/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/040907.mbx T R O U B L E D C O M P A N Y R E P O R T E R Tuesday, September 7, 2004, Vol. 8, No. 191 Headlines AAIPHARMA INC: Appoints Steve Cottrell as Interim President ADELPHIA COMMS: Wants to Hire TMNG to Help Fight Devon Lawsuit AIR CANADA: Transportation Agency Approves New Corporate Structure AMERICAN COMMERCE: Subsidiary Sells First 'Specialty' Trailer AQUA INVESTMENT: Case Summary & 42 Largest Unsecured Creditors ATLAS AIR: Chief Financial Officer David Lancelot Resigns AVONDALE MILLS: Moody's Junks $94 Million Sr. Subordinated Notes BANC OF AMERICA: Fitch Raises Class 2B-5 Rating from B to BB BANK OF AMERICA: Moody's Rates E8.3M Class E Preferred Shares Ba3 BEAR STEARNS: Moody's Assigns Ba2 Ratings to Classes M-7A & M-7B BISHOP GOLD: Taps Research Capital to Help Raise Much Needed Cash BOMBARDIER CAPITAL: Fitch Junks 12 Classes & Gives B Ratings to 5 BRILLIANT DIGITAL: Annual Stockholders Meeting is on Sept. 14 CHALK MEDIA: Names Mah as CFO & Harrison as Sales & Mktg. Director COEUR D'ALENE: Wheaton Board Asks Shareholders to Reject Offer COEUR D'ALENE: Estimates $105M Expenditures on San Bartolome Proj. COUNTRYWIDE HOME: Moody's Places Low-B Ratings on Four Classes COVANTA: SEC Grants Exemption From Section 314(d) Requirements CRMNET.COM: Appoints Gary Williams as President & Secretary CRYSTAL COVE: Moody's Puts Ba2 Rating on $20.3M Preference Shares CSFB MORTGAGE: S&P Pares Class G-ALH Rating from BBB- to BB+ DB COMPANIES: Gets Final Nod to Use Lenders' Cash Collateral DELAWARE TALON GROUP: Case Summary & Largest Unsecured Creditors DELTA AIR: Dept. of Labor Appoints Jim Swartz to Serve on NACOSH DELTA AIR: Reports 9% Increase System Traffic Increase in August DEUTSCHE FINANCIAL: Fitch Junks Three Classes & Pares One to B- DIAMOND TRIUMPH: Weak Performance Spurs S&P to Watch B Ratings DIGITAL LIGHTWAVE: Transfers Securities Trading to Nasdaq SmallCap DRESSER INC: Files Registration Statement for Proposed IPO ENRON CORP: Sues to Recover $7.2 Million of Preferential Transfers GAP INC: Moody's Raises Retailer's Debt & Issuer Ratings to Ba1 HAYES LEMMERZ: AP Wheels Discloses Ownership of 3.5 Million Shares HOLLINGER INC: Canadian Court Orders Appointment of an Inspector INFRASOURCE SERVICES: Completes EnStructure Acuisition INTEGRATED ELECTRICAL: Moody's May Cut Low-B Ratings After Review JOSTENS INTERMEDIATE: S&P Puts Single-B Ratings on Notes & Loan KELLEY BROS: Case Summary & 17 Largest Unsecured Creditors LA QUINTA: Completes The Marcus Corp. Acquisition for $412 Million MASTEC INC: Ernst & Young Resigns as Independent Accounting Firm MERIT SECURITIES: Fitch Chips Class M-2 Rating to B & Junks B-1 MERIT SECURITIES: Fitch Junks Class B-1 & Cuts Class M-2 to BB- MINORPLANET SYSTEMS: Plan Confirmed & New Shares Distributed MOTHERS WORK: Operating Concerns Prompt S&P's B+ Credit Rating NATIONAL CENTURY: Court Upholds Lincoln Clinic Sale to Aprahamian NEW WORLD: Files Schedules of Statement and Financial Affairs NRG ENERGY: Court Authorizes Rejection of 33 Executory Contracts OWENS CORNING: Court Says Dr. Sider's Retention is Premature OXFORD AUTOMOTIVE: S&P Withdraws Junk Ratings for Lack of Info PAN AMERICAN ZINC: Voluntary Chapter 11 Case Summary PARMALAT USA: Wants to Employ Mahoney Cohen as Accountants PG&E NATIONAL: Will Pay $267,816 Pepco Energy Services Settlement SEQUOIA MORTGAGE: Moody's Rates Class B-4 & B-5 Certs. at Low-B SOLUTIA: Gets Court Nod to Contribute $11 Million to Pension Plan THOMAS R. RICKETTS: Case Summary & 9 Largest Unsecured Creditors U.S. RESTAURANT: Fitch's BB Rating on Watch After Acquisition News U.S. STEEL: Vice Chairman Roy Dorrance to Retire by Month's End US AIRWAYS: Reports 79.1% Increase in Passenger Load Factor UNITED AGRI: Further Extends Senior Debt Offering to Sept. 16 VIASYSTEMS INC: Parent Company Initiates Rights Offering VILLA ST. MICHAEL: Court Gives Third Interim Nod to Access $662K WHITING PETROLEUM: S&P Affirms B+ Corporate Credit Rating WHITING PETROLEUM: Moody's Reviewing Low-B Ratings & May Downgrade WORLDCOM INC: MCI Board Members to Purchase Stock with Fees WORLDWATER CORP: Executes $2 Million Contract for AquaMax(TM) * Large Companies with Insolvent Balance Sheets ********* AAIPHARMA INC: Appoints Steve Cottrell as Interim President ----------------------------------------------------------- Dr. Vijay Aggarwal has stepped down from his position as President of aaiPharma Inc. (NASDAQ: AAII) Development Services. Dr. Aggarwal has accepted the position of CEO of Aureon Biosciences Corporation. Effective immediately, Mr. Steve Cottrell has been appointed to the position of Interim President of Development Services. Mr. Cottrell joined AAI Development Services in 2002 and served as Executive Vice President of Sales, Marketing and Project Management for AAI Development Services prior to this appointment. "For the last 2 1/2 years, Vijay has led our development services organization with tremendous vision and diligence, stated Dr. Fred Sancilio, Executive Chairman and CEO of aaiPharma. "While we wish Vijay well in his new position, we are also very confident that Steve's experience will ensure that we remain focused on delivering scientific excellence and unmatched customer service to our clients." About aaiPharma Inc. aaiPharma Inc. is a science-based pharmaceutical Company focused on pain management, with corporate headquarters in Wilmington, North Carolina. With more than 24 years of drug development expertise, the Company is focused on developing, acquiring, and marketing branded medicines in its targeted therapeutic areas. aaiPharma's development efforts are focused on developing improved medicines from established molecules through its significant research and development capabilities. * * * As reported in the Troubled Company Reporter's on April 29, 2004, Standard & Poor's Ratings Services affirmed its 'CCC' corporate credit and 'CC' subordinated debt ratings on aaiPharma Inc. At the same time, Standard & Poor's removed the ratings on the Wilmington, North Carolina-based specialty pharmaceutical company from CreditWatch. S&P's outlook on aaiPharma is negative. "The low speculative-grade ratings reflect the company's improved but still limited liquidity given the lack of visibility of aaiPharma's profitability and cash flow generation," said Standard & Poor's credit analyst Arthur Wong. For more information on the Company, including its product development organization AAI Development Services, visit aaiPharma's website at http://www.aaipharma.com/ ADELPHIA COMMS: Wants to Hire TMNG to Help Fight Devon Lawsuit -------------------------------------------------------------- Adelphia Communications Corporation and its debtor-affiliates ask the permission from the U.S. Bankruptcy Court for the Southern District of New York to employ TMNG Strategy as communications industry expert consultants, nunc pro tunc to July 19, 2004. Shelley C. Chapman, Esq., at Willkie Farr & Gallagher, in New York, relates that ACOM and Devon Mobile, LP, have filed multi- million dollar claims against each other's estate in connection with among other things, the Devon Limited Partnership Agreement. On June 21, 2004, the Devon Mobile Liquidating Trust, as successor to Devon Mobile, commenced an adversary proceeding against the ACOM Debtors. Devon Mobile alleged preference, fraudulent conveyance, breach of fiduciary duty and deepening insolvency claims against ACOM. Ms. Chapman tells Judge Gerber that, in defending the Devon Mobile Action and in prosecuting the related counterclaims, the ACOM Debtors will require the assistance of communications industry experts to: -- analyze the industry's conditions during the time periods alleged in the complaint; -- conduct valuation and damages analyses; and -- render opinions, reports and testimony in connection with the analyses. TMNG is a consulting firm that provides a full range of strategic business advisory services to the communications industry. The ACOM Debtors will need TMNG to assist them and their counsel, Klehr Harrison Branzburg & Ellis and Willkie Farr & Gallagher, in collecting, analyzing information, and providing industry expertise relating to issues raised in the Devon Mobile Action. TMNG will also analyze certain issues relating to the Devon Limited Partnership Agreement and other related agreements between the ACOM Debtors and Devon Mobile. To the extent TMNG provides advisory services to Klehr Harrison or Willkie Farr, TMNG's work will be performed at the counsels' sole direction and will be exclusively for the purpose of assisting the counsels' representation of the ACOM Debtors. The ACOM Debtors believe that TMNG's work may be of fundamental importance in the formation of mental impressions and legal theories by the counsels. In this regard, the ACOM Debtors ask the Court to find that TMNG's writings, analysis, communications and mental impressions in connection with its assistance with Klehr Harrison or Willkie Farr in the Devon Mobile Action, are the counsels' work product and should be treated with confidentiality. The Debtors also ask the Court to rule that the confidential or privileged status of the TMNG Litigation Work Product is unaffected by the fact that TMNG is retained by the Debtors rather than by their counsels. The Debtors will compensate TMNG for its services in accordance with the firm's customary hourly rates: Consulting Level Hourly Rates ---------------- ------------ President $500 Vice President 400 Principal 400 Manager 350 Associate 250 Senior Analyst 180 Analyst 150 Research Librarian 100 Document Production 60 The Debtors will also reimburse TMNG for reasonable out-of-pocket expenses. The ACOM Debtors agree to indemnify and hold harmless TMNG and its directors, officers, employees, affiliates, agents and controlling persons during the pendency of their cases. TMNG Vice President Susan M. Simmons advises the Court that she is unaware of any conflicts of interest with respect to any potential parties-in-interest. Ms. Simmons assures the Court that TMNG will continue to monitor other potential conflicts that would arise during the course of the engagement and will disclose promptly should any come to TMNG's attention. Ms. Simmons ascertains that TMNG's principals and professionals do not hold or represent an interest adverse to the ACOM Debtors' estates and are "disinterested persons" within the meaning of Section 101(14) of the Bankruptcy Code. Headquartered in Coudersport, Pennsylvania, Adelphia Communications Corporation (OTC: ADELQ) is the fifth-largest cable television company in the country. Adelphia serves customers in 30 states and Puerto Rico, and offers analog and digital video services, high-speed Internet access and other advanced services over its broadband networks. The Company 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 ACOM Debtors. (Adelphia Bankruptcy News, Issue No. 68; Bankruptcy Creditors' Service, Inc., 215/945-7000) AIR CANADA: Transportation Agency Approves New Corporate Structure ------------------------------------------------------------------ Air Canada welcomed the decision rendered by the Canadian Transportation Agency, which concludes that Air Canada's proposed new corporate structure will meet the Canadian ownership and control requirements as defined in the Canada Transportation Act. "We welcome Friday's decision by the Canadian Transportation Agency that allows us to meet the closing ownership conditions and proceed towards the completion of our restructuring by the end of September," said John Baker, Senior Vice President and General Counsel. 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 filed a Section 304 petition in the U.S. Bankruptcy Court for the Southern District of New York (Case No. 03-11971). Sean F. Dunphy, Esq., and Ashley John Taylor, Esq., at Stikeman Elliott LLP, in Toronto, serve as Canadian Counsel to the carrier. 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. AMERICAN COMMERCE: Subsidiary Sells First 'Specialty' Trailer ------------------------------------------------------------- Chariot Manufacturing Company, Inc., a subsidiary of American Commerce Solutions, Inc. (OTC Bulletin Board: AACS), has sold the first Chariot trailer specifically designed for the landscape industry. Steven D. Smith, President of Chariot, stated, "We are pleased to announce that we have now completed development and have received a deposit to build a landscaping/lawn maintenance trailer that will provide specific features to fit their particular needs. We felt this was an opportunity for us to bring a premium product to the landscape industry that will not only meet their specific needs, but also be much lighter than competitors. The unit will have secured compartments that keep their tools safe and organized, special holders for irrigation parts and pipes and will have fiber glassed floors which allow cleanup inside the trailer without fear of wood rot. Additionally, since there are no obstructing seams or rivets, the trailer sides are perfect for the application of the Contractor's graphics." Mr. Smith continued, "While our first deposit was paid in cash, as will be the balance upon delivery, we can offer Contractor's financing through a third party leasing program. This will enable the Landscape Contractor to package other equipment, or even vehicles under the same lease plan. For business owners in this type of market, price is not as much an issue as cash flow. As long as the lease plan fits their cash flow, the Contractor can have a much more tailored, efficient and useful tool. Sales of our premium trailers has been steadily growing with more complex trailers including air conditioning, electrical packages, windows, cabinets and deluxe interiors. We are working with several customers designing RV packages making the trailer half motorcycle carrier and half RV. Our sales backlog remains strong as are the number of inquiries we receive every day." Integral to the development of the landscaper's trailer and purchaser of the first unit is Richard Gearin, President and owner of Essential Property Maintenance in Brandon, Florida. Gearin commented, "I have over twenty years in this business and finally I'll have a covered trailer that will be stylish, industry practical and economically lightweight. Working on the design and applications was interesting and enjoyable. These guys know what they're doing and worked hard to meet this customer's needs." American Commerce Solutions, Inc. President and Chief Executive Officer, Daniel L. Hefner, stated, "Steve and his team continue to do an outstanding job of promoting the Chariot line of lightweight, aerodynamic trailers to both dealers and the private sector through motorcycle rallies and word of mouth. Successfully converting a plan on paper to reality validates Chariot's ability to increase its potential through market focus and diversification. It is virtually impossible to quantify the benefit of this increased market. You see landscape trailers virtually everywhere, now some will be Chariot Trailers." Chariot Manufacturing Company, Inc. -- http://www.chariot-trailer.com/ -- is a wholly owned subsidiary of American Commerce Solutions, Inc. American Commerce Solutions, Inc. (f/k/a JD American Workwear, Inc.) provides heavy equipment repair services and parts sales. Heavy equipment services are offered to construction, forestry, waste and scrap industries. The Group provides complete service of the equipment, which includes rebuilding undercarriages, engines, transmissions, final drives and hydraulics. The Group's operating subsidiary is International Machine and Welding, Inc. During 2001, the Group has discontinued the operations of two subsidiaries, JD American Workwear, Inc., a workwear distributor and Rhode Island Truck and Equipment Corp., a paving contractor. * * * In its Form 10-QSB for the quarterly period ended May 31, 2004, filed with the Securities and Exchange Commission, American Commerce Solutions, Inc. reports: "The Company has incurred substantial operating losses since inception and has used approximately $78,500 of cash in operations for the three months ended May 31, 2004. The Company recorded losses from continuing operations of $341,510 and $251,260 for the three months ended May 31, 2004 and 2003, respectively. Current liabilities exceed current assets by $1,170,255 at May 31, 2004. Additionally, the Company is in default on several notes payable. The ability of the Company to continue as a going concern is dependent upon its ability to reverse negative operating trends, raise additional capital, and obtain debt financing. "Management has revised its business strategy to include expansion into other lines of business through the acquisition of other companies in exchange for the Company's stock. Management is currently negotiating new debt financing, the proceeds from which would be used to settle outstanding debts at more favorable terms, to finance operations, and to complete additional business acquisitions. However, there can be no assurance that the Company will be able to raise capital, obtain debt financing, or improve operating results sufficiently to continue as a going concern." AQUA INVESTMENT: Case Summary & 42 Largest Unsecured Creditors -------------------------------------------------------------- Lead Debtor: Aqua Investment Group, Inc. 12981 National Road South West Pataskala, Ohio 43062 Bankruptcy Case No.: 04-63852 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Aqua II Pools, Inc. 04-63848 Antonio W. Marino 04-63855 Type of Business: The Debtor is engaged of retail sales, service of pools, and pool product development. Chapter 11 Petition Date: September 1, 2004 Court: Southern District of Ohio (Columbus) Judge: Charles M. Caldwell Debtors' Counsel: James E. Nobile, Esq. Nobile, Needleman & Thompson, L.L.C. 341 South Third Street, Suite 11 Columbus, OH 43215 Tel: 614-222-4220 Fax: 614-222-4272 Total Assets Total Debts ------------ ----------- Aqua Investment Group, Inc. $1,255,000 $1,102,000 Aqua II Pools, Inc. $251,147 $149,606 Antonio W. Marino $537,800 $604,714 A. Aqua Investment Group's 2 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ John, Sr. & Lishia Gueli $900,000 2804 Johnstown Road Columbus, Ohio 43219 John Gueli, Jr. $202,000 B. Aqua II Pools, Inc.'s 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ U.S. Bank, N.A. $34,566 Zodiac American Pools, Inc. $25,039 American Express $22,800 Bison Labratories, Inc. $12,018 Astral Products, Inc. $10,131 SCP Distributors, LLC $9,637 Gehl Finance $9,267 Composite Pool Corporation $7,503 Yellow Book USA $5,660 CAPO Industries, Ltd. $4,480 H2O On The Go, Inc. $1,165 Glasgow Account Services, Inc. $1,000 Columbus Check Cashers $900 Paisley's Rental $757 BCS Transport, LLC $650 Dana & Pariser $573 Estes Express Lines $528 Viking Pools Northeast, Inc. $454 Professional Turf Management Systems $427 Monk's Copy Shop, Inc. $368 C. Antonio W. Marino's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ John C. Gueli, Jr. $202,000 First National Bank $52,000 Discover $6,650 Bank Of America $2,800 Direct Merchants Bank $2,575 Capital One $1,695 BankFirst Card Center $1,550 Mount Carmel Health $1,524 Providian $1,275 Capital One $1,236 Value City Department Stores $950 ORS $855 Household Bank (SB), N.A. $821 Verizon Wireless $632 First North American National Bank $532 Radiology Inc. $392 Shell Gas Card Processing Center $360 Children's Hospital $360 Khanh V. Dang, MD $148 Child Radiologic Institute $143 ATLAS AIR: Chief Financial Officer David Lancelot Resigns --------------------------------------------------------- Atlas Air Worldwide Holdings Inc.'s Chief Financial Officer David Lancelot will leave his post on September 10, 2004. Mr. Lancelot resigned to return to his home town of Dallas, Texas in a senior financial position with Highland Capital Management, an investment advisory firm. David Lancelot was named Chief Financial Officer for Atlas Air on May 15, 2003. Lancelot originally joined Atlas Air Worldwide Holdings in March 2002 as Controller from its Polar Air Cargo subsidiary, where he served in the same role. He came to Polar in July 2000 from AirTran Airways, where he was Vice President of Finance, Controller and Treasurer. Prior to that Lancelot held various corporate accounting positions at American Airlines. He has a strong background in aviation accounting and finance and brings to the company experience with capital markets and a proven ability to install financial controls and turn around financial performance. Mr. Lancelot is a graduate of Baylor University with a degree in accounting. He is a certified public accountant, with previous public accounting experience as an auditor with KPMG LLP in Dallas, Texas. The Company is commencing a search to fill Mr. Lancelot's position. Until a permanent replacement is found, his responsibilities will be assumed by the existing members of the Company's senior management team. Atlas didn't indicate when it expects to hire a new CFO, Dow Jones said. Highland manages more than $9 billion in leveraged loans, high- yield bonds and other assets, according to its Web site. Atlas Air Worldwide Holdings, Inc. -- http://www.atlasair.com/-- is a worldwide all-cargo carriers that operate fleets of Boeing 747 freighters. The Company filed for chapter 11 protection (Bankr. Fla. Case No. 04-10794) on January 30, 2004. The Honorable Robert A. Mark presided over Atlas' restructuring proceeding. Jordi Guso, Esq., at Berger Singerman, represents the debtor. Atlas Air emerged from bankruptcy on July 27, 2004. AVONDALE MILLS: Moody's Junks $94 Million Sr. Subordinated Notes ---------------------------------------------------------------- Moody's Investors Service downgraded the ratings of Avondale Mills, Inc., and those of its parent company, Avondale Incorporated and assigned a negative outlook. These ratings were affected: Avondale Mills, Inc: * $91 million issue of senior subordinated notes due 2013, downgraded to Ca from B3. Avondale Incorporated: * The senior implied rating lowered to B3 from B1; * The senior unsecured issuer rating lowered to Caa2 from B2. The stable outlook was changed to negative. The downgrade reflects Moody's view that the recently negotiated exchange of $59 million of existing senior subordinated notes due 2013 for $41million of new senior unsecured notes due 2012 represents an impairment of value to the sellers of the subordinated notes. The additional layer of senior unsecured debt also increases the potential severity of loss in a distress scenario for the remaining holders of the subordinated notes. The downgrade also considers: * the decrease in cash from operations, * significant leverage on a free cash flow basis, and * an operating loss for the last twelve months. In addition, the operating loss over average total assets may indicate a need for asset writedowns. The ratings continue to incorporate: * the company's market position as a leading domestic, * vertically integrated supplier of apparel textiles, * its on-going cost control, and * plant rationalization programs, which were initiated in fiscal 2002. The ratings outlook is negative. The company's determined efforts to increase absorption of fixed costs through facility rationalization may not keep pace with the relentless competition from lower price imported products particularly in light of continued price deflation in apparel. The uncertain level of future profitable demand, combined with a more volatile cotton market and an increasing proportion of sales to offshore contractors, leaves doubt about the company's ability to generate sufficient cash from operations to reduce its high leverage outside of a financial restructuring. The Ca rating on the senior subordinated notes reflects the effective subordination of the notes to the claims of secured lenders under the secured credit facility and other senior indebtedness. On May 28, 2004, Avondale had no borrowings outstanding and $30.9 million of availability under its borrowing based revolving credit facility. The subordinated notes are also effectively subordinated to a $13 million equipment term loan and $41 million of new senior unsecured notes due 2012. The credit facility and the unsecured notes are not rated by Moody's. In the last several years, the company's revenues have consistently declined due to both the weakened domestic consumer demand for apparel and increased competition from the cheaper, foreign sourced fabrics and packaged goods, as well as the company's internalization of yarn production and shift in product mix. Margin improvements achieved during the previous twelve month period as a result of facility rationalization and cost cutting were offset by higher raw material costs and weaker pricing across the industry over the last twelve months ended May 28, 2004. Gross margin for the last twelve months ended May 28, 2004 declined to 2.1% from 7% for the fiscal year ended August 29, 2003 primarily due to lower unit demand, weaker pricing and higher average cotton costs. While SG&A remained flat, EBIT was a loss of $13 million for the last twelve months ended May 28, 2004 versus $15 million in EBIT (or 2.5% of sales) at fiscal year end 2003. The loss on average total assets may indicate a need for asset writedowns. Free cash flow declined in the last twelve-month period ended May 28, 2004 due to the company's net loss, which was somewhat offset by historically low levels of capex. Cash coverage of debt, measured as cash from operations less capex and dividends for the trailing twelve months ended May 28, 2004 to debt plus the off-balance sheet accounts receivable securitization program, decreased to 4.7% from 6.2% for fiscal year end 2003. Interest protection measures are inadequate. EBITDA less capex to interest was insufficient at 0.8 times for the last twelve months ended May 28, 2004 versus 1.9 times at fiscal year end 2003. Due to the operating loss, all EBIT based metrics were negative. Avondale Mills, Inc., with the headquarters in Monroe, Georgia, is a wholly owned operating subsidiary of Avondale Incorporated. The company is a leading manufacturer and marketer of indigo-dyed denim, piece-dyed workwear and sportswear fabrics, and cotton and cotton-blend yarns. BANC OF AMERICA: Fitch Raises Class 2B-5 Rating from B to BB ------------------------------------------------------------ Fitch has taken rating actions on these Banc of America Mortgage Securities, Inc., mortgage pass-through certificates: Banc of America Mortgage Securities, Inc. mortgage pass-through certificates, series 2003-3 group 1 -- Class 1A affirmed at 'AAA'. Banc of America Mortgage Securities, Inc. mortgage pass-through certificates, series 2003-3 group 2 -- Class 2A affirmed at 'AAA'; -- Class 2B-1 upgraded to 'AAA' from 'AA'; -- Class 2B-2 upgraded to 'AA' from 'A'; -- Class 2B-3 upgraded to 'A' from 'BBB'; -- Class 2B-4 upgraded to 'BBB' from 'BB'; -- Class 2B-5 upgraded to 'BB' from 'B'. The upgrades reflect an increase in credit enhancement relative to future loss expectations and affect $2,700,981 of outstanding certificates. The affirmations reflect credit enhancement consistent with future loss expectations and affect $503,965,612 of outstanding certificates. As of the August 25, 2004 distribution, the senior class A certificates of series 2003-3 group 1 are benefiting from 4.52% subordination (up from 2.5% as of the closing date, April 24, 2003) provided by the certificates 1B-1 to 1B-6, which were not rated by Fitch. Currently, 0.18% of the remaining loans are in 30-day delinquency, there have been no losses to the pool, and 46% of the group 1 collateral has paid down. The group 1 collateral consists of conventional, fixed-rate, fully amortizing, first lien, and one- to four-family residential mortgage loans with original terms to stated maturity ranging from 240 to 360 months. As of the August 25, 2004 distribution, the senior class A certificates of series 2003-3 group 2 are benefiting from a 2.50% subordination (up from 1.25% as of the closing date, April 24, 2003) provided by the subordinate classes (2B-1 to 2-B6). The current credit enhancement of classes 2B-1, 2B-2, 2B-3, 2B-4, and 2B-5 are 1.30%, 0.90%, 0.60%, 0.40%, and 0.20%, respectively. Currently, there are no delinquent loans and no losses to the pool and 53% of the group 2 collateral has paid down. The group 2 collateral consists of conventional, fixed-rate, fully amortizing, first lien, one- to four-family residential mortgage loans with original terms to stated maturity ranging from 120 to 180 months. There is no cross-collateralization between the two groups. BANK OF AMERICA: Moody's Rates E8.3M Class E Preferred Shares Ba3 ----------------------------------------------------------------- New York, September 03, 2004 Moody's Investors Service has assigned ratings of Prime-1, Aaa, Aa1 and Aa3 to nine classes of notes and of Baa2 and Ba3 to two classes of preferred shares issued by GEARS, Ltd. 2004-A. The ratings of the notes and preferred shares are based on the quality of the underlying automobile loans, the structure of the transaction, the amount of credit enhancement, the expertise of Bank of America, N.A. -- BANA -- as originator and servicer. The Prime-1 ratings of the Class A-IO and Class A-1 notes are based primarily on the amount of liquidity from collections on the underlying receivables during the period prior to the notes' legal final maturity date. The complete rating actions are: Rating Action: Class A-IO Notes, rated Prime-1 * $105,000,000 LIBOR plus 0.12% Class A-P Notes, rated Aaa; * $375,400,000 1.75% Class A-1 Notes, rated Prime-1; * $521,700,000 2.47% Class A-2 Notes, rated Aaa; * $547,200,000 3.07% Class A-3 Notes, rated Aaa; * $305,700,000 3.55% Class A-4 Notes, rated Aaa; * $32,912,000 LIBOR plus 0.27% Class B-1 Notes, rated Aa1; * E10,000,000 EURIBOR plus 0.27% Class B-2 Notes, rated Aa1; * E28,954,000 EURIBOR plus 0.45% Class C Notes, rated Aa3; * E45,500,000 EURIBOR plus 1.75% Class D Preferred Shares, rated Baa2; and * E8,272,000 EURIBOR plus 4.75% Class E Preferred Shares, rated Ba3. BANA, headquartered in Charlotte, North Carolina, has a long-term deposit rating of Aa1. BANA's auto group, headquartered in Jacksonville, Florida, manages an auto loan portfolio of approximately $13 Billion purchased from dealers in approximately 21 states. BEAR STEARNS: Moody's Assigns Ba2 Ratings to Classes M-7A & M-7B ---------------------------------------------------------------- Moody's Investors Service assigned a Aaa rating to the senior certificates issued by Bear Stearns Asset Backed Securities I Trust 2004-HE6, and ratings ranging from Aa2 to Ba2 to the subordinate certificates in the deal. The securitization is backed by: * Encore Credit Corporation (17.06%), * People's Choice Home Loans, Inc. (42.15%), and * Fremont Investment and Loan (30.38%) originated adjustable- rate (70.48%) and fixed-rate (29.52%) subprime mortgage loans acquired by EMC Mortgage Corporation. The ratings are based primarily on the credit quality of the loans, and on the protection from subordination, overcollateralization, and excess spread. The credit quality of the loan pool is in line with the average loan pool backing recent subprime securitizations. EMC will act as master servicer of the loans. Moody's assigned EMC its top servicer quality rating -- SQ1 -- as a primary servicer of subprime loans. The complete rating actions are: Bear Stearns Asset Backed Securities I Trust 2004-HE6, Asset- Backed Certificates, Series 2004-HE6 * Class I-A-1, $263,537,000, rated Aaa; * Class I-A-2, $45,482,000, rated Aaa; * Class II-A, $211,021,000, rated Aaa; * Class III-A, $212,238,000, rated Aaa; * Class M-1, $59,411,000, rated Aa2; * Class M-2, $46,976,000 rated A2; * Class M-3, $13,817,000 rated A3; * Class M-4, $11,514,000, rated Baa1; * Class M-5, $10,132,000, rated Baa2; * Class M-6, $9,211,000, rated Baa3; * Class M-7A, $8,059,000, rated Ba2; and * Class M-7B, $8,059,000, rated Ba2. BISHOP GOLD: Taps Research Capital to Help Raise Much Needed Cash ----------------------------------------------------------------- Bishop Gold, Inc., listed on the TSX Venture Exchange Inc. under the trading symbol "BSG", entered into an engagement letter with Research Capital Corporation in connection with its previously announced financing. The financing will be completed by way of Short-Form Offering Document in accordance with Exchange policies and will consist of the offering of a minimum 2,500,000 and maximum of 4,166,667 units of Bishop at a purchase price of $0.30 per unit for gross proceeds of a minimum of $750,000 and a maximum of $1,250,000. Each Unit will consist of two thirds (2/3) of one flow-through common share, one third (1/3) of one common share and one common share purchase warrant. Each full Warrant will entitle the holder to acquire one non-flow-through common share at a price of $0.35 for a period of twelve months from the date of issue or at a price of $0.40 for an additional period of 12 months thereafter. As compensation for its services as agent in connection with this offering, Research will receive a cash commission equal to 8% of the gross proceeds received by Bishop from the sale of the Units on a best efforts basis. In addition, Bishop has agreed to pay Research a corporate finance fee of $15,000, of which $7,500 is non-refundable and has been paid to Research and the remaining $7,500 will be paid upon closing of the financing. Research and its sub-agents will also receive a non-transferable option to acquire that number of units that is equal to 12% of the aggregate number of Units issued pursuant to the offering at an exercise price of $0.30 per Broker Unit for a period of two years from the date of issue. Each Broker Unit received by Research upon exercise of the aforementioned option will consist of one common share and one Warrant. Bishop will also pay all of the expenses incurred by Research in connection with this offering. It is expected that a formal agency agreement will be entered into prior to the filing of the Short-Form Offering Document. The filing of the Short-Form Offering Document and entering into of the agency agreement will be publicly announced upon the execution and filing thereof. Proceeds from the financing will be used to complete Phase I of the proposed exploration and development program on the Lawyers Property and for general working capital purposes. It is expected that the financing will close concurrently with the final acquisition of the Toodoggone properties by Bishop pursuant to its previously announced Mineral Claim Purchase and Sale Agreement between Bishop and Guardsmen Resources, Inc., (for the purchase of a 100% interest in two significant gold properties known as the Al/Bonanza and the Lawyers properties located in the Toodoggone district of North Central British Columbia). Bishop has also completed an amending agreement with Guardsmen to extend the closing date of the aforementioned Toodoggone property acquisition to October 15, 2004 in order to facilitate the closing of the offering. The Lawyers property comprises approximately 38 sq km in 23 claims on which a total of over 30,000 metres of diamond drilling was completed in over 1,000 drill holes funded by seven separate companies during the period 1979 to 2001. The Al/Bonanza property comprises approximately 23 sq km in 14 claims on which a total of 20,000 metres of diamond drilling was completed in 960 drill holes funded by six separate companies during the period 1979 to 2001. Bishop Gold is a mineral exploration company with interests in the Al/Bonanza property and the Lawyers property, both are located in the Toodoggone District of North Central B.C.; and the Gordon Lake Property in the Giant Bay Region near Yellowknife, NWT. Stated in Bishop Gold's 3rd Quarter Report ending June 30, 2004: "The Company has realized recurring losses from operations, and has a working capital deficiency of $191,905. These factors, amongst others, cast substantial doubt with respect to the Company's ability to continue as a going concern." BOMBARDIER CAPITAL: Fitch Junks 12 Classes & Gives B Ratings to 5 ----------------------------------------------------------------- Fitch Ratings reviewed the Bombardier Capital Mortgage Securitization Company manufactured housing -- MH -- transactions. Ten classes representing $261 million were downgraded and 20 classes representing $712 million were affirmed. The receivables of these pools consist of fixed rate manufactured housing contracts secured by new and used manufactured homes. The affirmations reflect credit enhancement consistent with future loss expectations. The downgrade rating actions are a result of the poor performance of the underlying MH collateral (i.e., 11% three month rolling average default rate (approximately 90 basis points above industry average) and a three month rolling average loss severity of 77%). Fitch does not believe that certain classes of certificates have sufficient remaining credit enhancement to maintain their prior ratings. In each transaction, OC and LOCs have been completely exhausted and subordinate classes of certificates are directly being written down as a result of continuing losses. For example, the M-2 classes for 1999-B and 2000-A have been written down to $0 in May 2004 and August 2004, respectively. Following up with the recent Hurricane Charley tragedy in Florida, Fitch contacted the servicer Bombardier Capital, Inc., to determine the hurricane's impact on the 2,500 Bombardier MH properties in the State of Florida. According to Bombardier Capital, no manufactured housing within its portfolio is reported to have sustained material damage thus far. Fitch will continue to closely monitor this situation. Based on the review, these rating actions have been taken: Series 1998-A (40% Pool Factor; i.e., percentage of remaining principal balance of the original balance as of the cut-off date): -- Classes A-3 - A-5 are affirmed at 'AAA'; -- Class M is downgraded to 'A' from 'AA'; -- Class B-1 is downgraded to 'C' from 'CCC'; -- Class B-2 remains at 'C'. Series 1998-B (46% Pool Factor): -- Class A is downgraded to 'A' from 'AA-'; -- Class M-1 is downgraded to 'B' from 'BB-'; -- Class M-2 is downgraded to 'C' from 'CCC'; -- Class B-1 remains at 'C'. Series 1998-C (48% Pool Factor): -- Class A is affirmed at 'AA'; -- Class M-1 is affirmed at 'BBB-'; -- Class M-2 is downgraded to 'B' from 'BB-'; -- Class B-1 is downgraded to 'C' from 'CCC'; -- Class B-2 remains at 'C'. Series 1999-B (56% Pool Factor): -- Classes A-1A & A-1B - A-6 are affirmed at 'B-'; -- Class M-1 is downgraded to 'C' from 'CCC'; -- Class M-2 remains at 'C'. Series 2000-A (55% Pool Factor): -- Classes A-1 - A-5 are affirmed at 'B-'; -- Class M-1 is downgraded to 'C' from 'CCC'; -- Class M-2 remains at 'C'. Series 2001-A (59% Pool Factor): -- Class A is affirmed at 'AA-'; -- Class M-1 is affirmed at 'BBB'; -- Class M-2 is affirmed at 'B-'; -- Class B-1 is downgraded to 'C' from 'CCC'; -- Class B-2 remains at 'C'. BRILLIANT DIGITAL: Annual Stockholders Meeting is on Sept. 14 ------------------------------------------------------------- The Annual Meeting of stockholders of Brilliant Digital Entertainment, Inc., will be held at 10:00 a.m., Pacific Time, on Tuesday, September 14, 2004, at Brilliant's headquarters located at 6355 Topanga Canyon Boulevard, Suite 520, in Woodland Hills, California. Items of Business to be considered and voted upon are: (1) To elect 2 Class II members of the Board of Directors for three-year terms. (2) To amend the Company's 1996 Stock Option Plan to increase the number of authorized shares from 20,000,000 to 35,000,000. (3) To amend the Company's Amended and Restated Certificate of Incorporation to increase the number of authorized shares of common stock from 250,000,000 to 350,000,000. (4) To transact such other business as may properly come before the Meeting and any adjournment or postponement. Shareholders may vote if, at the close of business on July 21, 2004, they were stockholders of record. * * * As reported in the Troubled Company Reporter on May 14, 2004, Brilliant Digital Entertainment's consolidated financial statements for the fiscal year ended December 31, 2003, have been prepared assuming that Brilliant Digital Entertainment will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The carrying amounts of assets and liabilities presented in the financial statements do not purport to represent realizable or settlement values. However, the Company has suffered recurring operating losses and at December 31, 2003, had, as stated, negative working capital of approximately $5,763,000, and a stockholders' deficit of approximately $4,594,000. These factors raise substantial doubt about the Company's ability to continue as a going concern. Management anticipates that current cash reserves, plus expected generation of cash from existing operations in 2004, may not be sufficient to fund anticipated expenditures. Consequently, the Company may require additional equity or debt financing during 2004, the amount and timing of which will depend in large part on the Company's spending program. The report of the Company's Independent Certified Public Accountants for the December 31, 2003 financial statements include an explanatory paragraph expressing substantial doubt about Brilliant Digital Entertainment, Inc.'s ability to continue as a going concern. CHALK MEDIA: Names Mah as CFO & Harrison as Sales & Mktg. Director ------------------------------------------------------------------ Chalk Media Corp. named Calvin Mah, C.A., as its new Chief Financial Officer and the appointment of Carrie Harrison as Director of Sales & Marketing. Kim Campbell, Chalk Media's current Chief Financial Officer, and Tracey Greason, Chalk Media's current Vice President of Sales & Marketing, have resigned to pursue other business interests. Both Mr. Campbell and Ms. Greason have agreed to make themselves available during the transition. Chalk Media sincerely thanks Mr. Campbell and Ms. Greason for their valued contributions to the Company. Prior to joining Chalk Media, Mr. Mah was the Chief Financial Officer of NetNation Communications, Inc. Mr. Mah was appointed Chief Financial Officer of NetNation in February 2001. From 1996 to 2000, Mr. Mah was Chief Financial Officer of Simba Technologies Inc., a privately held, venture-backed software development company. Mr. Mah is professionally qualified as a Chartered Accountant and graduated with a Bachelor of Commerce in Accounting and Management Information Systems, with honours, from the University of British Columbia in 1985. Carrie Harrison was formerly Director of Marketing for Chalk Media. Ms. Harrison comes from a business development, strategic marketing and client management background. Previously Vice President of an email marketing firm, FORGE Marketing, Ms. Harrison was responsible for building and maintaining all areas of operations, sales and marketing. Ms. Harrison increased FORGE Marketing's revenues by 100% in her last year through the coordination of numerous results oriented campaigns for high- profile clients such as AOL, TELUS, Shaw, Intrawest, and others. Ms. Harrison is also an active public speaker and published writer on e-marketing Canada and is a member of the Board of Directors of the BCDMA (British Columbia Direct Marketing Association). Chalk Media produces network television & in-flight entertainment programming and online training & marketing solutions. The company's award-winning television shows, ranging from Dave Chalk Computer Show to Dave Chalk Connected, have served to build a highly recognizable brand name. Leveraging this brand has allowed the company to build relationships with a blue-chip customer base and provide them with custom online training and marketing solutions. Chalk Media's custom solutions help industry-leading companies communicate more effectively with their customers, distribution partners and employees. As of June 30, 2004, Chalk Media reported a CDN$540,498 stockholders' deficit. COEUR D'ALENE: Wheaton Board Asks Shareholders to Reject Offer -------------------------------------------------------------- Wheaton River Minerals Ltd.'s (AMEX:WHT) (TSX:WRM) Board of Directors unanimously recommends that Wheaton shareholders reject the offer to purchase all of the outstanding Wheaton shares made by Coeur d'Alene Mines Corporation and its affiliates on August 23, 2004 and that shareholders not tender their Wheaton shares to the Coeur offer. The Board decision followed receipt of a recommendation by the Special Committee of the Board. The Board and the Special Committee also relied upon, among other things, the opinion of Orion Securities Inc. that states, subject to the assumptions and limitations contained therein, that the consideration that Coeur is offering is inadequate from a financial point of view to Wheaton shareholders. The Board's recommendation, the Special Committee's assessment of the Coeur offer and its reasons for the recommendation that shareholders reject the Coeur offer will be set out in a Directors' Circular to be mailed to Wheaton shareholders. The principal reasons for the conclusion and recommendation of the Special Committee and the Board are as follows: -- There are no financial or strategic benefits to Wheaton or the Wheaton shareholders under the Coeur offer and a business combination with Coeur is not in the best interests of the Wheaton shareholders. -- The Coeur offer is financially inadequate and highly dilutive. -- Coeur has a lengthy history of significant net losses and has experienced negative cash flow from operating activities over the past five and one-half years. -- Coeur has not had sufficient earnings to cover its fixed charges (i.e. interest and preferred stock dividends) in each of the last five years. -- Coeur's development properties are subject to significant risks and its existing mines are nearing the end of their mine life. -- The pro-forma debt-to-equity ratio of the combined Coeur/Wheaton company proposed by Coeur will present an increased financial risk and a riskier capital structure than Wheaton and peer group companies. -- Coeur has financed its operations through the use of convertible debt resulting in significant potential dilution. -- The Coeur offer requires Coeur shareholder approval and is highly conditional. -- The technical reports Coeur has filed prior to the date hereof relating to the San Bartolome project fail to provide important information. -- The value of the Coeur offer is not Cdn$5.47 per share. The value of the Coeur offer (based on the Coeur share closing price on September 1, 2004) for Wheaton shareholders who elect the "all share" option is Cdn$3.84 per Wheaton share, Cdn$4.13 per Wheaton share if all Wheaton shareholders elect the "cash and share" option, and Cdn$4.06 per Wheaton share if the "in-the-money" options and warrants are taken into account. The cash portion of the Coeur offer is less than Cdn$5.47 per share and could be significantly less than Cdn$1.00 per share. -- The Board and the Special Committee have serious reservations about the ability of the management of Coeur and do not recommend that Wheaton shareholders become shareholders of the combined Coeur/Wheaton company that would be controlled by the management of Coeur. Shareholders are advised to read the full explanation of the reasons for the Board's recommendation in the Directors' Circular. If a Wheaton shareholder has already tendered any Wheaton shares under the offer, such shareholder is advised to withdraw them immediately. Wheaton shareholders who have deposited Wheaton shares under the Coeur offer and who wish to obtain advice or assistance in withdrawing their Wheaton shares are urged to contact Kingsdale Shareholder Services Inc., toll free at 1-866- 749-5464. About Coeur d'Alene Coeur d'Alene Mines Corporation is the world's largest primary silver producer, as well as a significant, low-cost producer of gold. The Company has mining interests in Nevada, Idaho, Alaska, Argentina, Chile and Bolivia. * * * As reported in the Troubled Company Reporter on June 3, 2004, Standard & Poor's Ratings Services placed its B- corporate credit and senior unsecured debt ratings on Coeur D'Alene Mines Corp. on CreditWatch with positive implications following the company's announcement that it intends to acquire precious metals mining company Wheaton River Minerals Ltd. in a stock and cash transaction valued at approximately $1.8 billion. "The CreditWatch action reflects what is likely to be a meaningful improvement in Coeur's business and financial profile upon the successful acquisition of lower-cost producer Wheaton," said Standard & Poor's credit analyst Paul Vastola. Standard & Poor's expects that its ratings on Coeur would likely be raised several notches. Standard & Poor's will continue to monitor the transaction for any potential revisions to the deal. The deal remains subject to several conditions and is expected to close by Sept. 30, 2004. COEUR D'ALENE: Estimates $105M Expenditures on San Bartolome Proj. --------------------------------------------------------------- Coeur d'Alene Mines Corporation (NYSE: CDE) reported that, based on work completed to date by the independent engineer at San Bartolome, the Company estimates capital expenditures at San Bartolome to be approximately US $105 million and anticipates operating costs of approximately US $3.55 per ounce of silver. Coeur has filed an updated technical report in Canada that includes these estimates. Coeur d'Alene Mines Corporation is the world's largest primary silver producer, as well as a significant, low-cost producer of gold. The Company has mining interests in Nevada, Idaho, Alaska, Argentina, Chile and Bolivia. About Coeur d'Alene Coeur d'Alene Mines Corporation is the world's largest primary silver producer, as well as a significant, low-cost producer of gold. The Company has mining interests in Nevada, Idaho, Alaska, Argentina, Chile and Bolivia. * * * As reported in the Troubled Company Reporter on June 3, 2004, Standard & Poor's Ratings Services placed its B- corporate credit and senior unsecured debt ratings on Coeur D'Alene Mines Corp. on CreditWatch with positive implications following the company's announcement that it intends to acquire precious metals mining company Wheaton River Minerals Ltd. in a stock and cash transaction valued at approximately $1.8 billion. "The CreditWatch action reflects what is likely to be a meaningful improvement in Coeur's business and financial profile upon the successful acquisition of lower-cost producer Wheaton," said Standard & Poor's credit analyst Paul Vastola. Standard & Poor's expects that its ratings on Coeur would likely be raised several notches. Standard & Poor's will continue to monitor the transaction for any potential revisions to the deal. The deal remains subject to several conditions and is expected to close by Sept. 30, 2004. COUNTRYWIDE HOME: Moody's Places Low-B Ratings on Four Classes -------------------------------------------------------------- Moody's Investors Service assigned a rating of Aaa to the senior certificates issued in the Mortgage Pass-Through Trust Series 2004-HYB5 securitization of prime-quality jumbo adjustable-rate mortgage loans. Moody's also assigned a rating of Aa1 to the Class 3-A-2, Class 4-A-2 and Class 6-A-2 senior certificates of the same transaction. In addition, ratings ranging from Aa2 to B2 were assigned to subordinate certificates in the transaction. Moody's analyst, Tamara Zaliznyak, says the credit quality of the loans underlying the transaction is average for adjustable-rate jumbo mortgage loans. Moody's ratings are based on the credit support provided through subordination, the integrity of the cash flows and of the legal structure, as well as Countrywide's ability as master servicer. The underlying collateral consists of 30-year hybrid and negative amortization mortgage loans. The mortgage loans are divided into two groups (eight subgroups). Loans in subgroup 1, 2, 3, 4, 5, 6 and 8 are hybrid loans with fixed mortgage rates for a certain period of time after which they adjust annually. The mortgage loans in the group 7 are negative amortization loan. Loans originated under this program have fixed mortgage rates for three months after which the mortgage rates adjust monthly based on a specific index, but the monthly payments will be adjusted annually. As a result, the amount of interest accruing on the principal balance of the mortgage loans may exceed the amount of the scheduled monthly payment and a portion of the accrued interest may become deferred interest that will be added to the respective principal balance, creating negative amortization on the mortgage loan. These loans are riskier than fixed-rate fully amortizing loans since the principal balance can potentially grow throughout the life of the loan. The risk however, is somewhat limited by the fact that the unpaid principal balance is allowed to grow only up to a certain percentage of the original principal balance after which the monthly payments are recast to fully amortize the loans over the remaining term to maturity without regard to the monthly payment cap. Moreover, the loans are recast every five years even if the unpaid balance is within the allowable limit. Countrywide Home Loans Servicing LP will be the master servicer of the mortgage loans. Countrywide is considered to be a highly capable servicer of prime quality mortgage loans. Countrywide Home Loans Servicing LP was established by Countrywide in February 2000 to service loans originated by CHL. Moody's has assigned Countrywide Home Loans Inc. servicer rating of SQ1. Moody's highest servicer rating for servicing Prime/Alt-A loans. Countrywide is located in Calabasas, California. Issuer: Mortgage Pass-Through Trust 2004-HYB5 Depositor: CWMBS, Inc. Seller: Countrywide Home Loans. * Class 1-A-1 $80,389,900, rated Aaa; * Class 2-A-1 $250,117,000, rated Aaa; * Class 3-A-1 $78,318,000, rated Aaa; * Class 3-A-2 $551,000, rated Aa1; * Class 4-A-1 $115,448,000, rated Aaa; * Class 4-A-2 $812,000, rated Aa1; * Class 5-A-1 $30,095,000, rated Aaa; * Class 6-A-1 $350,337,000, rated Aaa; * Class 6-A-2 $2,465,000, rated Aa1; * Class 7-A-1 $103,067,500, rated Aaa; * Class 8-A-1 $58,027,000, rated Aaa; * Class 8-X Interest Only, rated Aaa; * Class A-R $100, rated Aaa; * Class I-B-1 $5,337,000, rated Aa2; * Class I-B-2 $3,443,000, rated A2; * Class I-B-3 $1,549,000, rated Baa2; * Class I-B-4 $1,377,000, rated Ba2; * Class I-B-5 $689,000, rated B2; * Class II-B-1 $15,301,000, rated Aa2; * Class II-B-2 $10,593,000, rated A2; * Class II-B-3 $6,277,000, rated Baa2; * Class II-B-4 $3,139,000, rated Ba2; and * Class II-B-5 $3,531,000, rated B2. COVANTA: SEC Grants Exemption From Section 314(d) Requirements -------------------------------------------------------------- Pursuant to Section 304(d) of the Trust Indenture Act of 1939, Covanta Energy Corporation asked the Securities and Exchange Commission for an exemption from the certificate or opinion delivery requirements of Section 314(d) of the 1939 Act, related to certain provisions of an indenture between Covanta, certain guarantors and U.S. Bank National Association, as trustee. Specifically, Covanta seeks an exemption to the extent that the indenture allows specified dispositions of, and the related release of the indenture's lien with respect to, certain collateral that are made in Covanta's and the guarantors' ordinary course of business. Upon consideration of Covanta's application and the indenture, the Commission finds that a conditional exemption from the Section 314(d) requirements is: (i) necessary or appropriate: (ii) in the public interest and (iii) consistent with the protection of investors and the purposes fairly intended by the 1939 Act. The Commission notes that: * The Indenture permits Covanta and the guarantors to dispose of collateral in the ordinary course of their business and have the collateral released from the indenture's lien; * Covanta and the guarantors will deliver to the Trustee, annual consolidated financial statements audited by certified independent accountants; and * Covanta and the guarantors will deliver to the Trustee a semi-annual certificate stating that: -- all dispositions of collateral during the relevant six- month period occurred in Covanta's and the guarantors' ordinary course of business; and -- all of the proceeds were used as permitted by the Indenture. Accordingly, the Commission conditionally exempts the provisions of the Indenture governing specified dispositions of collateral and collateral releases from the Indenture's lien that are made in ordinary course, from the certificate of opinion delivery provisions of Section 314(d). Headquartered in Fairfield, New Jersey, Covanta Energy Corporation -- http://www.covantaenergy.com/-- is a publicly traded holding company whose subsidiaries develop, own or operate power generation facilities and water and wastewater facilities in the United States and abroad. The Company filed for Chapter 11 protection on April 1, 2002 (Bankr. S.D.N.Y. Case No. 02-40826). Deborah M. Buell, Esq., and James L. Bromley, Esq., at Cleary, Gottlieb, Steen & Hamilton represent the Debtors in their restructuring efforts. When the Debtors filed for protection from its creditors, they listed $3,280,378,000 in assets and $3,031,462,000 in liabilities. (Covanta Bankruptcy News, Issue No. 64; Bankruptcy Creditors' Service, Inc., 215/945-7000) CRMNET.COM: Appoints Gary Williams as President & Secretary ----------------------------------------------------------- CRMNet.com, Inc., (TSX Venture:CRM.H) reported that as part of its ongoing reorganization it has appointed Gary Williams as President and Secretary of the company, succeeding John C. Gingerich. Mr. Gingerich will continue to serve on the board of directors. Mr. Williams has been involved in the mining industry since 1977, conducting both mineral exploration programs, and environmental site investigations for resource industries throughout his career. Project experience includes exploration for base metals, precious metals and uranium, along with environmental investigations of a number of tailings and waste rock storage areas. He is currently involved in a number of gold exploration programs, as well as directing the business development efforts of a company involved in the airborne detection of hydrocarbons using an advanced laser technology. Mr. Williams has a M.Sc. and is a Professional Geologist. The board of directors of the company is now composed of five individuals: * John C. Gingerich, * David A. Ross, * Mirella Howell, * Clara Mancini, and * George Dinadis. These appointments are subject to the approval of the TSX Venture Exchange. CRMnet.com Inc. is currently inactive. The new management intends to pursue potential acquisition(s) for the company in an effort to reactivate its business. Shareholders will be advised if and when any progress or decisions are reached. CRMnet.com, Inc., was a provider of customer relationship management software and services, it is presently inactive. At June 30, 2004, CRMnet posted a $530,259 stockholders' deficit compared to a $474,656 deficit at December 31, 2004. Furthermore, Moore Stephens Cooper Molyneux, LLP, CRMnet's Auditor indicated in the company's year-end report: "As a result of operating losses over the past several years and the working capital deficiency as at December 31, 2003, the Company's continuance as a going concern is dependent upon its ability to obtain adequate financing and its ability to reach profitable levels of operations. It is not possible to predict whether financing effects will be successful or if the Company will attain profitable levels of operation." CRYSTAL COVE: Moody's Puts Ba2 Rating on $20.3M Preference Shares ----------------------------------------------------------------- Moody's Investors Service assigned ratings to the following tranches of notes all due 2039 being issued by Crystal Cove CDO, Ltd. as follows: (1) Aaa to the U.S.$ 350,000,000 Class A-1 First Priority Senior Secured Floating Rate Notes; (2) Aaa to the U.S.$ 70,000,000 Class A-2 Second Priority Senior Secured Floating Rate Notes; (3) Aa2 to the U.S.$ 39,700,000 Class B Third Priority Senior Secured Floating Rate Notes; (4) Baa2 to the U.S.$ 19,500,000 Class C-1 Mezzanine Secured Deferrable Floating Rate Notes; and (5) Baa2 to the U.S.$ 1,500,000 Class C-2 Mezzanine Secured Deferrable Fixed Rate Notes. Moody's also assigned ratings of: (a) Ba2 to the U.S.$20,300,000 Preference Shares; (b) Baa3 to the U.S.$ 4,000,000 Class C-1 Combination Securities; and (c) Aaa to the U.S.$ 4,000,000 Class P Combination Securities; all due 2039. Moody's notes that the ratings of these notes address the ultimate cash receipt of all required interest and principal payments required by the governing documents and are based on the expected losses posed to holders of the notes relative to the promise of receiving the present value of such payments. Moody's has rated the Notes considering: (i) the risk of a diminishment of cash flows from the underlying portfolio due to defaults; (ii) the characteristics of the initial portfolio; and (iii) the safety of the Notes' legal structure. The Moody's Rating on the Preference Shares addresses the ultimate receipt of the Preference Share Rated Balance (initially $20.3 million) and does not address any additional promises in respect of any other cash flows that may now or hereafter be made to such holders. Moody's rating of the Class C-1 Combination Securities only addresses the ultimate receipt of the principal amount and does not address any additional promises in respect of any other cash flows that may now or hereafter be made to such holders. Moody's rating of the Class P Combination Securities is based upon the support of an underlying note issued by the Federal National Mortgage Association due September 3, 2030. The rating addresses only the likelihood that the holders of the Class P Combination Securities will receive ultimate payment of principal due at maturity of the underlying note and does not address any possible shortfall before maturity of the underlying note. This transaction, underwritten by Merrill Lynch & Co. is a resecuritization of mostly Asset-Backed Securities -- ABS, Corporate Debt Securities and Synthetic Securities. CSFB MORTGAGE: S&P Pares Class G-ALH Rating from BBB- to BB+ ------------------------------------------------------------ Standard & Poor's Ratings Services raised its rating on class C of Credit Suisse First Boston Mortgage Securities Corp.'s commercial mortgage pass-through certificates series 2002-TFL1. At the same time, Standard & Poor's lowered its ratings on three classes and affirmed its ratings on 18 other classes from the same transaction. The raised and affirmed ratings reflect the increased credit support for the senior pooled classes due to the approximately 29% pay down of the loan pool balance since issuance and the expectation that the Alliance BP Multifamily Portfolio loan ($110.00 million) will pay off before to the next pay period. Additionally, the Aon Office Building loan ($52.00 million) has paid off since the last trustee report date. The lowered rating is due to the decline in the reported financial operating performance of the Alliance LHP Portfolio and the Williamsburg & The Commons Portfolio. As of August 2004, the loan pool balance was $563 million (eight floating-rate loans secured by 43 properties). One loan (South Park Mall) is on Wachovia Bank N.A.'s (master and special servicer) watchlist due to recent loan maturity but has since been extended, and one loan (Williamsburg & The Commons Portfolio) is being specially serviced due to a decline in the properties' net cash flow -- NCF, triggering a cash trap. The transaction is structured with senior pooled classes from classes A-2 to E and subordinate classes directly secured by three specific loans -- rake classes. The transaction is structured with senior pooled classes from classes A-2 to E and subordinate classes directly secured by three specific loans -- rake classes. The following describes the remaining loans. The largest loan balance is the 717 Fifth Avenue building (whole loan $220.00 million: $145.00 million in trust with 36.2% of the loan pool balance and $75.00 million mezzanine debt), which is a class A, 379,569-sq.-ft. office building (with 55,700 sq. ft. of retail space) located between 55th and 56th Streets in Midtown Manhattan. The property's reported year-end 2003 NCF declined approximately 5% since issuance. The property's submarket remains strong, and it has a superior location; thus, the property's value has not declined. The original maturity is November 2004 with two optional 12-month maturity extensions that could be exercised. However, according to the servicer, this loan may prepay later this month. The Alliance LHMD Multifamily Portfolio (whole balance is $246.86 million with $135.69 million in trust, totaling 9.9% of the loan pool) consists of 21 garden-style properties located in: * Tennessee (one property), * Texas (two), * South Carolina (two), * North Carolina (nine), * Georgia (two), and * Virginia (two), with a total of 4,850 units that were built between 1968 and 1986. Although the average occupancy for the properties was 91% in May 2004, the reported year-end 2003 NCF was down 30% as a result of the low-mortgage interest rate impact on demand for multifamily rental properties, which, in turn, resulted in rent concessions in an effort to retain current tenants and to attract new tenants. Williamsburg & The Commons Portfolio (whole balance is $65.00 million with $42.25 million in trust totaling 9.9% of the loan pool) consists of two multifamily properties in Woodlawn and Cincinnati, Ohio, with a total of 1,264 units built between 1966 and 1990. The properties' combined July 2004 occupancy was 81%, compared with 83% at issuance. The combined reported NCF for the trailing 12 months ending March 31, 2004 was down 26.8%, compared with year-end 2002 (A note debt service coverage -- DSC -- of 1.58x and A/B note DSC of 0.84x). In May 2004, the master servicer replaced the property manager at both properties. This loan has been specially serviced since June 2004 when the decline in the properties' NCF triggered the pre-defined cash trap. An August 2004 appraisal valued the properties at $60.3 million. Also in August 2004, the special servicer declared an event of default for various issues. According to the terms of the participation agreement, in an event of default, the special servicer may withhold interest to the B note to pay property expenses. Cottonstar Portfolio (whole balance is $88.76 million with $47.82 million in trust, totaling 9.9% of the loan pool) is secured by two office properties (one 286,404-sq.-ft. property built in 1983; the other is a 307,130-sq.-ft. property built in 1981) located in Dallas, Texas. Two Houston, Texas office buildings were released, as planned, from the portfolio in December 2003 at issuance, and the principal loan balance was paid down accordingly. The remaining two Dallas properties reported a May 2004 combined occupancy of 88% with a 9% decline in NCF compared with 90% occupancy at issuance. This loan matures in September 2004; the borrower has three optional 12-month loan extensions. The servicer and borrower are currently working on the loan extension. South Park Mall (whole balance is $46.1 million with $38.70 million in trust, totaling 9.9% of the loan pool) is a 791,043-sq. ft. shopping mall in San Antonio, Texas, anchored by JC Penney, Sears, and Foley's. The reported year-end 2003 NCF was down approximately 10% from the NCF at issuance, due largely to an increase in property real estate taxes. As of June 2004, the mall's occupancy remained strong at 98%, an increase from 95% at issuance. The master servicer recently approved a loan maturity extension until July 2005. Finally, Portland Multifamily Portfolio (whole balance is $52.85 million with $37.55 million in trust, totaling 9.9% of the loan pool) consists of two apartment complexes built in 1989 with a total of 710 units in Beaverton and Lake Oswego, Oregon (suburbs of Portland). The properties reported a year-end 2003 11% decline in NCF compared with the NCF at issuance, with a slight decline in combined March 2004 occupancy to 93% from 95% at issuance. Rating Raised Credit Suisse First Boston Mortgage Securities Corp. Commercial mortgage pass-thru certs series 2002 TFL1 Rating Credit Class To From Support (%) ----- -- ---- ----------- C AA+ AA 11.88 Ratings Lowered Credit Suisse First Boston Mortgage Securities Corp. Commercial mortgage pass-thru certs series 2002 TFL1 Rating Credit Class To From Support (%) ----- -- ---- ----------- E BBB A- 0.00 F-ALH BBB- BBB N/A G-ALH BB+ BBB- N/A Ratings Affirmed Credit Suisse First Boston Mortgage Securities Corp. Commercial mortgage pass-thru certs series 2002 TFL1 Credit Class Rating Support (%) ----- ------ ----------- A-1 AAA 25.27 A-2 AAA 25.27 B AAA 25.27 D A 3.06 F-717 A- N/A F-ABP BBB N/A F-AON A- N/A G-ABP BBB- N/A G-AON BBB N/A G-717 BBB N/A H-717 BBB- N/A H-AON BBB- N/A F-SP BBB N/A G-SP BBB- N/A A-X AAA N/A A-YCDC AAA N/A A-YCF-1 AAA N/A A-YCF-2 AAA N/A N/A - Not applicable. DB COMPANIES: Gets Final Nod to Use Lenders' Cash Collateral ------------------------------------------------------------ The Honorable Peter J. Walsh gave his stamp of approval to DB Companies, Inc., and its debtor-affiliates' request for authority to use their Lenders cash collateral to continue financing their business operations, maintain the value of their assets and avoid irreparable harm to their estates. DB Companies owes Fleet National Bank, N.A., La Salle Bank National Association, GMAC Commercial Mortgage Corporation and Valero Marketing and Supply Co. approximately $45 million. The Debtor will limit use of the Lenders' cash collateral to the amounts shown in a Weekly Budget from June 2, 2004 to October 2, 2004, projecting: 6-05 6-12 6-19 6-26 7-03 7-10 7-17 ==== ==== ==== ==== ==== ==== ==== Total Cash Flow 1423 3346 3100 3101 3102 3400 3100 Operating Disbursements 1051 3044 3054 3104 3555 3161 3111 7-24 7-31 8-07 8-14 8-21 8-28 ==== ==== ==== ==== ==== ==== Total Cash Flow 3102 3491 2716 3314 2716 2716 Operating Disbursements 3148 1945 3222 3067 3516 2000 9-04 9-11 9-18 9-25 10-2 ==== ==== ==== ==== ==== Total Cash Flow 1586 2484 2985 2572 2572 Operating Disbursements 3171 2761 2763 2651 3706 As adequate protection for any diminution in the value of the interests of each Creditor, postpetition replacement liens of the same extent, order and priority are granted upon all of the Debtors' assets. As an added protection, liens which are not fully secured will be given, on a pro rata basis, superpriority administrative claim status in accordance with Section 507(b) of the Bankruptcy Code. To give Fleet National Bank added protection, the Court orders the Debtors to maintain, at all times, a minimum cash balance of $150,000 and the Bank is allowed to dishonor withdrawals against the Deposit Accounts in order to maintain the minimum balance. Headquartered in Pawtucket, Rhode Island, DB Companies, Inc. -- http://www.dbmarts.com/-- operates and franchises a regional Chain of DB Mart convenience stores in Connecticut, Massachusetts, Rhode Island, and the Hudson Valley region of New York. The Company filed for chapter 11 protection on June 2, 2004 (Bankr. Del. Case No. 04-11618). William E. Chipman Jr., Esq., at Greenberg Traurig, LLP represents the Debtors in their restructuring efforts. When the Company filed for protection from their creditors, they estimated assets of over $50 million and debts of approximately $65 million. DELAWARE TALON GROUP: Case Summary & Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Delaware Talon Group, Inc. 1111 Mineral Springs Arlington, Texas 76001 Bankruptcy Case No.: 04-48557 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- CLG Steel, Inc. 04-48560 Chapter 11 Petition Date: September 3, 2004 Court: Northern District of Texas (Ft. Worth) Debtor's Counsel: Michael P. Massad, Jr., Esq. Hunton & Williams Energy Plaza, 30th Floor 1601 Bryan Street Dallas, Texas 75201 Tel: (214)979-3013 Estimated Assets Estimated Debts ---------------- --------------- Delaware Talon Group, Inc. $50,000 to $100,000 $50 M to $100 M CLG Steel, Inc. $1 M to $10 M $1 M to $10 M A. Delaware Talon Group, Inc.'s 6 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Carl Gasket Loan $350,000 c/o John Escher Waterfall, Economides, et al. 5210 East Williams Circle Suite 800 Tucson, Arizona 85711 Kevin Burns & Lisa C. Burns Loan $160,000 Atra Corporation Loan $150,000 Joel Mark Byko and Loan $140,000 Phyllis Ellen Byko Barnsco Loan $5,000 Carl Skibell, Esq. Legal $3,000 B. CLG Steel, Inc.'s 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Border Steel, Inc. Trade $566,956 PO Box 120534 Dallas, Texas 75312 Internal Revenue Service Taxes $73,715 Nudura Corporation Trade $71,199 North Star Steel Company Trade $65,853 Suncoast Post Tension Trade $42,401 Davis Wire Corporation Trade $24,538 Health Net of AZ Trade $18,394 Pima County Treasurer Taxes $16,546 Paragon Building Products Trade $14,423 MetLife Trade $11,611 CSC Trade $10,544 Jefferson Pilot Financial Trade $10,076 Itax Group Trade $9,902 KC Metals South Trade $9,798 Unitex Trade $9,764 Atlas Construction Supply Trade $9,761 River Steel Ltd. Company Trade $9,056 Barsplice Trade $8,153 Rocky Mountain Steel Mills Trade $7,421 Euler American Credit Trade $7,167 Indemnity DELTA AIR: Dept. of Labor Appoints Jim Swartz to Serve on NACOSH ---------------------------------------------------------------- Delta Air Lines (NYSE: DAL) said Jim Swartz, director - Corporate Safety has been appointed by the United States Department of Labor to serve on the National Advisory Committee on Occupational Safety and Health (NACOSH). Swartz will advise the secretaries of Labor and Health and Human Services on occupational safety and health programs and policies. "I'm honored to have the opportunity to advise the government's decision makers on matters of occupational safety," said Swartz. "I welcome the opportunity to share the success Delta has had in creating, implementing and improving programs that result in better work environments for our employees." Earlier this year, Delta's TechOps division earned Star status, the Occupational Safety and Health Administration's (OSHA) top honor for industry-leading safety practices, policies and training. Delta is the only major commercial airline to qualify for and receive Star status. Delta has earned the FAA's Diamond award for six consecutive years, the FAA's most prestigious safety honor. Mr. Swartz is currently on the Boards of Project Safe Georgia, the National Safety Council and Georgetown University McDonough School of Business. He is an active member and past president of the National Safety Council's Air Transport Section's Executive Committee, and was awarded the National Safety Council's Distinguished Service to Safety Award in 1993, the highest recognition bestowed on an individual by this group. He received the Flight Safety Foundation's Air BP Ramp Safety Award in 1999. NACOSH, comprised of occupational safety professionals, was established under the Occupational Safety and Health Act of 1970 to advise the secretaries of Labor and Health and Human Services on occupational safety and health programs and policies. Members of the 12-person advisory committee serve two-year terms and are chosen on the basis of their knowledge and experience in occupational safety and health. Delta Air Lines is proud to celebrate its 75th anniversary in 2004. Delta is the world's second largest airline in terms of passengers carried and the leading U.S. carrier across the Atlantic, offering daily flights to 493 destinations in 87 countries on Delta, Song, Delta Shuttle, the Delta Connection carriers and its worldwide partners. Delta's marketing alliances allow customers to earn and redeem frequent flier miles on more than 14,000 flights offered by SkyTeam, Northwest Airlines, Continental Airlines and other partners. Delta is a founding member of SkyTeam, a global airline alliance that provides customers with extensive worldwide destinations, flights and services. For more information, please visit http://www.delta.com/ * * * As reported in the Troubled Company Reporter on August 23, 2004, Standard & Poor's Ratings Services lowered Delta Air Lines, Inc.'s corporate credit rating and the ratings on Delta's equipment trust certificates and pass-through certificates to 'CCC'. Any out-of- court restructuring of bond payments or a coercive exchange would be considered a default and cause the company's corporate credit rating to be lowered to 'D' -- default -- or 'SD' -- selective default, S&P noted. Ratings on Delta's enhanced equipment trust certificates, which are considered more difficult to restructure outside of bankruptcy, were not lowered. A Committee of Senior Secured Aircraft Creditors of Delta Air Lines, Inc., holding $1.4 billion of senior secured debt and represented by the law firm of Bingham McCutchen LLP, has asked Delta for more information. Delta hasn't been forthcoming, the Committee indicated earlier this week. DELTA AIR: Reports 9% Increase System Traffic Increase in August ---------------------------------------------------------------- Delta Air Lines (NYSE: DAL) reported traffic results for the month of August 2004. System traffic for August 2004 increased 9.0 percent from August 2003 on a capacity increase of 10.7 percent. Delta's system load factor was 78.9 percent in August 2004, down 1.2 points from the same period last year. Domestic traffic in August 2004 increased 7.4 percent year over year while capacity increased 9.2 percent. Domestic load factor in August 2004 was 78.0 percent, down 1.2 points from the same period one year ago. International traffic in August 2004 increased 14.1 percent year over year on a 16.1 percent increase in capacity. International load factor was 81.8 percent, down 1.4 points from August 2003. During August 2004, Delta operated its schedule at a 98.7 percent completion rate, compared to 99.1 percent in August 2003. Delta boarded 9,799,113 passengers during the month of August 2004, an increase of 3.7 percent from August 2003. Delta Air Lines is proud to celebrate its 75th anniversary in 2004. Delta is the world's second largest airline in terms of passengers carried and the leading U.S. carrier across the Atlantic, offering daily flights to 493 destinations in 87 countries on Delta, Song, Delta Shuttle, the Delta Connection carriers and its worldwide partners. Delta's marketing alliances allow customers to earn and redeem frequent flier miles on more than 14,000 flights offered by SkyTeam, Northwest Airlines, Continental Airlines and other partners. Delta is a founding member of SkyTeam, a global airline alliance that provides customers with extensive worldwide destinations, flights and services. For more information, please visit http://www.delta.com/ Delta Air Lines August Traffic 2004 2003 Change RPMs (000): Domestic 7,757,880 7,220,937 7.4 % Delta Mainline 6,770,766 6,394,483 5.9 % ASA 418,538 336,372 24.4 % Comair 568,576 490,082 16.0 % International 2,447,757 2,144,415 14.1 % Latin America 481,563 417,481 15.3 % Delta Mainline 466,127 405,212 15.0 % ASA 8,155 6,924 17.8 % Comair 7,281 5,345 36.2 % Atlantic 1,865,666 1,634,433 14.1 % Pacific 100,528 92,501 8.7 % Total System 10,205,637 9,365,352 9.0 % ASMs (000): Domestic 9,949,034 9,114,788 9.2 % Delta Mainline 8,546,668 7,921,774 7.9 % ASA 598,417 495,277 20.8 % Comair 803,949 697,737 15.2 % International 2,993,847 2,577,811 16.1 % Latin America 606,532 514,507 17.9 % Delta Mainline 585,576 496,923 17.8 % ASA 11,456 10,655 7.5 % Comair 9,500 6,929 37.1 % Atlantic 2,274,053 1,960,428 16.0 % Pacific 113,262 102,876 10.1 % Total System 12,942,881 11,692,599 10.7 % Load Factor Domestic 78.0 % 79.2 % (1.2) pts Delta Mainline 79.2 % 80.7 % (1.5) pts ASA 69.9 % 67.9 % 2.0 pts Comair 70.7 % 70.2 % 0.5 pts International 81.8 % 83.2 % (1.4) pts Latin America 79.4 % 81.1 % (1.7) pts Delta Mainline 79.6 % 81.5 % (1.9) pts ASA 71.2 % 65.0 % 6.2 pts Comair 76.6 % 77.1 % (0.5) pts Atlantic 82.0 % 83.4 % (1.4) pts Pacific 88.8 % 89.9 % (1.1) pts Total System 78.9 % 80.1 % (1.2) pts Passengers Boarded 9,799,113 9,451,018 3.7 % Delta Air Lines Calendar Year-to-Date August Traffic August 2004 August 2003 Change RPMs (000): Domestic 57,126,841 51,918,321 10.0 % Delta Mainline 49,881,723 46,092,336 8.2 % ASA 3,011,958 2,564,509 17.4 % Comair 4,233,160 3,261,476 29.8 % International 16,673,559 13,856,930 20.3 % Latin America 3,263,255 2,937,747 11.1 % Delta Mainline 3,164,923 2,863,878 10.5 % ASA 65,818 49,742 32.3 % Comair 32,514 24,127 34.8 % Atlantic 12,643,944 10,300,986 22.7 % Pacific 766,360 618,197 24.0 % Total System 73,800,400 65,775,251 12.2 % ASMs (000): Domestic 76,549,308 70,237,094 9.0 % Delta Mainline 65,963,532 61,484,478 7.3 % ASA 4,381,572 3,799,853 15.3 % Comair 6,204,204 4,952,763 25.3 % International 20,889,896 18,129,315 15.2 % Latin America 4,396,701 4,184,134 5.1 % Delta Mainline 4,251,767 4,067,157 4.5 % ASA 100,916 84,422 19.5 % Comair 44,018 32,555 35.2 % Atlantic 15,599,167 13,134,211 18.8 % Pacific 894,028 810,970 10.2 % Total System 97,439,204 88,366,409 10.3 % Load Factor Domestic 74.6 % 73.9 % 0.7 pts Delta Mainline 75.6 % 75.0 % 0.6 pts ASA 68.7 % 67.5 % 1.2 pts Comair 68.2 % 65.9 % 2.3 pts International 79.8 % 76.4 % 3.4 pts Latin America 74.2 % 70.2 % 4.0 pts Delta Mainline 74.4 % 70.4 % 4.0 pts ASA 65.2 % 58.9 % 6.3 pts Comair 73.9 % 74.1 % (0.2)pts Atlantic 81.1 % 78.4 % 2.7 pts Pacific 85.7 % 76.2 % 9.5 pts Total System 75.7 % 74.4 % 1.3 pts Passengers Boarded 74,145,252 70,022,013 5.9 % Delta Air Lines is proud to celebrate its 75th anniversary in 2004. Delta is the world's second largest airline in terms of passengers carried and the leading U.S. carrier across the Atlantic, offering daily flights to 493 destinations in 87 countries on Delta, Song, Delta Shuttle, the Delta Connection carriers and its worldwide partners. Delta's marketing alliances allow customers to earn and redeem frequent flier miles on more than 14,000 flights offered by SkyTeam, Northwest Airlines, Continental Airlines and other partners. Delta is a founding member of SkyTeam, a global airline alliance that provides customers with extensive worldwide destinations, flights and services. For more information, please visit http://www.delta.com/ * * * As reported in the Troubled Company Reporter on August 23, 2004, Standard & Poor's Ratings Services lowered Delta Air Lines, Inc.'s corporate credit rating and the ratings on Delta's equipment trust certificates and pass-through certificates to 'CCC'. Any out-of- court restructuring of bond payments or a coercive exchange would be considered a default and cause the company's corporate credit rating to be lowered to 'D' -- default -- or 'SD' -- selective default, S&P noted. Ratings on Delta's enhanced equipment trust certificates, which are considered more difficult to restructure outside of bankruptcy, were not lowered. A Committee of Senior Secured Aircraft Creditors of Delta Air Lines, Inc., holding $1.4 billion of senior secured debt and represented by the law firm of Bingham McCutchen LLP, has asked Delta for more information. Delta hasn't been forthcoming, the Committee indicated earlier this week. DEUTSCHE FINANCIAL: Fitch Junks Three Classes & Pares One to B- --------------------------------------------------------------- Fitch Ratings reviewed the Deutsche Financial Capital manufactured housing transactions. Nine classes representing approximately $101 million were downgraded and four classes representing approximately $33 million were affirmed: Series 1997-I (35% Pool Factor): -- i.e., remaining mortgage principal balance as a percentage of the original balance as of the cut-off date): * Classes A-3 through A-6 affirmed at 'AAA'; * Class M downgraded to 'BBB' from 'A-'; * Class B-1 downgraded to 'C' from 'CC'; * Class B-2 remains at 'C'. Series 1998-I (30% Pool Factor): * Classes A-2 - 7 downgraded to 'A' from 'AA-'; * Class M downgraded to 'B-' from 'BB-'; * Class B-1 remains at 'C'. Deutsche Financial was a joint venture of Deutsche Financial Services Corporation and Oakwood Acceptance Corporation. Collateral included in the transactions consists of fixed rate manufactured housing contracts secured by new and used manufactured homes which are serviced by Oakwood Acceptance, a wholly owned subsidiary of Oakwood Homes Corporation. Founded in 1946, Oakwood Homes was one of the largest manufacturers and retailers of manufactured homes. Oakwood Homes Corporation filed for Chapter 11 bankruptcy protection on Nov. 15, 2002, and in late 2003, announced that substantially all of its assets would be acquired by Clayton Homes, Inc., a subsidiary of Berkshire Hathaway. Credit enhancement - in the form of overcollateralization - was fully depleted in both transactions more than two years ago. As a result, subordinate classes of certificates have been directly absorbing losses generated within the collateral pool and in certain cases have been fully written down. Fitch remains concerned about the continuing impact of such losses on the downgraded classes, although monthly losses: (i) appear to be decreasing in the case of 1997-I (three month rolling average is $337,234 compared to six month rolling average of $432,375); and (ii) remaining relatively stable for 1998-I. DIAMOND TRIUMPH: Weak Performance Spurs S&P to Watch B Ratings -------------------------------------------------------------- Standard & Poor's Ratings Services placed its 'B' corporate credit and senior unsecured debt ratings for Diamond Triumph Auto Glass, Inc., on CreditWatch with negative implications. Kingston, Penssylvania-based Diamond, one of the largest providers of automotive glass replacement and repair in North America, had balance sheet debt totaling $80 million at June 30, 2004. "The CreditWatch listing reflects continuing weak operating performance resulting from a combination of pricing pressures and weak market demand," said Standard & Poor's credit analyst Nancy C. Messer. Because trailing 12 months' EBITDA is trending downward, it appears unlikely the company will achieve Standard & Poor's expectation of 2x EBITDA interest coverage in fiscal 2004. DIGITAL LIGHTWAVE: Transfers Securities Trading to Nasdaq SmallCap ------------------------------------------------------------------ Digital Lightwave, Inc.'s (Nasdaq:DIGL) board of directors approved the transfer of the listing of the Company's securities to the Nasdaq SmallCap Market from the Nasdaq National Market. The Company filed the transfer application with The Nasdaq Stock Market on September 3, 2004. The board approved the change in securities market listing in anticipation of a delisting notification from the Nasdaq National Market. The Company was notified August 4, 2004, of the possibility of delisting from the Nasdaq National Market due to the market value of its securities falling below the minimum $50 million requirement for continued inclusion in the Nasdaq National Market. As of that date, the market value of the Company's listed securities was approximately $42.3 million. Jim Green, President and CEO of the Company, stated that, "We believe the decision to transfer the listing of the Company's securities to the Nasdaq SmallCap Market is in the best interests of our stockholders. The liquidity provided by the Nasdaq SmallCap Market is similar to that of the Nasdaq National Market. Additionally, the lower administration costs associated with the Nasdaq SmallCap Market are more appropriate given the current size and scope of the Company." Review and approval of the transfer application by the Nasdaq Stock Market will be conducted during the month of September. It is anticipated there will not be any disruption in the trading of the Company's securities during the transfer process. About Digital Lightwave, Inc. Based in Clearwater, Florida, Digital Lightwave, Inc. provides the global communications networking industry with products, technology and services that enable the efficient development, deployment and management of high-performance networks. The Company's customers -- companies that deploy networks, develop networking equipment, and manage networks -- rely on its offerings to optimize network performance and ensure service reliability. The Company designs, develops and markets a portfolio of portable and network-based products for installing, maintaining and monitoring fiber optic circuits and networks. Network operators and telecommunications service providers use fiber optics to provide increased network bandwidth to transmit voice and other non-voice traffic such as internet, data and multimedia video transmissions. The Company provides telecommunications service providers and equipment manufacturers with product capabilities to cost-effectively deploy and manage fiber optic networks. The Company's product lines include: Network Information Computers, Network Access Agents, Optical Test Systems, and Optical Wavelength Managers. The Company's wholly owned subsidiaries are Digital Lightwave (UK) Limited, Digital Lightwave Asia Pacific Pty, Ltd., and Digital Lightwave Latino Americana Ltda. At June 30, 2004, Digital Lightwave, Inc.'s balance sheet showed a $20,478,000 stockholders' deficit, compared to a $21,140,000 deficit at December 31, 2003. DRESSER INC: Files Registration Statement for Proposed IPO ---------------------------------------------------------- Dresser, Inc. has filed a registration statement with the Securities and Exchange Commission for a proposed initial public offering of its common stock. The number of shares to be offered and the price range for the offering have not yet been determined. A portion of the shares will be issued by the Company and a portion will be sold by certain existing shareholders of Dresser. Proceeds from the shares issued by the Company will be used to pay down debt. Morgan Stanley and Credit Suisse First Boston will act as joint book-running managers for the proposed offering, with Banc of America LLC, UBS Investment Bank, Lehman Brothers, Raymond James, and Simmons & Company International as co-managers. A preliminary prospectus, when it becomes available, may be obtained from: Morgan Stanley & Co. Incorporated Prospectus Department 1585 Broadway New York, NY 10036 Telephone 212-761-6775 - or - Credit Suisse First Boston LLC Prospectus Department One Madison Avenue New York, NY 10010 Telephone 212-325-2580 A registration statement relating to these securities has been filed with the Securities and Exchange Commission but has not yet become effective. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. This press release shall not constitute an offer to sell or a solicitation of an offer to buy, nor shall there be any sale of these securities in any state in which such an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state. Headquartered in Dallas, Dresser, Inc., is a worldwide leader in the design, manufacture and marketing of highly engineered equipment and services sold primarily to customers in the flow control, measurement systems, and compression and power systems segments of the energy industry. Dresser has a widely distributed global presence, with over 8,500 employees and a sales presence in over 100 countries worldwide. The Company's website can be accessed at http://www.dresser.com/ At June 30, 2004, Dresser, Inc.'s balance sheet showed a $318.3 million stockholders' deficit, compared to a $312.6 deficit at December 31, 2003. ENRON CORP: Sues to Recover $7.2 Million of Preferential Transfers ------------------------------------------------------------------ On or within 90 days before the Petition Date, Enron and its debtor-affiliates made, or caused to be made, transfers to 43 creditors: Creditor Amount -------- ------ Air Power of New England $58,087 Alan Ziperstein 21,478 Alfa Laval, Inc. 1,624,864 All Crane of Georgia, Inc. 59,291 Allan Electric Company, Inc. 53,010 Allen Concrete of Blytheville, Inc. 72,833 Clean Energy Solutions, LLC 403,098 Cogenix 36,469 Collins-Oliver, Inc. 24,321 Colonial Electric Supply Company 98,249 Columbia Lakes 22,080 Columbia Electric Supply 72,828 Columbus Machine 81,791 Florida Maintenance & Construction 140,587 Flow-Lin Corporation 56,869 Flowserve Pumps 229,403 FNB Factors 76,060 Fnw Pasco 71,089 Foster Wheeler Limited 835,105 Furino & Sons, Inc. 67,272 Labov Mechanical, Inc. 858,399 Lampson International, Ltd. 104,864 Lane-Valente Industries, Inc. 23,270 Las Ventanas Al Paraiso 45,289 Liberty Supply, Inc. 74,564 Lighting Dynamics, Inc. 25,443 Lighting Technology Services, Inc. 46,962 Loan Clearing Agency Services 87,384 Onyx Industrial 144,000 Outlaw Brothers 117,980 Owens Construction Services 36,360 Oxy Vinyls, LP 230,724 Paco Pumps 80,007 Pan Ocean, Inc. 20,000 Par Realty Company 107,495 Southeast Pipe Fabricators, Inc. 26,573 Southern Associates Company 60,589 Southwest Carbon & Alloy 80,768 Southwest Fastener 41,824 Southwest Performance Group, Inc. 90,892 Spalj Construction Company 489,212 Sridharon Raghavachari 312,720 Stanley Consultants, Inc. 24,500 ------------ TOTAL $7,234,603 ============ Neil Berger, Esq., at Togut, Segal & Segal, LLP, in New York, relates that: (a) the Transfers constitute transfers of interest of the Debtors' property; (b) the Debtors made, or caused to be made, the Transfers to, or for the benefit of, the Creditors; (c) the Debtors made, or caused to be made, the Transfers for, or on account of, antecedent debts owed to the Creditors prior to the dates on which the Transfers were made; (d) the Debtors were insolvent when the Transfers were made; and (e) the Transfers enabled the Creditors to receive more than they would have received if: -- Enron's cases were administered under Chapter 7 of the Bankruptcy Code; -- the Transfers had not been made; and -- the Creditors had received payment of the debt to the extent provided by the Bankruptcy Code. Thus, Mr. Berger contends that the Transfers constitute avoidable preferential transfers pursuant to Section 547(b) of the Bankruptcy Code. In accordance with Section 550(a), the Debtors may recover from the Creditors the amount of the Transfers, plus interest. In the alternative, Mr. Berger asserts that the Transfers are avoidable fraudulent transfers under Section 548(a)(1)(B) because: (a) the Transfers constitute transfers of interest in the Debtors' property; (b) the Transfers were to or for the benefit of the Creditors; (c) the Debtors received less than reasonable equivalent value in exchange for some or all of the Transfers; (d) the Debtors were insolvent, or became insolvent, or had unreasonably small capital in relation to their businesses or their transactions at the time or as a result of the Transfers; and (e) the Transfers were made within one year before the Petition Date. Accordingly, the Debtors ask the Court to: (i) avoid and set aside the Transfers pursuant to Section 547(b); (ii) in the alternative, avoid and set aside the Transfers pursuant to Section 548(a)(1)(B); (iii) direct the Creditors to immediately disgorge the Transfers pursuant to Section 550(a), together with interest from the date of the Transfers; and (iv) award them attorney's fees, costs and other expenses incurred. Headquartered in Houston, Texas, Enron Corporation is in the midst of restructuring various businesses for distribution as ongoing companies to its creditors and liquidating its remaining operations. Before the company agreed to be acquired, controversy over accounting procedures had caused Enron's stock price and credit rating to drop sharply. The Company filed for chapter 11 protection on December 2, 2001 (Bankr. S.D.N.Y. Case No. 01- 16033). Judge Gonzalez confirmed the Company's Modified Fifth Amended Plan on July 15, 2004, and numerous appeals followed. Martin J. Bienenstock, Esq., and Brian S. Rosen, Esq., at Weil, Gotshal & Manges, LLP, represent the Debtors in their restructuring efforts. (Enron Bankruptcy News, Issue No. 123; Bankruptcy Creditors' Service, Inc., 215/945-7000) GAP INC: Moody's Raises Retailer's Debt & Issuer Ratings to Ba1 --------------------------------------------------------------- Moody's Investors Service upgraded the senior unsecured debt and issuer ratings of Gap, Inc., on the elimination of the effective and structural subordination of the company's public debt to its bank agreement. The company's senior implied and speculative grade liquidity ratings are affirmed, based on Gap's strong free cash flow and credit metrics as a result of a more disciplined approach to its operations, as well as the fact that assets are now generally unencumbered. Ratings upgraded: Gap, Inc.: * Senior unsecured notes, global notes and convertible global bonds to Ba1 from Ba2; and * Issuer rating to Ba1 from Ba2. Gap International B.V.: * Eurobonds guaranteed by Gap Inc. to Ba1 from Ba2. Gap (Japan) K.K: * Senior notes guaranteed by Gap Inc. to Ba1 from Ba2. Ratings affirmed: Gap Inc.: * Senior implied rating at Ba1; and * Speculative grade liquidity rating of SGL-1. Gap recently announced the execution of a new $750 million 5 year bank revolving credit agreement. Unlike the $750 million revolving credit that it replaced, the new facility is unsecured and is not guaranteed by subsidiaries. Thus, the company's senior notes, which do not have security or upstream guarantees, are no longer structurally and effectively subordinated to Gap's banks. All company debt now ranks pari passu, and is appropriately rated at the same level. The Ba1 senior implied rating considers Gap Inc.'s dominant brand names, strong liquidity, solid asset base, and debt protection measures that provide a cushion at this rating level. The rating levels also reflects management's prudent financial policies and more disciplined approach towards managing the business risk inherent in apparel retailing and its future growth opportunities. However, the ratings are currently constrained by: * the relative newness of the management team, * the intense competition and volatility of apparel retailing, and * the potential pressure on the new management team to quickly return value to shareholders. The positive outlook reflects the expectation that the company will sustain its improvements in operating performance by staying focused on its customers, core brands, and its more disciplined approach to product assortment and inventory management. It also assumes that management will continue to pursue a conservative financial strategy including debt protection measures and liquidity. It is Moody's expectation that there will be a further reduction in leverage over the next twelve months. Moody's also anticipates that Gap will continue to generate strong operating cash flow despite the negative same store sales of the past three months. An upgrade will require the management team to demonstrate discipline and financial conservatism over the next 12 to 18 months as the company's strategy shifts from turning its three brands around to a greater emphasis on growth and enhancing shareholder returns. While demonstration of a disciplined approach to planning and executing its growth strategy will be a key factor, an upgrade would also likely require the company to consistently maintain free cash flow available for debt service above $1 billion, adjusted debt/EBITDAR below 3.0x, and unrestricted cash on balance sheet above $2 billion. Given the positive outlook, a downgrade is currently unlikely; however, the ratings could move downward if the company's operating performance deteriorates or if it aggressively increases leverage to spend on capital expenditures, acquisitions, or share repurchases. Gap, Inc.'s speculative grade liquidity rating of SGL-1 reflects very good liquidity. The company's primary sources of liquidity are net positive cash flow from operations and its high available cash balances (nearly $3 billion at July 31, 2004), excluding restricted cash of $1.4 billion that secures the company's committed bank line for letters of credit. Gap's unrestricted cash exceeded its debt of about $2.3 billion at that date. Moody's expects Gap Inc. to meet all of its anticipated capital expenditures, upcoming debt maturities over the next 12 months and the announced prepayment of another $122 million in the current third quarter through internal sources of cash. The company's new $750 million revolving credit facility is undrawn. Given that the new credit agreement is not secured by inventory and the pledge of the stock of domestic facilities, unlike the facility that it replaced, Gap's assets are now predominantly unencumbered; the only pledged assets are the restricted portion of the company's cash balances. Headquartered in San Francisco, Gap, Inc., operates 2,999 stores internationally under the Gap, Old Navy, and Banana Republic brands. Gap, Inc. had annual revenues of approximately $15.9 billion in the year ended February 1, 2004. HAYES LEMMERZ: AP Wheels Discloses Ownership of 3.5 Million Shares ------------------------------------------------------------------ AP Wheels, LLC, discloses in a report filed with the Securities and Exchange Commission its beneficial ownership of 3,461,193 shares of Hayes Lemmerz International, Inc. Common Stock, including: -- 3,346,983 shares held of record by AP Wheels; -- 30,492 shares issuable on exercise of the Series A Warrants; and -- 83,718 shares issuable in exchange for the 17,823 shares of Series A Preferred Stock. AP Wheels' holdings represent 9.1% of the outstanding Hayes Lemmerz Common Stock. According to AP Wheels' Vice President Patricia M. Navis, the shares are held by seven Apollo funds: -- Apollo Investment Fund V, L.P.; -- Apollo Overseas Partners V, L.P.; -- Apollo Netherlands Partners V (A), L.P.; -- Apollo Netherlands Partners V (B), L.P.; -- Apollo German Partners V GmbH & Co. KG; -- Apollo Management V, L.P.; and -- Apollo Advisors V, L.P. Ms. Navis further relates that AP Wheels and Hayes Lemmerz entered into a Registration Rights Agreement on July 1, 2004. Pursuant to the Agreement, AP Wheels was granted: -- two demand registration rights to register the shares it beneficially owned for resale under the Securities Act of 1933, as amended; and -- the right to include certain shares on registration statements, other than on SEC Forms S-4 or S-8, otherwise filed by Hayes Lemmerz. Under the Agreement, AP Wheels agreed: -- not to effect a public sale or distribution of Hayes Lemmerz' securities during certain periods before and after Hayes Lemmerz files a registration statement with respect to an underwritten offering of its securities, provided that the director nominated by AP Wheels is still serving on Hayes Lemmerz's Board of Directors; -- to enter into customary lock-up agreements with the underwriters participating in an underwritten offering of the Hayes Lemmerz securities at the underwriter's request, provided that AP Wheels holds 5% or more of the outstanding Common Stock and that the director nominated by AP Wheels is still serving on the Hayes Lemmerz Board; and -- to use its best efforts to cause the director nominated by AP Wheels to resign from the Board once AP Wheels beneficially owns less than 1,000,000 shares of Common Stock. The Agreement terminates once AP Wheels beneficially owns less than 1,000,000 shares of Common Stock. (Hayes Lemmerz Bankruptcy News, Issue No. 53; Bankruptcy Creditors' Service, Inc., 215/945- 7000) HOLLINGER INC: Canadian Court Orders Appointment of an Inspector ---------------------------------------------------------------- The Honourable Mr. Justice Colin L. Campbell of the Ontario Superior Court of Justice has ordered that an inspector be appointed pursuant to s. 229(1) of the Canada Business Corporations Act to conduct an investigation of Hollinger, Inc., (TSX: HLG.C; HLG.PR.B), as requested by Catalyst Fund General Partner I Inc., a shareholder of Hollinger. The reasons for the decision are expected to be released by Justice Campbell before September 15, 2004 and will deal with the bases for the remedy sought as well as the method by which the parties may address the extent, scope, timing, cost and reporting of the investigation prior to the commencement of the investigation. The Litigation Committee of the board of directors of Hollinger, comprised solely of Hollinger's three independent directors, will consider its options as a result of this order following the issuance of Mr. Justice Campbell's reasons for decision. The review of certain related party transactions involving Hollinger and certain of its affiliates by Gottschalk Forensic Accounting & Valuations, Inc., is currently underway under the supervision of Hollinger's Independent Committee/Litigation Committee. Hollinger's principal asset is its approximately 68.0% voting and 18.2% equity interest in Hollinger International. Hollinger International is an international newspaper publisher with English-language newspapers in the United States and Israel. Its assets include the Chicago Sun-Times and a large number of community newspapers in the Chicago area, The Jerusalem Post and The International Jerusalem Post in Israel, a portfolio of new media investments and a variety of other assets. * * * As reported in the Troubled Company Reporter on August 31, 2004, as a result of the delay in the filing of Hollinger's 2003 Form 20-F (which would include its 2003 audited annual financial statements) with the United States Securities and Exchange Commission by June 30, 2004, Hollinger is not in compliance with its obligation to deliver to relevant parties its filings under the indenture governing its senior secured notes due 2011. US$78 million principal amount of Notes are outstanding under the Indenture. On August 19, 2004, Hollinger received a Notice of Event of Default from the trustee under the Indenture notifying Hollinger that an event of default has occurred under the Indenture. As a result, pursuant to the terms of the Indenture, the trustee under the Indenture or the holders of at least 25 percent of the outstanding principal amount of the Notes will have the right to accelerate the maturity of the Notes. Approximately US$5 million in interest on the Notes was due on September 1, 2004. Hollinger has deposited the full amount of such interest payment with the trustee under the Indenture and noteholders will receive their interest payment in a timely manner. As of the close of business on August 27, 2004, Hollinger had approximately US$8.7 million of cash or cash equivalents on hand and owned, directly or indirectly, 792,560 shares of Class A Common Stock and 14,990,000 shares of Class B Common Stock of Hollinger International. Based on the August 27, 2004 closing price of the shares of Class A Common Stock of Hollinger International on the New York Stock Exchange of US$17.14, the market value of Hollinger's direct and indirect holdings in Hollinger International was US$270,513,078.40. All of Hollinger's direct and indirect interest in the shares of Class A Common Stock of Hollinger International are being held in escrow with a licensed trust company in support of future retractions of its Series II Preference Shares and all of Hollinger's direct and indirect interest in the shares of Class B Common Stock of Hollinger International are pledged as security in connection with the Notes. In addition, Hollinger has previously deposited with the trustee under the Indenture approximately US$10.5 million in cash as collateral in support of the Notes. Consequently, there is currently in excess of US$267.4 million aggregate collateral securing the US$78 million principal amount of the Notes outstanding. Hollinger also received notice from staff of the Midwest Regional Office of the U.S. Securities and Exchange Commission that they intend to recommend to the Commission that it authorize civil injunctive proceedings against Hollinger for certain alleged violations of the U.S. Securities Exchange Act of 1934 and the Rules thereunder. The notice includes an offer to Hollinger to make a "Wells Submission", which Hollinger will be making, setting forth the reasons why it believes the injunctive action should not be brought. A similar notice has been sent to some of Hollinger's directors and officers. INFRASOURCE SERVICES: Completes EnStructure Acuisition ------------------------------------------------------ InfraSource Services, Inc. (NYSE:IFS), one of the largest specialty contractors servicing utility transmission and distribution infrastructure in the United States, completed its acquisition of substantially all of the assets and certain liabilities of EnStructure. EnStructure, headquartered in Michigan, provides a wide range of construction services including pipeline integrity services, installation of underground transmission and distribution pipelines, construction of compressor and meter stations, paving and restoration, and fiber optic installation for customers within the utilities and oil & gas markets. EnStructure, which had annual revenues in 2003 of approximately $75 million and has approximately 750 employees, operates throughout the Midwestern, Southern and Southeastern regions of the United States through three operating companies: SubSurface Construction, Iowa Pipeline Associates, and Flint Construction. David Helwig, InfraSource President & CEO, said, "This acquisition is consistent with our value-building strategy, and complements our existing businesses and skill sets. EnStructure has expanded our portfolio of service offerings, and consolidated our customer base in the Midwest, as well as provided additional geographic reach in the South and Southeast. We are pleased to announce that Steve Hicks, President of EnStructure, has joined our leadership team." About InfraSource Services, Inc. InfraSource Services, Inc. (NYSE:IFS) is one of the largest specialty contractors servicing utility transmission and distribution infrastructure in the United States. InfraSource designs, builds, and maintains transmission and distribution networks for utilities, power producers, and industrial customers. Further information can be found at http://www.infrasourceinc.com/ * * * As reported in the Troubled Company Reporter's May 11, 2004, edition, Standard & Poor's Ratings Services assigned its 'BB-' corporate credit rating to Aston, Pennsylvania-based InfraSource Services Inc. At the same time, Standard & Poor's assigned its 'BB-' senior secured bank loan rating and recovery rating of '5,' indicating negligible (less than 25%) recovery of principal in the event of a default, to the company's $157.2 million senior secured credit facility. The specialty contractor provides infrastructure services to the power, telecommunications, and general industrial markets. Its total debt (including present value of operating leases) outstanding as of Dec. 31, 2003, was about $169 million. The outlook is stable. "Niche market positions, growing geographic presence, and a highly variable cost structure temper downside risk," said Standard & Poor's credit analyst Heather Henyon. "Modest liquidity, weak end- markets, and customer concentration strain upside rating potential." INTEGRATED ELECTRICAL: Moody's May Cut Low-B Ratings After Review ----------------------------------------------------------------- Moody's Investors Service has placed the ratings of Integrated Electrical Services, Inc., on review for possible downgrade following the announcement that it had received notice from the trustee on its senior subordinated notes that a default had occurred because the company had failed to file its fiscal 2004 third quarter 10-Q in a timely fashion. This default notice will require the company to obtain waivers from 51% of the holders of its senior sub debt within the next 30 days in order to cure (at least temporarily) the default. Since a notice of default under the senior sub notes triggers a cross default under the bank credit agreement, the company will be required as well to seek a new waiver from its bank group to replace the one granted on August 16, 2004. On August 2, 2004, Integrated Electrical announced that it was rescheduling its fiscal 2004 third quarter earnings release and conference call due to its ongoing evaluation of certain large and complex projects at one subsidiary that experienced project management changes in the latter part of the third quarter. On August 13, 2004, Integrated Electrical announced that it would be delaying the filing of its fiscal 2004 third quarter 10-Q. On August 16, 2004, the company disclosed that it had identified potential problems at one of its subsidiaries and an additional issue on one contract at another subsidiary. This review resulted in adjustments to operating income of $5.7 million. Integrated Electrical's auditors, Ernst & Young, advised the company that as a result of these issues, there were material weaknesses in complying with Sarbanes-Oxley and that the filing of the 10-Q would occur simultaneously with the release of the fiscal 2004 year-end audit, which is expected to occur on December 15, 2004. Moody's review will focus on Integrated Electrical's progress in obtaining the requisite waivers in a timely fashion and on its efforts to address weaknesses in its internal controls, including integrating many disparate subsidiary companies into a smoothly functioning national corporation and the methods employed in properly estimating revenues, costs and percentage of completion on contracts. In addition, the review will address Integrated Electrical's continuing relationships with its bank group and surety provider, litigation risks, and the company's ongoing liquidity. Unrestricted cash on hand, currently estimated at $29 million, should be sufficient carry the company through to receipt of the waivers, assuming that trade credit is not curtailed or suspended. These ratings are affected by the review: * Ba3 senior implied rating; * B1 senior unsecured issuer rating; and * B2 rating on $173 million (remaining balance) of 9.375% senior subordinated notes due 2009 (in two series). Formed in 1997 and headquartered in Houston, Texas, Integrated Electrical Services, Inc. is a national provider of electrical and communications solutions to the commercial and industrial, residential, and service markets. JOSTENS INTERMEDIATE: S&P Puts Single-B Ratings on Notes & Loan --------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B+' corporate credit rating to Minneapolis, Minnesota-based Jostens Intermediate Holding Corp. In addition, Standard & Poor's assigned its 'B+' senior secured bank loan rating and '3' recovery rating to Jostens IH Corp.'s proposed $1.27 billion senior secured bank facilities, indicating that lenders can expect meaningful (50%-80%) recovery of principal in the event of a default. Standard & Poor's also assigned its 'B-' rating to Jostens IH Corp's proposed $500 million senior subordinated notes due 2012, to be issued under Rule 144A with registration rights. Standard & Poor's expects Jostens Holding Corp.'s (the parent of Jostens IH Corp.) 10.25% senior discount notes to remain outstanding. Standard & Poor's affirmed its 'B+' corporate credit rating on Jostens Holding Corp. and its 'B-' rating on Jostens Holding Corp.'s 10.25% senior discount notes due 2013, reflecting the issue's structural subordination to debt at Jostens IH Corp. The outlook is stable. For analytical purposes, Standard & Poor's views Jostens Holding Corp. and Jostens IH Corp. (jointly, Jostens) as one economic entity. Standard & Poor's expects Jostens to have about $1.7 billion of total lease adjusted debt outstanding at closing. The proposed notes offering and credit facilities fund Kohlberg Kravis Roberts' and DLJ Merchant Banking Partners' recently announced plan to combine Jostens, Inc., Von Hoffman Corp. and AKI Holding Corp., as well as its operating subsidiary AKI, Inc. These companies will become subsidiaries of Jostens IH Corp. under the proposed combination. All outstanding ratings on Jostens, Inc. (the operating subsidiary of Jostens IH Corp.), Von Hoffman, AKI Holding, and AKI, Inc., were placed on CreditWatch with negative implications on July 21, 2004, following the announcement of the combination. Standard & Poor's expects that all outstanding debt at these entities will be redeemed or repaid upon the closing of the proposed transaction, and all related ratings will be withdrawn. Jostens, combined with Von Hoffman and AKI, is a leading supplier of yearbooks, class rings, educational printing and cosmetic sampling products. Von Hoffman adds case-bound and softcover instructional materials and AKI adds cosmetic sampling products-- including fragrance, skin care, and makeup samplers -- to Jostens' product portfolio. KELLEY BROS: Case Summary & 17 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: Kelley Bros., Inc. P.O. Box 1000 Veneta, Oregon 97487 Bankruptcy Case No.: 04-67002 Chapter 11 Petition Date: September 3, 2004 Court: District of Oregon (Eugene) Judge: Albert E. Radcliffe Debtor's Counsel: John Putnam Pries, Esq. 862 Olive Eugene, OR 97401 Tel: 541-343-0684 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 17 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ J & L Cutting, Inc. Trade Debt-Timber $199,221 Cutting Tyree Oil, Inc. Trade Debt-Fuel $86,446 ODR Bankruptcy Unit $72,898 Dan Muir Enterprises Trade debt-Mechanic $31,970 for repairs Employment Department Government- $29,226 Unemployment taxes Parkhurst Trucking, Co. Trade Debt-Trucking $19,712 Services OR Consumer Business & $13,136 Services IRS Special Procedures Government-Trust $13,111 Fund Taxes Boman Industries Repair $11,798 Road Runner Tire Trade Debt-tires $8,889 Kirkpatrick, Henderson, & Accountant $5,593 Risen Tracer Truck Repair, Inc. Trade Debt-repair $5,224 Springfield Radio Trade Debt-repair $3,584 Roberts Motor Inc. Trade Debt-repair $2,966 Sherman Bros. Trucking Trade Debt-trucking $2,522 Case Credit Corp. Trade Debt-parts $1,902 Jewell Manufacturing Trade Debt-parts $1,124 LA QUINTA: Completes The Marcus Corp. Acquisition for $412 Million ------------------------------------------------------------------ La Quinta Corporation (NYSE: LQI) has completed the previously announced acquisition of substantially all of the assets of The Marcus Corporation's limited service lodging division for a total purchase price of approximately $412 million (including approximately $44 million held in escrow pending completion of certain customary transfer requirements). The purchase price of the acquisition increased from the previously announced price of approximately $395 million to reflect the purchase of three additional Baymont hotels that were previously joint venture partnerships excluded from the acquisition that will now be wholly owned by La Quinta. As part of the agreement, La Quinta has acquired 89 Baymont Inns & Suites (including one management contract), seven Woodfield Suites and one Budgetel. In addition, La Quinta has acquired all of the trade rights associated with the Baymont, Woodfield Suites and Budgetel brands, and the current Baymont franchise system of 88 hotels, which includes five joint venture partnerships excluded from the acquisition that have become Baymont franchised hotels. The 185 hotels are located across 32 states, with approximately half of the hotels in the Midwest region of the U.S. "We are very pleased to have completed the Baymont acquisition," commented Francis W. ("Butch") Cash, president and chief executive officer of La Quinta Corporation. "Baymont is an excellent fit with La Quinta and will become an important part of our growth strategy. With the Baymont acquisition, we gain geographic diversity in key Midwest markets and a strong brand with high quality assets. We look forward to growing the La Quinta and Baymont brands and increasing our scale and distribution." La Quinta Corporation also announced that La Quinta Properties, Inc. has closed a $200 million private placement of 7% senior notes due 2012. The net proceeds of the 7% senior notes, together with cash on hand, were used to fund the Baymont acquisition and related transaction costs. "The successful completion of this debt financing once again demonstrates the capital markets' faith in the Company," said David L. Rea, executive vice president and chief financial officer of La Quinta. "By leveraging our marketing and operating strengths, we believe that this acquisition will allow us to continue to create and enhance shareholder value." About La Quinta Corporation La Quinta Corporation is one of the largest owner/operators of limited-service hotels in the United States. Based in Dallas, Texas, La Quinta owns, operates or franchises more than 550 hotels in 39 states under the La Quinta Inns(R), La Quinta Inn & Suites(R), Baymont Inns & Suites(R), Woodfield Suites(R) and Budgetel(R) brands. For reservations or more information about La Quinta, its brands or franchising program, please visit http://www.LQ.com/ * * * As reported in the Troubled Company Reporter on July 19, 2004, Fitch Ratings has affirmed the senior unsecured ratings of La Quinta at 'BB-' following LQI's recent announcement that it will acquire the limited service lodging business of Marcus Corporation for $395 million in cash. Structured as an asset sale, the acquisition entails 178 properties or roughly 16,837 rooms, which include 84 owned Baymont hotels, seven owned Woodfield hotels, one owned Budgetel hotel, seven joint venture interests and management contracts; and 84 existing Baymont franchises. Baymont branded hotels account for 85% of acquired EBITDA. The proposed transaction represents a 12 times multiple of LTM pro forma EBITDA of approximately $33 million, or approximately $38,000 per room. In the event that certain liabilities are assumed, the purchase price would be reduced accordingly. The purchase price appears to be in line with recent limited service hotel transactions, and well below estimated replacement cost. The Rating Outlook is Stable. The acquisition will initially be financed with cash-on-hand of $291 million and committed debt financing of $150 million. Committed debt financing will take the form of either a term bank loan or senior notes, and may be upsized to $200 million to meet additional financing requirements. The acquisition can be accommodated within existing financial covenants, but required a waiver under the current credit agreement which limited acquisition spending to $300 million. The acquisition is expected to close sometime in late-summer or early-autumn 2004. In the event that the deal is not completed, Fitch would continue to regard LQI's acquisition appetite as overhang to the rating despite credit metrics that are relatively strong for the rating. MASTEC INC: Ernst & Young Resigns as Independent Accounting Firm ---------------------------------------------------------------- MasTec, Inc.'s (NYSE: MTZ) audit committee has received and accepted Ernst & Young LLP's resignation as MasTec's independent public accounting firm. The resignation was not the result of any disagreement between the Company and E&Y on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure. Similarly, during the calendar years ended December 31, 2002 and 2003 in which E&Y served as auditor, MasTec had no unresolved issues on any accounting or auditing matters with E&Y. The change is effective as of August 30, 2004. However, E&Y will complete the audit opinion on our main operating subsidiary, MasTec North America, Inc. The new audit firm will begin with a review of our first and second quarter 2004 10-Qs. Upon announcement of the new audit firm, a schedule for the releases will be provided. Austin J. Shanfelter, MasTec's President and CEO stated, "We are in the final stages of negotiation with a recognized international accounting firm. We are excited about this change and believe that the new firm will provide improved and timely service to the Company. We anticipate announcing the final selection of an accounting firm within the next 15 business days and expect to file the 10-Qs shortly thereafter." MasTec -- http://www.mastec.com/-- is a leading communications, broadband, intelligent traffic and energy infrastructure service provider. The Company designs, builds, installs, maintains, upgrades and monitors internal and external networks for leading companies and government entities. * * * As reported in the Troubled Company Reporter on August 25, Standard & Poor's Ratings Services withdrew its corporate credit, senior secured, and subordinated debt ratings on MasTec, Inc. The ratings had been placed on CreditWatch negative on March 17, 2004. At Dec. 31, 2003, MasTec had approximately $237 million of debt outstanding. "We believe that there currently is insufficient information available to support a ratings opinion," said Standard & Poor's credit analyst Heather Henyon. MasTec has yet to file financial statements for the first or second quarters of 2004 and has not announced any specific timeline for that information to be made available. As previously reported on May 13, 2004, Standard & Poor's Ratings Services lowered its corporate credit rating on MasTec, Inc., to 'B' from 'BB-', its senior secured bank loan rating to 'B+' from 'BB', and its subordinated debt rating to 'CCC+' from 'B'. At the same time, all ratings remain on CreditWatch with negative implications, where they were placed on March 17, 2004. Total debt (including present value of operating leases) was $226 million at Sept. 30, 2003, for the Miami, Fla.-based provider of infrastructure services. The downgrade follows MasTec's announcement of a net loss for the 2004 first quarter that is significantly greater than the year- earlier loss as well as a delay in its Form 10Q filing for the first quarter because of an unfinished audit for full-year 2003. market conditions in the specialty contractor industry are weak, resulting in declining margins and higher leverage. "We continue to be concerned about the breakdown of certain financial controls and policies, the length of time it is taking to complete the 2003 audit, and the liquidity profile, including obtaining a waiver or amendment to bank covenants," said Standard & Poor's credit analyst Heather Henyon. MERIT SECURITIES: Fitch Chips Class M-2 Rating to B & Junks B-1 --------------------------------------------------------------- Fitch Ratings has taken these rating actions on Merit Securities Corp. manufactured housing contract, Series 13: -- Class A3 affirmed at 'AAA'; -- Class A4 affirmed at 'AA-' ; -- Class M-1 downgraded to 'BBB-' from 'BBB+'; -- Class M-2 downgraded to 'B' from 'BB+'; -- Class B-1 downgraded to 'C' from 'B+'. The downgrade rating actions reflect the poor performance of the collateral pool and its potential impact on the subordinate certificates. Downgrades affect nearly $89 million of certificates while the affirmations affect $141 million. The manufactured housing -- MH -- industry is experiencing its worst downturn ever. Relaxed credit standards, overbuilding by manufacturers, and the difficulties relating to servicing this unique asset have all contributed to poor performance of MH securities. Fitch believes the industry will continue to struggle for some time. Servicers must still contend with saturated repossession inventories, and Fitch does not expect recoveries on sold repossessions to improve in the near future. In addition, given the depreciating nature of the assets, as pools have seasoned, recoveries have generally declined. For these reasons, Fitch expects recovery rates to remain at low levels for some time. Credit enhancement in the form of overcollateralization -- OC -- was exhausted in November 2003 and there is no monthly excess spread to help cover losses. However, this transaction benefits from an additional credit enhancement feature. At closing, Merit deposited $15.11 million of additional MH loans into a separate collateral fund. The cash flow generated by this separate pool of loans is available to support the subject transaction. There currently remains approx. $6.7 million of MH loans outstanding in this fund. However monthly losses in the Merit 13 transaction far exceed this supplemental cash flow and result in the continuing write down of the most subordinate class (currently class B-3, which along with class B-2, was privately placed). This program's pool factor (the percentage of mortgage principal outstanding to the initial mortgage pool at closing) is just over 58%. The MH loans supporting Merit 13 were originated and continue to be serviced by Origen Financial, previously under the name Dynex Financial, Inc. Origen's outstanding servicing portfolio is $1.3 billion as of year-end 2003. MERIT SECURITIES: Fitch Junks Class B-1 & Cuts Class M-2 to BB- --------------------------------------------------------------- Fitch has taken these rating actions on Merit Securities Corp. manufactured housing contract, series 12-1. -- Class A3 affirmed at 'AAA'; -- Class M-1 is affirmed at 'A'; -- Class M-2 downgraded to 'BB-' from 'BBB-'; -- Class B-1 downgraded to 'CCC' from 'BB-'. The downgrade rating actions reflect the poor performance of the collateral pool and its potential impact on the subordinate certificates. Downgrades affect $41.7 million of certificates while the affirmations affect $140.7 million. The manufactured housing -- MH -- industry is experiencing its worst downturn ever. Relaxed credit standards, overbuilding by manufacturers, and the difficulties relating to servicing this unique asset have all contributed to poor performance of MH securities. Fitch believes the industry will continue to struggle for some time. Servicers must still contend with saturated repossession inventories, and Fitch does not expect recoveries on sold repossessions to improve in the near future. In addition, given the depreciating nature of the assets, as pools have seasoned, recoveries have generally declined. For these reasons, Fitch expects recovery rates to remain at low levels for some time. Just over $10.1 million in credit enhancement in the form of overcollateralization -- OC -- currently remains and there is very little monthly excess spread to help cover losses. However, this transaction benefits from an additional credit enhancement feature. At closing, Merit deposited $11 million of additional MH loans into a separate collateral fund. The cash flow generated by this separate pool of loans is available to support the subject transaction. There currently remains approximately $5.3 million of MH loans outstanding in this fund. However monthly losses in the Merit 12-1 transaction exceed this supplemental cash flow and result in the continuing write down of over-collateralization. This program's pool factor (the percentage of mortgage principal outstanding to the initial mortgage pool at closing) is nearly 58%. The MH loans supporting Merit 12-1 were originated and continue to be serviced by Origen Financial, previously under the name Dynex Financial, Inc. Origen's outstanding servicing portfolio is $1.3 billion as of year-end 2003. MINORPLANET SYSTEMS: Plan Confirmed & New Shares Distributed ------------------------------------------------------------ The Honorable Harlin D. Hale of the U.S. Bankruptcy Court for the Northern District of Texas, Dallas Division, confirmed the Third Amended Joint Plan of Reorganization for Minorplanet Systems USA, Inc., and its debtor-affiliates, on June 28, 2004. On July 2, 2004, the Plan took effect. Minorplanet is now known as Remote Dynamics, Inc. The company's rehabilitated balance sheet shows $25 million in assets and $14 million in liabilities. As of July 14, 2004, New Common Stock in the reorganized Debtor had been issued to holders of General Unsecured Creditors and interests in Minorplanet as provided for in the Plan. Merced Partners Limited Partnership, Global Capital Management, Inc., Michael J. Frey and John D. Brandenborg disclose in an regulatory filing that they beneficially own 625,558 shares of the common stock of Remote Dynamics Inc., representing 8.51% of the outstanding common stock of the Company. The entities share voting and dispositive powers over the stock. Headquartered in Dallas, Texas, Minorplanet Systems -- http://www.remotedynamics.com-- develops and implements mobile communications solutions for service vehicle fleets, long-haul truck fleets and other mobile-asset fleets, including integrated voice, data and position location services. The Company and its debtor-affiliates filed for chapter 11 protection on February 2, 2004 (Bankr. N.D. TX. Case No. 04-31200). Omar J. Alaniz, Esq. and Patrick J. Neligan, Jr., Esq. at Neligan Tarpley Andrews and Foley LLP represent the Debtors in their restructuring efforts. When the Debtor filed for protection it listed both estimated assets and debts of $10 million. MOTHERS WORK: Operating Concerns Prompt S&P's B+ Credit Rating -------------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on Mothers Work, Inc. to negative from stable. Ratings on the Philadelphia, Pennsylvania-based specialty maternity apparel retailer, including the 'B+' corporate credit rating, were affirmed. "The outlook revision is based on concerns over recent weak sales trends and our expectation that credit protection measures are likely to be meaningfully weaker than previously anticipated given the increased competitive pressure," said Standard & Poor's credit analyst Ana Lai. "The ratings reflect the high business risk associated with the company's participation in the narrowly defined maternity segment of the apparel retailing industry, high debt leverage, and the company's relatively small size. These risks are partly offset by the company's position as the largest specialty maternity apparel retailer in the country, adequate liquidity, and relatively stable demand for maternity apparel driven by the stable birth rate in the U.S." Mothers Work has reported weaker-than-expected sales trends for the past few quarters, with comparable-store sales decreasing 5% in the quarter ended June 30, 2004, following a narrow 0.2% increase in the prior quarter due to increased competitive pressure, particularly from mass merchants and other specialty retailers. As a result, Mothers Work's operating performance has been under pressure, with EBITDA declining to about $34.1 million for the nine months ended June 30, 2004, from $39.3 million a year ago. Sales declines accelerated in July and August, with comparable-store sales for this two-month period decreasing about 7.9%, as increased markdowns from competitors continued to adversely affect Mothers Work's sales. As such, Standard & Poor's expects operating results for the fiscal year ending Sept. 30, 2004 to be lower than previously anticipated, resulting in weaker than previously expected credit protection measures. Due to the weak operating performance, total debt to EBITDA increased to 5.4x for the 12 months ended June 30, 2004, from 4.7x in the prior year. EBITDA interest coverage declined to about 1.9x from 2.0x. Mothers Work is the largest retailer of maternity apparel in the U.S. However, competition is intense, especially in the moderate- price segment (the majority of company sales), in which participants include large national department stores, discount department stores, and specialty retailers. Although the company has a very focused strategy targeting the maternity market, the narrowness of this segment poses risks. NATIONAL CENTURY: Court Upholds Lincoln Clinic Sale to Aprahamian ----------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of Ohio denied the request of Liberty National Enterprise, L.P., to reconsider the Court's order approving the sale of the Lincoln Clinic Property to Mark Aprahamian for $4,525,000 as the second highest bidder As reported in the Troubled Company Reporter on August 13, 2004, on July 7, 2004, the U.S. Bankruptcy Court for the District of Ohio ruled that Liberty National defaulted under the Bid Procedures Order for failing to close the sale of the Lincoln Clinic Property by May 3, 2004. The Court ordered Memorial Drive Office Complex, National Century Financial Enterprises, Inc. debtor-affiliate, to sell the Lincoln Clinic Property to Mark Aprahamian for $4,525,000 as the second highest bidder. Liberty National argued that that the Court's oral ruling did not refer to: (a) MDOC's prior non-disclosure of the existence of an environmental impact report; or (b) the fact that MDOC and Liberty National had mutually consented to a new closing date at a purchase price about 3% less than Liberty National's original bid amount; or (c) the fact that even the reduced price was higher than Mr. Aprahamian's second place bid. Headquartered in Dublin, Ohio, National Century Financial Enterprises, Inc. -- http://www.ncfe.com/-- is the market leader in healthcare finance focused on providing medical accounts receivable financing to middle market healthcare providers. The Company filed for Chapter 11 protection on November 18, 2002 (Bankr. S.D. Ohio Case No. 02-65235). The healthcare finance company prosecuted its Fourth Amended Plan of Liquidation to confirmation on April 16, 2004. Paul E. Harner, Esq., at Jones Day represents the Debtors. (National Century Bankruptcy News, Issue No. 45; Bankruptcy Creditors' Service, Inc., 215/945-7000) NEW WORLD: Files Schedules of Statement and Financial Affairs ------------------------------------------------------------- New World Pasta Company filed its Schedules of Assets and Liabilities and Statement of Financial Affairs with the U.S. Bankruptcy Court for the Middle District of Pennsylvania. A full- text copy of the Debtor's Statement of Financial Affairs is available for a fee at: http://www.researcharchives.com/bin/download?id=040812020022 Chief Financial Officer Edward Carroll, under penalties of perjury, reports that New World Pasta's debts and property as of May 10, 2004, consisted of: Name of Schedule Assets Liabilities ---------------- ------ ----------- A. Real Property $ 17,668,033 B. Personal Property 146,726,706 C. Property Claimed As Exempt N/A D. Creditors Holding Secured Claims $310,308,361 E. Creditors Holding Unsecured Priority Claims -- F. Creditors Holding Unsecured Nonpriority Claims 196,537,402 ------------ ------------ TOTALS $164,394,739 $506,845,763 ============ ============ Headquartered in Harrisburg, Pennsylvania, New World Pasta Company -- http://www.nwpasta.com/-- is the leading dry pasta manufacturer in the United States. The Company and its debtor- affiliates, filed for chapter 11 protection on May 10, 2004(Bankr. M.D. Penn. Case No. 04-02817). Eric L. Brossman, Esq., at Saul Ewing LLP, represents the Company in its restructuring efforts. When the Debtor filed for protection it listed $426,174,000 in assets and $430,952,000 in debts. NRG ENERGY: Court Authorizes Rejection of 33 Executory Contracts ---------------------------------------------------------------- Judge Beatty authorizes Debtors LSP-Nelson Energy, LLC, and NRG Nelson Turbines, LLC, to reject 33 executory contracts as of August 18, 2004. A complete list of the 33 Rejected Contracts is available at no charge at: http://bankrupt.com/misc/33rejectedcontracts.pdf Judge Beatty adjourns the Nelson Debtors' request as to 27 contracts. The Court directs the Debtors to file a second supplemental notice of assumption or rejection with respect to the Adjourned Contracts. A complete list of the 27 Adjourned Contracts is available at no charge at: http://bankrupt.com/misc/27adjournedcontracts.pdf * * * David J. Karp, Esq., at Kirkland & Ellis, in New York, advises the Court that the Nelson Debtors will assume and assign 15 executory contracts and unexpired leases to Invenergy Investment Company, LLC, as part of the sale: (1) Option to Enter Into Easement with Commonwealth Edison dated March 15, 2000; (2) Option to Enter Into Easement with Commonwealth Edison dated march 15, 2000; (3) Option to Enter Into Easement with Commonwealth Edison dated March 15, 2000; (4) Option to Enter Into Easement with Commonwealth Edison dated March 15, 2000; (5) Option to Enter Into Easement with Commonwealth Edison dated March 15, 2000; (6) Option to Enter Into Easement with Commonwealth Edison dated March 15, 2000; (7) Option to Enter Into Easement with Commonwealth Edison dated March 15, 2000; (8) Pipeline Crossing Agreement with Union Pacific Railroad Company dated January 10, 2001; (9) Pipeline Crossing Agreement with Union Pacific Railroad Company dated January 10, 2001; (10) Pipeline Crossing Agreement with Union Pacific Railroad Company dated January 10, 2001; (11) Pipeline Crossing Agreement with Union Pacific Railroad Company dated January 10, 2001; (12) Pipeline Crossing Agreement with Union Pacific Railroad Company dated January 10, 2001; (13) Easement and Consent with Commonwealth Edison Company dated January 29, 2001; (14) Grant of Easement for Interconnection Transmission Line with Commonwealth Edison Company dated January 29, 2001; and (15) Longitudinal Pipeline Encroachment Agreement with Union Pacific Railroad Company dated February 6, 2001. NRG Energy, Inc. owns and operates a diverse portfolio of power- generating facilities, primarily in the United States. Its operations include baseload, intermediate, peaking, and cogeneration facilities, thermal energy production and energy resource recovery facilities. The company, along with its affiliates, filed for chapter 11 protection (Bankr. S.D.N.Y. Case No. 03-13024) on May 14, 2003. The Company emerged from chapter 11 on December 5, 2003, under the terms of its confirmed Second Amended Plan. James H.M. Sprayregen, P.C., Matthew A. Cantor, Esq., and Robbin L. Itkin, Esq. at Kirkland & Ellis, represented NRG Energy in its $10 billion restructuring. (NRG Energy Bankruptcy News, Issue No. 33; Bankruptcy Creditors' Service, Inc., 215/945-7000) OWENS CORNING: Court Says Dr. Sider's Retention is Premature ------------------------------------------------------------ The U.S. Bankruptcy Court for the District of Delaware rules that since no Asbestos Claims Bar Date has been set, the retention of the Official Committee of Unsecured Creditors of the chapter 11 cases of Owens Corning and its debtor-affiliates, of Lee Edward Sider is premature to the extent that Dr. Sider is to provide services regarding medical criteria, which will be contained in the trust distribution procedures in connection with potential objections to present asbestos personal injury claims. Accordingly, Judge Fitzgerald denies the Committee's application for Dr. Sider's services beyond estimation "without prejudice in the event that there is [an Asbestos Claims] bar date order set." Judge Fitzgerald directs the Committee's counsel to circulate a proposed order consistent with the Court's ruling. Futures Representative Objects James J. McMonagle, as Legal Representative for Future Asbestos Claimants, opposes the proposed order submitted by the Commercial Committee with respect to Dr. Sider's retention as asbestos medical consultant. Contrary to the Court's instructions, the Proposed Order does not state that: -- any testimony to be provided by Dr. Sider should be clearly limited to the services approved by the Order; and -- the denial of Dr. Sider's retention for services beyond estimation is without prejudice to renewal only after an Asbestos Claims Bar Date is set for present asbestos personal injury claims. As reported in the Troubled Company Reporter on March 17, 2004, the Commercial Committee seeks to retain Lee Edward Sider, M.D., as asbestos medical consultant, nunc pro tunc to December 2, 2003, to advise the Commercial Committee on issues related to radiology and the use of x-rays in asbestos-related disease and impairment. Dr. Sider is an asbestos medical consultant specializing in radiology. He has extensive and diverse experience, knowledge and reputation in the field of radiology, especially with regard to his experience as a "B-reader" of x-rays related to asbestos- related disease and impairments. Dr. Sider wrote medical journal articles concerning the use of x-rays in determining asbestos- related disease and impairment. Dr. Sider has been a board- certified radiologist for 20 years and a certified B-reader of x- rays for 18 years. According to William H. Sudell, Jr., Esq., at Morris, Nichols, Arsht & Tunnel, in Wilmington, Delaware, as consultant, Dr. Sider will be: (1) advising on issues related to radiology; (2) providing advice related to the use of x-rays in asbestos- related disease and impairment; (3) assisting in the development of radiological standards to be used in claims procedures in any future trust; (4) assisting the Commercial Committee's counsel in preparing for expert depositions; (5) testifying on behalf of the Commercial Committee, if necessary; and (6) performing any other necessary services as the Commercial Committee may request from time to time with respect to any asbestos-related issue. Dr. Sider will coordinate with the Commercial Committee's other advisors and counsel, as appropriate, to avoid duplication of effort. Dr. Sider will be compensated for services rendered at $450 per hour. This does not include out-of-pocket expenses like travel, long distance telephone calls, messenger service, express mail, bulk mailing, photocopies, or entertainment. These expenses are billed at cost in addition to the hourly rate. This compensation arrangement is consistent with and typical of the arrangements entered into by Dr. Sider regarding the provision of similar services for clients like the Commercial Committee. Headquartered in Toledo, Ohio, Owens Corning -- http://www.owenscorning.com/-- manufactures fiberglass insulation, roofing materials, vinyl windows and siding, patio doors, rain gutters and downspouts. The Company filed for chapter 11 protection on October 5, 2000 (Bankr. Del. Case. No. 00-03837). Mark S. Chehi, Esq., at Skadden, Arps, Slate, Meagher & Flom represents the Debtors in their restructuring efforts. At June 30, 2004, the Company's balance sheet shows $7.3 billion in assets and a $4.3 billion stockholders' deficit. (Owens Corning Bankruptcy News, Issue No. 82 Bankruptcy Creditors' Service, Inc., 215/945- 7000) OXFORD AUTOMOTIVE: S&P Withdraws Junk Ratings for Lack of Info -------------------------------------------------------------- Standard & Poor's Ratings Services withdrew its corporate credit and senior secured debt ratings on Oxford Automotive, Inc. The ratings had been placed on CreditWatch with negative implications on early August. As reported in the Troubled Company Reporter on August 12, 2004, Standard & Poor's Ratings Services lowered its corporate credit rating on Troy, Michigan-based Oxford Automotive Inc. to 'CCC-' from 'B-'. In addition, Standard & Poor's lowered its rating on the company's second-lien senior secured debt to 'C' from 'CCC'. Ratings remain on CreditWatch with negative implications, where they were placed on Feb. 23, 2004. Oxford had balance sheet debt of $288 million at Dec. 31, 2003, the latest reported date. Financial sponsor MatlinPatterson owns privately held Oxford. "The downgrade reflects our ongoing concerns over Oxford's liquidity," said Standard & Poor's credit analyst Nancy Messer. As previously indicated, Oxford's liquidity is very constrained while the company prepares for the December 2004 launch of the Mercedes M-class program at its new McCalla, Ala. facility. Troy, Michigan-based Oxford, a supplier of specialized metal- formed systems, modules, and assemblies to the automotive industry, had $288 million of total balance sheet debt at Dec. 31, 2003. "The rating actions reflect Standard & Poor's belief that the available financial information on Oxford is insufficient to support a current ratings opinion," said Standard & Poor's credit analyst Nancy C. Messer. Oxford has not yet filed financial statements for fiscal 2004, ended March 31, 2004, or the first quarter of fiscal 2005, ended June 30, 2004, and there is no clear indication as to when that information will be disclosed. PAN AMERICAN ZINC: Voluntary Chapter 11 Case Summary ---------------------------------------------------- Debtor: Pan American Zinc PO Box 12638 Reno, Nevada 89510 Bankruptcy Case No.: 04-52640 Chapter 11 Petition Date: September 3, 2004 Court: District of Nevada (Reno) Judge: Gregg W. Zive Debtor's Counsel: John S. Bartlett, Esq. Law Offices of John S. Bartlett 777 East William Street #201 Carson City, Nevada 89701 Tel: (775) 841-6444 Fax: (775) 841-2172 Total Assets: $2,410,655 Total Debts: $1,325,978 The Debtor did not file a list of its 20-largest creditors. PARMALAT USA: Wants to Employ Mahoney Cohen as Accountants ---------------------------------------------------------- Parmalat USA Corporation and its U.S. debtor-affiliates ask the U.S. Bankruptcy Court for the Southern District of New York for permission to employ Mahoney Cohen & Company, CPA, P.C., as their accountants, nunc pro tunc to July 26, 2004. Mahoney will: -- provide tax compliance services, consisting of preparation of 2003 and 2004 federal, state and local corporate tax returns, tax consulting services; -- represent the U.S. Debtors before various taxing authorities; -- perform an audit of the Debtors' financial statements for the year ended December 31, 2004, and, if needed, the year ended December 31, 2003; and -- perform any other services that it deems necessary in its role as accountants to the Debtors or that may be requested by the Debtors or their professionals. The U.S. Debtors believe that Mahoney is well qualified and able to represent them in a cost-effective, efficient and timely manner. Since July 26, 2004, Mahoney has provided substantial work for the Debtors, including an analysis of net operating losses, an analysis of the tax consequences of various prepetition transactions, and tax compliance work. Mahoney has also worked with various government agencies, including the Internal Revenue Service -- which is currently conducting an audit of the Debtors - - the State of New York, and the State of New Jersey to represent the Debtors' interests. Mahoney is a middle market certified public accounting and management consulting firm in the New York metropolitan area that has been ranked among the top 35 CPA firms nationally. Mahoney promotes its audit services as rigorous and thorough, with stringent quality controls that conform to generally accepted auditing standards. The firm's audit methodology analyzes a company's business within the context it its industry, providing a value-added service, looking for areas where savings can be realized, cost controls can be introduced and unforeseen business opportunities may exist. Mahoney also provides a wide range of tax compliance and planning solutions to businesses, trusts, private foundations and individuals, ensuring compliance requirements are fulfilled while every opportunity to minimize tax liabilities is explored. Steven E. Golden, a partner and director of Bankruptcy Taxation at Mahoney, will lead the Mahoney team assigned to the U.S. Debtors. Mr. Golden is a certified public accountant and a licensed attorney with extensive experience working with insolvent businesses ranging in size from small, privately held companies to large, publicly traded corporations throughout the United States. Before joining Mahoney, Mr. Golden was a tax partner and director of Bankruptcy Taxation at BDO Seidman, LLP. He has worked closely with bankruptcy attorneys and trustees on various issues relating to the liquidation or reorganization of bankrupt companies, including the cases of Starter Corp., Loehmanns, Inc., Artha Management, Sasson Jeans and Cuyahoga. Mr. Golden has also been called upon to provide expert testimony in numerous matters, including Celotex's bankruptcy litigation. Mr. Golden is a published author and noted speaker. The U.S. Debtors will compensate Mahoney for its services in accordance with the firm's normal hourly rates: Professional Hourly Rate ------------ ----------- Shareholders and directors $365 - 435 Managers and senior managers 210 - 280 Senior accountants and staff 115 - 205 The Debtors will also reimburse the firm for all reasonable and necessary out-of-pocket expenses. Mahoney has agreed to cap the fees for the tax compliance services relating to the year ended December 31, 2003 at $45,000. Mr. Golden assures the Court that Mahoney is a "disinterested person" within the meaning of Section 101(14) of the Bankruptcy Code and as required by Section 327(a). The firm holds no interest adverse to the U.S. Debtors and their estates. The firm has no connection to the Debtors, their significant creditors or to certain other parties-in-interest. Headquartered in Wallington, New Jersey, Parmalat USA Corporation -- http://www.parmalatusa.com/-- generates more than 7 billion euros in annual revenue. The Parmalat Group's 40-some brand product line includes milk, yogurt, cheese, butter, cakes and cookies, breads, pizza, snack foods and vegetable sauces, soups and juices and employs over 36,000 workers in 139 plants located in 31 countries on six continents. The Company filed for chapter 11 protection on February 24, 2004 (Bankr. S.D.N.Y. Case No. 04-11139). Gary Holtzer, Esq., and Marcia L. Goldstein, Esq., at Weil Gotshal & Manges LLP represent the Debtors in their restructuring efforts. On June 30, 2003, the Debtors listed EUR2,001,818,912 in assets and EUR1,061,786,417 in debts. (Parmalat Bankruptcy News, Issue No. 29; Bankruptcy Creditors' Service, Inc., 215/945-7000) PG&E NATIONAL: Will Pay $267,816 Pepco Energy Services Settlement ----------------------------------------------------------------- Paul M. Nussbaum, Esq., at Whiteford, Taylor & Preston, LLP, in Baltimore, Maryland, relates that NEGT Energy Trading Holdings Corporation, NEGT Energy Trading - Power, LP, and NEGT Energy Trading - Gas Corporation, on one hand, and Pepco Energy Services, Inc., on the other hand, are parties to a Settlement Agreement and Mutual Release dated as of June 9, 2004. Pursuant to the Settlement Agreement, Pepco Energy will pay $267,816 to the ET Debtors in full and final satisfaction of all claims arising out of five Contracts: (a) Confirmation dated November 18, 2002 between NEGT Energy Trading - Power, LP, and PEPCO Energy Services, Inc., for 50 MW PJM Unforced Capacity Credits; (b) Confirmation dated January 23, 2003 between NEGT Energy Trading - Power, LP, and PEPCO Energy Trading Services, Inc., for 50 MW PJM Unforced Capacity Credits; (c) Confirmation dated July 1, 2002 between NEGT Energy Trading - Gas Corporation and PEPCO Energy Services, Inc., for 10,000 MMBtu/day at Columbia Gas Pool; (d) Confirmation dated, March 14, 2003 between NEGT Energy Trading - Gas Corporation and PEPCO Energy Services, Inc., for 10,000 MMBtu/day at Columbia Gas Pool; and (e) Confirmation dated July 15, 2002 between NEGT Energy Trading - Gas Corporation and PEPCO Energy Services, Inc., for 5,000 MMBtu/day at Tetco M3. The parties will release each other from any liabilities whatsoever arising out of the Contracts. Mr. Nussbaum maintains that the Settlement Agreement is advantageous to the ET Debtors because the Settlement Amount approximates the recovery that the ET Debtors could otherwise achieve through litigation, without any of the attendant risks and costs. Headquartered in Bethesda, Maryland, PG&E National Energy Group, Inc. -- http://www.pge.com/-- develops, builds, owns and operates electric generating and natural gas pipeline facilities and provides energy trading, marketing and risk-management services. The Company filed for Chapter 11 protection on July 8, 2003 (Bankr. D. Md. Case No. 03-30459). Matthew A. Feldman, Esq., Shelley C. Chapman, Esq., and Carollynn H.G. Callari, Esq., at Willkie Farr & Gallagher represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $7,613,000,000 in assets and $9,062,000,000 in debts. (PG&E National Bankruptcy News, Issue No. 27; Bankruptcy Creditors' Service, Inc., 215/945-7000) SEQUOIA MORTGAGE: Moody's Rates Class B-4 & B-5 Certs. at Low-B --------------------------------------------------------------- Moody's Investor Service assigned a Aaa rating to the senior certificates issued by Sequoia Mortgage Trust 2004-7, and ratings ranging from Aa2 to B2 for the subordinate certificates of the deal. The securitization is backed by three pools of mortgage loans having, in the aggregate, 3,117 conventional adjustable-rate Jumbo mortgage loans secured by first liens on one-to-four family residential properties. Pool 1 consists of 1,534 loans with a total balance of $522.3 million, originated primarily by: (1) GreenPoint Mortgage Funding, Inc. (52.38%); (2) Countrywide Home Loans (18.60%); and (3) Morgan Stanley Dean Witter Credit Corporation (17.81%). Pool 2 consists of 748 loans with a total balance of $264.0 million, originated primarily by: (1) GreenPoint Mortgage Funding, Inc. (48.74%); (2) Morgan Stanley Dean Witter Credit Corporation (30.53%); and (3) Countrywide Home Loans (18.96%). Pool 3 consists of 835 loans totaling $263.7 million, originated primarily by: (1) GreenPoint Mortgage Funding, Inc. (64.42%); (2) Morgan Stanley Dean Witter Credit Corporation (8.37%); and (3) Countrywide Home Loans, Inc. (16.08%). The ratings are based primarily on the credit quality of the loans, and on the protection from subordination. The credit quality of this loan pool is similar to the credit quality of other recent Sequoia Mortgage Trust offerings, with a FICO of 734 for the current deal versus a FICO score of 732 for the last securitization. The Aa1 rating for the Class A-3-B Certificates is also based upon the Class A-3-B's status as the "senior support" for the "super senior" Class A-3-A certificates. The senior support class has the same credit enhancement support levels as the other senior, Aaa-rated classes in this transaction. This implies that the super-senior support certificates have a probability of default consistent with that of Class A-3-A. However, the A-3-B senior support certificates would assume losses otherwise attributable to the super senior A-3-A certificates they support. These entities will initially service the mortgage loans: * Bank or America, N.A., * Cendant Mortgage Corporation, * Countrywide Home Loans Servicing LP, * GMAC Mortgage Corporation, * Greenpoint Mortgage Funding, Inc., and * Morgan Stanley Dean Witter Credit Corporation Following the closing date, substantially all of the mortgage loans initially serviced by GreenPoint is expected to be transferred to GMAC Mortgage Corporation. Wells Fargo Bank, N.A., will act as master servicer. The complete rating actions are: * Class A-1, $498,828,000, rated Aaa; * Class A-2, $252,102,000, rated Aaa; * Class A-3-A, $247,874,000, rated Aaa; * Class A-3-B, $3,956,000, rated Aa1; * Class X-A, Interest Only, rated Aaa; * Class X-B, Interest Only, rated Aaa; * Class A-R, $100, rated Aaa; * Class B-1, $18,900,000, rated Aa2; * Class B-2, $11,025,000, rated A2; * Class B-3, $6,300,000, rated Baa2; * Class B-4, $3,150,000, rated Ba2; and * Class B-5, $2,625,000, rated B2. The Class B-4 and Class B-5 certificates are being offered in privately negotiated transactions without registration under the 1933 Act. The issuance was designed to permit resale under Rule 144A. SOLUTIA: Gets Court Nod to Contribute $11 Million to Pension Plan ----------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York gave its permission to Solutia, Inc., and its debtor-affiliates to contribute $11 million to the pension plan. As reported in the Troubled Company Reporter on August 4, 2004, Solutia's employees' Pension Plan was established in connection with the spin-off from Monsanto Company, with all prior plan provisions being maintained. The Pension Plan is funded solely through employer contributions and covers both union and non-union employees. Benefit accruals under the Pension Plan for non-union employees were "frozen" effective as of July 1, 2004. Union employees continue to accrue benefits under the Pension Plan, and the benefit accruals can be frozen only through negotiations with the affected unions or pursuant to the procedures set forth in Section 1113 of the Bankruptcy Code. Proposed Voluntary Contribution M. Natasha Labovitz, Esq., at Gibson, Dunn & Crutcher, LLP, in New York, relates that due to the recent three-year decline of the equity markets, the Pension Plan is significantly underfunded and ongoing obligations to it will place a significant financial burden on the Debtors over the next several years. In consultation with its creditors, Solutia has considered all alternatives to alleviate the problem, including termination of the Pension Plan. However, Solutia believes that terminating the Pension Plan at this time is not a viable option since it would create a large claim against the estate in favor of the Pension Benefit Guaranty Corporation and possibly result in the imposition of large liabilities on Solutia's overseas subsidiaries. Solutia decided to implement two actions that together will greatly reduce the burdens of the Pension Plan on the estate: (1) Solutia froze benefit accruals under the Pension Plan for non-union employees effective July 1, 2004; and (2) Solutia determined to seek separate Court approval to make a voluntary contribution of $11 million to the Pension Plan this year. Viewed together, those actions will: -- save the Debtors between $30 million and $40 million in pension expense for each of the next several years; -- reduce overall pension funding requirements over the next five years by $110 million; and -- defer the next required contribution to the Pension Plan to January 2006. According to Ms. Labovitz, if Solutia makes the Pension Contribution by September 15, 2004, by law, the Pension Contribution will be deemed to have been made as of December 31, 2003, which will increase the current liability funded status for the Pension Plan to 80% as of January 1, 2004. Under ERISA and the Internal Revenue Code, it is advantageous for a plan sponsor of a qualified defined benefit pension plan to ensure that its plan is at least 80% funded. In Solutia's case, ensuring that the Pension Plan is 80% funded will likely result in a credit balance of $54 million at January 1, 2005, which can be used to offset future contributions. Ms. Labovitz explains that the sponsor of a qualified defined benefit plan is generally required to make contributions to its benefit plan each year to meet the minimum funding standards set by the Tax Code and ERISA. The contributions depend on a number of factors designed to ensure that the benefit plan has sufficient assets to pay participants' benefits. Along with "regular" contributions, additional contributions are generally required if a defined benefit pension plan's assets are less than 90% of the its current liability for a given year. The requirement for additional contribution is referred to as a "deficit reduction contribution." Deficit reduction contributions can substantially be in excess of the amount of contributions otherwise required under ERISA and the Tax Code. However, there is an important exception to the deficit reduction contribution requirement. If a defined benefit pension plan's assets equal at least 80% of its current liability and for each of the two immediately preceding plan years the plan's assets equaled at least 90% of the plan's current liability, the plan sponsor is not required to make deficit reduction contributions for that year. Therefore, it can be advantageous for the plan sponsor to make additional plan contributions to attain or maintain at least the 80% funding level to take advantage of the limited exception to the deficit reduction contribution requirement. In Solutia's case, the Pension Plan's assets did equal 99.2% of its current liability in 2001 and 91.6% in 2002. Thus, an 80% funded status for 2004 will avoid the deficit reduction contribution for 2004. By making the $11 million Pension Contribution on or before September 15, 2004, the 80% threshold will be satisfied as of January 1, 2004, thus avoiding the deficit reduction contribution that otherwise would be required for 2004, which is estimated to be $47 million. Headquartered in St. Louis, Missouri, Solutia, Inc. -- http://www.solutia.com/-- with its subsidiaries, make and sell a variety of high-performance chemical-based materials used in a broad range of consumer and industrial applications. The Company filed for chapter 11 protection on December 17, 2003 (Bankr. S.D.N.Y. Case No. 03-17949). When the Debtors filed for protection from their creditors, they listed $2,854,000,000 in assets and $3,223,000,000 in debts. THOMAS R. RICKETTS: Case Summary & 9 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Thomas R. Ricketts Family Trust 5809 Golden Leaf Court Plano, Texas 75093 Bankruptcy Case No.: 04-39593 Chapter 11 Petition Date: September 3, 2004 Court: Northern District of Texas (Dallas) Judge: Barbara J. Houser Debtor's Counsel: Robert Yaquinto, Jr., Esq. Sherman & Yaquinto 509 North Montclair Avenue Dallas, Texas 75208-5498 Tel: 214-942-5502 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 9 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Robert T. Ricketts $310,537 5809 Golden Leaf Court Plano, Texas 75093 County of Dallas 2003 Property Taxes $37,322 Tax Department Marek Brothers Co., L.L.P. Mechanic's Lien $25,661 Wilson Plywood & Door, Inc. Mechanic's Lien $20,954 Leisure Living Pools, Inc. Mechanic's Lien $20,000 EZ-Wall Systems, Inc. Mechanic's Lien $11,250 Trinity Stairs, Inc. Mechanic's Lien $10,883 Ramer Concrete, Inc. Mechanic's Lien $8,890 Nationwide Gutter, Inc. Mechanic's Lien $1,718 U.S. RESTAURANT: Fitch's BB Rating on Watch After Acquisition News ------------------------------------------------------------------ Fitch Ratings places U.S. Restaurant Properties on Rating Watch Evolving following the company's announcement that it is acquiring CNL Restaurant Properties for approximately $1.3 billion. Approximately $111 million of 'BB' unsecured notes and $122 million of 'B+' preferred stock are affected by Fitch's action. U.S. Restaurant's Rating Outlook had previously been Negative. Rating Watch Evolving indicates that a rating could be raised, lowered or maintained over a three-to-six month period following the resolution of uncertain circumstances. The new company, which will continue to trade on the NYSE, will operate under the CNL Restaurant Properties name, with ownership of 1,900 properties, financial interests in an additional 1,100 properties and total assets of approximately $2.5 billion. In adherence to the merger agreement, CNL Restaurant Properties will merge with and into U.S. Restaurant Properties. Moreover, each of the eighteen CNL Income Funds will merge with a separate wholly owned subsidiary of U.S. Restaurant Properties' operating partnership. The total transaction consists of approximately $715 million in common and preferred stock and $540 million for the eighteen CNL Income Funds. The specifics of the transition call for CNL Restaurant Properties shareholders to receive 0.7742 shares of U.S. Restaurant Properties common stock and 0.16 shares of newly issued U.S. Restaurant Properties 7.5% series C redeemable convertible preferred stock for each share of CNL Restaurant Properties common stock held. The 7.5% series C redeemable convertible preferred stock has a conversion price of $19.50 per share and a liquidation value of $25 per share. Fitch acknowledges the increased operational efficiencies for the new entity with regard to size and synergies and further recognizes the augmented diversification of brand, tenant and geography of the combined portfolio. The transaction will also provide the company with added flexibility with respect to a broader array of available business lines; however, such increased accessibility will heighten the complexity involved in analyzing the company. In addition, Fitch anticipates the deal to be highly leveraged as well as structurally complicated and as such presents concerns about resultant leverage and coverage metrics and strategic organizational issues. This uncertainty pertaining to the formation of the company's capital structure and operations elicits our Ratings Watch Evolving stance. Fitch will continue to monitor the progress of the transaction as more details regarding the structure of the newly formed company develop. US Restaurant Properties, Inc., through its subsidiaries, is a fully integrated, self-administered real estate investment trust -- REIT -- that acquires, owns, leases, and in some cases, operates restaurant, service station and other retail properties. Most of the properties are leased by U.S. Restaurant on a triple net lease basis to quick and full service dining chain restaurants affiliated with national and regional brands. As of June 30, 2004, U.S. Restaurant owned 778 properties located in 48 states, which were leased to 270 tenants. Additionally, U.S. Restaurant conducts its retail operations through a taxable REIT subsidiary -- TRS -- called Fuel Supply, Inc., which operates twelve service stations and three restaurants and also sells fuel through fourteen operators and on a wholesale basis to two other operators. U.S. Restaurant currently has total assets of $542 million, total debt of $325 million and an undepreciated total book capital of $639 million. U.S. STEEL: Vice Chairman Roy Dorrance to Retire by Month's End --------------------------------------------------------------- Roy G. Dorrance, vice chairman of United States Steel Corporation (NYSE: X), has elected to retire from his post at the end of September. "Throughout the last decade, Roy's leadership has helped guide U. S. Steel through some challenging times," said Thomas J. Usher, chairman and chief executive officer. "He was an early advocate of building a culture of continuous improvement within the company, and his leadership has allowed us to establish and maintain a strong position in domestic and international markets." Mr. Dorrance's career with U. S. Steel has spanned more than 36 years, during which he has served in a number of key positions including: 1989-1992 Vice president -- U. S. Steel International, Inc. 1992-1994 President -- UEC Technologies LLC (formerly USX Engineers and Consultants) 1994-1995 Vice President - purchasing and technology 1995-1997 Vice president - operations; and 1997-2001 Exec. Vice president - sheet products In 2001, Mr. Dorrance was named executive vice president, with responsibility for new business development. During this time, he was a driving force behind the development of the company's information technology to support customer service initiatives and to enhance the efficiency of the company's operations. One year later, he was named vice chairman and chief operating officer, and in 2003, he assumed his most recent position. Mr. Dorrance's efforts have helped strengthen U. S. Steel's global position through steel export, engineering and consulting activities, and through involvement in Europe and China. Mr. Dorrance earned a bachelor of science degree in management from the Massachusetts Institute of Technology and a master's degree in industrial management from Carnegie Mellon University. He held his first position, hot strip mill foreman, at Mon Valley Works in 1968, and served in various capacities on the company's financial, international and resource development staffs early in his career. "From his early years in the company through his service as vice chairman, Roy has helped cultivate a work environment that empowered employees," said Mr. Usher. "He saw the advantages early on of involving employees in making key decisions and encouraging them to work as a team. His leadership and integrity will be missed." * * * As reported in the Troubled Company Reporter on July 6, 2004, Fitch Ratings has affirmed the senior unsecured long-term debt ratings of U.S. Steel at 'BB-', the ratings of the company's senior secured bank debt at 'BB', and convertible preferred stock at 'B'. The Rating Outlook has been changed to Stable from Negative. This rating action affects approximately $1.3 billion of securities outstanding at the end of the first quarter. In the wake of the National Steel acquisition, USS' operating leverage is making a big difference. The company should move from a loss last year to a profit of greater absolute magnitude this year, and a net debt/EBITDA of 1.0 times (x) or less may not be out of question by year-end. A $300/ton run-up in the price for sheet products has been the primary earnings driver; synergies from the merger and the labor agreement with the United Steelworkers have also helped. Counter-balancing gains on the revenues side have been increases in costs for coke, energy, and scrap. USS is self-sufficient in iron ore and coke, except at its Central European operations. The added costs are being eclipsed by the increase in prices, and volumes have been good across all major product lines. US AIRWAYS: Reports 79.1% Increase in Passenger Load Factor ----------------------------------------------------------- US Airways reported its August 2004 passenger traffic. Mainline revenue passenger miles for August 2004 increased 0.8 percent on a 2.9 percent increase in available seat miles compared to August 2003. The passenger load factor was 79.1 percent, which is a 1.6 percentage point decrease compared to August 2003. For the first eight months of 2004, mainline revenue passenger miles increased 7.4 percent on a 4.6 percent increase in available seat miles compared to the same period in 2003. The passenger load factor for January through August 2004 was 76.3 percent, a 2.0 percentage point increase compared to the same period in 2003. The two wholly owned subsidiaries of US Airways Group, Inc. -- Piedmont Airlines, Inc. and PSA, Inc. -- along with MidAtlantic Airways, reported a 79.0 percent increase in revenue passenger miles for August 2004, on 50.5 percent more capacity compared to August 2003. The passenger load factor was 64.2 percent, a 10.2 percentage point increase compared to August 2003. For January through August 2004, revenue passenger miles for the two wholly owned US Airways Express carriers and MidAtlantic increased 36.9 percent on an 18.3 percent increase in available seat miles compared to the first eight months of 2003. The passenger load factor for January through August 2004 was 60.9 percent, an 8.3 percentage point increase compared to the same period in 2003. Mainline system passenger unit revenue for August 2004 is expected to decrease between 4.5 percent and 5.5 percent compared to August 2003. Customer reaction to US Airways' new low GoFares, which were introduced in Philadelphia in May and in the Washington area in mid-June, continues to be positive, resulting in an 83.6 percent mainline August load factor in GoFares markets, compared to a 78.2 percent load factor in non-GoFares markets. US Airways ended the month of August by completing 97.9 percent of its scheduled departures. Continued heavy rain and thunderstorm activity in the East during the month of August affected the company's departure performance. There was no change in the mileage completion factor compared to August 2003. Headquartered in Arlington, Virgina, US Airways' primary business activity is the ownership of the common stock of US Airways, Inc., Allegheny Airlines, Inc., Piedmont Airlines, Inc., PSA Airlines, Inc., MidAtlantic Airways, Inc., US Airways Leasing and Sales, Inc., Material Services Company, Inc. and Airways Assurance Limited, LLC. The Company filed for chapter 11 protection on August 11, 2002 (Bankr. E.D. Va. Case No. 02-83984). Under a chapter 11 plan declared effective on March 31, 2003, USAir emerged from bankruptcy with the Retirement Systems of Alabama taking a 40% equity stake in the deleveraged carrier in exchange for $240 million infusion of new capital. Alexander Williamson Powell Jr., Esq. and David E. Carney, Esq. at Skadden, Arps, Slate, Meagher & Flom and Lawrence E. Rifken, Esq. at McGuireWoods LLP represented the Debtors in their restructuring. UNITED AGRI: Further Extends Senior Debt Offering to Sept. 16 ------------------------------------------------------------- UAP Holding Corp. and United Agri Products, Inc. are each extending the expiration date for the previously announced offers to purchase for cash any and all of UAP Holdings' outstanding $125,000,000 principal amount at maturity of 10-3/4% Senior Discount Notes due 2012 and any and all of United Agri Products' outstanding $225,000,000 principal amount of 8-1/4% Senior Notes due 2011. The tender offers by the Companies, each previously scheduled to expire at 5:00 p.m., New York City Time, on Friday, September 3, 2004, will now expire at 5:00 p.m., New York City Time, on Thursday, September 16, 2004, unless further extended. As of 5:00 p.m., New York City Time, on September 2, 2004, all $125,000,000 aggregate principal amount at maturity of the 10-3/4% Discount Notes and all $225,000,000 aggregate principal amount of the 8 1/4% Notes have been validly tendered and have not been withdrawn in the offers to purchase and consent solicitations. Each Company's tender offer is conditioned on, among other things: (a) the consummation of UAP Holdings' offering of Income Deposit Securities and (b) United Agri Products amending its existing revolving credit facility and entering into a new senior secured second lien term loan facility, the net proceeds of both of which will be used, among other things, to pay the considerations for the Notes purchased in the tender offers. Information regarding the pricing, tender and delivery procedures and conditions to the tender offer and consent solicitation are contained in the Offer to Purchase and Consent Solicitation Statement dated April 26, 2004, as supplemented by the Supplement thereto dated May 6, 2004 and the accompanying Letter of Transmittal and Consent. UBS Investment Bank is acting as dealer manager for the tender offers and consent solicitations. MacKenzie Partners, Inc. is acting as information agent. Questions about the tender offers may be directed to the Liability Management Group of UBS Investment Bank at (888) 722-9555 x4210 (toll free) or (203) 719-4210 (collect), or to MacKenzie Partners, Inc. at (212) 929-5500 (collect) or (800) 322-2885 (toll free). Copies of the Offer Documents and other related documents may be obtained from the information agent. The tender offer and consent solicitation are being made solely on the terms and conditions set forth in the Offer Documents. Under no circumstances shall this press release constitute an offer to buy or the solicitation of an offer to sell the Notes or any other securities of the Companies. It also is not a solicitation of consents to the proposed amendments to the indentures and registration rights agreements. No recommendation is made as to whether holders of the Notes should tender their Notes or give their consent. About the Companies UAP Holdings is a holding company with no significant assets or operations other than the ownership of 100% of the stock of United Agri Products. United Agri Products is the largest private distributor of agricultural and non-crop inputs in the United States and Canada. It markets a comprehensive line of products including crop protection chemicals, seeds and fertilizers to growers and regional dealers. In addition, as part of its product offering, United Agri Products provides a broad array of value- added services including crop management, biotechnology advisory services, custom blending, inventory management and custom applications of crop inputs. United Agri Products maintains a comprehensive network of approximately 350 distribution and storage facilities and five formulation and blending plants, strategically located throughout the United States and Canada. * * * As reported in the Troubled Company Reporter's May 13, 2004 edition, Standard & Poor's Ratings Services lowered its corporate credit rating on crop protection and agriculture distributor United Agri Products, Inc., to 'B' from 'B+'. It also lowered the rating on UAP's existing $500 million senior secured revolving credit facility to 'B+' from 'BB-'. The lower ratings reflect the company's anticipated more aggressive financial profile after its parent company, UAP Holdings Corp., proposed a $625 million issuance of income deposit securities (IDS). At the same time, Standard & Poor's assigned a rating of 'CCC' to the senior subordinated notes of UAP Holdings Corp. The ratings on UAP Holdings' existing senior discount notes have been lowered to 'CCC+' from 'B-', while the ratings on United Agri Products' senior unsecured notes have been lowered to 'B-' from 'B'. However, these ratings will be withdrawn upon issuance of the income deposit securities, which will be used to retire the debt. UAP Holdings' proposed $625 million IDS issuance will consist of common stock and subordinated notes. The new bank loan and subordinated debt ratings are based on preliminary offering statements and are subject to review upon final documentation. The ratings on both UAP and UAP Holdings have been removed from CreditWatch, where they were placed April 13, 2004. "Standard & Poor's believes that the IDS structure reflects a more aggressive financial policy," said Standard & Poor's credit analyst Ronald Neysmith. "Previously, UAP did not pay dividends on its common stock. However, as a result of the IDS offering, UAP will be distributing roughly 75% of its cash flow as interest and dividends, thereby materially reducing financial flexibility." VIASYSTEMS INC: Parent Company Initiates Rights Offering -------------------------------------------------------- Viasystems Group, Inc., the parent of Viasystems, Inc., is offering to holders of shares of its common stock and its class B senior convertible preferred stock the right to subscribe for and to purchase an aggregate of 5,555,555 additional shares of its common stock, as described in an Offering Memorandum dated September 3, 2004. Certain Viasystems Group stockholders have executed a standby commitment agreement to purchase any shares of Viasystems Group common stock that are not subscribed for in the rights offering. As a result, Viasystems Group will receive gross proceeds of approximately $50 million. Net proceeds of the offering will be applied in the expansion of Viasystems' printed circuit board operations in China. The record date for the rights offering is August 15, 2004. Holders of record of Viasystems Group's common stock at the close of business on the record date will receive 0.21730 of a right for each share of common stock owned on the record date. Holders of record of Viasystems Group's class B senior convertible preferred stock at the close of business on the record date will receive 0.24896 of a right for each share of class B senior convertible preferred stock owned on the record date, which represents the number of shares of common stock into which each share of class B senior convertible preferred stock is convertible on the record date (1.1457 shares) multiplied by the common stock subscription right ratio of 0.21730. Each whole right entitles the holder to purchase one share of Viasystems Group's common stock at a subscription price of $9.00 per share. The rights will expire at 5:00 p.m., New York City time, on October 4, 2004, unless extended by Viasystems Group. In addition, certain affiliates of Hicks, Muse, Tate & Furst Incorporated have agreed to exchange, concurrently with the consummation of the rights offering, 297,763 shares of Viasystems Group class A junior preferred stock held by them with an aggregate liquidation preference of $30 million for 2,625,673 shares of Viasystems Group common stock with an aggregate value of approximately $23.63 million, based on the rights offering subscription price. The shares of Viasystems Group's common stock offered pursuant to this rights offering will not be registered under the Securities Act of 1933, as amended, or any 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 or applicable state securities laws. Viasystems Group, Inc. is a global provider of electro-mechanical components and assemblies. The company's 22,000 employees serve more than 100 customers in the automotive, consumer, computer and data communications, industrial and instrumentation, and telecommunications markets. Viasystems, Inc., a subsidiary of Viasystems Group, Inc. is a leading, worldwide, independent provider of electronics manufacturing services, or EMS, to original equipment manufacturers, or OEMs, primarily in the telecommunications, networking, automotive, consumer, industrial and computer industries. * * * As reported in the Troubled Company Reporter on July 23, 2004, Standard & Poor's Ratings Services affirmed its 'B' corporate credit and other ratings for St. Louis, Missouri-based Viasystems Inc., and revised its outlook on the company to stable from positive. "The outlook revision reflects the withdrawal of the company's filing for an IPO of its common stock of up to $275 million, removing our previous expectation that credit protection measures would improve because of debt repayment with the planned IPO proceeds," said Standard & Poor's credit analyst Emile Courtney. Total debt was approximately $470 million as of March 2004. The ratings reflect Viasystems Inc.'s highly fragmented and competitive printed circuit board manufacturing market, volatile sales levels and profitability through the business cycle, and high debt leverage. These partly are offset by the company's low- cost manufacturing locations and its leading original equipment manufacturer customer base. Viasystems manufactures PCBs for electronics OEMs and wire harnesses for consumer appliance makers. Following Viasystems' voluntary reorganization, completed in January 2003, the company extinguished about $740 million in debt. Viasystems has closed and consolidated more than 50% of its manufacturing facilities since 2001, locating its remaining manufacturing sites primarily in China and Mexico, both low-cost areas. VILLA ST. MICHAEL: Court Gives Third Interim Nod to Access $662K ---------------------------------------------------------------- The Honorable E. Stephen Derby of the U.S. Bankruptcy Court for the District of Maryland, Baltimore Division, approved the third interim agreement and stipulation for the use of cash collateral pledged by Villa St. Michael Limited Partnership to repay secured debts owed to PMI Mid-Atlantic LLC, HMIS, and the United States Treasury, Internal Revenue Service. The debtor can continue using up to $662,000 of its secured creditors' cash collateral. The Debtor submits that it has a continuing need to use the Lender's cash collateral in order to continue the operation of its business operations and to preserve the value of its assets. The Debtor and the Lender agree that cash collateral use will be limited to amounts detailed in a Budget through September 30, 2004, projecting: 8/1/04-8/31/04 9/1/04-9/30/04 -------------- -------------- Cash Receipts $635,000 $662,000 Cash disbursements $673,000 $662,000 Replacement liens of the same validity, extent and priority are granted to the Lender. As further adequate protection, the Debtor will pay to the Lender the following: a) $15,000 by July 23, 2004; b) $35,000 by August 15, 2004; and c) $37,500 by September 15, 2004. Headquartered in Baltimore, Maryland, Villa St. Michael Limited Partnership operates Villa St. Michael Nursing and Retirement Center located in Baltimore, Maryland. The Company filed for chapter 11 protection on May 27, 2004 (Bankr. D. Md. Case No. 04-23064). Constance M. Hare, Esq., at Mehlman, Greenblatt & Hare, LLC, represents the Company in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed over $1 Million in estimated assets and over $10 Million in estimated liabilities. WHITING PETROLEUM: S&P Affirms B+ Corporate Credit Rating --------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'B+' corporate credit rating on Whiting Petroleum Corp. and revised its outlook on the company to stable from positive. The rating action follows the company's announcement that it will acquire oil and gas properties in the Permian Basin for a total cash cost of about $345 million. The transaction will be funded entirely by draws under the company's revolving credit facility. "The outlook revision is based on concerns about the company's increased leverage, which weakens credit measures and constrains liquidity," said Standard & Poor's credit analyst Kimberly Stokes. "The stable outlook hinges on the success of Whiting's deleveraging program and the company's ability to achieve a more moderate financial profile." Standard & Poor's also said that the outlook could be revised to negative in the intermediate term if credit measures do not materially improve. Additional significant debt-financed acquisitions could lead to lower ratings. Pro forma for the recent acquisition and other small transactions, Standard & Poor's expects Denver, Colo.-based Whiting to have over $580 million in total debt, including $435 million outstanding under its revolving credit facility, which will be expanded to accommodate this transaction. WHITING PETROLEUM: Moody's Reviewing Low-B Ratings & May Downgrade ------------------------------------------------------------------ Moody's placed Whiting Petroleum's ratings on review for downgrade upon its most recent debt funded acquisition, pending Whiting's review of its near-term funding plan. The $345 million purchase of 41.9 mmboe of oil and gas reserves (60% proven developed, or PD) in seventeen fields in the Permian Basin will, at least initially, be funded with bank debt. This sharply escalates leverage. Whiting had already completed three smaller all-debt funded acquisitions, totaling $98.5 million, since June 30, 2004, and would need to complete a substantial common equity offering before the end of the rating review to retain its ratings. If downgraded, the ratings would be reduced by one rating notch. Moody's review will encompass appropriate capital and liquidity structures, relative to the ratings, following a review of Whiting's pro-forma: * reserve base and drilling inventory profiles, * unit economics and reserve replacement costs, * leverage on PD reserves and on PD plus fully-funded PUD reserves, PD reserve life, and * developing growth and financial strategies. Whiting has shown relatively high unit production and G&A costs but, to date, competitive reserve replacement costs. The $444 million of debt-funded acquisitions since June 30, 2004, plus Whiting's earlier partly equity funded Equity Oil acquisition, add important scale and diversification to its reserves, prospect base, and potential financial flexibility. Pro-forma total reserves and PD reserves would total approximately 140 mmboe and approximately 101 mmboe, respectively, with a healthy PD reserve life of 9 to 10 years and located in the Permian Basin of West Texas and Southeast New Mexico, the Rocky Mountains, the Midcontinent, and Michigan. In the current $345 million transaction, Whiting is paying a high $54,475 per daily barrel of current oil-equivalent production and an apparent $9.80/boe for proven reserves fully loaded for $65 million of required development capital spending. The packages hold a comparatively large 40% unfunded proven undeveloped reserve -- PUD -- component. To achieve its intended acquisition economics, Whiting will need to be realize competitive results with the acquired PUD drilling locations as well as additional activity in the probable and possible reserve component. A key element of Whiting's ability to retain its ratings was pursuing diversifying growth, while retaining sound unit full- cycle costs and leverage on PD reserves. However, so far, unless Whiting launches equity soon, its funding strategy will not match that anticipated by Moody's. The new April 2004 Ba3 Senior Implied and B2 senior subordinated note ratings were based largely on: * conservative initial leverage, * reasonable track record given the restraints of its prior control and ownership by a regulated utility, * Whiting's commitment to adequately fund material acquisitions with common equity, and * adequate unit economics, scale, and diversification for the ratings at the time. The ratings were assigned with a modest degree of room for diversifying acquisitions to be funded solely by debt. However, assuming the four acquisitions announced since mid-2004 remain funded with debt, leverage will have jumped 115% since June 30, 2004, rising from $2.79/boe of PD reserves to in the range of a pro-forma $6/boe of PD reserves. Debt/Capital will have risen from 35% to roughly 65%. If Whiting eventually refinances debt with equity, it would then reestablish its capacity to make material acquisitions and gain added flexibility for price weakness and capital spending programs. Ratings under review for downgrade include Whiting's: i) B2 rated $150 million of 8-year senior subordinated guaranteed notes; ii) Ba3 Senior Implied Rating; and iii) B1 Senior Unsecured Issuer rating. Whiting Petroleum Corporation is headquartered in Denver, Colorado. WORLDCOM INC: MCI Board Members to Purchase Stock with Fees ----------------------------------------------------------- MCI, Inc. (Nasdaq:MCIP) reported that members of its Board of Directors will invest 25 percent of their directors' fees in MCI Common Stock. By using a portion of their compensation to purchase company stock, the directors are implementing the latest in a series of initiatives designed to promote good corporate governance. MCI has withheld 25 percent of all directors' fees earned since the fourth quarter of 2003 and will transfer those funds to a broker, which will purchase the shares on behalf of each director. Shares will be held in individual accounts in each director's name and the directors will control their accounts. Going forward, directors will continue to purchase shares on a quarterly basis using this method. All shares purchased will be subject to certain long-term retention requirements. 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. The Bankruptcy Court confirmed WorldCom's Plan on October 31, 2003, and on April 20, 2004, the company formally emerged from U.S. Chapter 11 protection as MCI, Inc. (Worldcom Bankruptcy News, Issue No. 60; Bankruptcy Creditors' Service, Inc., 215/945-7000) WORLDWATER CORP: Executes $2 Million Contract for AquaMax(TM) ------------------------------------------------------------- WorldWater Corporation (OTCBB: WWAT), the world's sole provider of cutting edge patented high-volume solar powered technology with diverse commercial applications in a broad range of industries, has executed a $2 million contract for its proprietary AquaMax(TM) pumping system at a California citrus ranch. WorldWater's proprietary and patented AquaMax(TM) system will drive a high powered 200 horsepower pumping system at the facility, establishing the most powerful solar powered irrigation system in the world. The project represents a quantum leap forward in the deployment of large-scale solar power pumping technology and demonstrates the viability of solar power for broad applications in virtually all industries anywhere in the world. "While many of the world's finite energy sources are being depleted at a disquieting rate, as evidenced by the current global oil crisis. WorldWater's ability to harness the unlimited power of the sun with our proprietary AquaMax systems represents breakthrough technology," said Quentin T. Kelly, WorldWater's chairman and CEO. "Our patented technology can deliver up to 600 horsepower - more than 100 times as powerful as the nearest competitors - making ours the only products available anywhere in the world that can deliver the water-pumping horsepower required for large scale commercial applications. Installations such as the one at this California agricultural facility clearly demonstrate how WorldWater has enabled solar power to achieve an unparalleled level of practicality and cost-effectiveness for a broad spectrum of commercial mainstream uses." "California is one of the leading states in the development of solar and renewable energy, and is the proving ground of many of the world's most advanced solar power systems," continued Mr. Kelly. "This new ranch irrigation system is just the latest in a series of major projects in development for WorldWater in California." Among WorldWater's recent milestones powered by its AquaMax(TM) solar power technology in California are: -- Supply of a powerful one megawatt solar system for Cerro Coso Community College in Ridgecrest, projected to furnish an unprecedented 60% of the institution's electricity requirements; -- Design and installation of the world's largest solar-powered commercial refrigeration system, for a 350 horsepower hydracooler for a food processing facility in Edison; -- Development of a 50 horsepower solar pumping system for an agricultural facility in Firebaugh. About WorldWater WorldWater Corp., a full-service, international solar engineering and water management company with unique, high-powered and patented solar technology, provides solutions to a broad spectrum of the world's water supply and energy problems. The Company's recently patented AquaMax(TM) solar pumping systems, capable of driving motors up to an unprecedented 600 horsepower, make WorldWater the first solar company in the world with the power to deliver mainstream motor-drive and pumping capability. The Company is also a pioneering provider of solar powered water systems in the Philippines and developing nations in Africa and Asia. At June 30, 2004, WorldWater Corp.'s balance sheet showed a $4,421,431 stockholders' deficit, compared to a $3,941,442 deficit at December 31, 2003. * Large Companies with Insolvent Balance Sheets ----------------------------------------------- Total Shareholders Total Working Equity Assets Capital Company Ticker ($MM) ($MM) ($MM) ------- ------ ------------ ------- -------- Airgate PCS Inc. CSA (378) 291 13 Alliance Imaging AIQ (68) 628 20 Amazon.com AMZN (1,036) 2,162 568 Blount International BLT (397) 400 83 Cell Therapeutic CTIC (83) 146 72 Centennial Comm CYCL (547) 1,540 13 Choice Hotels CHH (118) 267 (42) Cincinnati Bell CBB (640) 2,074 (47) Compass Minerals CMP (144) 687 106 Cubist Pharmacy CBST (18) 223 91 Delta Air Lines DAL (384) 26,356 (1,657) Deluxe Corp DLX (298) 563 (309) Domino Pizza DPZ (718) 448 (1) Echostar Comm DISH (1,033) 7,585 1,601 Graftech International GTI (97) 967 94 Hawaian Holdings HA (143) 256 (114) Idenix Pharm IDIX (28) 67 30 Imax Corporation IMAX (52) 250 47 Kinetic Concepts KCI (246) 665 228 Lodgenet Entertainment LNET (129) 283 (6) Lucent Tech. Inc. LU (3,371) 15,765 2,818 Maxxam Inc. MXM (602) 1,061 127 Memberworks Inc. MBRS (20) 249 89 Millennium Chem. MCH (46) 2,398 637 McDermott Int'l MDR (363) 1,249 (24) McMoRan Exploration MMR (54) 169 83 Northwest Airlines NWAC (1,775) 14,154 (297) Nextel Partner NXTP (13) 1,889 277 Per-se Tech. Inc. PSTI (18) 172 41 Pinnacle Airline PNCL (48) 128 13 Phosphate Res. PLP (420) 306 3 Qwest Communication Q (1,016) 26,216 (1,132) Rightnow Tech. RNOW (13) 29 (9) Sepracor Inc SEPR (619) 1,020 256 St. John Knits Int'l SJKI (65) 234 69 UST Inc. UST (115) 1,726 727 Valence Tech. VLNC (52) 21 (5) Vector Group Ltd. VGR (3) 628 142 WR Grace & Co. GRA (184) 2,874 658 Western Wireless WWCA (225) 2,522 15 ********* Monday's edition of the TCR delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. 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Parcon, Bernadette C. de Roda, Rizande B. Delos Santos, Jazel P. Laureno, Cherry Soriano-Baaclo, Marjorie Sabijon 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 ***