Electric Supply Claim Colonial Electric Supply Chain filed Claim No. 33 for $24,772 for "Insurance Proceeds for Creditor Loss." However, no explanation or supporting documents were provided to explain the Claim against RFSC. In addition, although the Colonial Electric Claim was filed under RFSC's case number, the named debtor listed on the Claim is "Reliance Holding Group d/b/a Reliance National Insurance Co." Therefore, the Claim was incorrectly filed. (4) Gerald G. Cassidy Gerald G. Cassidy filed Claim No. 252 in RFSC's case for an unliquidated amount, based on the money Mr. Cassidy purportedly loaned. However, the named debtor in the Cassidy Claim is RGH. The Cassidy Claim appears to be a bondholder claim that was incorrectly filed against RFSC. (5) David D. Woodward David D. Woodward filed Claim No. 249 for $2,628,602 based on supplemental retirement benefits. According to Mr. DeNatale, the Claim appears to request benefits under the Reliance Group Holdings, Inc., Retirement Benefit Equalization Plan. However, RFSC does not have any obligations under the Retirement Plan and neither the proof of claim nor the supporting documentation adequately proves that RFSC is liable for the claimed benefits. (6) Washington Group International The Washington Group International, Inc., formerly known as Morrison Knudson Corporation, filed Claim No. 405 for $25,000,000 based on alleged insurance indemnity. Mr. DeNatale tells Judge Gonzalez that the Claim No. 405 was filed on May 16, 2003, almost 17 months after the Bar Date. In addition, Claim No. 405 appears to be based on insurance coverage provided by ECS/Reliance Insurance Company, not RFSC. The Claim also does not provide proof as to any obligation by RFSC to WGI. Headquartered in New York, New York, Reliance Group Holdings, Inc. -- http://www.rgh.com/-- is a holding company that owns 100% of Reliance Financial Services Corporation. Reliance Financial, in turn, owns 100% of Reliance Reliance Insurance Company. The Company filed for chapter 11 protection on June 12, 2001 (Bankr. S.D.N.Y. Case No. 01-13403). When the Company filed for protection from their creditors, they listed $12,598,054,000 in assets and $12,877,472,000 in debts. (Reliance Bankruptcy News, Issue No. 57; Bankruptcy Creditors' Service, Inc., 215/945-7000) RENAL CARE: Reports Q2 Results & Acquires Nevada Dialysis Program ----------------------------------------------------------------- Renal Care Group, Inc. (NYSE:RCI) reported results for the second quarter and six months ended June 30, 2004. The Company has entered into a definitive agreement to acquire a dialysis program serving more than 525 patients in Las Vegas, Nevada. For the three months ended June 30, 2004, Renal Care Group's net revenues increased 38.0% to $340.9 million compared with net revenues of $247.1 million for the same period in 2003. Net income for the second quarter of 2004 rose 13.1% to $29.2 million compared with net income of $25.8 million in the second quarter of 2003. Diluted net income per share for the second quarter of 2004 increased 23.5% to $0.42 compared with diluted net income per share of $0.34 in the same quarter of 2003. Gary A. Brukardt, the Company's president and chief executive officer, commented, "We are pleased to report solid second quarter results, and we continue to execute our business plan. The integration of National Nephrology Associates is nearing completion. We remain focused on making selective acquisitions using our customary disciplined approach, and we have been actively developing de novo facilities to grow the Company. The credit for another successful quarter goes to our 8,500 associates working in concert with our dedicated affiliated nephrologists on the front lines to deliver optimal care to our patients. We hope that recently introduced legislation will bolster the industry's efforts to address some of the most pressing issues facing those who suffer from ESRD." For the six months ended June 30, 2004, Renal Care Group's net revenues increased 26.5% to $618.9 million compared with net revenues of $489.2 million for the same period in 2003. Net income for the first half of 2004 rose 24.6% to $59.3 million, compared with net income of $47.6 million in the same period of 2003. Diluted net income per share for the six months ended June 30, 2004, increased 31.3% to $0.84 compared with diluted net income per share of $0.64 for the same period in 2003. GAAP results for the six months ended June 30, 2004, give effect to resolutions of contractual issues with payors that were unusual in amount and timing, which favorably impacted earnings per share by $0.04 per diluted share. Excluding the effect of these resolutions, non-GAAP net income for the six months ended June 30, 2004, was $56.4 million, or $0.80 per diluted share. GAAP results for the six months ended June 30, 2003, give effect to a non- recurring, after-tax charge of $0.05 per diluted share, related to a retirement package for the Company's former chairman and founder. Excluding the effect of the retirement package, non-GAAP net income for the six months ended June 30, 2003, was $50.9 million, or $0.68 per diluted share. Renal Care Group has decided to present the non-GAAP information to give investors a means of comparing the Company's normalized operational performance for the first half of 2004 with its operational performance in the same period in 2003, before the impact of the resolutions of the payor contract issues and the one-time charge related to the retirement package. A reconciliation between the non-GAAP results and the Company's GAAP results accompanies this press release. David M. Dill, Renal Care Group's executive vice president and chief financial officer, commented, "This quarter is the first to include the operations of NNA in our combined results. We are pleased with the contribution that the transaction has made, and we remain confident in our future outlook." Commenting on the Nevada dialysis program acquisition, Mr. Brukardt said, "Las Vegas is a new market for us, and Nevada represents our 32nd state. We believe it will offer excellent opportunities for growth and development leveraging our existing regional infrastructure. We are proud to affiliate with Renal Dialysis of Las Vegas, which will serve as medical director for the facilities." The Nevada dialysis program provides care to more than 525 patients at three outpatient dialysis facilities, as well as providing acute dialysis services to seven hospitals. The agreement is subject to customary closing conditions, and the Company expects the transaction to be completed within the next several weeks. The Company did not disclose terms of the transaction. Renal Care Group, Inc. is a specialized dialysis services company that provides care to patients with kidney disease. The Company currently treats over 28,700 patients at more than 395 owned outpatient dialysis facilities in addition to providing acute dialysis services at more than 200 hospitals. Over 8,500 associates provide services across the Company's 31-state network. More information about Renal Care Group, Inc. may be found at http://www.renalcaregroup.com/ * * * As reported in the Troubled Company Reporter's April 6, 2004 edition, Standard & Poor's Ratings Services assigned its 'BB-' corporate credit and 'B' subordinated debt ratings to the Nashville, Tennessee-based dialysis provider Renal Care Group Inc., following the company's $345 million acquisition of National Nephrology Associates Inc., another Nashville-based dialysis provider. At the same time, Standard & Poor's withdrew its corporate credit rating on National Nephrology and raised its rating on National Nephrology's existing $160 million 9% subordinated notes due in 2011 to 'B' from 'B-'. Renal Care is expected to initiate an exchange offer that will subsequently change the obligor name on the notes from National Nephrology to Renal Care. National Nephrology's ratings have also been removed from CreditWatch, where they were placed Feb. 2, 2004, when Renal Care announced it would acquire the firm. The rating outlook is positive, reflecting that Standard & Poor's could raise Renal Care's ratings within a couple of years if the company strengthens its financial profile to build additional insulation against competitive risks. Standard & Poor's will also monitor how aggressively Renal Care pursues new investments and share repurchases, actions that could create operating pressures and strain financial resources. RF MICRO: To Redeem $100 Mil. Outstanding 3.75% Convertible Bonds ----------------------------------------------------------------- RF Micro Devices, Inc. (NASDAQ: RFMD), a leading provider of proprietary radio frequency integrated circuits (RFICs) for wireless communications applications, has called for redemption on August 15, 2004 all of its outstanding 3.75% Convertible Subordinated Notes due August 15, 2005. The aggregate principal amount outstanding of the Notes is $100,000,000. The Notes will be redeemed at a redemption price of 100.0% of the principal amount of the Notes, plus accrued and unpaid interest to, but excluding, the redemption date. As an alternative to redemption, prior to close of business on August 13, 2004, holders may convert their Notes into shares of RF Micro Devices common stock at a price of $45.09 per share, or 22.18 shares of RF Micro Devices common stock per $1,000 principal amount of the Notes. Cash will be paid in lieu of fractional shares. On July 27, 2004, the closing price of RF Micro Devices common stock on The Nasdaq National Market was $5.92 per share. Accordingly, the Company expects all of the Notes to be surrendered for redemption. A Notice of Redemption is being mailed by Wachovia Bank, National Association, the Trustee and Paying Agent for the Notes, to all registered holders of the Notes. Copies of the Notice of Redemption and additional information relating to the procedure for redemption may be obtained from Wachovia by calling 1-800-665- 9343. RF Micro Devices, Inc., an ISO 9001- and ISO 14001-certified manufacturer, designs, develops, manufactures and markets proprietary radio frequency integrated circuits (RFICs) for wireless communications products and applications. The Company is a leading supplier of power amplifiers, one of the most critical radio frequency (RF) components in cellular phones. The Company is also the leading manufacturer of GaAs HBT, which offers distinct advantages over other technologies for the manufacture of current- and next-generation power amplifiers. The Company's products are included primarily in cellular phones, base stations, wireless local area networks (WLANs), cable television modems and global positioning systems (GPS). The Company derives revenue from the sale of standard and custom-designed products. The Company offers a broad array of products including amplifiers, mixers, modulators/demodulators and single-chip transmitters, Bluetooth(R) products and receivers and transceivers that represent a substantial majority of the RFICs required in wireless subscriber equipment. The Company's goal is to be the premier supplier of low-cost, high-performance integrated circuits and solutions for applications that enable wireless connectivity. RF Micro Devices, Inc., is traded on the Nasdaq National Market under the symbol RFMD. For more information about RFMD, please visit http://www.rfmd.com/ RF Micro Devices, Inc., an ISO 9001- and ISO 14001-certified manufacturer, designs, develops, manufactures and markets proprietary RFICs primarily for wireless communications products and applications such as cellular and PCS phones, base stations, WLANs and cable television modems. The Company offers a broad array of products - including amplifiers, mixers, modulators/demodulators, and single-chip receivers, transmitters and transceivers - representing a substantial majority of the RFICs required in wireless subscriber equipment. The Company's goal is to be the premier supplier of low-cost, high-performance integrated circuits and solutions for applications that enable wireless connectivity. RF Micro Devices, Inc. is traded on the Nasdaq National Market under the symbol RFMD. For more information about RFMD, please visit http://www.rfmd.com/ * * * As reported in the Troubled Company Reporter's May 10, 2004 edition, Standard & Poor's Ratings Services affirmed its 'B+' corporate credit rating and other ratings on Greensboro, North Carolina-based RF Micro Devices Inc. (RFMD), and revised the ratings outlook to stable from negative. "The action recognized improving business conditions and a growing business base, resulting in improved profitability and stronger debt-protection measures. The ratings continue to reflect the company's relatively concentrated revenue base, high debt levels, and rapid technology and marketplace evolution, as well as its good position in its niche market and strong customer relationships," said Standard & Poor's credit analyst Bruce Hyman. SECURED DIVERSIFIED: Names Kabani as New Independent Accountants ---------------------------------------------------------------- On June 2, 2004, the Board of Directors of Secured Diversified Investment, Ltd., dismissed Cacciamatta Accountancy Corporation as the Company's independent accountants. At the same time, the Board appointed the firm of Kabani & Company, Inc., to serve as independent public accountants of the Company for the fiscal year ending December 31, 2004. CAC's report on the Company's consolidated financial statements for the fiscal years ended December 31, 2003 and 2002 were modified to include an explanatory paragraph expressing substantial doubt about the Company's ability to continue as a going concern. SONIC ENVIRONMENTAL: Signs First Commercial Clean-up Contract ------------------------------------------------------------- Sonic Environmental Solutions Inc. (SNV.TSX Venture) has signed its first commercial contract for on-site clean-up and treatment of approximately 3000 tons of Polychlorinated Biphenyls contaminated soil and other materials. The contract was signed on Friday July the 23rd with Juker Holdings Ltd., which owns the property where the contaminated material is isolated. The property is located in the Vancouver Lower Mainland of British Columbia where Sonic will deploy its new on-site remediation facility and commence the clean-up of this property later this year. Mr. Sumel stated "This is a very significant milestone for Sonic. Securing this contract is validation of our Polychlorinated Biphenyls soil remediation process and of our fundamental strategy to develop commercial Sonoprocesses based on our Platform Technology. This is the first major site remediation contract for Sonic and will coincide with the commissioning of Plant Two, our full-scale remediation facility, which is on track to be deployed on this site later this year. Polychlorinated Biphenyls contaminated soil from the Juker site was used and successfully remediated to below 2 parts per million during our recent demonstrations for process approval with the Ministry of Land, Water and Air Protection. In order to ensure expeditious completion of this site we will sub-contract certain material handling and related work". Sonic's proprietary Polychlorinated Biphenyls soil remediation process is a cost-effective alternative to incineration and offers many additional advantages. Sonic's Polychlorinated Biphenyls destruction process is conducted on-site and eliminates the risk of transporting hazardous materials to a fixed facility. The process is non-thermal and avoids the potential of creating hazardous gaseous bi-products such as chloro-dioxins and furans. Sonic's solution is scalable, creating a global deployment opportunity. Mr. Pete Shields of Juker Holdings commented, "We have been watching Sonic's progress for some time and we take great pride in using Sonic's environmentally friendly, on-site solution to clean up our property. Juker could have remediated the site earlier than this but we did not like the solution available to us. Previously our only option was to transport the entire contaminated product off site to be incinerated. We chose to isolate the contaminated material and keep it on-site until a better solution became available and I am pleased that that day has now arrived". The Company is now ready to market its proprietary Polychlorinated Biphenyls soil remediation process and further discussions with new clients and end users, and is preparing to bid on additional sites. For information on how Sonic's Polychlorinated Biphenyls soil remediation process or its Platform Technology can help, email Sonic at info@sesi.ca Sonic Environmental Solutions, Inc., is based in Vancouver, Canada and trades publicly on the TSX Venture Exchange (SNV). Sonic has achieved significant milestones in commercializing its Platform Technology. Sonic owns a patented Platform Technology (sonic generator) that creates sonic energy on an industrial scale. This Platform Technology will be applied in proprietary high value applications -- Sonoprocesses. Sonic has completed an extensive process development and testing program and created a proprietary Sonoprocess to apply our Platform Technology to the remediation of soils contaminated with Polychlorinated Biphenyl. The Company holds patents for low frequency sonic energy generator technology and proprietary processes to remediate Polychlorinated Biphenyls contaminated soils. As of March 31, 2004, Sonic Environmental's stockholders' deficit widened to CDN$2,138,228, compared to a CDN$1,717,111 deficit at December 31, 2003. TAHERA DIAMOND: Equity Deficit Narrows to CDN$1.3 Mil at June 30 ---------------------------------------------------------------- Tahera Diamond Corporation reports these developments as part that of its second quarter report: -- Receipt of federal approval of the Jericho Diamond Project -- Signed exploration and development agreement with De Beers on highly prospective property (Polar Project) adjacent to the Jericho Claims -- Completed name change to Tahera Diamond Corporation to accurately reflect the Company's business -- Appointment of Daniel Johnson as Executive Vice President, Operations -- Appointment of Andrew Adams to the Board of Directors and Chairman of the Audit Committee Development Tahera Diamond Corporation is focused on developing its wholly owned Jericho Diamond Project as Nunavut's first diamond mine. Federal approval of the project was received in June 2004, marking the successful completion of the environmental assessment process. The Company is now working toward finalizing the required authorizations for the project, including the water license and land leases. Tahera anticipates completing these requirements during 2004, allowing sufficient time to meet the Company's goal of commencing project construction in early 2005. Tahera has received strong interest from several parties with regard to a diamond marketing arrangement for the Jericho Diamond Project, and the Company is continuing to advance both the marketing and project financing initiatives during the third quarter. Exploration Tahera will continue to be an aggressive diamond explorer during the Jericho mine development phase. The exploration programs will focus on delineating additional diamond reserves in close proximity to the proposed Jericho diamond mine, and on advancing the Company's other prospective diamond exploration properties. During the spring 2004 exploration program, a series of ground geophysical surveys to define potential kimberlite targets and refine existing kimberlite targets at both the Jericho Claims and the Hood River Property were conducted. Nineteen ground magnetic survey grids were completed during the program. A number of targets that were identified on the Jericho Claims will be drilled during the current summer program. Targets developed at the Hood River Property will be prepared for drilling during the upcoming winter program. Tahera mobilized the summer 2004 exploration program in mid-July. The $2.5 million program will run to September 2004, and includes drill testing priority kimberlite targets on the Jericho Claims, the Polar Project, and the Rockinghorse Property (Anuri Project). A regional program designed to identify new areas of interest for detailed diamond exploration work will also be conducted. Numerous targets on the Jericho Claims have been prioritized based on geological, geophysical, topographic, and geochemical data. The Jericho Claims exploration program will focus in the Bird Lake area located approximately nine kilometres south of the Jericho kimberlite. Further delineation of the significantly diamondiferous Bird Lake dyke structure will be completed, and new exploration targets in the area will be tested. Approximately ten exploration targets are scheduled for drill testing during the summer program. Tahera entered into an agreement with De Beers in June 2004 for exploration and potential development of a highly prospective property situated adjacent to Tahera's Jericho Claims. An airborne geophysical program, ground magnetic and gravity surveys, and sampling will be completed over selected areas to further define kimberlite targets. Approximately ten targets will be drill tested during the summer. Evaluation of the diamondiferous Muskox pipe, located approximately 14 kilometres west of the Jericho site, will also be conducted in preparation for further sampling of the kimberlite during the upcoming winter program. Numerous targets have been prioritized on the Rockinghorse Property (Anuri kimberlite) based on geological, geophysical, topographic and geochemical factors. An airborne geophysical survey, and ground magnetic and gravity surveys will be utilized to refine and further prioritize these exploration targets. A number of the targets will be drill tested during the current summer program, and additional technical analysis of the Anuri kimberlite data will be completed. Tahera has acquired additional landholdings within the Slave Craton as a result of a regional exploration campaign conducted in 2003/04, and the Company has identified several areas of interest outside of its current landholdings where further exploration work is planned. 2004 Second Quarter Results At June 30, 2004, Tahera's cash balance was CDN$13,418,000. The Company recorded a loss of CDN$738,000 (CDN$0.002 per share) for the quarter ended June 30, 2004, which compares with a loss of CDN$645,000 for the quarter ended June 30, 2003 (CDN$0.001 per share). Operating expenses increased moderately to CDN$771,000 for the quarter ended June 30, 2004 compared to CDN$631,000 for the quarter ended June 30, 2003. At June 30, 2004, stockholders' deficit narrowed to CDN$1,319,000 from a $43,340,000 deficit at December 31, 2003. About the Company Tahera is a mineral exploration and development company in the development stage and is engaged primarily in the exploration for and development of diamond deposits. The recoverability of the Company's exploration and development projects costs is dependent on the confirmation of economically recoverable reserves, the ability of the Company to obtain financing to complete its development plans and the success of future operations, or alternatively upon the disposal of the interests on an advantageous basis. TELTRONICS INC: Ernst & Young Resigns as Independent Accountants ---------------------------------------------------------------- On June 2, 2004, Ernst & Young LLP resigned as Teltronics Inc.'s independent certified public accountants. In connection with its audit for the year ended December 31, 2003, dated March 15, 2004, E&Y included an explanatory paragraph citing matters that raised substantial doubt about the Company's ability to continue as a going concern. Search for New Accountants Underway Teltronics has commenced the process of retaining new independent certified public accountants. As of June 4, 2004, the process was not yet completed. About Teltronics Inc. Teltronics, Inc. is dedicated to excellence in the design, development, and assembly of electronics equipment and software to enhance the performance of telecommunications networks. The Company manufactures telephone switching systems and software for small-to-large size businesses, government, and 911 public safety communications centers. Teltronics provides remote maintenance hardware and software solutions to help large organizations and regional telephone companies effectively monitor and maintain their telecommunications systems. The Company also serves as an electronic contract-manufacturing partner to customers in the U.S. and overseas. Further information regarding Teltronics can be found at their web site, http://www.teltronics.com/ At March 31, 2004, Teltronics Inc.'s balance sheet shows a shareholders' deficit of $6,264,638 compared to a deficit of $6,124,389 at December 31, 2003. TEMBEC: Signs Working Protocol and Pact with Ktunaxa Nation ----------------------------------------------------------- Tembec, represented by Frank Dottori, President and CEO, and the Ktunaxa Nation, represented by Kathryn Teneese, Administrator, recently signed a Working Protocol and Consultation and Accommodation Agreement at the Delta St. Eugene Mission Resort. Tembec BC Division's Chief Forester, Troy Hromadnik, notes "the Working Protocol is intended to promote a positive and sustainable working relationship between the members of the Ktunaxa Nation and Tembec. Through mutual recognition and respect, the Working Protocol shall serve as a framework to enhance existing and future relationships." The Consultation and Accommodation Agreement governs Tembec's activities within the Ktunaxa traditional territory, defines a process for consultation between the two parties, and identifies potential means to accommodate Ktunaxa interests. Highlights of this agreement include: -- Development of a consultation process at various levels; -- Establishment of a Joint Management Advisory Committee (JMAC); -- Capacity and resource requirements; -- Information-sharing protocols; -- Revenue-sharing opportunities; and, -- Development of employment, training, contracting and business strategies. Kathryn Teneese notes, "the signing of this agreement is a huge accomplishment for the Ktunaxa Nation in that Tembec recognizes and respects the Ktunaxa's historic and ongoing use and occupancy of lands and resources within Ktunaxa traditional territory." She commends Tembec for setting the stage for the Ktunaxa to develop new relationships in economic development and resource management. Established in the early 1970s, the Ktunaxa Kinbasket Tribal Council's mission is to promote the political goals and developmental needs of the Ktunaxa Nation and Kinbasket people. The programs and services of the Council and its affiliates are available to the Council's member Bands and their citizens living on- or off-reserve, as well as to other status and non-status persons living within the Ktunaxa traditional territory. Additional information on the Ktunaxa Kinbasket Tribal Council is available at http://www.kktc.bc.ca Tembec (S&P, BB Long-Term Corp. Credit, Negative) is a leading integrated forest products company well established in North America and France, with sales of approximately $4 billion and some 11,000 employees. Tembec's common shares are listed on the Toronto Stock Exchange under the symbol TBC. Additional information on Tembec is available on its Web site at http://www.tembec.com/ TENECO AUTOMOTIVE: Fitch Rates New Senior Subordinated Debt B- -------------------------------------------------------------- Fitch Ratings has assigned a 'B-' rating to the new senior subordinated notes Tenneco Automotive Inc. is issuing to refinance the existing senior subordinated notes. Tenneco's senior secured bank debt and senior secured debt are 'B+' and 'B', respectively. The Rating Outlook is Stable. Tenneco announced on July 26 a tender offer for its outstanding 11-5/8% senior subordinated notes due 2009. Tenneco plans to refinance the $500 million of higher coupon notes with the issuance of a new senior subordinated notes in the like amount with a meaningfully lower coupon rate and 2014 maturity date. Fitch views the refinancing transaction as mildly positive as the refinancing will allow for an extended debt maturity profile and improved interest coverage metrics for debt holders going forward. However, the premiums for the tender offer and the fees associated with the transaction will require some cash usage, leading to a slight increase in net debt capitalization, pro-forma for the transaction. At June 30, 2004, Tenneco had $1.419 billion of debt on its balance sheet with another $148 million of funding through its accounts receivable funding facility. Liquidity was provided by $166 million in cash plus $220 million in revolver and $125 million in L/C facility availability. These debt and liquidity levels compare favorably to year-end 2003 and comparable year ago levels. Reduction in working capital and stable operating performance have contributed to the stable balance sheet performance. For six months ended June 30, 2004, Tenneco's free cash flow, defined as operating cash flow minus capital expenditures, was a positive $5 million versus a negative $26 million last year. Some of the positive drivers this year were better profitability, good working capital performance, and favorable timing of balance sheet items. Typically, the second half of the year is a stronger cash flow period, so overall for the year Fitch expects that Tenneco should be able to generate a modest level of free cash flow for debt reduction. Operationally, Tenneco has shown above average performance for the year to date with growth in sales and profitability for the first six months 2004 despite a relatively flat build environment in North America and in Europe and continued adverse cost conditions. Adjusted for foreign currency translation and pass-through sales, Tenneco's first half 2004 sales increased 7% to $1.681 billion while consolidated EBIT gained a strong 26% to $131 million. Rebounding performance in the European OE operations, both in sales and in profitability plus stabilization in North American aftermarkets were the key drivers in the improved operating performance. Rationalization/cost efficiency programs were used to offset the continued pricing pressures from OE customers while a large steel contract, which runs through 2005 has helped Tenneco manage through the cost volatility in the steel market. Looking forward to the balance of the year and beyond, key risks to extending the operational momentum loom in the way of production volume uncertainty with domestic OEMs, continued raw material cost volatility which run past the 2005 contract period, and reversal of the nascent gains in European operations. Tenneco Automotive Inc., headquartered in Lake Forest, Illinois, is a leading global producer of ride control and emissions/exhaust components, modules and systems for both the OEM and the aftermarket. About 75% of its revenues come from the OEM market and 25% is derived from the aftermarket. Geographically, 50% of revenue is from North America, 38% in Europe, 12% from rest of the world. TENNECO AUTOMATIVE: Will Not Proceed with $500M Private Placement ----------------------------------------------------------------- Tenneco Automotive (NYSE: TEN) will not proceed with its proposed private placement offering of $500 million in senior subordinated notes as announced on July 26, 2004, due to unfavorable pricing conditions. As a result, Tenneco Automotive is also withdrawing its tender offer and consent solicitation for its 11-5/8% Senior Subordinated Notes. "The deal was not as attractive as we had anticipated due to rising interest rates in the bond market," said Mark P. Frissora, chairman and CEO, Tenneco Automotive. "While the offering was one opportunity for reducing our annual interest expense, we didn't have to complete the transaction. We are in a favorable position of being able to wait for better market conditions." The company will continue to evaluate opportunities to reduce the interest expense on its 11-5/8% Senior Subordinated Notes, which mature in October 2009. Tenneco Automotive (S&P, B+ Corporate Credit Rating, B- Senior Subordinated Notes) is a $3.8 billion manufacturing company with headquarters in Lake Forest, Illinois and approximately 19,200 employees worldwide. Tenneco Automotive is one of the world's largest designers, manufacturers and marketers of emission control and ride control products and systems for the automotive original equipment market and the aftermarket. Tenneco Automotive markets its products principally under the Monroe(R), Walker(R), Gillet(R) and Clevite(R)Elastomer brand names. Among its products are Sensa- Trac(R) and Monroe Reflex(R) shocks and struts, Rancho(R) shock absorbers, Walker(R) Quiet-Flow(R) mufflers, Dynomax(R) performance exhaust products, and Clevite(R)Elastomer noise, vibration and harshness control components. THERMADYNE HOLDINGS: 2nd Quarter Conference Call Set for Aug. 9 --------------------------------------------------------------- Thermadyne Holdings Corporation (OTC:THMD) will report financial results for the second quarter of 2004 on Monday, August 9, 2004. Thermadyne management will host a teleconference to discuss the Company's second quarter results also on Monday, August 9, 2004 at 4:30PM EDT. Interested parties may join the live conference call by using one of these dial-in numbers: * US & Canada (877) 313-3171 * International (706) 634-7085 Participants are asked to dial in ten minutes before the conference begins. For those unable to join the live conference call, a recording of the call will be available from Monday, August 9, 2004 at 5:30 p.m. EDT to Monday, August 16, 2004 at 11:30 p.m. EDT by dialing (800) 642-1687 or (706) 645-9291. Thermadyne, headquartered in St. Louis, Missouri, is a leading global marketer of cutting and welding products and accessories under a variety of brand names including Victor(R), Tweco/Arcair(R), Thermal Dynamics(R), Thermal Arc(R), Stoody(R), GenSet(R), and Cigweld(R). For more information about Thermadyne, its products and services or to obtain information regarding the August 9 conference call, visit the Company's web site at http://www.thermadyne.com/ TOWNHOUSE INC: Case Summary & 2 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: Townhouse Incorporated 6839 La Tijera Boulevard Los Angeles, California 90045 Bankruptcy Case No.: 04-26141 Chapter 11 Petition Date: July 26, 2004 Court: Central District of California (Los Angeles) Judge: Samuel L. Bufford Debtor's Counsel: Michael D. Anderson, Esq. Maseda & Anderson LLP 140 S. Lake Avenue, Ste. 328 Pasadena, CA 91101 Tel: 626-449-8131 Estimated Assets: $1 Million to $10 Million Estimated Debts: $500,000 to $1 Million Debtor's 2 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ One United Bank Bank Loan $585,000 f/k/a Founders National Bank c/o Wanda Smith 3683 Crenshaw Blvd. Los Angeles, CA 90016 Howard Bell Premises liability $40,140 UAL CORP: ACA Wants $3 Million Monthly Payment Paid in Full ----------------------------------------------------------- Michael A. Rosenthal, Esq., at Gibson, Dunn & Crutcher, in Dallas, Texas, relates that on July 25, 2003, UAL Corp. Debtors, Atlantic Coast Airlines and Atlantic Coast Airlines Holdings, Inc., entered a stipulation addressing Cost Per Departure rates to be paid by UAL Corp. and its debtor-affiliates to ACA. Also, the Debtors were to make a $3,000,000 monthly payment to ACA until the fate of the Agreements between the parties was decided. Ultimately, the Debtors rejected the Agreements. Mr. Rosenthal points out that the parties reached a Transition Agreement to minimize the disruption to their operations. The Transition Agreement provided that all provisions of the Stipulation continue in full force and effect. While the Transition Agreement modifies the Cost Per Departure Fee, it does not modify the Monthly Payment. According to Mr. Rosenthal, the Debtors assert that only a prorated portion of the Monthly Payment is owed to ACA. As a result, the Debtors have paid only a fraction of the amount owed. ACA brought the breach to the attention of Jeffrey W. Gettleman, Esq., at Kirkland & Ellis, by letter on June 10, 2004. On June 21, 2004, Mr. Gettleman responded that the parties agreed to prorate the Monthly Payment and no further amounts would be forthcoming. By this motion, ACA asks Judge Wedoff to compel the Debtors to comply with the Court's prior orders and the Transition Agreement and make the full Monthly Payment. 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. 54; Bankruptcy Creditors' Service, Inc., 215/945-7000) US AIRWAYS: Reports $34 Million Profit in Strongest 2nd Quarter --------------------------------------------------------------- US Airways Group, Inc. (Nasdaq: UAIR) reported net income of $34 million for the second quarter 2004, which is a $21 million improvement over the second quarter of 2003. The $34 million pre-tax income for the second quarter 2004 compares to pre-tax income of $26 million for the same quarter in 2003. However, the second quarter of 2003 included some significant unusual items, primarily a $214 million reimbursement from the Transportation Security Administration under the 2003 Emergency Wartime Supplemental Appropriations Act. "While we reported a small profit, we should have done significantly better in the second quarter, which is traditionally our best. Absent an immediate and dramatic reduction in costs, this nominal profit is insufficient, and we will likely be faced with additional second half losses," said Bruce R. Lakefield, US Airways president and chief executive officer. "These results reaffirm what we have told our labor leaders -- that we must change course now. I am pleased that we are at various stages of 'at the negotiating table' with most of our unions, but I remain concerned that some labor leaders believe these are typical negotiations that can drag out and lead to a series of insufficient compromises." The company's results for the quarter were favorably impacted by several factors, including fuel hedging, the sale of four aircraft which had previously been leased to a third party, the impact of the "Medicare Prescription Drug, Improvement and Modernization Act of 2003" on expenses related to post-retirement benefit obligations, and a favorable tax audit settlement. Operating revenue for the second quarter improved to $1.96 billion from $1.78 billion for the second quarter of 2003, which is a 10.1 percent increase year-over-year. This increase was largely related to a 24.4 percent increase in capacity at the Express carriers. System passenger revenue per available seat mile (PRASM) for the second quarter 2004 was 11.34 cents, up 3.8 percent compared to the second quarter of 2003. Domestically, system PRASM grew 4.0 percent. System statistics encompass mainline, MidAtlantic Airways, wholly owned airline subsidiaries of US Airways Group, Inc. as well as capacity purchases from third parties operating regional jets as US Airways Express. For US Airways mainline operations only, the PRASM of 10.16 cents was up 2.8 percent. System available seat miles (ASMs) were up 6.2 percent, while mainline ASMs increased 4.0 percent during the second quarter. Revenue passenger miles (RPMs) increased 11.8 percent for the full US Airways system, while mainline RPMs increased 8.7 percent. The second quarter system load factor of 77.4 percent was up 3.9 percentage points year-over-year, and was the highest for any quarter in the company's history. The mainline passenger load factor was up 3.5 percentage points to 78.9 percent, which also was the highest quarterly mainline load factor in company history. For the quarter, US Airways Group Inc.'s system carried 14.9 million passengers, an increase of 7.8 percent, while mainline operations carried 11.1 million passengers, a 2.0 percent increase compared to the same period of 2003. The second quarter 2004 yield for mainline operations of 12.87 cents was down 1.8 percent from the same period in 2003, while system yield was down 1.3 percent to 14.66 cents. "Low cost carriers now price over 70 percent of our domestic revenue. We have taken a number of aggressive steps to meet the new low-fare realities of the marketplace, including the introduction of permanent and simple GoFares in May. These lower fares in Philadelphia and Washington are doing exceptionally well in terms of bookings, driving strong load factor improvements," said B. Ben Baldanza, US Airways senior vice president of marketing and planning. "While GoFares are bringing in additional passengers, lower fares translate to lower revenue, and yields remain under intense pressure. Our existing cost structure will not allow for sustained profitability, given the competitive environment now dominated by low fares." The mainline cost per available seat mile (CASM), excluding fuel and unusual items, of 9.40 cents for the quarter, was a 12.6 percent improvement over the same period in 2003. This year-over- year performance is favorably impacted by non-cash stock compensation expense for stock granted to US Airways' organized labor groups upon emergence from bankruptcy, which declined by $84 million. Absent the stock charges in both years, mainline CASM excluding fuel and unusual items would have declined 7.0 percent. The cost of aviation fuel per gallon, including taxes, for the second quarter 2004 was 106.87 cents (101.39 cents excluding taxes), up 25.9 percent from the same period in 2003. Fuel hedging benefits, which partially mitigated the dramatic increase in fuel price, improved results by $19 million, or 7.1 cents per gallon. US Airways' fuel position is 32.5 percent hedged for the second half of 2004 at an equivalent crude value of less than $26 per barrel and 5 percent hedged for 2005 at a crude value of $30 per barrel. US Airways Group ended the quarter with total restricted and unrestricted cash, cash equivalents and short-term investments of approximately $1.73 billion, including $975 million in unrestricted cash, cash equivalents and short-term investments. US Airways began the quarter with an unrestricted cash balance of $978 million, so the company's available cash balance remained steady during the second quarter. The company has reached agreements with its primary sources of regional jet financing to continue financing aircraft deliveries through Sept. 30, 2004. The agreements require the company to achieve its Transformation Plan in order to continue to take delivery of new regional jets. "Despite posting a slight profit this quarter, our year-to-date loss of $143 million is unsustainable and the competitive environment continues to intensify. We remain under pressure to cut our costs considerably if we hope to maintain relationships with key financial stakeholders and remain viable in 2005," said David M. Davis, US Airways executive vice president of finance and chief financial officer. USG CORP: Posts Record $1.1 Billion Net Sales in Second Quarter --------------------------------------------------------------- USG Corporation (NYSE: USG), a leading building products company, reported second quarter net sales of $1.1 billion, a record for any quarter in USG's history, and net earnings of $80 million. Net sales increased $231 million and net earnings more than doubled compared with the second quarter of last year. "Our financial performance demonstrates that USG has positioned its businesses well to capitalize on the strength of the new housing and residential remodeling markets," said USG Corporation Chairman, CEO and President William C. Foote. "Product shipments were at an all-time high in the second quarter and market selling prices for gypsum wallboard have risen throughout the year. Our strong sales and solid profit performance were somewhat hindered by continuing cost pressures, including higher raw material, energy and employee benefit costs, which were partially offset by increased manufacturing efficiencies and other cost reductions." Commenting on his outlook for the business, Mr. Foote said, "Overall, our outlook for the remainder of the year is favorable. We expect the residential market to remain strong, though the exceptional levels of activity seen in the first half may moderate. This should allow our shipments of SHEETROCK(R) Brand gypsum wallboard to continue at a relatively high level. While we expect rising costs to remain a challenge for the remainder of the year, we remain committed to our goal of profitable growth." Net sales for the first six months of 2004 were $2.2 billion versus net sales of $1.8 billion for the same period in 2003. USG reported net earnings of $137 million for the first six months of this year compared with net earnings of $37 million for the same period a year ago. Net earnings for the first half of 2003 included a noncash, after-tax charge of $16 million related to the adoption of SFAS No. 143, "Accounting for Asset Retirement Obligations." Net earnings before the cumulative effect of this accounting change for the first half of last year were $53 million. Core Business Results North American Gypsum USG's North American gypsum business recorded net sales of $678 million and operating profit of $102 million in the second quarter. Second quarter net sales increased by $112 million while operating profit more than doubled compared with the same period a year ago. United States Gypsum Company recorded second quarter 2004 net sales of $617 million and operating profit of $87 million, increases of $105 million and $51 million, respectively, compared with the second quarter of 2003. U.S. Gypsum's strong performance during the quarter was mainly attributable to improved pricing and record shipments of the company's SHEETROCK Brand gypsum wallboard. In the second quarter of 2004, U.S. Gypsum's shipments of SHEETROCK Brand gypsum wallboard were a record for any quarter in USG's history. Wallboard shipments totaled 2.8 billion square feet, 8 percent higher than shipments in the second quarter last year. U.S. Gypsum's nationwide average realized price of wallboard was $118.47 per thousand square feet during the second quarter compared with $100.47 in the second quarter of last year. U.S. Gypsum also continued to grow sales of its complementary products. It achieved record second quarter shipments of SHEETROCK Brand joint compounds, DUROCK(R) Brand Cement Board products and FIBEROCK(R) Brand Gypsum Fiber Panels. The gypsum division of Canada-based CGC Inc. reported second quarter 2004 net sales of $68 million and operating profit of $9 million. Sales increased by $6 million, and operating profit improved $2 million versus the prior year. Most of the improvement in results was due to higher shipments of SHEETROCK Brand gypsum wallboard, partially offset by slightly lower wallboard and joint compound selling prices. Worldwide Ceilings USG's worldwide ceilings business reported second quarter net sales of $190 million, an increase of $36 million compared with the second quarter of 2003. Operating profit increased to $26 million, an improvement of $17 million over the same period a year ago. USG's domestic ceilings business, USG Interiors, reported second quarter 2004 sales and operating profit of $135 million and $19 million, respectively. Net sales increased $21 million and operating profit improved by $12 million. Factors behind the improvement in sales and operating profit include a surge in sales of ceiling grid, higher selling prices for ceiling tile and grid, and the implementation of new sales and distribution policies. Steel costs have risen due to a global steel shortage and are expected to continue to rise during the second half of 2004 but at a lesser rate than the first half of the year. Concerns over this shortage and the related increases in steel costs caused the surge in demand for ceiling grid during the first half of 2004. USG International reported a profit of $4 million, an increase of $3 million over last year's second quarter. These results improved largely due to increased demand for USG's ceiling grid in Europe. Operating profit for the ceilings division of CGC Inc. was $3 million in the quarter, versus $1 million in the same period a year ago. Building Products Distribution L&W Supply, USG's building products distribution business, reported second quarter 2004 net sales of $454 million and operating profit of $31 million. Sales and operating profit increased $129 million and $15 million, respectively, over the second quarter of 2003. The higher sales and profit reflect record second quarter shipments and improved pricing of most product lines. L&W's wallboard shipments were up 12 percent versus the second quarter of 2003. Other Consolidated Information Second quarter 2004 selling and administrative expenses of $79 million declined by $2 million versus the second quarter of 2003. Reductions in these expenses primarily reflect lower expenses related to the bankruptcy court-approved key employee retention plan, the favorable impact of a fourth quarter 2003 salaried workforce reduction program, and other cost reduction initiatives. These favorable factors were offset in part by higher employee benefit costs. Selling and administrative expenses as a percent of net sales were 7 percent, compared with 9 percent in last year's second quarter. Interest expense of $1 million was incurred in the second quarter of 2004, versus $2 million in the same period a year ago. Under AICPA Statement of Position 90-7, "Financial Reporting by Entities in Reorganization Under the Bankruptcy Code," virtually all of USG's outstanding debt is classified as liabilities subject to compromise, and interest expense on this debt has not been accrued or recorded since USG's bankruptcy filing. Contractual interest expense not accrued or recorded on pre-petition debt totaled $18 million in the second quarter of 2004 and $35 million during the first half of the year. From the date of USG's bankruptcy filing through June 30, 2004, contractual interest expense not accrued or recorded on pre-petition debt totaled $221 million. USG incurred Chapter 11 reorganization expenses of $4 million in the second quarter of 2004. This consisted of $6 million in legal and financial advisory fees, partially offset by $2 million in bankruptcy-related interest income. Under SOP 90-7, interest income on USG's bankruptcy-related cash is offset against Chapter 11 reorganization expenses. As of June 30, 2004, USG had $973 million of cash, cash equivalents, restricted cash and marketable securities on a consolidated basis, compared with $925 million as of March 31, 2004, and $947 as of December 31, 2003. Capital expenditures in the second quarter of 2004 were $27 million compared with $19 million in the corresponding 2003 period. For the first six months of 2004, capital expenditures were $47 million versus $36 million in the first six months of 2003. Chapter 11 Reorganization USG and its principal domestic subsidiaries filed voluntary petitions for reorganization under Chapter 11 of the United States Bankruptcy Code on June 25, 2001. This action was taken to resolve asbestos claims in a fair and equitable manner, protect the long- term value of the businesses and maintain their market leadership positions. On May 17, 2004, the Third Circuit Court of Appeals removed U.S. District Court Judge Alfred M. Wolin from presiding over three asbestos-related Chapter 11 cases, including USG's cases, based on motions brought by USG, the Unsecured Creditors Committee in USG's case, and several other creditors in the other two cases. USG's Chapter 11 cases have not yet been reassigned to a new district court judge. In the second quarter of 2004, Judge Judith K. Fitzgerald, the bankruptcy judge presiding over USG's Chapter 11 cases, entered an order directing the parties to enter into non-binding mediation relating to USG's asbestos personal injury liability and the potential terms of a plan of reorganization. It is expected that mediation will begin in the third quarter of 2004. Headquartered in Chicago, Illinois, USG Corporation -- http://www.usg.com/-- through its subsidiaries, is a leading manufacturer and distributor of building materials producing a wide range of products for use in new residential, new nonresidential and repair and remodel construction, as well as products used in certain industrial processes. The Company filed for chapter 11 protection on June 25, 2001 (Bankr. Del. Case No. 01-02094). David G. Heiman, Esq., and Paul E. Harner, Esq., at Jones, Day, Reavis & Pogue represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $3,252,000,000 in assets and $2,739,000,000 in debts. UGS PLM: Inks $600,000 Pact with Fereng on Teamcenter(R) Use ------------------------------------------------------------ Fereng, the engineering company of group FERBER -- a leading textile machinery manufacturer based in Italy -- has signed an agreement valued at euro 500,000 (US$600,000) to implement Teamcenter(R) and NX products of UGS, a leading global provider of product lifecycle management (PLM) software and services, as its corporate standards for PLM and product development. Fereng will deploy Teamcenter, the world's most widely used PLM portfolio, to integrate and manage product information generated internally and by its customers. The company will use NX, UGS' world-class computer-aided design, manufacturing and engineering analysis (CAD/CAM/CAE) software, for the development of its textile machinery products. An additional requirement of Fereng's is the need to address certification and documentation issues. Avoiding data losses and other management inefficiencies that might cause customer dissatisfaction is of vital importance to the company. Fereng determined that UGS' products comprised the most effective solutions for helping to address these requirements. "Of all of the PLM providers we reviewed, UGS was the only one that provided a truly integrated PLM suite of solutions," said Agostino Ripamonti, project manager at Fereng. "The company's strategic approach to PLM and exceptional service were each critical factors in our final decision to work with them as our PLM vendor of choice. We will use Teamcenter and NX to further enhance our technological infrastructure." "We are very pleased that Fereng has placed its confidence in UGS to help enhance its product lifecycle process and address its important certification and documentation requirements," said Jim Duncan, executive vice president of Europe, Middle East and Africa for UGS. "UGS considers our customer relationships of utmost importance, and we look forward to a long and productive association with Fereng and the FERBER group." The first phase of the PLM implementation will be completed at Fereng, with a long-term goal to extend UGS solutions to the entire FERBER group, including the sales and production areas. About Fereng Fereng was founded in late 2003 as a result of FERBER's decision to split its two main operations (engineering and sales) into two independent companies with their own organization. Fereng can be considered as the expression of the corporate know-how acquired by FERBER throughout the years. Besides the "historical" headquarters in Missaglia, near Lecco, a new branch office was opened a few months ago in Santa Margherita di Pula (Cagliari), inside the Science and Technology Center POLARIS. The two sites are linked by means of advanced connectivity systems and provided with "twin" software to work in Lombardy or Sardinia indifferently. Fereng employs about 15 people. About FERBER In 2003, FERBER, a worldwide leader in the textile machinery industry, celebrated 20 years in business. FERBER operates through their own network of agents and affiliated partners, such as loom manufacturers, who supply FERBER products as a complement to their plants. The company manufactures auxiliary equipment for the textile industry, including winding and lap machines, control and finishing plants, etc. Currently, 60% of FERBER products are sold in Italy, the rest worldwide. At the end of last year, FERBER signed an agreement with a major European loom manufacturer, which resulted in a radical reorganization of the entire group: the two main operations (engineering and sales) were split into two independent companies with their own organization, creating Fereng and Fercom. About UGS UGS is a leading global provider of product lifecycle management (PLM) software and services with more than 3 million licensed seats and 42,000 clients worldwide. Headquartered in Plano, Texas, the company promotes openness and standardization and works collaboratively with its clients in creating enterprise solutions enabling them to transform their process of innovation and thus begin to capture the value of PLM. For more information on UGS products and services, visit http://www.ugs.com. * * * As previously reported in the Trouble Company reporter, May 3, 2004 issue, Standard & Poor's Ratings Services assigned its 'B+' corporate credit rating to Plano, Texas-based UGS PLM Solutions Inc., and a 'B-' subordinated debt rating to the company's $550 million senior subordinated notes due 2012. At the same time, Standard & Poor's assigned its 'B+' bank loan rating and a recovery rating of '3' to UGS PLM Solutions Inc.'s $625 million senior secured credit facility, reflecting expectations for meaningful (50%-80%) recovery of principal in a default or bankruptcy scenario. The secured credit facility consists of a $125 million revolving credit facility due 2010 and $500 million term loan facility due 2011. The outlook is stable. VANGUARD HEALTH: Commences Solicitation for $300M Senior Notes -------------------------------------------------------------- Vanguard Health Systems, Inc. announced that, in connection with its recently announced definitive agreement with The Blackstone Group, a private equity firm, pursuant to which Blackstone will make a major investment in the Company, the Company has commenced a cash tender offer and consent solicitation for any and all of its $300 million aggregate principal amount of 9-3/4% Senior Subordinated Notes due 2011 (CUSIP No. 922036AB4). The purchase price to be paid for each $1,000 principal amount of Notes validly tendered in the offer will be based on a fixed spread of 50 basis points over the yield on the pricing date of the 7% U.S. Treasury Note due July 15, 2006, plus accrued and unpaid interest up to, but not including, the date of payment for the Notes, minus the consent payment. The price determination date will be August 10, 2004, unless extended or modified. The Company expects the payment date to be promptly after the expiration date. In connection with the offer, the Company is soliciting consents to certain proposed amendments to eliminate substantially all of the restrictive covenants in the indenture governing the Notes. The Company is offering to make a consent payment of $20.00 per $1,000 principal amount of Notes to holders who validly tender their Notes and deliver their consents prior to 5:00 p.m., New York City time, on August 9, 2004, unless extended. Holders may not tender their Notes without delivering consents or deliver consents without tendering their Notes. The offer is scheduled to expire at 11:59 p.m., New York City time, on August 23, 2004, unless extended or earlier terminated. However, no consent payments will be made in respect of Notes tendered after the Consent Date. Tendered Notes may not be withdrawn and consents may not be revoked after 5:00 p.m., New York City time, on August 9, 2004, unless extended, except in limited circumstances. The offer is subject to the satisfaction of certain conditions including satisfaction of conditions relating to the Blackstone investment and the receipt of consents of holders representing a majority in principal amount of the outstanding Notes. The terms of the offer are described in the Offer to Purchase and Consent Solicitation Statement dated July 27, 2004, copies of which may be obtained from Global Bondholder Services Corporation, the information agent for the offer, at (866) 804-2200 (US toll free) and (212) 430-3774 (collect). The Company has engaged Citigroup Global Markets Inc. and Banc of America Securities, LLC, to act as the dealer managers and solicitation agents in connection with the offer and consent solicitation. Questions regarding the offer may be directed to Citigroup at (800) 558-3745 (US toll-free) and (212) 723-6106 (collect) or Banc of America at (888) 292-0070 (US toll-free) and (704) 388-4813 (collect). About Vanguard Health Systems Vanguard Health Systems, Inc. owns and operates 16 acute care hospitals and complementary facilities and services in Chicago, Illinois; Phoenix, Arizona; Orange County, California; and San Antonio, Texas. The Company's strategy is to develop locally branded, comprehensive healthcare delivery networks in urban markets. Vanguard will pursue acquisitions where there are opportunities to partner with leading delivery systems in new urban markets. Upon acquiring a facility or network of facilities, Vanguard implements strategic and operational improvement initiatives, including expanding services, strengthening relationships with physicians and managed care organizations, recruiting new physicians and upgrading information systems and other capital equipment. These strategies improve quality and network coverage in a cost effective and accessible manner for the communities we serve. * * * As reported in yesterday's edition of the Troubled Company Reporter, Standard & Poor's Ratings Services placed its ratings on Vanguard Health Systems Inc., including the company's 'B+' corporate credit rating, on CreditWatch with negative implications. "The CreditWatch listing follows the company's announcement ... that Blackstone Group has entered into a definitive agreement to acquire a majority interest in Vanguard in a transaction valued at about $1.75 billion," said Standard & Poor's credit analyst David Peknay. Vanguard's current majority owner is Morgan Stanley Capital Partners. This transaction, if completed, is expected to add to the company's financial leverage. As of March 31, 2004, Vanguard's total debt outstanding was $526 million. W.R. GRACE: Wants Court Nod to Expand Nelson Mullins' Services -------------------------------------------------------------- W.R. Grace and its debtor-affiliates were previously authorized to employ Nelson Mullins Riley & Scarborough, LLP, as Special Counsel to represent, defend and advise the Debtors as to environmental litigation-related matters. The Debtors now propose to employ Nelson Mullins in other areas as well. One area in which the Debtors seek Nelson Mullins' expertise relates to real estate transactions. The expanded representation may also involve financial, tax, corporate and environmental issues. Compensation The members and counsel presently primarily expected to work on these matters, and their hourly rates, are: Bernard F. Hawkins, Jr. $280 Newman Jackson Smith 275 William Bobo, Jr. 275 Joseph M. Melchers 250 Rose-Marie T. Carlisle 250 Jeffrey Plowman 315 James Holmes, Jr. 250 George B. Cauthen 300 Betsy Johnson Burn 190 Anne Price, paralegal 95 Laurie Jennings, paralegal 115 These hourly rates are subject to periodic adjustment to reflect economic and other conditions. Other attorneys and paralegals from Nelson Mullins may, from time to time, also serve the Debtors in connection with Nelson Mullins' employed services. Disinterestedness George B. Cauthen, a partner of Nelson Mullins, says that two former Grace employees joined the firm in March 2001: partner David Cleary was formerly Senior Environmental Counsel for Grace from 1990 to 2001; and Karen Brown, a Nelson Mullins' litigation consultant, was with Grace for 23 years, and was employed in information gathering on a large number of environmental sites. Both Mr. Cleary and Ms. Brown resigned from the firm in 2003, and are no longer affiliated with Nelson Mullins. Mr. Cauthen informs the Court that Nelson Mullins is not "a prepetition creditor per se." Since the Petition Date, the firm has forwarded a bill for services to the Debtors, a portion of which has included amounts owed for services rendered prior to the Petition Date, but unbilled as of that date. The Debtors owe Nelson Mullins $17,869 for services rendered prepetition. Mr. Cauthen asserts that none of these things affects the firm's status as a disinterested professional. (W.R. Grace Bankruptcy News, Issue No. 67; Bankruptcy Creditors' Service, Inc., 215/945- 7000) WESTERN FOREST: Tricap Acquires 4.5M Shares Pursuant to CCAA Plan ----------------------------------------------------------------- Tricap Management Limited acquired 4,563,228 common shares of Western Forest Products Inc. (TSX:WEF), the reorganized company of Doman Industries Limited, on behalf of Tricap Restructuring Fund, a co-investment fund comprised of financial institutions, institutional investors and private client accounts. Pursuant to the terms of the Fund, Tricap has control and direction over these common shares, which are beneficially owned by the investors in the Fund. These common shares constitute 17.8% of the issued and outstanding common shares of Western Forest Products. In addition to these common shares the Fund acquired US$53.5 million principal amount of secured bonds issued by Western Forest Products. The Fund's common shares and secured bonds in Western Forest Products were issued to it pursuant to the Plan of Compromise and Arrangement in respect of Doman Industries Limited and certain of its subsidiaries under the Companies' Creditors Arrangement Act. The Fund received a portion of its common shares on account of its position as a creditor of Doman and received the balance of its common shares and bonds by subscribing for units of Western Forest Products in connection with the Plan. Under the Plan, Western Forest Products distributed a total of approximately 25.6 million common shares and US$221 million principal amount of secured bonds to former creditors of Doman and approximately 2.9 million Class C warrants to former holders of Doman shares. Tricap holds its common shares of Western Forest Products for investment purposes. Tricap will continue to review its investment alternatives and may acquire additional common shares or may sell the shares it now holds in the open market or in privately negotiated transactions to one or more persons. The Tricap Restructuring Fund was established by Brascan Corporation to provide a source of patient, long-term capital and strategic assistance to companies experiencing financial or operational difficulty. With dedicated capital exceeding $415 million and strong industry and financial management expertise, the Tricap Restructuring Fund is well positioned to assist these companies in reaching their full potential. About Western Forest Following implementation of the Plan, Western Forest becomes an integrated Canadian forest products company and the second largest coastal woodland operator in British Columbia. Principal activities conducted by Western Forest and its post-Plan implementation subsidiaries include timber harvesting, reforestation, sawmilling logs into lumber and wood chips, value- added remanufacturing and producing NBSK pulp. All of Western Forest's operations, employees and corporate facilities are located in the coastal region of British Columbia and its products are sold in 30 countries worldwide. WILSONS LEATHER: To Release 2nd Quarter Results on Aug. 17 ---------------------------------------------------------- Wilsons The Leather Experts Inc. (Nasdaq:WLSN) is scheduled to release its second quarter 2004 results after market close on Tuesday, August 17. A conference call to discuss the Company's second quarter results will be held at 4:30 p.m. ET that same afternoon. While the question-and-answer session of the call will be limited to institutional analysts and investors, retail brokers and individual investors are invited to attend via a live webcast at http://www.fulldisclosure.com/or by visiting any of the investor sites in CCBN's Individual Investor Network. Institutional investors can access the call via CCBN's password-protected event management site StreetEvents at http://www.streetevents.com/ To listen to the webcast, your computer must have RealPlayer or Windows Media Player installed. If you do not have Internet access and would like to listen to an audio replay, dial 1-877-519-4471 in the United States or 1-973- 341-3080 internationally. The replay PIN is 5019684. The audio replay will be available beginning approximately one hour after the call ends on August 17, 2004, through midnight ET on August 24, 2004. About Wilsons Leather Wilsons Leather is the leading specialty retailer of leather outerwear, accessories and apparel in the United States. As of May 29, 2004, Wilsons Leather operated 457 stores located in 45 states and the District of Columbia, including 332 mall stores, 108 outlet stores and 17 airport stores. The Company regularly supplements its permanent mall stores with seasonal stores during its peak selling season from October through January. * * * In its Form 10-Q for the quarterly period ended May 1, 2004, Wilsons the Leather Experts Inc. reports: "The Company currently does not have the funds to pay the outstanding principal amount of the 11-1/4% Senior Notes when they are due on August 15, 2004. The senior credit facility prohibits the Company from incurring any indebtedness which refunds, renews, extends or refinances the 11-1/4% Senior Notes on terms more burdensome than the current terms of such notes, and the rate of interest with respect to any replacement notes cannot exceed the sum of the rate of interest on United States treasury obligations of like tenor at the time of such refunding, renewal, extension or refinancing, plus 7.0% per annum. The Company anticipates that it will not be able to refund, renew, extend or refinance the 11-1/4% Senior Notes with indebtedness that would comply with such limitations. However, if the Company completes a sale of its capital stock by August 15, 2004, on terms that are acceptable to the lenders under the senior credit facility, such lenders have agreed that the Company may use the proceeds from such sale to pay the 11-1/4% Senior Notes. The lenders have agreed that the terms of the Equity Financing if consummated, would be acceptable for this purpose. If the Company is unable to close the Equity Financing for any reason, it will need to find an alternative source of permitted financing for the repayment of the 11-1/4% Senior Notes before it will be permitted to borrow under the senior credit facility. The Company anticipates that it will need to access the revolving portion of the senior credit facility by the middle of July 2004." WINMAX TRADING GROUP: Goldstein Replaces Stark Winter as Auditors ----------------------------------------------------------------- On January 13, 2004, Winmax Trading Group Inc. engaged Goldstein Golub Kessler LLP as its independent auditors and accepted the resignation, dated December 4, 2003, of Stark Winter Schenkein & Co., LLP from that position. The decision to change accountants was recommended and approved by the Company's Board of Directors. The reports on the financial statements for the years ended December 31, 2000, 2001 and 2002 contained going concern qualifications. During Winmax' two most recent fiscal years, and any subsequent interim period preceding the resignation on December 4, 2003, there were no disagreements with the former accountant, Stark Winter Schenkein & Co., LLP, or any other former accountant on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreement(s), if not resolved to the satisfaction of Stark Winter Schenkein & Co., LLP, would have caused them to make reference to the subject matter of the disagreement(s) in connection with their reports, except that Stark Winter Schenkein orally stated that they were unable to complete their review of the September 30, 2003 financial statements. This subject matter was discussed with the Company. The Company has authorized the former accountants to fully respond to the inquiries of the successor accountant concerning the above-referenced subject matter. About the Company Winmax Trading Group Inc. is a dynamic and diversified international company. The company specializes in retailing gem and precious gem jewelry using their multimedia and technology operating divisions to help brand and grow operations. At September 30, 2003, Winmax Trading's balance sheet shows a stockholders' deficit of $186,462 WOOD PRODUCTS: Three Officers & Directors Resign ------------------------------------------------ Wood Products, Inc. reports the resignation of Gordon Watts, James Watts and Frank Bartek as officers and from the Board of Directors, effective July 27, 2004. Because the directors' backgrounds in business are different than required for implementation of the current business plan of Wood Products, each director felt that he would not be able to provide constructive advice to the benefit of the Company. In addition, the directors felt the Board would be more efficient with fewer members, and could act more quickly to implement business strategies now in progress. Wood Products, Inc. is a development stage company with nominal assets and no revenues. For the year ended March 31, 2003, the Company's auditors advised the Company's directors and stockholders that there was "substantial doubt about the Company's ability to continue as a going concern". WORLDCOM: Court OK Stipulation Resolving Kael Contract Disputes --------------------------------------------------------------- KAEL Direct, Inc., provided prepetition goods and services to WorldCom Inc. and its debtor-affiliates pursuant to an Independent Contractor Services Agreement. KAEL asserts that the Debtors owe it $1,122,207 pursuant to the KAEL Contract. KAEL filed Claim No. 14950 in the Debtors' bankruptcy cases. On the other hand, the Debtors assert that KAEL owes them $434,700 for prepetition goods and services they provided to KAEL. At the Debtors' request, Judge Gonzalez approves the terms of the parties' stipulation resolving their disputes: -- The Debtors will assume the KAEL Contract. The Cure Payment for the assumption will be $1,122,207, which will be recognized and satisfied by deducting the KAEL Debt from the Cure Payment. The Debtors will also pay KAEL $687,507 in cash; -- The Debtors will not be obligated to make any other payment as a result of the assumption of the KAEL Contract. The Cure Payment will satisfy, discharge, and remedy the WorldCom Debt and all conditions, defaults, and amounts owed by the Debtors under or related to the KAEL Contract that are necessary or required to enable and authorize the assumption of the KAEL Contract; and -- On receipt of the $687,507 cash payment, KAEL will have no claims of any kind against any of the Debtors. KAEL's Claim, and any other proofs of claim filed by or on behalf of KAEL, will be deemed automatically expunged and extinguished on receipt of the Cure Payment. Headquartered in Clinton, Mississippi, WorldCom, Inc., now known as MCI-- http://www.worldcom.com/-- is a pre-eminent global communications provider, operating in more than 65 countries and maintaining one of the most expansive IP networks in the world. The Company filed for chapter 11 protection on July 21, 2002 (Bankr. S.D.N.Y. Case No. 02-13532). On March 31, 2002, the Debtors listed $103,803,000,000 in assets and $45,897,000,000 in debts. On April 20, 2004, the company (WCOEQ, MCWEQ) formally emerged from U.S. Chapter 11 protection as MCI, Inc. This emergence signifies that MCI's plan of reorganization, confirmed on October 31, 2003, by the U. S. Bankruptcy Court for the Southern District of New York is now effective and the company has begun to distribute securities and cash to its creditors. (Worldcom Bankruptcy News, Issue No. 58; Bankruptcy Creditors' Service, Inc., 215/945-7000) * Fitch Sets Aug 3 Teleconference to Discuss Report on Health Care ------------------------------------------------------------------ On Tuesday, Aug. 3 at 2:00 p.m. EDT, Fitch Ratings analysts Emily Wong, Joe Korleski and Keith Dickinson will host a teleconference to discuss the upcoming Fitch research report '2004 Median Ratios for Non-Profit Hospitals and Health Care Systems'. The report, to be issued the week of Aug. 2, will detail liquidity, profitability, operational, capital, and cash flow ratios as well as Fitch's forecast for the sector. A dial-in number will be available later this week. Contact: Emily Wong +1-212-908-0767, Joe Korleski +1-212-908-0591, New York or Keith Dickinson +1-415-732-5622, San Francisco. Media Relations: James Jockle +1-212-908-0547, New York. ********* 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, Emi Rose S.R. Parcon, 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 ***