/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/040913.mbx T R O U B L E D C O M P A N Y R E P O R T E R Monday, September 13, 2004, Vol. 8, No. 196 Headlines AIR CANADA: Attorney General Asks Court to Stay Sanction Order ARGENT SECURITIES: Fitch Puts BB+ Rating on $8M Class M-9 Certs. B & P APARTMENTS: Case Summary & 20 Largest Unsecured Creditors BANDICOOT CORPORATION: Case Summary & Largest Unsecured Creditors BRIDALS BY KAUFMAN'S: Case Summary & Largest Unsecured Creditors CATHOLIC CHURCH: Wants to Retain Hamilton as Special Counsel CHELL GROUP: Neil Anderson Discloses 12.8% Equity Stake COEUR: Names Donald Moss Management Information Systems Director CONTIMORTGAGE HOME: Performance Prompts S&P to Slash Ratings to D CSFB MORTGAGE: Fitch Affirms Low-B Ratings on Eight Cert. Classes CSFB MORTGAGE: Fitch Junks Class B-6 & Pares Class B-5 Rating to B DELTA AIR: Fitch Expresses Concerns About Turnaround Plan DII INDUSTRIES: U.S. Government Approves KBR Purchasing System ENRON: Court Okays CrossCountry Sale to Southern Union/GE Comm'l. FEDERAL-MOGUL: Environmental Claims Must be Filed by October 15 FRONTIER FINANCING: Moody's Withdraws Pref. Securities' C Rating GE COMMERCIAL: Fitch Puts Low-B Ratings on Six Certificate Classes GREENPOINT CREDIT: Fitch Shaves Ratings on Two Classes & Junks One GOSHAWK RIDGE DEV'T: Case Summary & 5 Largest Unsecured Creditors HANGER ORTHOPEDIC: Lenders Agree to Modify 5 Key Loan Covenants HAYES LEMMERZ: Asks Court to Deny GE Capital to File Sur-Reply IMMUNE RESPONSE: First HIV Patients Enrolled in New Int'l Trial IMPERIAL SCHRADE CORP: Case Summary & Largest Unsecured Creditors INNOVATIVE WATER: Taps James Edward Capital to Get More Financing INTERCEPT INC: Inks Acquisition Pact by Fidelity Nat'l Financial INTERSTATE BAKERIES: Gets Bank Commitment to Continue Funding INTERSTATE BAKERIES: Hires Miller Buckfire for Financial Advice IRISH PUB RESTAURANTS: Releases List of 20-Largest Creditors ISLAND DREAMS LLC: Case Summary & 20 Largest Unsecured Creditors KAISER ALUMINUM: Ferazzi Wants to Hire Haynes & Boone as Counsel LIBERATE TECH: To Appeal Court Ruling Dismissing Bankruptcy Case MCGARRH TRUCKING: Case Summary & 20 Largest Unsecured Creditors METROPCS INC: Fails to Comply with Covenant Due to Late Filing MIDLAND REALTY: Fitch Affirms Low-B Ratings on Cert. Classes J & K MIRANT CORP: Has Until Plan Confirmation to Decide on Leases MORGAN STANLEY: Fitch Assigns Low-B Ratings to Six Cert. Classes NEWARK INSURANCE: Shut-Down Prompts Moody's to Withdraw Ratings NOVA CDO: S&P Affirms Junk Ratings on Four CBO Notes Transaction OM ENTERPRISES: Voluntary Chapter 11 Case Summary ORBITAL SCIENCES: Names G. David Low VP-Techn'l Services Division OWENS CORNING: Objects to M. Pope's Fee Disgorgement Request PARMALAT: Has Until Thursday to File Plan & Disclosure Statement PENN TRAFFIC: Selling Distribution Centers for $45.9 Million PEREGRINE SYS: June 30 Balance Sheet Upside-Down by $272 Million PRIME HOSPITALITY: Launches 8-3/4% Cash Tender Offer & Consent QUESTERRE: Receives Court Approval for Corporate Restructuring QWEST COMMS: Subsidiary Completes Tender Offer for Debt Securities REPTRON ELECTRONICS: Facility Inks New Prod. Pact with Hunt Tech. RIDDELL BELL: Moody's Assigns Single-B Ratings to Notes & Credit RIDDELL BELL: S&P Assigns B+ Corporate Credit Rating RUSSELL CORP: Names Robert Koney, Jr., Chief Financial Officer SANRE REALTY CORPORATION: Voluntary Chapter 11 Case Summary SCOTT ACQUISITION: Case Summary & 20 Largest Unsecured Creditors SPIEGEL: Eddie Bauer Opens Outlet at The Shops at Briargate SOLUTIA INC: Reports Status of Flexsys Related Litigation SUMMITVILLE TILES: Files Chapter 11 Plan of Reorganization SUPERIOR NAT'L: Liquidation Cues Moody's to Withdraw Junk Ratings TNP ENTERPRISES: Acquisition by PNM to Strengthen Fin'l Positions TRICO MARINE: 67% of Sr. Noteholders Support Chapter 11 Pre-pack UNITED AIR: Names Sean Donohue United Express & Ted Vice-President US AIRWAYS: Files for Chapter 22 Protection in E.D. Virginia US AIRWAYS GROUP: Case Summary & 95 Largest Unsecured Creditors U.S. CANADIAN: Purchases 1.66% More Interest in CMKM Diamonds U.S. CANADIAN: Gets $3 Million of Funding Via Private Placement VENTAS INC: Appoints Christopher T. Hannon to Board of Directors VENTAS INC: Closes New $300 Million Secured Credit Facility VISTEON CORP: Moody's Reviewing Low-B Ratings & May Downgrade W.R. GRACE: Objects to Massachusetts Environmental Claims WAVING LEAVES: Hires David Wilson as Accountants WEST PENN: Plans to Transition Bellevue Hospital to AGH * Accountants Face New Concerns Says Cendrowski Corporate Advisors * Gregory Ford Joins Alvarez & Marsal as Director * BOND PRICING: For the week of September 13 - September 17, 2004 ********* AIR CANADA: Attorney General Asks Court to Stay Sanction Order -------------------------------------------------------------- The Attorney General of Canada asks the Court of Appeal of Ontario to rule whether Mr. Justice Farley's Sanction Order approving the Applicants' Plan of Reorganization, Compromise and Arrangement, will, as of September 30, 2004, extinguish or render "moot" its right to seek leave to appeal the Part III Complaints Order and any subsequent appeal if not heard and determined before that date. If so, the Attorney General asks the Court of Appeal to stay the Sanction Order insofar as it purports to extinguish any outstanding Part III Complaints, including those complaints subject to its appeal, until its request for leave to appeal pending before the Court of Appeal and any subsequent appeal can be heard. The Sanction Order releases all outstanding claims against the Applicants as of September 30, 2004. Mr. Justice Farley dismissed the Attorney General's request to exclude claims arising under Part III of the Canada Labour Code that are asserted by 11 non-unionized Air Canada employees from compromise under the Companies' Creditors Arrangement Act. The Attorney General has taken the matter to the Court of Appeal for review. The Applicants anticipate emerging from bankruptcy by September 30, 2004. The Applicants have taken the position that the Sanction Order extinguishes the Attorney General's request for leave to appeal the Part III Complaints Order and any subsequent appeal if not determined by the Court of Appeal by that date. Jacqueline Dais-Visca, Solicitor for the Attorney General, explains that the appeal raises serious, precedential issues relating to the statutory interpretation of the CCAA. The monetary value of the Part III Complaints is insignificant in the context of the billions of dollars of claims being compromised by the Applicants and will not unduly, if at all, interfere with the Applicants' ability to emerge from CCAA Court protection. However, the determination of whether to grant leave to review the correctness of the Part III Complaints Order and any subsequent appeal can await the Applicants' emergence. The Attorney General believes that there is an apparent conflict between the Parliament of Canada's policy of protecting minimum employment standards under Part III of the Canada Labour Code and the Parliament's policy of facilitating the reorganization of financially troubled companies. Ms. Dais-Visca points out that the Parliament has resolved any such conflict in favor of protecting minimum employment standards under Part III, including the employee's right to seek redress against both the restructuring company and its directors for breaches of the proscribed statutory minimum employment standards. If the stay is not imposed, the Attorney General suggests that the Court of Appeal expedite the hearing on its request for leave to appeal the Part III Complaints Order so that the request is determined before September 30, 2004. Applicants Respond The Applicants consent to an expedited hearing of the Attorney General's request for leave to appeal the Part III Complaints Order. If leave to appeal is denied before September 30, 2004, then the Attorney General's request to stay the Sanction Order is unnecessary. The Applicants tell the Court of Appeal that staying the release provisions of the Sanction Order serves to amend the Plan. This should not be. The Applicants have worked diligently over the past 17 months to coordinate a complex series of corporate arrangements to ensure their expedient emergence from bankruptcy. Any harm that the Attorney General or the Part III complainants may suffer if the stay is not granted and the appeal becomes moot will be vastly outweighed by the harm to the Applicants, their stakeholders, and the Canadian public, should the Applicants' emergence be delayed. If the stay is imposed, the Applicants' entire restructuring will be put at risk. The Applicants will suffer permanent damage resulting in possible litigation and, at a minimum, a serious loss of investor, creditor and consumer confidence. The Applicants assert that the Attorney General will not suffer any harm if the stay is not granted. The Attorney General has known about the Claims Procedure since September 2003 and the Applicants' intention to compromise Part III claims since at least November 2003. However, the Attorney General did not bring before the CCAA Court the issue whether or not the Part III Claims can be compromised by the Plan until July 2004. The Attorney General's last-minute behavior is the type that courts have recognized indicates there is not irreparable harm at issue. In Dylex Ltd. v. Factory Carpet Corp. (1989), 44 C.P.C. (2d) 96 (Ont. H.C.J.), the Dylex court held that: "One is driven to the conclusion that if the plaintiff was suffering irreparable harm, it would have moved expeditiously . . . the plaintiff failed to adduce sufficient evidence to demonstrate irreparable harm." Irreparable harm must be clear and not speculative. The Applicants point out that the Attorney General has not put forward any evidence to show that clear harm will be suffered if the Sanction Order is not stayed. The Applicants also note that no Affected Unsecured Creditor will be able to collect 100% of their claims. Nevertheless, the creditors voted overwhelmingly in favor of the Plan. The Applicants assert that any harm that is potentially suffered by Part III complainants is equal to the harm suffered by all their unsecured creditors. 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. (Air Canada Bankruptcy News, Issue No. 48; Bankruptcy Creditors' Service, Inc., 215/945- 7000) ARGENT SECURITIES: Fitch Puts BB+ Rating on $8M Class M-9 Certs. ---------------------------------------------------------------- Argent Securities Inc. 2004-W10 is rated by Fitch as follows: -- $645,200,000 classes A-1 and A-2 certificates 'AAA',; -- $24,800,000 class M-1 certificates 'AA+'; -- $24,000,000 class M-2 certificates 'AA'; -- $14,000,000 class M-3 certificates 'AA-'; -- $24,000,000 class M-4 certificates 'A'; -- $12,000,000 class M-5 certificates 'A-'; -- $10,000,000 class M-6 certificates 'BBB+'; -- $8,000,000 class M-7 certificates 'BBB'; -- $8,000,000 class M-8 certificates 'BBB-'; -- $8,000,000 privately offered class M-9 certificates 'BB+'. Credit enhancement for the 'AAA' rated class A certificates reflects the 16.60% subordination provided by classes M-1 to M-9, monthly excess interest, and initial overcollateralization -- OC -- of 2.75%. Credit enhancement for the 'AA+' rated class M-1 certificates reflects the 13.50% subordination provided by classes M-2 to M-9, monthly excess interest, and initial OC. Credit enhancement for the 'AA' rated class M-2 certificates reflects the 10.50% subordination provided by classes M-3 to M-9, monthly excess interest, and initial OC. Credit enhancement for the 'AA-' rated class M-3 certificates reflects the 8.75% subordination provided by classes M-4 to M-9, monthly excess interest, and initial OC. Credit enhancement for the 'A' rated class M-4 certificates reflects the 5.75% subordination provided by class M-5 to M-9, monthly excess interest, and initial OC. Credit enhancement for the 'A-' rated class M-5 certificates reflects the 4.25% subordination provided by class M-6 to M-9, monthly excess interest, and initial OC. Credit enhancement for the 'BBB+' rated class M-6 certificates reflects the 3.00% subordination provided by class M-7 to M-9, monthly excess interest, and initial OC. Credit enhancement for the 'BBB' rated class M-7 certificates reflects the 2.00% subordination provided by class M-8 and M-9, monthly excess interest, and initial OC. Credit enhancement for the 'BBB-' rated class M-8 certificates reflects the 1.00% subordination provided by class M-9, monthly excess interest, and initial OC. Credit enhancement for the privately offered 'BB+' rated class M-9 certificates reflects the monthly excess interest and initial OC. In addition, the ratings reflect the integrity of the transaction's legal structure, as well as the capabilities of Ameriquest Mortgage Company as master servicer (rated 'RPS2' by Fitch). Deutsche Bank National Trust Company will act as trustee. The mortgage pool consists of closed-end, first lien subprime mortgage loans that may or may not conform to Freddie Mac and Fannie Mae loan limits. As of the cut-off date, Sept. 1, 2004, the mortgage loans have an aggregate balance of $625,000,768. The weighted average loan rate is approximately 7.191%. The weighted average remaining term to maturity is 356 months. The average cut-off date principal balance of the mortgage loans is approximately $182,429. The weighted average original loan-to- value ratio is 79.91%, and the weighted average Fair, Isaac & Co. -- FICO -- score is 605. The properties are primarily located in: * California (32.18%), * Florida (9.81%), and * New York (8.31%). In addition, on or before the 90th day following the closing date, the trust will acquire $174,999,232 in subsequent mortgage loans to be included in the mortgage pool. The loans were originated or acquired by Argent Mortgage Company, LLC, and Olympus Mortgage Company. Both mortgage companies are subsidiaries of Ameriquest Mortgage Company, which is a specialty finance company engaged in the business of originating, purchasing, and selling retail and wholesale subprime mortgage loans. Both Argent and Olympus focus primarily on wholesale subprime mortgage loans. B & P APARTMENTS: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: B & P Apartments, Inc. aka James Tackett aka Kathy Tackett 1120 West Lexington Avenue Winchester, Kentucky 40391 Bankruptcy Case No.: 04-52937 Type of Business: The Debtor is engaged in the business of rental of commercial and residential real estate. Chapter 11 Petition Date: September 3, 2004 Court: Eastern District of Kentucky (Lexington) Judge: Joseph M. Scott Jr. Debtor's Counsel: Matthew B. Bunch, Esq. Bunch & Brock 271 West Short Street 805 Security Trust Bldg. P.O. Box 2986 Lexington, KY 40588-2086 Tel: 859-254-5522 Fax: 859-233-1434 Total Assets: $5,938,900 Total Debts: $4,849,673 Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Bank One $35,138 Chase Mastercard $26,008 AT&T $24,820 Direct Merchants Bank $21,661 American Express Open $21,301 Advanta Business $14,000 US Bank $12,579 Farm Bureau Bank $10,977 Hager Cabinets $10,759 84 Lumber $9,112 Retail Services $8,200 Polaris Retail Services $8,054 Dell Financial $7,500 HH Gregg / GE Capital Consumer $7,200 MBNA America $7,100 Sears Gold Mastercard $6,427 CitiPlatinum Select $5,720 Wells Fargo $4,468 Capital One $4,360 GE Capital Consumer Card Co. $4,229 BANDICOOT CORPORATION: Case Summary & Largest Unsecured Creditors ----------------------------------------------------------------- Debtor: Bandicoot Corporation dba WordsWorth Books 30 Brattle Street Cambridge, Massachusetts 02139 Bankruptcy Case No.: 04-17416 Type of Business: The Debtor is an independent bookstore. See http://www.wordsworth.com/ Chapter 11 Petition Date: September 9, 2004 Court: District of Massachusetts (Boston) Judge: Joan N. Feeney Debtor's Counsel: Thomas O. Bean, Esq. Nutter, McClennen & Fish, LLP One International Place Boston, MA 02110-2699 Tel: 617-439-2000 Estimated Assets: $500,000 to $1 Million Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Koen Book Distributors $386,080 Baker & Taylor $226,623 Random House, Inc. $50,322 Bookazine Company, Inc. $43,339 Thomas Hadley Trust $37,900 Penguin Group USA $33,980 Ronnie Oldenburg $26,888 American Express $25,543 Sanj Kharbanda $24,546 Wendy Smith $24,146 Houghton Mifflin Co. $19,499 Martha Lightfoot $18,194 Kevin Griffiths $10,856 Cambridge Securities Co. $16,736 Julie Gerrity $10,856 Harvard Pilgrim Health Care $10,087 Jennifer Decan Shaw $9,968 Ingram Book Company $9,181 John Wiley & Sons, Inc. $8,026 Alex Toys, Panline USA, Inc. $7,509 BRIDALS BY KAUFMAN'S: Case Summary & Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Bridals By Kaufman's aka Kaufman's Wedding World aka Wedding World 681 Clairton Boulevard Pittsburgh, Pennsylvania 15236 Bankruptcy Case No.: 04-32015 Type of Business: The Debtor is a wedding dress and bridal gown retailer. See http://www.weddingworld.com/ Chapter 11 Petition Date: September 10, 2004 Court: Western District of Pennsylvania (Pittsburgh) Judge: Bernard Markovitz Debtor's Counsel: Salene R. Mazur, Esq. Campbell & Levine LLC 1700 Grant Building Pittsburgh, PA 15219 Tel: 412-261-0310 Fax: 412-261-5066 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Alfred Angelo Trade Credit $1,500,000 1690 S. Congress Avenue (estimated) Suite 120 Delray Beach, FL 33445 Mon Cheri Trade Creditor $321,646 1018 Whitehead Road Extension Trenton, NJ 08638 Exclusive Bridals Trade Creditor $320,000 American Clothing Express 7601 Highway 64 Memphis, TN 38133 Alyce Designs Trade Creditor $159,744 Mori Lee, LLC Trade Creditor $141,456 Jovani Trade Creditor $90,000 Bridal Originals Trade Credit $77,635 Bill Levkoff, Inc. Trade Creditor $62,092 Bari-Jay Fashions, Inc. Trade Creditor $59,479 Benjamin Walk Corp. Trade Creditor $55,509 Jessica McClintock Trade Creditor $50,000 Jasmine Enterprises, Inc. Trade Creditor $29,512 Jordan Fashions Trade Creditor $29,101 Fedex Trade Creditor $25,374 Night Moves Trade Creditor $61,567 Park Associates Trade Creditor $52,580 Washington Millinery Supply, Trade Creditor $42,252 Inc. Preit Services Trade Creditor $35,886 Sarno & Son Trade Creditor $28,165 R&M Apparel Trade Creditor $24,126 CATHOLIC CHURCH: Wants to Retain Hamilton as Special Counsel ------------------------------------------------------------ Albert N. Kennedy, Esq., at Tonkon Torp, LLP, in Portland, Oregon, recounts that the Archdiocese of Portland in Oregon refused to answer several questions at the Section 341(a) Meeting of Creditors on August 6, 2004, based on a purported privilege arising from the First Amendment to the Constitution of the United States of America. At the Case Management Conference on August 4, 2004, the Debtor asserted, among other things, that the Court may not have jurisdiction to determine the estate's assets. In its August 6, 2004 application to retain Rothgerber Johnson & Lyons, LLP, as special counsel, the Debtor represented that it needs the assistance and advice of special legal counsel to resolve all First Amendment issues in the case. The Debtor believes that First Amendment issues would arise throughout the case. The Official Committee of Tort Claimants anticipates that the Debtor will assert that the determination of its estate's assets by the Court is an unconstitutional intrusion into church affairs. Based on the position taken by the Debtor, the Tort Claimants Committee finds it necessary to retain a special counsel to assist in issues relating to the First Amendment and the Religious Freedom Restoration Act. Consequently, the Committee sought and obtained the Court's authority to retain Marci A. Hamilton as of August 20, 2004, as its special counsel. Professor Hamilton is one of the country's leading First Amendment scholars, holding the Paul R. Verkuil Chair in Public Law at the Benjamin N. Cardozo School of Law at Yeshiva University. She has been a visiting scholar at Princeton Theological Seminary, the Center of Theological Inquiry, New York University School of Law, and Emory University School of Law. Prof. Hamilton represented the City of Boerne, Texas, in a successful challenge to the Religious Freedom Restoration Act -- a case that resulted in the United States Supreme Court's decision in Boerne v. Flores, 507 US 521 (1997). Prof. Hamilton clerked for Associate Justice Sandra Day O'Connor of the U.S. Supreme Court and Chief Judge Edward R. Becker of the U.S. Court of Appeals for the Third Circuit. She received her J.D., magna cum laude, from the University of Pennsylvania Law School where she served as editor-in-chief of the University of Pennsylvania Law Review. Prof. Hamilton has published numerous articles on First Amendment issues. Prof. Hamilton will be paid $500 per hour. Prof. Hamilton's services will be billed to the Debtor's estate for payment as an administrative expense under Sections 503(b) and 507(a)(1) of the Bankruptcy Code. No other arrangement or agreement exists between the Committee and Prof. Hamilton with respect to the payment of Prof. Hamilton's fees and disbursements. Prof. Hamilton attests that she does not represent any other entity having an adverse interest in connection with the Chapter 11 case, or have any connection with the Debtor, creditors, any other party-in-interest. Prof. Hamilton is a "disinterested person" within the meaning of Section 101(14) of the Bankruptcy Code. The Archdiocese of Portland in Oregon filed for chapter 11 protection (Bankr. Ore. Case No. 04-37154) on July 6, 2004. Thomas W. Stilley, Esq. and William N. Stiles, Esq. of Sussman Shank LLP represent the debtor in its restructuring efforts. In its Schedules of Assets and Liabilities filed with the Court on July 30, 2004, the Portland Archdiocese reports $19,251,558 in assets and $373,015,566 in liabilities. (Catholic Church Bankruptcy News, Issue No. 5; Bankruptcy Creditors' Service, Inc., 215/945- 7000) CHELL GROUP: Neil Anderson Discloses 12.8% Equity Stake ------------------------------------------------------- Neil T. Anderson beneficially owns 4,630,000 shares of the common stock of Chell Group Corporation, representing 12.8% of the outstanding common stock of Chell. Mr. Anderson holds sole powers of voting and disposition over the stock. Stonefield Josephson, Inc. included in its auditor's report a substantial doubt about the company's ability to continue as a going concern. "The Company's significant recurring operating losses, working capital deficit, shareholders' deficit, and negative cash flows from operations raise substantial doubt about its ability to continue as a going concern," the Auditor reports. At August 31, 2002, Chell Group Corporation's balance sheets showed a C$16,988,536 stockholder's deficit, compared to a positive equity of C$3,408,066 at August 31, 2001. COEUR: Names Donald Moss Management Information Systems Director ---------------------------------------------------------------- Coeur d'Alene Mines Corporation (NYSE: CDE) appointed two new officers in its finance and accounting group, and the advancement of a new Director of Information Systems for the Company. Appointed as Treasurer of the Company is Jennifer Kean, who was previously Director of Financial Planning and Assistant Treasurer of Coeur. Ms. Kean joined Coeur in early 2004. Prior to joining Coeur, Ms. Kean worked as Director of Corporate Finance for Sony Pictures Entertainment. In addition, Thomas Angelos was named Controller and Chief Accounting Officer of the Company. Mr. Angelos was previously with Coeur as Controller from 1983 to 1998, and prior to his return to the Company was Corporate Controller at Stillwater Mining Company from 1998 to 2004. The Company has also named Donald Moss as Director of Management Information Systems. Mr. Moss has been with the company since 1999 as Coeur's Manager of Information Systems. Dennis E. Wheeler, Chairman & CEO stated, "I am pleased to make this announcement.... I firmly believe our management team is the deepest in the industry. These promotions are part of the Company's growth plan". 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. CONTIMORTGAGE HOME: Performance Prompts S&P to Slash Ratings to D ----------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on class B-I and class B-II from ContiMortgage Home Equity Loan Trust 1998- 3 to 'D' from 'CCC'. Simultaneously, ratings are affirmed on the remaining six classes from this transaction. The lowered ratings on class B-I and B-II reflect a decrease in credit support to the subordinate classes due to net losses that consistently exceed excess interest, resulting in an erosion of overcollateralization and losses being allocated to the certificates. Based on the current performance, it is not likely that the principal losses will be fully recoverable. The affirmations reflect adequate remaining credit support percentages for the senior classes. Credit support for the transaction is provided by subordination, excess interest, and overcollateralization. Additional credit support for the senior classes is provided by bond insurance issued by MBIA Insurance Corp. As of the August 2004 distribution date, total delinquencies were 39.41% and 39.67% for groups 1 and 2, respectively. Serious delinquencies were 26.89% and 28.02%, and cumulative losses were 6.69% and 7.69% for groups 1 and 2, respectively. The transaction is backed by fixed- and adjustable-rate subprime home equity mortgage loans secured by first and second liens on owner-occupied one- to four-family residences. Ratings Lowered ContiMortgage Home Equity Loan Trust 1998-3 Pass-thru certs Rating Class To From ----- -- ---- B-I D CCC B-II D CCC Ratings Affirmed ContiMortgage Home Equity Loan Trust 1998-3 Pass-thru certs Class Rating ----- ------ A-7, A-8, A-9 AAA A-17, A-18, A-20 AAA CSFB MORTGAGE: Fitch Affirms Low-B Ratings on Eight Cert. Classes ----------------------------------------------------------------- Fitch Ratings affirms Credit Suisse First Boston Mortgage Securities Corp. commercial pass-through certificates, series 2003-C3 as follows: -- $108.5 million class A-1 at 'AAA'; -- $214.0 million class A-2 at 'AAA'; -- $212.0 million class A-3 at 'AAA'; -- $55.0 million class A-4 at 'AAA'; -- $862.4 million class A-5 at 'AAA'; -- Interest Only (I/O) class A-X at 'AAA'; -- I/O class A-SP at 'AAA'; -- I/O class A-Y at 'AAA'; -- $47.4 million class B at 'AA'; -- $19.4 million class C at 'AA-'; -- $38.8 million class D at 'A'; -- $19.4 million class E at 'A-'; -- $19.4 million class F at 'BBB+'; -- $12.9 million class G at 'BBB'; -- $19.4 million class H at 'BBB-'; -- $2.5 million class 622A at 'BBB-'; -- $6.0 million class 622B at 'BBB-'; -- $6.0 million class 622C at 'BBB-'; -- $6.0 million class 622D at 'BBB-'; -- $19.4 million class J at 'BB+' -- $12.9 million class K at 'BB'; -- $17.8 million class 622E at 'BB'; -- $1.6 million class 622F at 'BB'; -- $6.5 million class L at 'BB-'; -- $10.8 million class M at 'B+'; -- $2.2 million class N at 'B'; -- $4.3 million class O at 'B-'. Fitch does not rate the $21.6 million class P. The affirmations are due to the stable pool performance and scheduled amortization. As of the August 2004 distribution date, the pool's aggregate principal certificate balance has decreased 1.1% to $1.75 billion compared to $1.76 billion at issuance. There is currently one loan in special servicing. 7451 Beverly Blvd. (0.16% of the pool) is secured by a 25,050 square feet (sf) office building located in Los Angeles, California. The loan was delinquent due to the borrower having difficulty leasing the vacant space at the property. The special servicer Arcap Servicing, Inc., recently informed Fitch that the loan has been brought current and is working on potential strategies to return the loan to the master servicer. The five credit assessed loans (29.4% of the pool) remain investment grade. Fitch reviewed operating statement analysis reports and other performance information provided by the master servicer, Key Commercial Mortgage. The debt service coverage ratio -- DSCR -- for the loans are calculated based on a Fitch adjusted net cash flow -- NCF -- and a stressed debt service on the current loan balance and a hypothetical mortgage constant. 622 Third Avenue (11.6%) is secured by a 1.0 million sf class A office building located in midtown Manhattan. The whole loan, as of August 2004, has an outstanding principal balance of $285.0 million. The whole loan was divided into a $203.0 million pooled portion, a $40.0 million non-pooled portion (representing classes 622A-622F) and a $43.0 million B-note held outside of the trust. The loan is interest only for the first two years then amortizes on a 30-year schedule with an anticipated repayment date of May 2013. As of YE 2003 the Fitch adjusted NCF has declined approximately 4.9% due to an increase in operating expenses. The corresponding DSCR for the pooled portion as of YE 2003 was 1.48 times (x) compared to 1.56x at issuance. As of June 2004 occupancy has remained flat at 98.0% since issuance. Washington Center Portfolio (7.0%) is secured by a 888-room Grand Hyatt mixed-use full-service hotel and a 355,718 sf class A office complex, located between the White House and the U.S. Capitol in the East End district of Washington, DC. The whole loan, as of August 2004, has an outstanding principal balance of $213.5 million. The whole loan was divided into a $122.0 million senior A note, a $64.0 million B note and a $27.5 million C note. The B and C notes are held outside of the trust. There also exists an additional $21.5 million senior mezzanine note and a $15.0 million junior mezzanine note. As of YE 2003 the Fitch adjusted NCF for the hotel portion declined 5.0% since issuance due to a slight drop in revenue per available room -- RevPar -- to $121.27 compared to $121.89 at issuance. The Fitch adjusted NCF as of YE 2003 for the office portion declined 10.3% due to an increase in operating expenses and a decrease in occupancy. Occupancy as of May 2004 for the office portion was 98.8% compared to 99.9% at issuance. The DSCR for the A note portion of the loan as of YE 2003 was 1.85x compared to 1.96x at issuance. Columbiana Center (4.0%) is secured by 464,588 sf of a 825,231 sf regional mall located in Columbia, South Carolina. The center is anchored by Sears, Dillard's, Parisan's and Belk's. In-line and collateral occupancy as of May 2004 declined to 90.6% and 93.3% respectively, compared to 94.1% and 98.8% at issuance. The Fitch adjusted NCF as YE 2003 declined 1.4% and the corresponding DSCR remained flat at 1.37x since issuance, due to amortization on the loan. Fitch will monitor the leasing activity at the property. The remaining two credit assessed loans, The Crossings (3.4%) and Great Lakes Shopping Center (3.4%) have remained stable since issuance. CSFB MORTGAGE: Fitch Junks Class B-6 & Pares Class B-5 Rating to B ------------------------------------------------------------------ Fitch Ratings has taken rating actions on the following classes of CS First Boston mortgage-backed securities, series 2001-2: -- Class IA1 affirmed at 'AAA'; -- Class B-1 affirmed at 'AA'; -- Class B-2 affirmed at 'A'; -- Classes B-3 and B-4 downgraded to 'BB' from 'BBB'; -- Class B-5 downgraded to 'B' from 'BB'; -- Class B-6 downgraded to 'C' from 'B'. The affirmations on the above classes reflect credit enhancement consistent with future loss expectations. The negative rating actions on classes B-3, B-4, B-5, and B-6 are the result of poor collateral performance, level of losses incurred, and future loss expectations. The 0.15% original credit support provided by the unoffered class B-7 certificate has been depleted. The mortgage pool supporting the trust is substantially paid down, with the current pool factor (current mortgage loans outstanding as a percentage of the initial pool) at 6.00%. As of the August 2004 distribution, the current pool balance is $9,137,148.00. The mortgage pool is currently 43 months seasoned. There are 80 mortgage loans remaining, 18 loans of which are in the delinquency buckets. The 90 plus delinquencies represents 13.69% of the mortgage pool, 4.82% and 8.87% represents Foreclosure and REO, respectively. The original mortgage pool consisted of 548 30-year fixed-rate mortgage loans. Approximately 71.0% of the loans were collateralized by single-family detached properties with a weighted average loan to value ratio of approximately 78.5%. The greatest concentration of properties is in California (37%). DELTA AIR: Fitch Expresses Concerns About Turnaround Plan --------------------------------------------------------- Fitch Ratings believes that Delta Air Lines (Delta, senior unsecured debt rated 'CC' by Fitch) plans to eliminate its hub at Dallas-Fort Worth International Airport (DFW) and redistribute its aircraft among its other hubs cities, which it announced Thursday, Sept. 9, providing these latter airports short-term benefits but heightening some long-term credit concerns. Based on its announcement Wednesday, Sept. 8, Delta plans to increase daily operations at Atlanta Hartsfield-Jackson International Airport (senior general airport revenue bonds (GARBS) rated 'AA-' by Fitch) to 1,051 daily flights in February 2004 from 970 currently and provide service to seven additional cities. Delta also plans to institute a 'rolling hub' at the airport, which spreads flights throughout the day rather than in concentrated banks, which should allow for smoother operations and generate efficiencies. The airline's schedule at Cinncinati/Northern Kentucky International Airport (operated by Kenton County Airport Board; senior lien GARBS rated 'A' by Fitch) increases to 619 daily flights in February 2005 from 590 at present, with an additional three cities served from the airport. Delta recently initiated its revamped fare structure, dubbed 'SimpliFares', in Cincinnati in an effort to address growing competition from regional airports such as Dayton International (senior lien GARBs rated 'BBB+' by Fitch). While both Atlanta-Hartsfield Jackson and Cincinnati/Northern Kentucky airports should benefit from increased enplanement activity in the near term, their heightened reliance on Delta, which continues to face significant financial challenges that may lead to the airline seeking protection under Chapter 11 of the U.S. Bankruptcy Code, represents a significant credit concern. While both airports feature attractive local markets that may attract replacement service should Delta substantially reduce its presence at either facility, it is unlikely that another airline would quickly replicate Delta's hub operations at either location in the current economic environment. Thus the financial operations of the airports may be strained, at least temporarily, should Delta significantly reduce its hubbing operations at either or both facilities in the future. Delta also announced increased service from five 'focus city' airports: Boston Logan International (Massachusetts Port Authority, senior lien revenue bonds rated 'AA-' by Fitch); New York John F. Kennedy International Airport (Port Authority of New York and New Jersey, senior lien revenue bonds rated 'AA-' by Fitch); Ft. Lauderdale-Hollywood (FL) International Airport (Broward County senior lien GARBs rated 'A+' by Fitch); Orlando (FL) International Airport (Greater Orlando Aviation Authority, senior lien GARBs rated 'AA- by Fitch); and Tampa (FL) International Airport (Hillsboro County Aviation Authority, senior lien GARBs rated 'A+' by Fitch). While the increased presence of Delta does raise the exposure of each of these airports to the financially troubled carrier, Delta does not represent more than 25% of enplanements at any of the five airports. Furthermore, as the traffic at these airports consists mainly of origination and destination passengers rather than connecting passengers, Fitch believes other carriers would likely expand service to capture a greater share of the market should Delta leave any or all of these facilities. As reported in the Troubled Company Reporter, DFW International Airport says it will continue to work closely with Delta Air Lines in its restructuring efforts and foresees long-term growth for the Airport in the years ahead. The Airport confirmed communications with Delta officials on the possibility of restructuring. Delta announced it is reducing its daily flights at DFW from 256 to 21, with the remaining flights servicing Delta's other hubs in Atlanta, Cincinnati and Salt Lake City. Delta expects the new flight schedule to be in place by January 31, 2005. The airline will also significantly reduce its workforce in North Texas. Delta Air Lines' top executive outlined key elements of the company's transformation on Tuesday intended to launch "the right airline for the new era" by improving its customers' traveling experience while simultaneously targeting more than $5 billion in annual cash savings by 2006. The company is on track to deliver by the end of this year through its previously announced Profit Improvement Initiatives (PII) approximately $2.3 billion of the total savings target. About Delta Air Lines 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://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 last week. DII INDUSTRIES: U.S. Government Approves KBR Purchasing System -------------------------------------------------------------- KBR, a subsidiary of Halliburton (NYSE:HAL), has been granted continued approval of its purchasing system by the Defense Contract Management Agency (DCMA). The DCMA is the United States Government agency that has the authority to make final decisions and judgments about the adequacy of the Company's business systems. KBR underwent an extensive Contractor Purchasing System Review (CPSR) conducted by the DCMA in April and May of this year. Prior to this review, KBR's purchasing system had been approved by the Government in June 2003. It was determined that another review was prudent due to the unprecedented level of support KBR currently provides the military in Iraq and Kuwait. DCMA issued an approval letter on September 7, 2004, stating that KBR's purchasing system's policies and practices are "effective and efficient, and provide adequate protection of the Government's interest." KBR has repeatedly said that its purchasing system provides the flexibility and responsiveness necessary to meet the needs of its customers in a war zone. KBR's priority remains making certain that the troops have the best possible food, shelter and living conditions while fighting the war in Iraq. We will continue to work with all Government agencies to establish that our contracts are not only good for the United States, but also the company is the best and most qualified contractor to perform these difficult and dangerous tasks. "While expected, this is clearly good news. Despite the constantly changing requirements of our customer and the challenges associated with operating in such a hostile environment, KBR continues to comply with the Government-mandated Federal Acquisition Regulation in all of our procurement actions, and we constantly seek out and implement improvements to our systems," said Andy Lane, president and chief executive officer, KBR. "This latest approval of our purchasing system by the Government only validates that fact." Halliburton has a 60-year history of working with the government. KBR helped build U.S. warships in World War II, as well as projects in Somalia, Rwanda, and the Balkans. Halliburton also helped put out more than half of the oil well fires in Kuwait during the 1991 Gulf War. We are proud to serve the troops making them feel a little closer to home. Headquartered in Houston, Texas, Kellogg, Brown & Root is engaged in the engineering and construction business, providing a wide range of services to energy and industrial customers and government entities in over 100 countries. DII has no business operations. The Company filed for chapter 11 protection on December 16, 2003 (Bankr. W.D. Pa. Case No. 02-12152). Jeffrey N. Rich, Esq., Michael G. Zanic, Esq., and Eric T. Moser, Esq., at Kirkpatrick & Lockhart LLP, represent the Debtors in their restructuring efforts. (DII & KBR Bankruptcy News, Issue No. 19; Bankruptcy Creditors' Service, Inc., 215/945-7000) ENRON: Court Okays CrossCountry Sale to Southern Union/GE Comm'l. ----------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York issued a Final Sale Order approving the Purchase Agreement, as amended, between CCE Holdings, LLC, a joint venture of Southern Union and GE Commercial Finance's Energy Financial Services, and Enron Corp. and its affiliates to acquire 100% of the equity interests of CrossCountry Energy, LLC. The total transaction is valued at $2.45 billion, including the assumption of certain consolidated debt. The acquisition is subject to satisfaction of certain approvals and other closing conditions and is expected to close no later than mid-December. Thomas F. Karam, President and Chief Operating Officer of Southern Union, stated, "We are happy to have finally reached the end of the auction process. Now the real effort begins as we work to close and then successfully integrate the acquisition. We very much look forward to working with the CrossCountry team to operate these superior assets. We are equally delighted to have such a strong equity partner as GE Commercial Finance." "This transaction is a great illustration of our strategy to invest in quality energy assets, from wellhead to wall socket," said Alex Urquhart, President and Chief Executive Officer of GE Commercial Finance's Energy Financial Services business. "Acquiring this interest in CrossCountry with Southern Union also demonstrates our commitment to supporting leading companies in the industry, across the entire energy spectrum." CrossCountry holds interests in and operates Transwestern Pipeline Company, Citrus Corp. and Northern Plains Natural Gas Company - which make up Enron's North American interstate natural gas pipeline system. The pipeline system owned or operated by CrossCountry is comprised of approximately 9,700 miles of pipeline and approximately 8.6 Bcf/d of natural gas capacity. About GE Commercial Finance Energy Financial Services Based in Stamford, Conn., GE Commercial Finance's Energy Financial Services (EFS) provides enterprise financial solutions to the global energy industry from wellhead to wall socket. EFS's more than 200 professionals provide financial products that span the capital structure, including structured equity, leveraged leasing, partnerships, project finance and broad-based commercial finance. GE Commercial Finance is a global, diversified financial services company with assets of over US$220 billion. GE (NYSE:GE) is a diversified technology, media and financial services company dedicated to creating products that make life better. GE operates in more than 100 countries and employs more than 300,000 people worldwide. For more information, visit http://www.ge.com/ About Southern Union Company Southern Union Company, headquartered in Wilkes-Barre, Pennsylvania, is engaged primarily in the transportation and distribution of natural gas. Through its Panhandle Energy subsidiary, the Company owns and operates Panhandle Eastern Pipe Line Company, Trunkline Gas Company, Sea Robin Pipeline Company, Trunkline LNG Company and Southwest Gas Storage Company. Collectively, the pipeline assets operate more than 10,000 miles of interstate pipelines that transport natural gas from the Gulf of Mexico, South Texas and the Panhandle regions of Texas and Oklahoma to major U.S. markets in the Midwest and Great Lakes region. Trunkline LNG, located in Lake Charles, Louisiana, is the nation's largest liquefied natural gas import terminal. Through its local distribution companies, Missouri Gas Energy, PG Energy and New England Gas Company, Southern Union also serves nearly one million natural gas end-user customers in Missouri, Pennsylvania, Massachusetts and Rhode Island. For more information, visit http://www.southernunionco.com/ 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. FEDERAL-MOGUL: Environmental Claims Must be Filed by October 15 --------------------------------------------------------------- Federal-Mogul Corporation and its debtor-affiliates continue to engage in extensive settlement negotiations with the United States Environmental Protection Agency and the Federal Natural Resource Trustees. The parties have made further substantial progress towards a global settlement. As of August 18, 2004, the parties have resolved numerous issues arising out of the environmental claim held by the EPA and have agreed on a variety of terms with respect to the global settlement. The EPA continues to review the terms of the global settlement and expects to begin the process of attempting to obtain the necessary internal approval soon. The parties also continue to address a number of issues arising out of the environmental claims held by certain state governments to determine their participation in the global settlement. In the interest of resolving the issues and reaching a global settlement, the Debtors agree to extend until October 15, 2004, at 4:00 p.m., prevailing Eastern Time, the EPA's deadline to file claims. All other provisions of the Bar Date Order will remain in full force and effect. Headquartered in Southfield, Michigan, Federal-Mogul Corporation -- http://www.federal-mogul.com/-- is one of the world's largest automotive parts companies with worldwide revenue of some $6 billion. The Company filed for chapter 11 protection on Oct. 1, 2001 (Bankr. Del. Case No. 01-10582). Lawrence J. Nyhan, Esq., James F. Conlan, Esq., and Kevin T. Lantry, Esq., at Sidley Austin Brown & Wood and Laura Davis Jones, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from its creditors, they listed $10.15 billion in assets and $8.86 billion in liabilities. (Federal-Mogul Bankruptcy News, Issue No. 63; Bankruptcy Creditors' Service, Inc., 215/945- 7000) FRONTIER FINANCING: Moody's Withdraws Pref. Securities' C Rating ---------------------------------------------------------------- Moody's Investors Service has withdrawn its trust preferred securities rating on Frontier Financing Trust -- a special purpose capital funding vehicle of Frontier Insurance Group, Inc. Interest payments on the company's trust preferred securities, rated C prior to withdrawal, have been in deferral since April of 2000. The rating has been withdrawn because of the runoff status of the group's insurance subsidiaries. Please refer to Moody's Withdrawal Policy on http://moodys.com/ GE COMMERCIAL: Fitch Puts Low-B Ratings on Six Certificate Classes ------------------------------------------------------------------ Fitch Ratings affirms GE Commercial Mortgage Corporation, series 2003-C2 as follows: -- $56 million class A-1 at 'AAA'; -- $165 million class A-2 at 'AAA'; -- $54.3 million class A-3 at 'AAA'; -- $406.1 million class A-4 at 'AAA'; -- $281.2 million class A-1A at 'AAA'; -- Interest-only class X-1 at 'AAA'; -- Interest-only class X-2 at 'AAA'; -- $35.5 million class B at 'AA'; -- $14.8 million class C at 'AA-'; -- $26.6 million class D at 'A'; -- $14.8 million class E at 'A-' -- $14.8 million class F at 'BBB+'; -- $14.8 million class G at 'BBB'; -- $14.8 million class H at 'BBB-'; -- $19.2 million class J at 'BB+'; -- $7.4 million class K at 'BB'; -- $8.8 million class L at 'BB-'; -- $4.4 million class M at 'B+'; -- $7.4 million class N at 'B'; -- $2.9 million class O at 'B-'; -- $3.7 million class BLVD-1 at 'A'; -- $2.5 million class BLVD-2 at 'A-'; -- $4.5 million class BLVD-3 at 'BBB+'; -- $3.5 million class BLVD-4 at 'BBB'; -- $8 million class BLVD-5 at 'BBB-'. Fitch does not rate $20.7 million class P certificates. The rating affirmations reflect the stable pool performance and minimal paydown since issuance. As of the August 2004 distribution date, the pool's aggregate certificate balance has decreased 1.16% to $1.19 million from $1.21 million at issuance. To date, there have been no loan payoffs or realized losses within the transaction. There are also no delinquent or specially serviced loans. Bank of America, the master servicer, collected year-end 2003 operating statements for 93% of the transaction. The YE 2003 weighted average debt service coverage ratio -- DSCR -- is 1.90 times (x), compared to 1.95x at issuance for the same loans. Fitch has reviewed credit assessments of DDR Portfolio (6.25%), Boulevard Mall (4.02%), and Wellbridge Portfolio (1.90%) loans. The loans have YE 2003 Fitch stressed DSCR of 1.85x, 3.31x, and 2.14 respectively. The DSCR for each loan is calculated using borrower provided net operating income less required reserves divided by debt service payments based on the current balance using a Fitch stressed refinance constant. The Wellbridge Portflio's DSCR reflects the A and B Notes. Based on their stable to improved performance, all loans maintain investment grade credit assessments. GREENPOINT CREDIT: Fitch Shaves Ratings on Two Classes & Junks One ------------------------------------------------------------------ Fitch Ratings has downgraded eleven classes (approximately $460.7 million in outstanding principal) and affirmed six classes (representing approximately $274.8 million in outstanding principal) from five Greenpoint Credit Manufactured Housing Trusts. The negative rating actions are a result of poor performance on the underlying collateral. Losses to date have significantly exceeded Fitch's initial expectations. The loans are serviced by Greenpoint Credit, a subsidiary of Greenpoint Financial Corp. currently rated 'BBB' by Fitch. Greenpoint exited the manufactured housing -- MH -- lending business in early 2002 but has continued to service its loan portfolio. In late 2002 and early 2003, Greenpoint's MH servicing operation was restructured and as a result a number of servicing functions were affected. Most notably, a centralized collection center was established in Atlanta, Georgia. Since exiting the MH business, Greenpoint has relied heavily on the wholesale channel and has recently seen recoveries of approximately 15-20% for most transactions. Like many manufactured housing servicers, Greenpoint relies heavily on modifications as a loss mitigation tool. Greenpoint is currently modifying approximately 2% of its portfolio on a monthly basis. While Fitch believes modifications can help maintain cash flow on a low recovery asset, Fitch expects the use of modifications to keep default rates higher than they would have been otherwise as the collateral seasons. Series 1999-5: -- Classes A-3 through A-5 affirmed at 'AAA'; -- Classes M-1A and M-1B downgraded to 'A-' from 'AA-' ; -- Class M-2 downgraded to 'BB-' from 'BBB'. Series 2000-1: -- Classes A-2 affirmed at 'AAA'; -- Class A-3 is downgraded to 'A' from 'AA'; -- Classes A-4 and A-5 downgraded to 'BBB' from 'A+'; -- Class M-1 downgraded to 'BB-' from 'BBB-'; -- Class M-2 downgraded to 'C' from 'CCC'. Series 2000-3: -- Class I A downgraded to 'BBB-' from 'A-'; -- Class I M-1 downgraded to 'B' from 'BB+'; -- Class I M-2 downgraded to 'CC' from 'CCC'. Series 2001-2 Group 1: -- Class I-A-1 affirmed at 'AAA'. Series 2001-2 Group 2: -- Class II-A-1 affirmed at 'AAA'. GOSHAWK RIDGE DEV'T: Case Summary & 5 Largest Unsecured Creditors ----------------------------------------------------------------- Debtor: Goshawk Ridge Development, Ltd. PO Box 6823 Incline Village, Nevada 89450 Bankruptcy Case No.: 04-52701 Chapter 11 Petition Date: September 10, 2004 Court: District of Nevada (Reno) Debtor's Counsel: Stephen R. Harris, Esq. Belding, Harris & Petroni, Ltd. 417 West Plumb Lane Reno, Nevada 89509 Tel: (775) 786-7600 Fax: (775) 786-7764 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 5 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Distinctive Homes $250,000 International LLC PO Box 1370 Zephyr Cove, Nevada 89448 Laurence C. and Loan $200,000 Carla T. Lusvardi Falcon Capital LLC Loan $51,569 Bradley Paul Elley Legal Services $21,677 James P. Borelli $7,997 HANGER ORTHOPEDIC: Lenders Agree to Modify 5 Key Loan Covenants --------------------------------------------------------------- As previously reported in the Troubled Company Reporter, Hanger Orthopedic Group, Inc., entered into a Third Amendment to the Amended and Restated Credit Agreement dated as of October 3, 2003, under which it obtains working capital and long-term financing. General Electric Capital Corporation serves as the Administrative Agent under the loan agreement for a consortium of unidentified lenders that includes GECC. In exchange for an amendment fee equal to 0.20% of the Lenders outstanding commitments, more than 80% of the lenders approved the Third Amendment. The Third Amendment requires Hanger to comply with five financial covenants: A. Hanger agrees to limit Capital Expenditures to: For the Period CapEx Limit -------------- ----------- Fiscal 2004 $19,375,000 Fiscal 2005 $17,500,000 Fiscal 2006 $17,500,000 Fiscal 2007 $17,500,000 Fiscal 2008 $17,500,000 B. Hanger promises that it will not permit its Consolidated Interest Coverage Ratio to be less than: At the End of Each Maximum Interest Fiscal Quarter Between Coverage Ratio ---------------------- ---------------- 09/30/2003 and 06/30/2004 2.25:1.00 09/30/2004 and 06/20/2005 2.00:1.00 09/30/2005 and 12/31/2005 2.25:1.00 03/31/2006 and 12/31/2006 2.50:1.00 03/31/2007 and 12/31/2007 2.75:1.00 03/31/2008 and thereafter 3.00:1.00 C. Hanger will not permit its Leverage Ratio to exceed: For the Fiscal Maximum Quarter Ending Leverage Ratio -------------- -------------- 12/31/2003 4.25:1.00 03/31/2004 4.75:1.00 06/30/2004 5.00:1.00 09/30/2004 6.00:1.00 12/31/2004 6.00:1.00 03/31/2005 6.00:1.00 06/30/2005 5.75:1.00 09/30/2005 5.00:1.00 12/31/2005 4.75:1.00 03/31/2006 4.50:1.00 06/30/2006 4.25:1.00 09/30/2006 4.25:1.00 12/31/2006 4.25:1.00 03/31/2007 4.00:1.00 06/30/2007 4.00:1.00 09/30/2007 4.00:1.00 12/31/2007 4.00:1.00 03/31/2008 3.50:1.00 06/30/2008 3.50:1.00 09/30/2008 3.50:1.00 12/31/2008 3.50:1.00 D. Hanger promises that it will not permit its Senior Secured Leverage Ratio to be greater than: Maximum For the Fiscal Senior Secured Quarter Ending Leverage Ratio -------------- -------------- 12/31/2003 2.50:1.00 03/31/2004 2.50:1.00 06/30/2004 2.50:1.00 09/30/2004 2.80:1.00 12/31/2004 2.80:1.00 03/31/2005 2.80:1.00 06/30/2005 2.80:1.00 09/30/2005 2.50:1.00 12/31/2005 2.50:1.00 03/31/2006 2.50:1.00 06/30/2006 2.50:1.00 09/30/2006 2.50:1.00 12/31/2006 2.50:1.00 03/31/2007 2.50:1.00 06/30/2007 2.50:1.00 09/30/2007 2.50:1.00 12/31/2007 2.50:1.00 03/31/2008 2.50:1.00 06/30/2008 2.50:1.00 09/30/2008 2.50:1.00 12/31/2008 2.50:1.00 E. Hanger promises that it will it will maintain a Fixed Charge Coverage Ratio of no less than: Minimum For the Fiscal Fixed Charge Quarter Ending Coverage Ratio -------------- -------------- 12/31/2003 1.30:1.00 03/31/2004 1.30:1.00 06/30/2004 1.30:1.00 09/30/2004 1.10:1.00 12/31/2004 1.10:1.00 03/31/2005 1.10:1.00 06/30/2005 1.10:1.00 09/30/2005 1.20:1.00 12/31/2005 1.20:1.00 03/31/2006 1.20:1.00 06/30/2006 1.20:1.00 09/30/2006 1.20:1.00 12/31/2006 1.20:1.00 03/31/2007 1.20:1.00 06/30/2007 1.30:1.00 09/30/2007 1.30:1.00 12/31/2007 1.30:1.00 03/31/2008 1.30:1.00 06/30/2008 1.30:1.00 09/30/2008 1.30:1.00 12/31/2008 1.30:1.00 Headquartered in Bethesda, Maryland, Hanger Orthopedic Group, Inc. (NYSE: HGR) is the world's premier provider of orthotic and prosthetic patient-care services. Hanger is the market leader in the United States, owning and operating 614 patient-care centers in 44 states and the District of Columbia, with 3,385 employees including 1,016 practitioners as of June 30, 2004. Hanger is organized into four business segments. The two key operating units are patient-care which consists of nationwide orthotic and prosthetic practice centers and distribution which consists of distribution centers managing the supply chain of orthotic and prosthetic componentry to Hanger and third party patient-care centers. The third is Linkia which is the first and only managed care organization for the orthotics and prosthetics industry. The fourth segment is Innovative Neutronics which introduces emerging neuromuscular technologies developed through independent research in a collaborative effort with industry suppliers worldwide. * * * Moody's Investors Service recently cut Hanger Orthopedic Group, Inc., ratings one notch to: * $100 Million Revolver due 2007 -- B2 * $150 Million Term Loan B due 2009 -- B2 * $200 Million 10.375% Senior Notes due 2009 -- B3 * $53 Million (accreted value) 7% Redeemable Preferred Stock due 2010 -- Caa2 * Senior Implied Rating -- B2 * Senior Unsecured Issuer Rating -- Caa1 and says the outlook remains negative notwithstanding the Third Amendment to the Credit Agreement. Moody's ratings reflect: * the deterioration in performance, * the company's high leverage, * the company's high reliance on government funds and Medicare's recent decision to freeze rates for three years, * pricing pressure from large commercial payors, * a competitive environment, and * weakening industry utilization and growth trends. Moody's concerns over these issues are compounded by the number of other problems that have arisen at the company recently, including billing discrepancies at the West Hempstead center and the accounting error related to uncollectible receivables recently uncovered. Credit strengths recognized include: * the company's dominant market position and competitive advantages including the ability to obtain greater purchase discounts, * national contracting capability and access to new technology, * the company's conservative operations-focused strategy and minimal reliance on acquisitions, * the geographic diversification of revenues through over 600 patient care centers, and * positive long term demographics and industry growth trends. Moody's also took into consideration the potential for significant sales and EBITDA growth in 2005 related to the company's Linkia subsidiary. The negative outlook reflects the risk that near-term fundamentals for the industry may remain weak and may lead to a continued decline in performance for a longer period that the company is predicting. The negative outlook also incorporates Moody's concern that the projected turnaround in Hanger's performance depends highly on the company's ability to grow a new business. There is considerable uncertainty over whether the company will be able to sign up additional contracts (at reasonable prices) and generate the profitability and cash flow anticipated. If Hanger is unsuccessful in starting up Linkia and other sales initiatives fail to generate improved same store growth, Moody's may consider further downgrading the company's ratings. Moody's notes that while certain targeted near-term expense reductions may boost profitability, such measures can only temporarily boost performance and thus may not prevent a downgrade. HAYES LEMMERZ: Asks Court to Deny GE Capital to File Sur-Reply -------------------------------------------------------------- Thomas G. Macauley, Esq., at Zuckerman Spaeder, LLP, in Wilmington, Delaware, relates that General Electric Capital Corporation filed two applications for allowance and payment of an $8 million administrative expense in 2003 in the chapter 11 cases of Hayes Lemmerz International, Inc. and its debtor-affiliates and subsidiaries. GE Capital alleged that each of the 51 machines subject to the equipment leases rejected by the Debtors and two expired leases sustained a "Casualty Occurrence" giving rise to the Debtors' obligation to pay the contractual "stipulated loss value" for each machine. Mr. Macauley tells the U.S. Bankruptcy Court for the District of Delaware that 25 of the machines were in operating condition on the Petition Date and on the date they were returned to GE Capital. Nine additional machines that required repair on the Petition Date suffered no further damage postpetition. Therefore, there is no evidence that a Casualty Occurrence took place on 34 machines after the Petition Date. GE Capital Seeks Leave to File Sur-Reply Julianne E. Hammond, Esq., at Blank Rome, LLP, in Wilmington, Delaware, points out that the Debtors attached seven inspection reports as exhibit to their Brief in support of their Summary Judgment Motion without: -- the accompanying photographs; -- any foundational testimony by the inspectors; and -- any evidence regarding the purpose of the reports or the circumstances surrounding the making of the reports. The Debtors assert that the "inspection reports relied on by Meritage and General Electric Capital Corporation" together with alleged deposition testimony of Ed Czosek, a Meritage salesman, provide "compelling evidence" that 25 machines could not have suffered a Casualty Occurrence. According to Mr. Czosek, "the inspection reports on certain machines indicate that the machines were not irreparably damaged or permanently rendered unfit for use." Ms. Hammond notes that the Debtors offered Mr. Czosek's testimony without accompanying foundational evidence that: (1) the purpose of the inspections was to determine whether or not the machines suffered a Casualty Occurrence within the meaning of the Master Lease Agreement; (2) the inspection report form was designed to report whether or not the machines suffered a Casualty Occurrence; (3) the inspectors were asked to make a determination whether or not the machines suffered a Casualty Occurrence; (4) it was Mr. Czosek's job to determine whether or not the machines suffered a Casualty Occurrence; (5) Mr. Czosek was qualified to determine whether or not the machines suffered a Casualty Occurrence; or (6) Mr. Czosek was ever asked by GE Capital or anyone else to determine whether or not the machines suffered a Casualty Occurrence. The Debtors contend that the inspection reports are admissible against GE Capital as "party admissions" pursuant to Rule 801(d)(2) of the Federal Rules of Evidence, because either: (1) GE Capital adopted and acted on the contents of inspection reports; or (2) the inspection reports are "statements by [GE Capital's] agent or servant concerning a matter within the scope of the agency or employment, made during the existence of the relationship." Ms. Hammond argues that the inspectors hired by Meritage, not GE Capital, were not asked to make and did not make in their reports any recommendations to GE Capital, whereby GE Capital could be said to have "adopted and acted upon" their recommendations and therefore accepted the truth of the contents of the report. Moreover, the Debtors identified not a single instance in the record where GE Capital relied on any one of the inspection reports. To the extent that the Court determines that the inspection reports offered by the Debtors are admissions by GE Capital, GE Capital retracts and repudiates the alleged Admissions. Ms. Hammond maintains that GE Capital is entitled to offer its explanation regarding the circumstances surrounding the making of the reports. In that regard, testimony from the individual inspectors and evidence offered by GE Capital regarding the sales process and the interaction between Meritage and GE Capital are all relevant to the Court's factual evaluation of the alleged admissions. Ms. Hammond avers that the issue is whether or not the Debtors' postpetition use and lack of proper maintenance and repairs rendered the machines worn out, irreparably damaged, or permanently unfit for use. Evidence that the machines were "operating" at some point in time or allegedly were "in operating condition" does not speak to whether or not the machine later suffered a Casualty Occurrence. Ms. Hammond also avers that the price that a third party buyer is willing to pay for a given machine in an arm's-length transaction, after personally inspecting the machine, is the best evidence of the condition of that machine. GE Capital presented evidence of the extensive sales and marketing process conducted by GE Capital and Meritage with respect to each of the machines, including the expert testimony of Thomas Hazelhurst regarding what each of the machines should have been worth if each had been properly maintained and repaired and had been in reasonable condition for its vintage. The Debtors have not presented any evidence of value to rebut the evidence presented by GE Capital. Instead, the Debtors incorrectly contend that Mr. Hazelhurst's valuation testimony is not relevant or probative because the valuation date allegedly is tied strictly to the schedule rejection date. Ms. Hammond contends that the Debtors are wrong in their claim that if the machine was destroyed prepetition, the maintenance obligation with respect to that machine did not "first" arise from and after 60 days after the Petition Date as required by Section 365(d)(10) of the Bankruptcy Code. The legislative history to Section 365(d)(10) sheds light on the purpose and intent of the use of the word "first": Sixty days after the order for relief, the debtor will have to perform all obligations under the equipment lease, unless the court holds a hearing and determines otherwise, with the burden on the debtor. The word "first" as used in the section refers to payments and other obligations that initially become due more than 60 days after the order for relief. The purpose of the reference is to make clear the intent that the provision does not affect payments originally due prior to the 60 days before (sic) the order of relief. If the Debtors wanted to avoid those obligations, with respect to any machines they allegedly destroyed prepetition, they should have rejected the lease schedules in the first 60 days of the case. With respect to the machines at issue, they did not. Accordingly, GE Capital asks the Court to deny the Debtors' request for partial summary judgment because the Debtors: -- have not carried their burden of proving that no genuine issues of fact remain for trial; and -- have failed to establish that they are entitled to judgment as a matter of law. Strike Debtors' Discovery Responses GE Capital further asks Judge Walrath to strike the Debtors' discovery responses as alleged evidence in support of the Summary Judgment Motion. The Discovery Responses are not properly supported by affidavit testimony or any other testimony and therefore are inadmissible hearsay pursuant to Rules 801 and 802 of the Federal Rules of Evidence when offered by the Debtors. The Discovery Responses also lack proper foundation for admissibility pursuant to Rule 901 of the Federal Rules of Evidence. Ms. Hammond points out that the affidavit attached to the Debtors' Discovery Responses does no more than confirm: (1) that the affiant lacks personal knowledge of the facts stated in the Discovery Responses; and (2) the Discovery Responses consist of a multitude of hearsay statements by unidentified "authorized employees and counsel for Debtors". Pursuant to Rule 56(e) of the Federal Rules of Civil Procedure, "[s]upporting and opposing affidavits shall be made on personal knowledge, shall set forth such facts as would be admissible in evidence, and shall show affirmatively that the affiant is competent to testify to the matters stated therein." Debtors Object to GE Capital's Sur-Reply Thomas G. Macauley, Esq., at Zuckerman Spaeder, LLP, in Wilmington, Delaware, reiterates that the Debtors submitted ample deposition testimony and affidavits of individuals who have first- hand knowledge of the condition of the machines. The testimony conclusively establishes that 25 machines were in operating condition on their return to GE Capital and that the prepetition condition of another nine did not change after the filing of the bankruptcy. The Debtors also presented reports of inspections commissioned by GE Capital, which show that the machines were in production or needed only minor work. Mr. Macauley points out that GE Capital has come forward with nothing to dispute any of the compelling evidence. Rather, its strategy is to exclude the evidence. GE Capital's request to file a sur-reply is part of that strategy since its proposed brief deals primarily with the admissibility of the inspection reports. In sum, the proposed sur-reply merely supplements GE Capital's Opposition Brief, which is not the purpose of a sur-reply. If however the Court allows the Sur-reply and determines that it requires a written response from the Debtors before ruling on the Debtors' Summary Judgment Motion, the Debtors would like the opportunity to correct seriously misleading representations made in the proposed Sur-reply. Mr. Macauley further points out that GE Capital failed to inform that it hired Meritage to perform the inspections. GE Capital does not mention to the Court that there is a contract between Meritage and GE Capital that requires Meritage to inspect the equipment on GE Capital's request. GE Capital also ignores the testimony of the GE Capital and Meritage witnesses on the role of the inspection reports. Thus, the Debtors ask the Court to deny GE Capital's request to file a sur-reply. (Hayes Lemmerz Bankruptcy News, Issue No. 54; Bankruptcy Creditors' Service, Inc., 215/945-7000) IMMUNE RESPONSE: First HIV Patients Enrolled in New Int'l Trial --------------------------------------------------------------- The Immune Response Corporation (Nasdaq: IMNR), a biopharmaceutical company dedicated to becoming a leading immune- based therapy company in HIV and multiple sclerosis, says the first patients have been enrolled at the Canadian site in its initial clinical trial investigating IR103, the Company's newest product candidate in development for the treatment of HIV. This trial, with active sites in the United Kingdom and Canada, will represent the first human experience with IR103, which combines the Company's patented HIV-1 Immunogen with Amplivax(TM), an immunostimulatory oligonucleotide adjuvant. "Our preclinical research has shown results that suggest the combination of our HIV-1 Immunogen with Amplivax(TM) in IR103 elicits a strong immune response. We believe this type of response will be replicated in human subjects by IR103. We are delighted to advance IR103 into its first clinical study formally initiating a development plan designed to carefully examine this important product candidate," said John N. Bonfiglio, Ph.D., Chief Executive Officer of The Immune Response Corporation. "Further, the UK Medicines and Healthcare Products Regulatory Agency (MHRA) has cleared our protocol and we plan to be enrolling patients in the UK shortly." The two-part, nine-arm, randomized, single-blind, controlled, multi-center phase I/II study began this summer and will run for approximately 28 weeks with 80 patients enrolled. The primary objective of this study is to evaluate safety and bioactivity or the ability to generate HIV-specific immune responses to IR103, with or without Incomplete Freund's Adjuvant (IFA), in HIV patients on HAART (highly active anti-retroviral therapy). Ability to generate HIV-1 specific immune responses is thought to be an important indicator of clinical utility. For more information about enrolling in this trial please contact The Immune Response Corporation at 760-431-7080 in the United States. Amplivax(TM) was developed by Hybridon, Inc. and has been licensed to The Immune Response Corporation. As reported in the Troubled Company Reporter on September 10, 2004, Immune Response and NovaRx Corporation, a privately-held company dedicated to developing therapeutic vaccines to treat cancer, signed a licensing agreement to transfer all of The Immune Response Corporation's in-licensed development and marketing rights of the Sidney Kimmel Cancer Center's -- SKCC -- patent portfolio for cancer cell line vaccines to NovaRx. In addition, NovaRx agreed to pay The Immune Response Corporation the total sum of $1,050,000, including an upfront fee and a final payment due on or before August of 2007. The Immune Response Corporation had previously licensed the cancer cell vaccine technology from SKCC in 1994. About The Immune Response Corporation The Immune Response Corporation is a biopharmaceutical company dedicated to becoming a leading immune-based therapy (IBT) company in HIV and multiple sclerosis (MS). The Company's HIV products are based on its patented whole-killed virus technology, co-invented by Company founder Dr. Jonas Salk to stimulate HIV immune responses. Remune(R), currently in Phase II clinical trials, is being developed as a first-line treatment for people with early- stage HIV. The Company has initiated development of a new IBT, IR103, which incorporates a second-generation immunostimulatory oligonucleotide adjuvant. The Immune Response Corporation is also developing an IBT for MS, NeuroVax(TM), which is currently in Phase II and has shown potential therapeutic value for this difficult-to-treat disease. * * * Going Concern Uncertainty In its Form 10-Q for the quarterly period ended June 30, 2004, filed with the Securities and Exchange Commission, The Immune Response Corporation reports: "The Company has incurred net losses since inception and has an accumulated deficit of $319,211,000 as of June 30, 2004. The Company will not generate meaningful revenues in the foreseeable future. "These factors, among others, raised substantial doubt about the Company's ability to continue as a going concern. Our independent certified public accountants, BDO Seidman, LLP, indicated in their report on the 2003 consolidated financial statements that there is substantial doubt about our ability to continue as a going concern." IMPERIAL SCHRADE CORP: Case Summary & Largest Unsecured Creditors ----------------------------------------------------------------- Debtor: Imperial Schrade Corporation 7 Schrade Court Ellenville, New York 12428-0981 Bankruptcy Case No.: 04-15877 Type of Business: The Debtor manufactures and designs knives and tools. See http://www.schradeknives.com/ Chapter 11 Petition Date: September 10, 2004 Court: Northern District of New York (Albany) Debtor's Counsel: Charles J. Sullivan, Esq. Hancock & Estabrook, LLP 1500 MONY Tower I PO Box 4976 Syracuse, New York 13221-4976 Tel: (315) 471-3151 Fax: (315) 471-3167 Estimated Assets: $10 Million to $50 Million Estimated Debts: $10 Million to $50 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Orange Imports Trade Debt $1,002,059 7084 Piedmont Drive Rapidan, Virginia 22733 MVP Select Care Health Insurance $631,758 111 Liberty Street Schenectady, New York 12305 Atchison Leather Trade Debt $205,160 Division of Berger Company Tax Collector Property Taxes $200,025 School Tax Collector School Taxes $185,809 Ernst & Young LLP Services $124,364 Inland Paperboard & Trade Debt $113,525 Packaging, Inc. Wagner, Davis & Gold, PC Services $113,000 United Parcel Service Services $95,474 Millard Wire Company Trade Debt $93,774 Saidman Designlaw Group Trade Debt $90,559 General Mills, Inc. Trade Debt $84,750 P & B Woodworking Company Trade Debt $84,259 Ray International Trading Trade Debt $71,795 Company Image Group, Inc. Trade Debt $68,063 AK Steel Trade Debt $63,651 Global Point Technology Trade Debt $58,358 Rosier Metalfinishing USA LLC $54,706 AIG Life Insurance Trade Debt $53,662 Camillus Cutlery Company Trade Debt $53,611 INNOVATIVE WATER: Taps James Edward Capital to Get More Financing ----------------------------------------------------------------- Innovative Water & Sewer Systems, Inc., Ottawa, Ontario (TSXV: IWS) engaged James Edward Capital Corporation to act as its agent to conduct on its behalf a debt, quasi-equity, and equity private placement financing for proceeds of $1 million to $1.5 million. Further particulars of the financing will be announced once finalized by the Corporation and James Edward Capital Corporation. Proceeds from the financing will be used for the development and marketing of the Corporation's business and general working capital for operations. The financing is subject to certain conditions and approvals including the acceptance of the TSX Venture Exchange. Innovative Water & Sewer Systems, Inc., is incorporated under the laws of Alberta. The Company markets, designs and installs communal water and wastewater systems. The Company is focused on marketing its Small Bore Sewer(TM) technology used in communal wastewater systems. Included in the Quartery Financial Report ended June 30, 2004 of Innovative Water & Sewer Systems, Inc: "These consolidated financial statements have been prepared on the basis of accounting principles applicable to a going concern, which assumes that the Company will realize the carrying value of its assets and satisfy its obligations as they become due in the normal course of operations. The Company has incurred a loss of $376,228 for the six months ended June 30, 2004 and has had losses during the last three years. In addition, the Company generated negative cash flow from operations of $390,112 for the six months ended June 30, 2004 and has accumulated losses of $3,403,018 as of June 30, 2004. The Company's management has focused on sales growth of its communal water and wastewater systems, which involve initial design contracts possibly leading to full design/build contracts. Currently, the Company has a number of design contracts and is in the pursuit of a number of design/build contracts. The Company's revenue has not yet reached a level sufficient to finance current operating expenses due to the time delays and risks associated with customers obtaining project financing, as well as the required approvals on design/build contracts. All of the above factors raise doubt about the Company's ability to continue as a going concern. Management's plans to address these issues include executing on existing customer contracts, continuing to grow revenue through new design/build contracts, minimizing operating expenses and consideration of obtaining additional equity financing. The Company's ability to continue as a going concern is subject to management's ability to successfully implement these plans. Failure to implement these plans could have a material adverse effect on the Company's position and results of operations and may result in ceasing operations. The consolidated financial statements do not include adjustments that may be required if the assets are not realized and the liabilities settled in the normal course of operations." INTERCEPT INC: Inks Acquisition Pact by Fidelity Nat'l Financial ---------------------------------------------------------------- InterCept, Inc., a leading provider of banking technology products and services for financial institutions and other businesses (Nasdaq: ICPT), signed a merger agreement with Fidelity National Financial, Inc. (NYSE: FNF), a Fortune 500 provider of products and outsourced services and solutions to financial institutions and the real estate industry, pursuant to which FNF will acquire InterCept for $18.90 per share. "FNF is a financially strong, growing organization that will offer great opportunities for our employees and customers," said InterCept Chief Executive Officer John W. Collins. "As part of a larger company with strong resources, InterCept will be able to expand its ability to provide financial institutions with the products and services they need to remain competitive in today's marketplace. This transaction will enhance InterCept's position in the marketplace and provide a strong foundation for future growth." "This is an exciting acquisition for FNF," said FNF Chairman and Chief Executive Officer William P. Foley, II. "It continues our strategy of building more significant critical mass in our technology solutions for the domestic banking and credit union marketplace and provides FNF with an incremental 425 core processing customers and more than 700 additional item processing customers. These relationships provide not only a valuable stream of recurring revenue and earnings, but also significant revenue opportunities including offering InterCept's ATM/EFT, item processing and output solutions to FNF's existing client base, as well as providing FNF mortgage, banking and data and information products and services to InterCept's customers. Under the terms of the definitive agreement, FNF has the option to pay the $18.90 consideration in all cash or in a combination of cash and FNF stock. If FNF elects the stock and cash consideration option, InterCept shareholders will have the option to elect any combination of cash and stock, subject to proration such that the overall limitation for the consideration in the transaction will be 75% cash and 25% in the form of FNF stock. The composition of the $18.90 per share offer will be finalized in the proxy statement that will be distributed prior to the InterCept shareholder vote to approve the transaction. If FNF stock is issued as consideration, it will be calculated using a trailing ten-day average determined one day before the closing of the transaction. The board of directors of InterCept has approved the transaction. Closing of the transaction is expected in the fourth quarter of 2004, subject to approval by InterCept shareholders and customary regulatory and other conditions. Jefferies & Company, Inc. acted as financial advisor to InterCept. In light of the merger agreement, InterCept has rescheduled its annual shareholders meeting to November 8, 2004. At that meeting, shareholders of record as of September 15, 2004 will vote on the merger and for the election of directors of InterCept. If the merger is approved and closed, however, the directors elected at the annual meeting will not take office. About InterCept InterCept provides innovative technology products and services to the financial industry, including core processing, check imaging and item processing, electronic funds transfer, debit card processing, communications management and related products and services. The company serves over 2,000 clients nationwide and is a leading provider of check imaging solutions with over 30 fully image-enabled processing centers from coast to coast. For more information about InterCept, Inc. (Nasdaq: ICPT), visit http://www.intercept.netemail info@intercept.net or call 770.248.9600. * * * Liquidity and Capital Resources In its Form 10-Q for the quarterly period ended June 30, 2004, filed with the Securities and Exchange Commission, InterCept, Inc. reports: "Since our incorporation, we have financed our operations and capital expenditures through cash from operations, borrowings from banks and sales of our common and preferred stock. In the second half of 2003, we enhanced our liquidity and capital resources by: -- obtaining a $60 million three-year credit facility from Bank of America, -- issuing shares of Series A preferred stock for $10 million, and -- obtaining $12 million in lease financing from GE Capital. "As of July 25, 2004, the outstanding balance on our credit facility was $13.5 million. We have no off-balance sheet arrangements. We believe that borrowings under our Bank of America facility, funds provided by operations and our GE Capital lease financing will be sufficient to meet our anticipated capital expenditures and liquidity requirements for at least the next 12 months as well as the longer term. "In connection with our sale of our merchant services division, we received a $793,749 note from Media Billing that matured on March 30, 2004 and is now in default. Media Billing also defaulted in its obligation to obtain a release of a $3.0 million letter of credit held by First Data that we had obtained for the benefit of iBill. First Data subsequently drew on the letter of credit in full. In addition, the sale price of iBill was subject to a final purchase price adjustment based on a determination of its working capital on the closing date. On June 18, 2004, according to the terms of the purchase agreement, we notified Media Billing of an $827,000 purchase price adjustment in our favor. Consequently, Media Billing owes us more than $4.6 million that we are seeking to collect. "Cash and cash equivalents were $11.5 million at June 30, 2004. Short-term investments with a maturity of one year or less were $122,000 at June 30, 2004. Net cash provided by operating activities was $328,000 and $7.3 million for the six months ended June 30, 2004, and June 30, 2003, respectively. The decrease in the net cash provided by operating activities was primarily attributable to the sale of our merchant services division." INTERSTATE BAKERIES: Gets Bank Commitment to Continue Funding ------------------------------------------------------------- Interstate Bakeries Corporation (NYSE:IBC) says that, under a further amendment to its revolving credit facility, it has received a commitment from its bank group that clarifies its ability to continue borrowing while it addresses the various issues that delayed the filing of its Fiscal 2004 Form 10-K with the Securities and Exchange Commission. Under the amendment and subject to certain conditions, the Company will have up to $255 million of availability on its revolving credit facility. Currently, there is $230 million outstanding under the revolving credit facility including the aggregate amount of outstanding letters of credit. Pursuant to the amendment, continued borrowings from and after September 26 require approval by two-thirds of the bank group. "We are extremely pleased by the continued support of our bank group," said James R. Elsesser, chief executive officer of IBC. "The Company is continuing to sort through the issues raised in its August 30, 2004, news release with respect to its financial reporting systems. Our goal is to be able to file our Fiscal 2004 Form 10-K by the September 26 deadline." The amendment provides a permanent increase of 0.50 percent in the interest rate on borrowings under the credit facility, with interest to be paid monthly. The Company's credit facility requires it to: -- deliver to the banks its financial statements and related audit opinion for Fiscal 2004 on or prior to September 26, 2004; -- provide a weekly cash flow forecast for loans made after September 13, 2004; and -- provide calculations showing compliance with the financial covenants under the credit facility for loans made after September 20, 2004. If the Company is not able to meet these conditions or receive appropriate waivers from the bank group at any time prior to September 26, 2004, or if the Company is not able to reach appropriate agreements with its bank group with respect to borrowing availability on and after September 26, 2004, it will have to seek alternative financing. There can be no assurance that IBC would be able to obtain alternative financing under such circumstances and, if alternative financing is not available, the Company will need to consider alternative courses of action that are typically considered by companies in similar circumstances. Interstate Bakeries Corporation is the nation's largest wholesale baker and distributor of fresh baked bread and sweet goods, under various national brand names, including Wonder, Hostess, Dolly Madison, Baker's Inn, Merita and Drake's. The Company, with 55 bread and cake bakeries located in strategic markets from coast- to-coast, is headquartered in Kansas City, Missouri. INTERSTATE BAKERIES: Hires Miller Buckfire for Financial Advice --------------------------------------------------------------- Interstate Bakeries Corporation (NYSE:IBC) has hired Miller Buckfire Lewis Ying & Co., LLC to assist the Company in its discussions with the bank group and to identify and evaluate strategic alternatives. Miller Buckfire Lewis Ying is a nationally recognized investment banking firm providing strategic and financial advisory services in large-scale corporate restructurings, mergers and acquisitions and privately placed financing transactions. In June, 2004, IBC disclosed irregularities in its accounting for workers' compensation reserves. At that time, IBC said it would increase those reserves by 40% and take record a $40 million pretax charge. The Company has received notice from the Securities and Exchange Commission that the SEC is conducting an informal inquiry. IBC's Audit Committee has retained the law firm of Skadden, Arps, Slate, Meagher & Flom LLP to investigate the Company's manner for setting its workers' compensation reserves and other reserves. Last month, Interstate Bakeries named Ronald B. Hutchison as its new Executive Vice President and Chief Financial Officer. Alvarez & Marsal is on board helping the company sort out its financial reporting problems. Interstate Bakeries Corporation is the nation's largest wholesale baker and distributor of fresh baked bread and sweet goods, under various national brand names, including Wonder, Hostess, Dolly Madison, Baker's Inn, Merita and Drake's. The Company, with 55 bread and cake bakeries located in strategic markets from coast- to-coast, is headquartered in Kansas City, Missouri. * * * As reported in the Troubled Company Reporter on September 3, 2004, Moody's Investors Service downgraded Interstate Bakeries' senior implied and senior secured ratings to Caa1 from B2. The ratings downgrade follows the company's announcement that it is further delaying the filing of its fiscal 2004 (ending May 29, 2004) 10K because implementation of new financial reporting systems in June 2004 has resulted in deficient information on performance since the company's fiscal year end. As a result, unless sufficient information becomes available for analysis, the company's independent auditors may issue a qualified opinion with the company's fiscal 2004 audited financials. If the company does not file its 10K by September 26 or files a 10K with a qualified opinion, the company would need to seek waivers from its debt holders. The downgrade reflects uncertainty about the company's financial position and liquidity pending effective implementation of the new financial reporting systems and filing of its FY04 10K, combined with continued negative sales and earnings trends and tight liquidity under bank covenants going forward. The downgrade also takes into account the risks associated with the company's process of significantly restructuring its operations to reduce costs, while, at the same time, operating in a very competitive business environment with weak category demand trends, much better resourced competitors, and tight liquidity. Although there is significant uncertainty about the company's financial position, the ratings outlook is stable, reflecting Moody's view that, in the event of a default, the senior secured credit facilities are largely supported by asset values. However, the company's challenges in generating adequate information to effectively support an appropriate operational restructuring may lead to negative ratings pressure, particularly if negative sales and earnings trends persist or if restructuring initiatives fail to sustain asset values. Given the near term liquidity uncertainties and ongoing operational challenges that Interstate Bakeries faces, an upgrade is unlikely over the medium term. Moody's ratings actions for Interstate Bakeries are: * Senior Secured Revolver, maturing 2006 -- to Caa1 from B2; * Senior Secured Term Loan A, maturing 2006 -- to Caa1 from B2; * Senior Secured Term Loan B, maturing 2007 -- to Caa1 from B2; * Senior Implied -- to Caa1 from B2; * Unsecured Issuer Rating -- to Caa3 from B3. * Ratings Outlook -- Stable. IRISH PUB RESTAURANTS: Releases List of 20-Largest Creditors ------------------------------------------------------------ Irish Pub Restaurants, Inc., operating a chain of Bennigan's casual dining restaurants with locations in three states: Massachusetts, New York and Connecticut, delivered a list of its 20-largest creditors to the Bankruptcy Court overseeing its chapter 11 restrucutring (Bankr. D. Mass. Case No. 04-17339) file Sept. 7, 2004: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Rewards Network Advertising & Loan $250,000 CT Department of Rev. Sales Tax $150,000 Bennigan's Franchising Co. Franchise Royalties $100,000 Advance Me Loans $70,000 MA Dept. of Revenue Sales Tax $60,000 NY Dept. of Revenue Sales Tax $50,000 MBM Food Corporation Food Vendor $50,000 Micro Fidelio Repair Vendor $40,000 Metromedia Energy Utility Bills $25,000 Franchise Financial Accounting Services $25,000 Management Katsirousbous Bros. $20,865 All Energy Services $18,134 NSTAR Electric Utility Bills $10,000 Ingreselli & Rinaldi Accounting Services $9,000 Carioto Produce Vendor $7,000 News America Marketing Advertising & Loan $7,000 Fowler Produce Vendor $7,000 Edward Don & Co. $6,000 Fleet Bank Line of Credit $6,000 Suburban Services Corp. $4,500 ISLAND DREAMS LLC: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Island Dreams, L. L. C. dba Nikki-Lee's Sports Pub & Grille 2640 East Sunset Road Las Vegas, Nevada 89120 Bankruptcy Case No.: 04-19584 Type of Business: Sports Bar Chapter 11 Petition Date: September 8, 2004 Court: District of Nevada (Las Vegas) Judge: Bruce A. Markell Debtor's Counsels: Michael J. Dawson, Esq. 515 South 3rd Street Las Vegas, Nevada 89101 Tel: (702) 384-1777 Total Assets: $1,800,000 Total Debts: $5,192,987 Debtor's 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ SJR Enterprises, Inc. Loan $2,137,268 c/o Frank A. Schrek, Esq. 300 South Fourth Street, # 1200 Las Vegas, Nevada 89101 Sun West Bank Loan $680,000 5830 West Flamingo Road Las Vegas, Nevada 89103 Bank of Commerce Loan $79,562 Piercy Bowler Taylor Trade Debt $6,400 Sports Direct Trade Debt $5,197 US Food Service Trade Debt $4,902 Get Fresh Sales Trade Debt $3,621 Cintas Corporation Trade Debt $3,363 Westco-Bakemark Trade Debt $2,935 AICCO, Inc. Trade Debt $2,836 Brandcor Foods, Inc. Trade Debt $2,748 Park 2000 Associates $2,603 Anytime Plumbing, Inc. Trade Debt $2,535 Desert Meats & Provisions Trade Debt $2,502 Republic Services of Trade Debt $2,380 Southern Nevada Redi-Spuds of Nevada Trade Debt $2,358 Nevada Beverage Company Trade Debt $2,264 Concord Foods Trade Debt $2,262 Southern Wine & Spirits Trade Debt $2,222 Summit Financial Resources Trade Debt $2,045 KAISER ALUMINUM: Ferazzi Wants to Hire Haynes & Boone as Counsel ---------------------------------------------------------------- Anne M. Ferazzi, the proposed the legal representative for future claimants with silica, coal tar pitch volatiles and excess occupational noise claims, sought and obtained authority from the United States Bankruptcy Court for the District of Delaware to retain Haynes and Boone, LLP, as her counsel for corporate, financial and documentation matters. Haynes and Boone is an expert in matters of corporate law and finance and has acted as counsel for various debtors, creditors committees, and creditors in numerous other reorganization cases particularly those involving mass torts. Haynes and Boone's attorneys have developed considerable expertise in matters that Ms. Ferazzi believes will be important in prosecuting the Future Silica Claimants' interests in the Debtors' case. Haynes and Boone was involved in In re Fuller-Austin Insulation Company, Inc., Case No. 98-2038-JJF, before the United States District Court for the District of Delaware. The firm later served as general counsel to the Fuller-Austin Asbestos Settlement Trust. Steven A. Buxbaum, a partner at Haynes and Boone, represented the Ad Hoc Committee of Asbestos Claimants in Fuller-Austin's Chapter 11 case, which is a mass tort pre-packaged Chapter 11 case. Mr. Buxbaum played an important role in the negotiation and documentation of Fuller-Austin's plan of reorganization and the resulting trust and claims resolution procedures. Haynes and Boone will: (a) advise Ms. Ferazzi regarding the duties and standards applicable to her service as the Future Silica Claimants' Representative; (b) assist Ms. Ferazzi with respect to legal and factual matters relevant to any proceeding or hearing before the Court and in any action in any other court where her rights or interests may be litigated or affected; (c) assist in the review and analysis of the corporate structure of the Debtors, their intercompany contracts, agreements, and relationships, financing arrangements among the Debtors and with third parties, plan proposals regarding equity interests or financing arrangements, and pleadings, motions, answers, notices, orders, and reports that are required for Ms. Ferazzi to analyze and negotiate the proposed treatment of Future Silica Claimants and to assist the Court in the orderly administration of the Debtors' estate; (d) advise, consult with, and assist Ms. Ferazzi in her investigation of the acts, conduct, assets, liabilities and financial condition of the Debtors, the operation of their business and any other matter relevant to the case; (e) assist Ms. Ferazzi in the analysis of assets available for the satisfaction of future silica claims and the value of those assets and the number and value of the claims, and the application of the information to the evaluation of proposed treatment of future silica claims in any plan or plans of reorganization; (f) assist Ms. Ferazzi in the formulation and review of trust distribution procedures and other documents necessary to implement a plan of reorganization in the case; (g) render necessary advice, legal services and legal research as Ms. Ferazzi may require in connection with the case. Haynes and Boone will be compensated at a fee commensurate with their normal hourly rates, which range from $300 to $525 for attorneys, paralegals and law clerks. The firm will be reimbursed for all out-of-pocket expenses. Mr. Buxbaum and the other attorneys that will be most involved in the case and their hourly rates are: Professional Position Rate ------------ -------- ---- Steven A. Buxbaum Partner $450 John R. Hohlt Of Counsel 445 James Simmons Associate 305 Jermaine L. Johnson Paralegal 160 Mr. Buxbaum assures Judge Fitzgerald that Haynes and Boone does not hold or represent an interest adverse to the Debtors' estates and is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code. Headquartered in Houston, Texas, Kaiser Aluminum Corporation -- http://www.kaiseral.com/-- operates in all principal aspects of the aluminum industry, including mining bauxite; refining bauxite into alumina; production of primary aluminum from alumina; and manufacturing fabricated and semi-fabricated aluminum products. The Company filed for chapter 11 protection on February 12, 2002 (Bankr. Del. Case No. 02-10429). Corinne Ball, Esq., at Jones, Day, Reavis & Pogue, represent the Debtors in their restructuring efforts. On September 30, 2001, the Company listed $3,364,300,000 in assets and $3,129,400,000 in debts. (Kaiser Bankruptcy News, Issue No. 49; Bankruptcy Creditors' Service, Inc., 215/945-7000) LIBERATE TECH: To Appeal Court Ruling Dismissing Bankruptcy Case ---------------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of California has dismissed Liberate Technologies' (Pink Sheets: LBRTQ) Chapter 11 bankruptcy case. The court ruled that Liberate has cash well in excess of its liabilities and is not otherwise entitled to bankruptcy protection. Liberate believes the bankruptcy laws and judicial precedent support Liberate's filing and intends to appeal this ruling. However, Liberate cannot predict the outcome or timing of the appellate process. Unless the decision of the Bankruptcy Court is reversed on appeal, Liberate will not be able to realize savings or the other benefits of a Chapter 11 proceeding. As a result of the dismissal of the bankruptcy case, Liberate will continue to be liable for the lease payments on its former offices in San Carlos, California. "We firmly believe in our bankruptcy case and intend to vigorously appeal," stated David Lockwood, Chairman and CEO of Liberate. "As we have throughout this process, we will continue to operate our business, marketing to new customers, and providing ongoing support to existing customers. The appeals process will continue in parallel with our plans to grow our business and to increase shareholder value." As reported in the Troubled Company Reporter on July 12, 2004, Liberate Technologies filed a voluntary petition under Chapter 11 of Title 11 of the United States Code on April 30, 2004. The Chapter 11 Case was filed in the United States Bankruptcy Court for the District of Delaware (Bankr. Case No. 04-11299) and venue was subsequently transferred to the United States Bankruptcy Court for the Northern District of California, San Francisco Division (Bankr. Case No. 04-31394)(Carlson, J.). For several months prior to the Petition Date, the Debtor's Board of Directors considered and discussed the Debtor's ongoing restructuring activities, business activities and prospects, and potential strategic alternatives. On April 26, 2004, the Board authorized the Debtor to file a voluntary petition under Chapter 11 of the Bankruptcy Code in an effort to reorganize its business. In reaching its decision, the Board considered a number of factors including the Debtor's need to strengthen its financial position and reduce its cost structure. In particular, the Debtor has a number of potential liabilities and exposures that it is seeking to resolve in this Chapter 11 Case, including those arising from leases on excess facilities in San Carlos, California and the United Kingdom, claims from former employees, equipment leases, outstanding contracts with certain vendors and licensees, and pending shareholder and patent litigations. In addition the Debtor has retained (subject to approval of the Bankruptcy Court) Allen & Company as its financial advisor and investment banker to advise the Debtor on potential strategic alternatives that may arise. Headquartered in San Mateo, California, Liberate Technologies provides software and services for digital cable systems. The Company filed for chapter 11 protection on April 30, 2004 (Bankr. D. Del. Case No. 04-11299). Daniel J. DeFranceschi, Esq. at Richards, Layton & Finger represents the Debtor in its chapter 11 case. When the Company filed for bankruptcy protection, it listed $257,000,000 in total assets and more than $50 million in total debts. MCGARRH TRUCKING: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: McGarrh Trucking, Inc. dba Henderson Express 2047 Crestline Drive Henderson Kentucky 42420 Bankruptcy Case No.: 04-41841 Type of Business: The Debtor provides freight trucking services. Chapter 11 Petition Date: September 9, 2004 Court: Western District of Kentucky (Owensboro) Debtor's Counsel: Sandra D. Freeburger, Esq. Deitz & Freeburger, P.S.C. 101 First Street P.O. Box 21 Henderson, KY 42419-0021 Tel: 270-830-0830 Estimated Assets: $100,000 to $500,000 Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Internal Revenue Service $312,641 P O Box 1706, Stop 510 Louisville KY 40201 Kentucky Revenue Cabinet $37,000 Francis McGarrh $25,839 Pilot Corporation $24,084 EFS Transporatation Services $17,881 Xtra Lease $15,504 Lincoln General Ins. Co. $14,000 Archway Insurance Group $12,367 MBNA $10,000 Internal Revenue Service $5,874 Auto Wheel & Rim Service Co, Inc. $4,314 R & H Truck & Trailer Sales Inc. $3,994 Hazelwood Towing and Recovery $3,790 Brad Parrott, CPA $3,750 Action Western Star $3,622 Indiana Department of Revenue $3,553 Raben Tire Company $2,365 Clarke Detroit Diesel - Allison $2,086 Canawill, Inc. $2,000 Cananwill, Inc. $2,000 METROPCS INC: Fails to Comply with Covenant Due to Late Filing -------------------------------------------------------------- MetroPCS, Inc. says the trustee under the indenture governing its $150 million of 10-3/4% senior notes due 2011 has provided notice to MetroPCS of its failure to comply with a covenant requiring MetroPCS to file with the SEC and furnish its noteholders on a timely basis its quarterly report on Form 10-Q for the quarter ended June 30, 2004. Receipt of this notice does not result immediately in an event of default under the indenture or acceleration of the notes. However, an event of default will occur and the trustee or the holders of 25% of the principal amount of the notes will have the right to accelerate the notes at 100% of par value, if MetroPCS fails to comply with this covenant by November 8, 2004. Based on the most recently available trading data, the notes have a market value above par. Nevertheless, if an acceleration of the notes were to occur, MetroPCS might then be unable to satisfy its note payment obligations, and would likely seek alternative financing sources to satisfy those obligations. As previously announced, the MetroPCS Audit Committee is conducting an independent investigation into an understatement of revenues and net income for the quarter ended March 31, 2004. MetroPCS will delay its second quarter 2004 earnings release and the filing of its second quarter 2004 10-Q until after completion of the investigation, and cannot predict when such investigation will be completed. However, the Audit Committee intends to complete the investigation as soon as practicable, and management intends to avoid the event of default under the indenture by filing the second quarter 2004 10-Q promptly after the investigation and on or prior to November 8, 2004. About MetroPCS, Inc. Dallas-based MetroPCS, Inc. is a wholly-owned subsidiary of MetroPCS Communications, Inc. and a provider of wireless communications services. Through its subsidiaries, MetroPCS, Inc. holds 18 PCS licenses in the greater Miami, San Francisco, Atlanta and Sacramento metropolitan areas. MetroPCS offers customers flat rate plans with unlimited anytime local and long distance minutes with no contract. MetroPCS is among the first wireless operators to deploy an all-digital network based on third generation infrastructure and handsets. For more information, visit the MetroPCS web site at http://www.metropcs.com/ * * * In its Form 10-Q for the quarterly period ended March 31, 2004, filed with the Securities and Exchange Commission, MetroPCS, Inc. reports: Liquidity and Capital Resources "The construction of our network and the marketing and distribution of our wireless communications products and services have required, and will continue to require, substantial capital investment. Capital outlays have included license acquisition costs, capital expenditures for network construction, funding of operating cash flow losses and other working capital costs, debt service and financing fees and expenses. We estimate that our aggregate capital expenditures for 2004, which will be primarily associated with our efforts to increase the capacity of our network, will be approximately $210 million, of which $49.2 million had been incurred through March 31, 2004. We believe our cash on hand and cash generated from operations will be sufficient to meet our projected capital requirements for the foreseeable future. Although we estimate that these funds will be sufficient to finance our continued growth, we may have additional capital requirements, which could be substantial, for future network upgrades, and advances in new technology. "Existing Indebtedness. As of March 31, 2004, we had $193.1 million of total indebtedness. This indebtedness consists of $150.0 million of our senior notes, $43.5 million face amount of our FCC notes, which are recorded net of unamortized original issue discount of $4.2 million, and $3.8 million of debt associated with our obligation to other carriers for the cost of clearing microwave links in areas covered by our licenses." MIDLAND REALTY: Fitch Affirms Low-B Ratings on Cert. Classes J & K ------------------------------------------------------------------ Fitch upgrades Midland Realty Acceptance Corporation commercial mortgage pass-through certificates, series 1996-C2 as follows: -- $7.7 million class E to 'AAA' from 'AA'; -- $15.4 million class F to 'A+' from 'A'. In addition, Fitch affirms the following classes: -- $111.4 million class A-2 at 'AAA'; -- Interest-only class A-EC at 'AAA'; -- $30.7 million class B at 'AAA'; -- $20.2 million class C at 'AAA'; -- $23.0 million class D at 'AAA'; -- $12.8 million class G at 'BBB'; -- $5.1 million class H at 'BBB-'; -- $12.8 million class J at 'BB'; -- $7.7 million class K at 'B'. Fitch does not rate the $10.8 million class L-1 or the $10.8 million class L-2. Class A-1 has paid in full. The upgrades reflect increased credit enhancement levels from loan payoffs and amortization since issuance. As of the August 2004 distribution date, the pool's aggregate collateral balance has been reduced by approximately 48.4% to $264.1 million from $512.1 million at issuance. Midland Loan Services, the master servicer, has collected year-end 2003 financials for 95.0% of the loans in the pool. The YE 2003 comparable weighted debt service coverage ratio -- DSCR -- was 1.47 times (x), a decrease from 1.60x at YE 2002. However, the YE 2003 performance has increased since the 1.43x reported at issuance for the same loans. Loans with YE 2003 DSCRs less than 1.0x constitute 9.3% of the pool. Three loans, constituting 3.9% of the pool are currently in special servicing. The largest specially serviced loan (2.1%) is secured by a retail property in Malone, New York. Since undergoing a modification in April 2004, the loan has been pending return to the master servicer. The next largest loan in special servicing (1.5%) is secured by two industrial buildings in Hialeah, Florida, which are both 100% vacant. A foreclosure sale is scheduled for October 2004. Although losses are possible upon the disposition of these assets, upgrades are warranted due to the increased credit enhancement. MIRANT CORP: Has Until Plan Confirmation to Decide on Leases ------------------------------------------------------------ U.S. Bankruptcy Court for the Northern District of Texas extends the time for Mirant Corporation and its debtor-affiliates to elect to assume or reject their Leases until the confirmation date of the Debtors' plan of reorganization. Due to the objection raised by the City of Wyandotte to the Debtors' request for the lease decision period, the Court gave the Debtors until September 29, 2004, to assume or reject the Wyandotte Lease. Furthermore, on that date, the Court will consider a further extension of the time to assume or reject the Wyandotte Lease together with a timely filed motion to consider any unpaid obligations due and owing under the Wyandotte Lease pursuant to Section 365(d)(3) of the Bankruptcy Code. Mark E. MacDonald, Esq., at MacDonald + MacDonald, PC, in Dallas, Texas, relates that on December 21, 2000, the City of Wyandotte, Michigan and Tenaska Michigan Partners, LP, signed a Lease Agreement for certain parcels of property the City owned. The Lease allows Tenaska to develop an electrical generating facility on the leased premises. On January 24, 2001, Mirant Michigan Investments, Inc., acquired 100% of the ownership interests in Tenaska Michigan Partners, LLC. Wyandotte Michigan, LLC, is the legal successor to both Tenaska LP and Tenaska LLC. Based on the schedules Wyandotte filed, it appears that $203,000,000 in net book value was invested in work-in-progress on the Leased Premises. The Lease requires prompt payment of taxes. According to Mr. MacDonald, ad valorem taxes relating to the Leased Premises have not been paid as required by Section 365(d)(3) of the Bankruptcy Code: (a) $313,721 that became payable on August 1, 2003; (b) $301,655 that became payable on December 1, 2003; and (c) $714,501 that became payable on August 1, 2004. Mr. MacDonald notes that the 2003 taxes are already a first and prior lien on the Debtors' assets. The 2004 taxes are both an administrative expense and will be a lien on the Debtors' assets unless paid by December 1, 2004. Although the Debtors have been paying the $5,000 minimal rent per month, Mr. MacDonald reports that the Debtors are not performing their principal current monetary lease obligation. Mirant Wyandotte must pay all taxes accruing after the Construction Finance Date on a timely basis. The City asked Judge Lynn to deny the Debtors' request unless the Court conditions the extension with the Debtors' payment of the $1,378,142 outstanding 2003 and 2004 taxes, plus $60,538 interest, before September 26, 2004. As reported in the Troubled Company Reporter on August 11, 2004, the Debtors asked the Court to extend their time to assume or reject 15 unexpired non-residential real property leases, excluding the MirMA Leases, until the date a plan of reorganization is confirmed in the energy company's cases. Headquartered in Atlanta, Georgia, Mirant Corporation -- http://www.mirant.com/-- together with its direct and indirect subsidiaries, generate, sell and deliver electricity in North America, the Philippines and the Caribbean. The Company filed for chapter 11 protection on July 14, 2003 (Bankr. N.D. Tex. 03- 46590). Thomas E. Lauria, Esq., at White & Case LLP represent the Debtors in their restructuring efforts. When the Company filed for protection from their creditors, they listed $20,574,000,000 in assets and $11,401,000,000 in debts. (Mirant Bankruptcy News, Issue No. 44; Bankruptcy Creditors' Service, Inc., 215/945-7000) MORGAN STANLEY: Fitch Assigns Low-B Ratings to Six Cert. Classes ---------------------------------------------------------------- Fitch Ratings affirms Morgan Stanley Dean Witter Capital I Trust, commercial mortgage pass-through certificates, series 2002-TOP7 as follows: -- $222.4 million class A-1 at 'AAA'; -- $572.3 million class A-2 at 'AAA'; -- Interest Only (I/O) class X-1 at 'AAA'; -- I/O class X-2 at 'AAA'; -- $24.2 million class B at 'AA'; -- $29.1 million class C at 'A'; -- $7.3 million class D at 'A-'; -- $7.3 million class E at 'BBB+'; -- $12.1 million class F at 'BBB'; -- $7.3 million class G at 'BBB-'; -- $10.9 million class H at 'BB+'; -- $8.5 million class J at 'BB'; -- $7.3 million class K at 'BB-'; -- $4.8 million class L at 'B+'; -- $4.8 million class M at 'B'; -- $2.4 million class N at 'B-'; Fitch does not rate the $9.7 million class O. The affirmations are due to the stable pool performance and scheduled amortization. As of the August 2004 distribution date, the pool's aggregate principal certificate balance has decreased 4.0% to $930.4 million compared to $969.4 million at issuance. There is currently one loan in special servicing. Food 4 Less, Amarillo (0.5% of the pool) is secured by a single tenant 55,242 square feet (sf) retail center located in Amarillo, Texas. Due to the bankruptcy filing and rejection of the lease by the sole tenant Fleming, Co., the property became real estate owned through foreclosure in January 2004. The special servicer, GMAC Commercial Mortgage Corp., is currently marketing the property for sale. A loss is expected on this loan. The six credit assessed loans (17.4% of the pool) remain investment grade. Fitch reviewed operating statement analysis reports and other performance information provided by the master servicer, Wells Fargo Bank, N.A. The debt service coverage ratio -- DSCR -- for the loans are calculated based on a Fitch adjusted net cash flow -- NCF -- and a stressed debt service based on the current loan balance and a hypothetical mortgage constant. Woodfield Shopping Center (6.8%) is secured by 917,916 sf of a 2.2 million sf super regional mall located in Schaumburg, Illinois. The mall's anchors include: * Sears, * J.C. Penney, * Marshall Field's, * Nordstrom's, and * Lord & Taylor's. The trust amount as of August 2004 was $63.5 million, which represents a 25.3% pari passu interest in the $251.3 million senior portion of the $293.3 million whole loan. The remaining senior portions are held as collateral in the MSDWC 2002-IQ2 and the MSDWC 2002-HQ transactions. As of YE 2003 the Fitch adjusted NCF for the Woodfield Mall has remained stable since issuance. Occupancy as of March 2004 increased to 89.6% compared to 85.4% at issuance. The DSCR for the trust portion of the loan as of YE 2003 has remained flat at 1.72 times (x) since issuance. Kahala Mall (2.7%) is secured by a 363,432 sf retail center and 46,237 sf of office space located in Honolulu (Oaha Island) Hawaii in the Waikiki/Kahala submarket. The center consists of 252,886 sf of in-line space, 110,546 sf of anchor space and two office buildings. The Fitch adjusted NCF as of YE 2003 has increased 8.5%, due to an increase in occupancy to 98.9% compared to 92.5% at issuance. The corresponding DSCR has increased to 2.85x compared to 2.17x at issuance. The Grand Reserve at Kirkman Parke (2.1%) is secured by a 390-unit class A luxury apartment complex located in Orlando, Florida. The property consists of one and four bedroom units. Occupancy as of YE 2003 declined to 93.0% compared to 97.2% at issuance. The Fitch adjusted NCF decreased 14.0% as of YE 2003, as a direct result of the softening of the multifamily market and the drop in occupancy. The DSCR as of YE 2003 was 1.31x compared to 1.39x at issuance. The remaining three credit assessed loans (Renaissance Terrace Apartments (2.1%), The Fairways at Bay Lea (1.9%) and Route 9 Plaza (1.8%)) have performed as or better than expected since issuance. The weighted average DSCR for the three remaining loans as of YE 2003 was 1.53x compared to 1.51x at issuance. NEWARK INSURANCE: Shut-Down Prompts Moody's to Withdraw Ratings --------------------------------------------------------------- Moody's Investors Service has lowered and will withdraw its insurance financial strength rating on Newark Insurance Company. The insurance financial strength rating was lowered to Caa2 from B2. These actions have been taken because the insurer has been, and remains, under regulatory supervision of the New Jersey Department of Banking and Insurance and has consequently ceased all operations, including writing new business. Please refer to Moody's Withdrawal Policy on http://moodys.com/ Newark Insurance Company is based in Bethpage, New York. NOVA CDO: S&P Affirms Junk Ratings on Four CBO Notes Transaction ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on the class C-1, C-2, D-1, and D-2 notes issued by NOVA CDO 2001 Ltd., a high-yield arbitrage CBO transaction, and removed them from CreditWatch, where they were placed with negative implications on April 30, 2004. At the same time, the rating on the class B notes is affirmed due to the level of overcollateralization remaining to support them, and the rating on the class A notes is affirmed based on a financial guarantee insurance policy issued by Financial Security Assurance, Inc. The lowered ratings on the class C and D notes reflect factors that have negatively affected the credit enhancement available to support the notes since the last rating action. These factors include a negative migration in the credit quality of the performing assets in the pool and a decline in the weighted average coupon of the portfolio. Currently, 11.68% of the ratings in the portfolio are on CreditWatch negative and 8.63% of the performing assets are in the 'CCC' range. According to the Aug. 4, 2004 trustee report, the weighted average coupon was 9.508% versus a weighted average coupon of 9.686% at the time of the April 30, 2004 CreditWatch placement. Ratings Lowered and Off Creditwatch NOVA CDO 2001 Ltd. Rating Class To From ----- -- ---- C-1 CCC+ B/Watch Neg C-2 CCC+ B/Watch Neg D-1 CC CCC-/Watch Neg D-2 CC CCC-/Watch Neg Ratings Affirmed NOVA CDO 2001 Ltd. Class Rating ----- ------ A AAA B BBB Transaction Information Issuer: NOVA CDO 2001 Ltd. Co-issuer: NOVA CDO 2001 Corp. Current manager: Phoenix Investment Partners Ltd.(bonds) Antares Capital (loans) Underwriter: CIBC World Markets Corp. Trustee: JPMorganChase Bank Transaction type: Cash flow arbitrage high-yield CBO Tranche Initial Last Current Information Report Action Action ----------- ------- ------ ------- Date (MM/YYYY) 7/2001 4/2004 9/2004 Class A Note Rtg AAA AAA AAA Class A OC Ratio 124.27% 124.60% 123.82% Class A OC Ratio Min 116.40% 116.40% 116.40% Class A Note Balance $237.000mm $146.531mm $145.624mm Class B Note Rtg BBB BBB BBB Class B OC Ratio 115.91% 111.57% 110.88% Class B OC Ratio Min 111.50% 111.50% 111.50% Class B Note Balance $17.100mm $17.139mm $17.100mm Class C-1 Note Rtg BB- B/Watch Neg CCC+ Class C-2 Note Rtg BB- B/Watch Neg CCC+ Class C OC Ratio 110.19% 103.25% 102.60% Class C OC Ratio Min 103.00% 103.00% 103.00% Class C-1 Note Balance $3.500mm $4.223mm $3.892mm Class C-2 Note Balance $9.700mm $10.920mm $10.000mm Class D-1 Note Rtg B- CCC-/Watch Neg CC Class D-2 Note Rtg B- CCC-/Watch Neg CC Class D OC Ratio 105.08% 97.76% 97.57% Class D OC Ratio Min 100.00% 100.00% 100.00% Class D-1 Note Balance $9.400mm $11.584mm $12.414mm Class D-2 Note Balance $3.600mm $4.143mm $4.334mm Portfolio Benchmarks Current -------------------- ------- S&P Wtd. Avg. Rtg (excl. defaulted) BB- S&P Default Measure (excl. defaulted) 3.14% S&P Variability Measure(excl. defaulted) 2.19% S&P Correlation Measure(excl. defaulted) 1.22 Wtd. Avg. Coupon (excl. defaulted) 9.56% Wtd. Avg. Spread (excl. defaulted) 2.65% Oblig. Rtd. 'BBB-' and Above 11.18% Oblig. Rtd. 'BB-' and Above 57.18% Oblig. Rtd. 'B-' and Above 91.37% Oblig. Rtd. in 'CCC' Range 8.63% Oblig. Rtd. 'CC', 'SD' or 'D' 0.00% Obligors on Watch Neg (excl. defaulted) 11.68% Rated OC Ratios (ROCs) Prior To Action After Action ---------------------- --------------- ------------ Class A note N/A(1) N/A(1) Class B note 105.07% 105.07% Class C-1/C-2 notes 100.85% 102.30% Class D-1/D-2 notes N/A(2) N/A(2) (1) ROC is not published for insured tranches because the insurance policy, rather than the tranche credit support, determines the public rating. (2) ROC is not provided for tranches rated 'CC' or 'D' because these tranches are expected to default. For information on Standard & Poor's CDO Portfolio Benchmarks and Rated Overcollateralization -- ROC -- Statistic, please see "ROC Report August 2004," published on RatingsDirect, Standard & Poor's Web-based credit analysis system, and on the Standard & Poor's Web site at http://www.standardandpoors.com/ Go to "Fixed Income," under "Browse by Sector" choose "Structured Finance," and under Commentary & News click on "More" and scroll down to the desired articles. OM ENTERPRISES: Voluntary Chapter 11 Case Summary ------------------------------------------------- Debtor: OM Enterprises of Louisville Inc. 12601 Townpark Way, Suite 200 Louisville, Kentucky 40243 Bankruptcy Case No.: 04-35657 Chapter 11 Petition Date: September 3, 2004 Court: Western District of Kentucky (Louisville) Judge: David T. Stosberg Debtor's Counsel: Timothy F. Mann, Esq. 212 Kinnaird Lane Louisville, KY 40243 Tel: 502-245-000 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million The Debtor did not file a list of its 20-Largest Creditors. ORBITAL SCIENCES: Names G. David Low VP-Techn'l Services Division ----------------------------------------------------------------- Orbital Sciences Corporation (NYSE:ORB) names Mr. G. David Low Vice President of its Technical Services Division, headquartered in Greenbelt, MD. Mr. Low will succeed Mr. Richard Hicks, who is remaining with TSD on a part-time basis as an advisor on existing contracts and new business opportunities. Mr. Hicks has held various positions in the aerospace industry over the past 43 years and is entering into partial retirement. Mr. Low assumed his new post on September 7. "It is with great confidence in David's abilities that we announce his appointment as the new head of our Technical Services Division," said Mr. Jack Danko, Orbital's Executive Vice President and General Manager of its Space Systems Group. "His credentials as a senior Orbital manager and extensive knowledge of and background with NASA, TSD's principal customer, represent a perfect fit for the TSD business." Mr. Danko also added, "I am also pleased that Dick Hicks has agreed to remain active in the TSD business. Orbital will continue to benefit from the insight and wisdom he gained during his many years in the industry." Mr. Low has served with Orbital for the past eight years, joining the company's Launch Systems Group in 1996 as Vice President of Safety and Mission Assurance, spearheading the Group's ISO qualification effort. In addition to holding several other senior positions in the company, Mr. Low most recently served as Vice President and Deputy General Manager of Orbital's Advanced Programs Group. In this role, he helped lead the company's participation in NASA's efforts to develop new human space exploration systems. Prior to joining Orbital, Mr. Low was a NASA astronaut from 1984 until 1996. During this time he flew on three Space Shuttle missions as a mission specialist, flight engineer and payload commander. During his more than 700 hours in space, Mr. Low helped to deploy two communications satellites and retrieve two scientific satellites using the Shuttle's robotic arm. He also conducted a six-hour spacewalk and participated in numerous scientific and medical experiments. Mr. Low began his career with NASA in 1980 as a spacecraft systems engineer for the Jet Propulsion Laboratory. Mr. Low holds a B.S. in Physics-Engineering from Washington and Lee University, a B.S. in Mechanical Engineering from Cornell University, an M.S. in Aeronautics and Astronautics from Stanford University and an MBA from Johns Hopkins University. He has also completed the Advanced Management Program at Harvard Business School. Mr. Low is a recipient of the NASA Outstanding Leadership Medal, the NASA Exceptional Service Medal, three NASA Space Flight Medals and an honorary Doctor of Engineering Degree from Rensselaer Polytechnic Institute. He is an Associate Fellow of the AIAA. Mr. Low resides in Potomac Falls, Virginia with his wife JoAnn and their three children About Orbital Orbital develops and manufactures small space and rocket systems for commercial, military and civil government customers. The company's primary products are satellites and launch vehicles, including low-orbit, geosynchronous and planetary spacecraft for communications, remote sensing, scientific and defense missions; ground- and air-launched rockets that deliver satellites into orbit; and missile defense systems that are used as interceptor and target vehicles. Orbital also offers space-related technical services to government agencies and develops and builds satellite- based transportation management systems for public transit agencies and private vehicle fleet operators. * * * As reported in the Troubled Company Reporter's June 14, 2004 edition, Standard & Poor's Ratings Services raised its ratings, including the corporate credit rating to 'BB-' from 'B+', on Orbital Sciences Corp. The outlook is stable. The company has $135 million in rated debt. "The upgrade reflects Orbital's improved credit profile, supported by adequate liquidity, better operating performance, and a sizable backlog," said Standard & Poor's credit analyst Christopher DeNicolo. OWENS CORNING: Objects to M. Pope's Fee Disgorgement Request ------------------------------------------------------------ Credit Suisse First Boston, Kensington International, Limited, Springfield Associates, LLC and Angelo, Gordon & Co. inform the U.S. Bankruptcy Court for the District of Delaware of their views on the request of Michael Pope to require the advisors in the chapter 11 cases of Owens Corning and its debtor-affiliates. As reported in the Troubled Company Reporter on September 6, 2004, in view of Professor Francis McGovern's resignation as Court- appointed advisor effective June 30, 2004, and upon representation made by the counsel for C. Judson Hamlin and David Gross that they are no longer acting in any capacity in the Debtors' bankruptcy proceedings, Michael Pope withdraws his request for disqualification and termination as moot. Mr. Pope, instead, asked the U.S. District Court for the District of Delaware to: (a) require Messrs. Hamlin, Gross and McGovern to disgorge the fees they or their firms, Purcell, Ries, Shannon, Mulcahy & O'Neill, Budd Larner, P.C., David Gross & Associates, or Saiber Schlesinger Satz & Goldstein, LLC, received as Court-appointed advisors, consultants or mediators; and (b) order Messrs. Hamlin, Gross and McGovern to promptly submit their final fee applications, but hold any payment in abeyance pending the Bankruptcy Court's adjudication of the request for disgorgement. CSFB, Kensington, Springfield and Angelo assert that all fee disgorgement proceedings should be heard in the U.S. District Court for the District of Delaware. Any bifurcation of fee disgorgement proceedings between the District Court and the Bankruptcy Court would be factually unwarranted and judicially inefficient and wasteful. The Amended Supplemental Pope Motion seeks disgorgement of all fees paid to C. Judson Hamlin, David Gross and Francis McGovern, regardless of whether they served as advisors or consultants to Judge Wolin or mediators between and among the parties. The disgorgement includes the $2.6 million paid to Mr. McGovern for his mediation services, and the hundreds of thousands of dollars paid to Saiber Schlesinger Satz & Goldstein, LLC, which now employs Judge Wolin and his son. Rebecca L. Butcher, Esq., at Landis, Rath & Cobb, in Wilmington, Delaware, emphasizes that Mr. McGovern's role in these cases derives from his original appointment by the District Court. Although the Bankruptcy Court entered a subsequent order specifying McGovern's role as mediator in these cases, most of McGovern's "mediation services" continued to occur in connection with matters before, or closely supervised by the District Court. In any event, Ms. Butcher points out, bifurcating review of Mr. McGovern's services and the resolution of fee disgorgement issues between the District Court and the Bankruptcy Court would only confuse and delay matters. The substantial fees earned by Messrs. Gross, Hamlin and McGovern presently are before the District Court, and there is no basis for having duplicative, parallel proceedings in the Bankruptcy Court that would involve the same facts, the same parties and the same or very similar issues. Francis McGovern Responds Francis McGovern finds the amendment to set a deadline to submit final fee applications as unnecessary. Sam C. Pointer, Jr., Esq., at Lightfoot, Franklin & White, in Birmingham, Alabama, tells the Court that Mr. McGovern's services as a consultant concluded in the Spring of 2001, and he charged and was paid for fees and expenses from December 26, 2000, to January 31, 2001. Mr. Pointer tells the Court that Mr. McGovern will not seek any additional fees, and he does not need any more time to submit a further fee application. Mr. Pointer asserts that any issues relating to Mr. McGovern's services and fees as a mediator in the Debtors' case should, at least initially, be considered by the Bankruptcy Court -- the court that appointed Mr. McGovern, established his fees, and saw the fruits of his many months of work. Mr. Pointer notes that to grant Mr. Pope's request would: -- constitute a withdrawal of the reference with respect to Mr. McGovern's services and fees as a mediator in the Debtors' case; and -- deprive the District Court of the benefits that would come from the Bankruptcy Court's consideration of any attack on those services and fees. Accordingly, Mr. McGovern asks the District Court to summarily deny Mr. Pope's request to amend. Debtors Wants Request Denied The Debtors ask the Court to deny Michael Pope's request so as to avoid further waste of estate resources in light of the fact that Francis McGovern is no longer employed in any capacity in the Debtors' cases. J. Kate Stickles, Esq., at Saul Ewing, LLP, in Wilmington, Delaware, relates that Mr. Pope has not offered any compelling reason why he should be permitted to amend the Supplemental Disqualification Motion to include additional prayers for relief. Mr. Pope cannot claim any excuse for his failure to seek disgorgement of Mr. McGovern's mediator fees prior to the hearing on the merits of his request. The Debtors are also concerned that the premise of Mr. Pope's request to amend filed at this late stage of the proceedings is based on a claim that Mr. Pope was unaware of the Order appointing Mr. McGovern as a mediator. It would set a dangerous precedent in these cases if a creditor is permitted to appear at this late date, claim ignorance of the prior pleadings and court orders, and seek to relitigate matters for which the Bankruptcy Court already has entered a final order. Furthermore, there is no reason to amend the pleading to direct the submission of final fee applications at this time. Regardless of the proposed amendment, final fee applications ultimately will be filed with the Court and parties-in-interest will have the right to object. To the extent final fee applications are not filed as required, payment will not be rendered. 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. 83 Bankruptcy Creditors' Service, Inc., 215/945-7000) PARMALAT: Has Until Thursday to File Plan & Disclosure Statement ---------------------------------------------------------------- After further negotiations, Parmalat USA Corporation and its U.S. debtor-affiliates, General Electric Capital Corporation as agent and lender, Citibank, N.A., and the Official Committee of Unsecured Creditors agree that the Debtors will file a plan of reorganization and accompanying disclosure statement on or before September 16, 2004. The Debtors' failure to comply will constitute a Termination Event under the DIP Financing Agreement. The parties also agree that all obligations and commitments of Citibank, GE Capital and the DIP Lenders, and the U.S. Debtors' authorization to use the Cash Collateral, will terminate at the earliest of: (i) September 16, 2004, solely with respect to the DIP Financing Agreement; (ii) the effective date of any reorganization plan; (iii) the entry of a Court order converting any of the Chapter 11 Cases to a case under Chapter 7 of the Bankruptcy Code or dismissing any of the cases; or (iv) the termination of the DIP Financing Agreement or the Debtors' Receivables Purchase Agreement with Citibank. The Final DIP Order remains in full force and effect in all other respects. 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. 30; Bankruptcy Creditors' Service, Inc., 215/945-7000) PENN TRAFFIC: Selling Distribution Centers for $45.9 Million ------------------------------------------------------------ The Penn Traffic Company, through Keen Realty, LLC, is marketing for sale-leaseback these distribution Centers for $45.9 Million in connection with its plan to emerge from Chapter 11: Property Type Address Land Size Building Size ------------- ------- --------- ------------- Jamestown DC 133 Jackson Avenue 14.10 287,959 Jamestown, New York State Fair 1200 State Fair Blvd. 25.84 567,800 Blvd DC Syracuse, New York P&C 3407 Walters Road 50.50 273,225 Perishable DC Syracuse, New York BiLo 851 Beaver Drive 30.38 202,800 Perishable DC Dubois, Pennsylvania PT Dry Goods Shaffer Road & Route 255 25.87 410,000 Warehouse Dubois, Pennsylvania Keen advises that the cap rate is 9%. "This sale-leaseback is a terrific opportunity for investors to obtain a quality real estate portfolio with a strong tenant, Penn Traffic. The reorganized company has new leadership that has stabilized the company and will grow it into the future," said Chris Mahoney, Keen Realty's Vice President. "We are encouraging prospective purchasers to submit their offers as soon as possible, as the company plans to move quickly with its exit from bankruptcy." A complete list of locations and offering terms are available upon request. Interested parties must act immediately. Keen Realty, LLC is a consulting firm specializing in providing real estate consulting services to companies and their creditors in bankruptcy and work-out scenarios. For 22 years, Keen Realty, LLC solved complex problems and evaluated and sold over 230 million square feet of real estate, leases and businesses in bankruptcies, workouts and restructurings, and repositioned nearly 13,000 retail properties across the country. Other current and recent clients of Keen include Arthur Andersen, Cooker Restaurants, Country Home Bakers, Cumberland Farms, Eddie Bauer, FILA, Fleming, Huffman Koos, Just for Feet, Parmalat, Pillowtex, Spiegel, and Warnaco. For more information regarding these available locations, please contact: Keen Realty, LLC 60 Cutter Mill Road, Suite 407 Great Neck, NY 11021 Telephone: 516-482-2700 x 229 Fax: 516-482-5764 e-mail: cmahoney@keenconsultants.com http://www.keenconsultants.com/ Headquartered in Rye, New York, Penn Traffic Company distributes through retail and wholesale outlets. The Group through its supermarkets carries on the retail and wholesale distribution of food, franchise supermarkets and independent wholesale accounts. The Company filed for chapter 11 protection on May 30, 2003 (Bankr. S.D.N.Y. Case No. 03-22945). Kelley Ann Cornish, Esq., at Paul Weiss Rifkind Wharton & Garrison, represent the Debtors in their restructuring efforts. When the grocer filed for protection from their creditors, they listed $736,532,614 in total assets and $736,532,610 in total debts. PEREGRINE SYS: June 30 Balance Sheet Upside-Down by $272 Million ---------------------------------------------------------------- Peregrine Systems, Inc. (OTC: PRGN), a leading provider of asset and service management solutions, released historical financial results for the fiscal 2004 first quarter ended June 30, 2003. The filing of Peregrine's fiscal 2004 first quarter 10-Q was delayed due to Peregrine's prior financial restatement, voluntary Chapter 11 bankruptcy reorganization proceedings and restructuring activities. As a result of Peregrine's emergence from reorganization proceedings on Aug. 7, 2003, the company intends to adopt fresh- start reporting in the fiscal year 2004 second quarter ended Sept. 30, 2003 in accordance with GAAP (Generally Accepted Accounting Principles). Historical GAAP Financial Results and Highlights: -- Total revenues for the fiscal 2004 first quarter were $42.5 million, a decrease of 14 percent over the same period of the preceding year. The fiscal 2003 first quarter total revenues were $49.5 million, which included approximately $6.7 million from non-core products that were subsequently divested during fiscal 2003. The company's core products consist primarily of AssetCenter(R) and ServiceCenter(R). -- Total license revenues for the fiscal 2004 first quarter were $12.5 million, a decline of approximately 4 percent when compared with the fiscal 2003 first quarter license revenue of $13.0 million. Of the total core license revenue in the fiscal 2004 first quarter, approximately $7.5 million was for license transactions initiated in the quarter, while approximately $5.0 million was attributable to transactions initiated prior to fiscal 2003. The $5.0 million in revenue was included as part of the fiscal 2004 first quarter revenue because the revenue recognition criteria for these transactions were not met until this period. -- The fiscal 2003 first quarter license revenue included approximately $1.0 million in revenues for non-core products. Of the total core license revenue in the fiscal 2003 first quarter, approximately $2.2 million was for license transactions initiated in the quarter, while approximately $9.7 million was attributable to transactions initiated prior to fiscal 2003. -- Net loss totaled $9.1 million on 196 million diluted shares outstanding in the fiscal 2004 first quarter, compared with a net loss of $79.6 million on 195 million diluted shares outstanding for the same period of the preceding year. In the fiscal 2004 first quarter, income from continuing operations before reorganization items, interest and income taxes was $1.3 million. -- Peregrine's cash and cash equivalent balances, excluding restricted cash and short-term investments, were $227.3 million and $234.3 million at June 30, 2003 and March 31, 2003, respectively. Historical Non-GAAP Pro Forma Financial Results: -- Peregrine reported a non-GAAP pro forma net loss of $3.0 million in the fiscal 2004 first quarter, or $0.02 per diluted share, compared with a non-GAAP pro forma net loss of $71.0 million in the fiscal 2003 first quarter. The non-GAAP pro forma results exclude bankruptcy reorganization, restructuring and impairments. The company has reconciled the non-GAAP pro forma net loss to GAAP net loss in the table below (in thousands, except diluted EPS). The pro forma net loss is not prepared in accordance with accounting principles generally accepted in the United States, and may be different from non-GAAP financial measures used by other companies. Non-GAAP financial measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance to GAAP. Peregrine uses non-GAAP pro forma information in analyzing financial results because Peregrine management believes that it provides meaningful information regarding the company's operating performance and facilitates management's internal comparisons to the company's historical and current operating results and to the operating results of other companies. The company believes that non-GAAP pro forma information is useful to investors because it allows for greater transparency of the company's operating performance. Management Commentary "Our financial results for the first quarter of fiscal 2004 provide clear evidence of a positive trend in Peregrine's return to operational stability," said John Mutch, Peregrine's president and CEO. "We were able to dramatically reduce our operating costs during the first quarter, while slightly increasing our license and maintenance revenue from our core products over the same period of the preceding year." Fresh-Start Reporting Fresh-start reporting requires that the company adjust the historical cost of its assets and liabilities to their fair value, effective July 18, 2003, the date of approval of the company's plan of reorganization. Accordingly, the company will re-value its balance sheet in the fiscal 2004 second quarter, which includes adjusting the value of current assets, property and equipment, intangible assets, accrued liabilities, deferred revenue and stockholders' equity for the effects of the company's plan of reorganization. The fair value of the new common stock for the reorganized company was determined by management to be $270 million, which represents the company's enterprise value adjusted for debt financing, net of cash. The non-trade debt of the reorganized company totals approximately $86 million as of August 2003, including secured factor loans, senior notes and non-interest bearing notes issued to satisfy pre-petition debt. As a result of fresh-start reporting, it may be difficult to compare financial results for the fiscal 2004 second quarter with other quarters of fiscal year 2004 as well as the quarters in prior fiscal years. About Peregrine Systems Peregrine Systems, Inc. develops enterprise software solutions that enable organizations to evolve their IT service and asset management practices for reduced costs, improved IT productivity and service, and lower risk. The company's asset and service management offerings -- such as Service Control and Expense Control -- address specific business problems. These solutions make it possible for IT organizations to maintain a changing IT infrastructure, manage their relationships with end-users and service providers, and gain greater visibility into the how IT investments are performing. The Peregrine Evolution Model provides a roadmap for companies that want to systematically evolve the sophistication and effectiveness of their IT operating practices. Founded in 1981, Peregrine Systems has sustained a rich tradition of delivering solutions with superior functionality to a broad segment of the global enterprise customer market. Headquartered in San Diego, Calif., the company conducts business from offices in the Americas, Europe, and Asia Pacific. At June 30, 2004, Peregrine System' balance sheet showed a $272,116,000 stockholders' deficit, compared to a $263,999,000 deficit at March 31, 2003. PRIME HOSPITALITY: Launches 8-3/4% Cash Tender Offer & Consent -------------------------------------------------------------- Prime Hospitality Corp. (NYSE: PDQ) had commenced a cash tender offer to purchase any and all of its outstanding 8-3/8% Senior Subordinated Notes due 2012 (CUSIP No. 741917AJ7), as well as a related consent solicitation to amend the Notes and the indenture pursuant to which they were issued. The tender offer and consent solicitation are being conducted in connection with Prime Hospitality's previously announced agreement to merge with an affiliate of The Blackstone Group. The consent solicitation will expire at 5:00 p.m., New York City time, on Wednesday, September 22, 2004, unless extended or amended by the Company. Tendered Notes may not be withdrawn and consents may not be revoked after the consent expiration date. The tender offer will expire at 8:00 a.m., New York City time, on Friday, October 8, 2004, unless extended or earlier terminated by the Company. Holders tendering their Notes will be required to consent to proposed amendments to the Notes and to the indenture governing the Notes, which will eliminate substantially all of the restrictive covenants and certain events of default, amend the merger and consolidation covenant and make changes to the defeasance provisions. Holders may not tender their Notes without also delivering consents or deliver consents without also tendering their Notes. The total consideration to be paid for each $1,000 principal amount of Notes will be a price equal to the present value, as of the payment date for such Notes purchased in the tender offer, of the earliest redemption price for such Notes ($1,041.88) and interest that would accrue on such Notes from the payment date up to, but not including the earliest redemption date (May 1, 2007), calculated based on: (a) the yield to maturity on the 4.375% U.S. Treasury Note due May 15, 2007, as calculated by Banc of America Securities LLC in accordance with standard market practice, based on the bid price of such reference security as of 2:00 p.m., New York City time, on the tenth business day immediately preceding the Tender Offer Expiration Date, as displayed on Bloomberg Government Pricing Monitor on "Page PX5" or any recognized quotation source selected by Banc of America Securities LLC in its sole discretion, plus (b) 50 basis points. Holders whose Notes are accepted for payment will also be paid accrued and unpaid interest up to, but not including the date of payment for the Notes. The total consideration includes a consent payment of $30.00 per $1,000 principal amount of the Notes which will be payable only in respect of the Notes purchased that are tendered on or prior to the consent expiration date. Holders who tender their Notes after the consent expiration date will not be entitled to receive the consent payment. The tender offer and consent solicitation are made upon the terms and conditions set forth in the Offer to Purchase and Consent Solicitation Statement, dated September 9, 2004 and the related Consent and Letter of Transmittal. The tender offer and consent solicitation are subject to the satisfaction of certain conditions, including receipt of consents sufficient to approve the proposed amendments and the merger having occurred or occurring substantially concurrent with the tender offer expiration date. The purpose of the tender offer is to acquire all outstanding Notes in connection with the merger. The purpose of the consent solicitation is to, among other things, amend the Notes and the indenture governing the Notes to eliminate substantially all of the restrictive covenants and certain events of default, amend the merger and consolidation covenant and make changes to the defeasance provisions (and make related changes in the Notes). Prime Hospitality has retained Banc of America Securities LLC and Bear, Stearns & Co. Inc. to act as the Dealer Managers for the tender offer and Solicitation Agents for the consent solicitation. Banc of America Securities LLC can be contacted at (888) 292-0070 (toll free) and (704) 388-9217 and Bear, Stearns & Co. Inc. can be contacted at (877) 696-BEAR (toll free). The tender offer and consent solicitation documents are expected to be distributed to holders beginning today. Requests for documentation may be directed to D.F. King & Co., Inc., the Information Agent, which can be contacted at (212) 269- 5550 (for banks and brokers only) and (800) 628-8532 (for all others toll free). Prime Hospitality owns, manages, and franchises 247 hotels throughout the U.S. The company owns and operates three proprietary brands that compete in different segments: AmeriSuites, Wellesday Inns & Suites, and Prime Hotels and Resorts. Also within its portfolio are owned and/or managed hotels operated under franchise agreements with national hotel chains including Hilton, Radisson, Sheraton, Holiday Inn, and Ramada. About Prime Hospitality Corp. Prime Hospitality Corp., one of the nation's premiere lodging companies, owns, manages, develops and franchises more than 240 hotels throughout North America. The Company owns and operates three proprietary brands, AmeriSuites(R) (all suites), PRIME Hotels & Resorts(R) (full-service) and Wellesley Inns & Suites(R) (limited service). Also within Prime's portfolio are owned and/or managed hotels operated under franchise agreements with national hotel chains including Hilton, Sheraton, Hampton, and Holiday Inn. Prime can be accessed over the Internet at http://www.primehospitality.com/ * * * As reported in the Troubled Company Reporter on August 23, 2004, Standard & Poor's Ratings Services placed its 'BB-' corporate credit and 'B' subordinated debt ratings on Prime Hospitality, Corp., on CreditWatch with negative implications. Fairfield, New Jersey-based hotel operator had about $223 million of debt outstanding at the end of June 2004. "The CreditWatch listing reflects the planned acquisition of Prime by affiliates of The Blackstone Group for $12.25 per share, or a total value of more than $790 million including debt," said Standard & Poor's credit analyst Sherry Cai. The transaction is expected to close in the fourth quarter of 2004, subject to shareholder approval and other customary conditions. QUESTERRE: Receives Court Approval for Corporate Restructuring -------------------------------------------------------------- Questerre Energy Corporation (QEC:TSX) received Court approval for the plans of arrangement proposed by the Company and its wholly owned subsidiary, Questerre Beaver River Inc. -- QBR -- for the settlement of all outstanding claims. The Plans were approved and sanctioned today pursuant to the Order granted by the Court of Queen's Bench of Alberta under the Companies' Creditors Arrangement Act. This follows the creditor meetings held on August 31, 2004 when the requisite majority of voting creditors approved the Plans. In conjunction with QBR, Questerre will now proceed with the implementation of these Plans through the distribution of cash and Common Shares to all the unsecured creditors. Questerre anticipates the Plans will be implemented within the next three weeks. Subject to the successful implementation of the Plans, Questerre anticipates emerging from CCAA protection prior to September 30, 2004. Questerre Energy Corporation is a Calgary-based independent resource company actively engaged in the exploration for and development, production and acquisition of large-scale natural gas projects in Canada. QWEST COMMS: Subsidiary Completes Tender Offer for Debt Securities ------------------------------------------------------------------ Qwest Corporation (QC), a wholly owned subsidiary of Qwest Communications International Inc. (NYSE: Q), closed its previously announced tender offer for approximately $750 million of aggregate principal amount of outstanding 7.20 percent notes due November 1, 2004. A total of approximately $569 million, representing 76 percent of the outstanding, in principal amount of QC notes maturing in 2004, were tendered prior to the expiration, and have been accepted and paid. The offer expired at midnight EDT, on Wednesday, Sept. 8, 2004, and final settlement of notes tendered after the Early Participation Deadline on Aug. 24, 2004, was completed Thursday, Sept. 9. Lehman Brothers and Goldman, Sachs & Co. were the dealer managers for the offer. About Qwest Qwest Communications International, Inc., (NYSE:Q) is a leading provider of voice, video and data services. With more than 40,000 employees, Qwest is committed to the "Spirit of Service" and providing world-class services that exceed customers' expectations for quality, value and reliability. For more information, visit the Qwest Web site at http://www.qwest.com/ Qwest's June 30, 2004, balance sheet shows a stockholders' deficit totaling $1,909,000,000 -- swelling 53% from the $1,251,000,000 shareholder deficit reported at March 31, 2004. REPTRON ELECTRONICS: Facility Inks New Prod. Pact with Hunt Tech. ----------------------------------------------------------------- Reptron Electronics, Inc. (OTC Bulletin Board: RPRN), an electronics manufacturing services company, says its Hibbing, MN facility has been awarded a multi-million dollar production contract from Hunt Technologies, Inc., a leading global provider of automatic meter reading products. Reptron will build RF-based electronic sub-assemblies for Minnesota-based Hunt's Multi-Utility Turtle(R) system, which uses a utility's existing power lines to transmit and collect daily usage, leak detection and tamper detection data from electric, gas and water meters. "This new program with Hunt builds upon the successful manufacturing partnership Reptron has enjoyed with Hunt and has the potential to double our level of business conducted with them," said Charlie Crep, Reptron Manufacturing Services' vice president of operations. "We have been providing Hunt Technologies with an array of devices supporting their various automatic meter reading product lines since 1998," Mr. Crep said. Production on the new program will begin this fall. About Hunt Technologies, Inc. Hunt Technologies employs innovative technology to deliver an endpoint information system that increases operational efficiency while optimizing the utility investment dollar. With more than 450 customers worldwide, Hunt is a market leader in the automatic meter reading industry. For more information on Hunt Technologies, visit http://www.turtletech.com/ About Reptron Reptron Electronics, Inc. is a leading electronics manufacturing services company providing engineering services, electronics manufacturing services and display integration services. Reptron Manufacturing Services offers full electronics manufacturing services, including complex circuit board assembly, complete supply-chain services and manufacturing engineering services to OEMs in a wide variety of industries. Reptron Display and System Integration provides value-added display design engineering and system integration services to OEMs. For more information, please access http://www.reptron.com/ Reptron filed a voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code on October 28, 2003. The Plan of Reorganization was confirmed by the U.S. Bankruptcy Court on January 14, 2004 and became effective on February 3, 2004 allowing the Company to emerge from bankruptcy. RIDDELL BELL: Moody's Assigns Single-B Ratings to Notes & Credit ---------------------------------------------------------------- Moody's Investors Service has assigned a B1 senior implied rating to Riddell Bell Holdings, Inc., and rated the company's proposed $160 million senior secured credit facilities and $140 million senior subordinated notes at B1 and B3, respectively. In addition, Moody's has assigned a speculative grade liquidity rating of SGL-3. Transaction proceeds will fund the acquisition of Bell Sports and its combination with Riddell Sports. The long- term ratings recognize the high debt levels and limited free cash flow resulting from the acquisition, and therefore the limited flexibility that exists for unexpected operating challenges. Nonetheless, the ratings are supported by the company's strong brands and stable, leading market positions, and by credible plans to leverage the scale, product development capability, and operational expertise of the two businesses. The rating outlook is stable. Although Moody's has rated both Riddell and Bell under different ownership, management and corporate structures, this is the first time it has rated Riddell Bell Holdings, Inc. These ratings were assigned: * Senior implied rating, B1; * $50 million senior secured revolving credit facility due 2010, B1; * $110 million senior secured term loan B facility due 2011, B1; * $140 million senior subordinated notes due 2012, B3; * Senior unsecured issuer rating, B2; Speculative grade liquidity rating, SGL-3. Proceeds from the debt transactions, along with $69 million in equity contribution from an investment group led by Fenway Partners, will fund the acquisition of Bell Sports and the refinancing of Riddell's debt. The total purchase price will be approximately $242.5 million (excluding transaction fees), or around 8.5x Bell's adjusted LTM EBITDA at June 2004. Fenway purchased Riddell in 2003 for around $140 million, with an equity contribution of nearly $70 million. Moody's recognizes that the combination of Riddell with Bell helps to moderate the significant leverage assumed in connection with the Bell acquisition. Notwithstanding this benefit, Riddell Bell's ratings are restrained by still meaningful leverage levels following the business combination that will require cash interest expenses and, along with integration-related costs, will limit free cash flow generation and debt repayment in the near-to-medium term. Moody's believes that the company's limited financial flexibility is particularly concerning due to its: * low-growth product categories; * potential unexpected integration/restructuring charges; * product liability risks present in selling head protection products; and * possible challenges related to the Bell business. In this last regard, Moody's notes that the majority of Bell's sales are to mass retailers, including certain challenged retailers, and that increasing sales concentration in all retail channels could pressure sales and profits. Further, the ratings recognize the material new product development demands required to sustain sales and profit margins in the bike accessories business (one of Bell's largest product categories), and the company's focus on growing new helmet categories that could require significant time and investment before turning profitable. The ratings and stable outlook are supported by Riddell Bell's strong brands, its dominant market positions in all product sub- sectors, and its historical product innovations that underpin the company's valuation. Despite high leverage and modest cash flows, Moody's recognizes Riddell Bell's ability to meet required debt service under stable operating conditions, while executing necessary growth investment and integration spending plans. In addition to the strong brand positions, cash flow reliability is supported by Riddell's stable business model, including the recurring sales offered: * by its reconditioning business; * by stable participation rates in its core sports categories and increasing head protection demand in these and several other sports; * by low capital spending and operating efficiency gains at Bell due to restructuring initiatives implemented over the past few years; and * by significant NOL's ($100M), including those created by the transaction. Riddell maintains the number one market position in football helmets (54%, supported by its marketing relationship with the National Football League), in football shoulder pads, and in the stable and complementary football equipment reconditioning market. Bell has the leading market share in mass and specialty bike helmets (Bell and Giro brands around 60%), in snow helmets (38%), and in mass bike accessories, as supported by its athlete endorsements and sponsorships. Together the companies will have the opportunity to leverage head protection R&D and design, while Riddell should benefit from Bell's more sophisticated sourcing, manufacturing, and product development capabilities. Bell will benefit from the product and customer diversification offered by Riddell, which sells to over 19,500 institutional customers with minimal annual account turnover. Credible sales growth drivers at both companies exist, including Riddell's Revolution product, Bell's specialty product categories, and Bell's return into power- sports. Given these strengths, Moody's expects Riddell Bell to sustain and improve upon its somewhat weak pro forma June 2004 credit metrics (excluding seasonal impacts): * debt-to-EBITDA 5.2x, * EBITDA less capex interest coverage 2.3x, and * free cash flow to funded debt around 5.5%. Moody's does not anticipate positive rating pressures over the coming twelve months given the integration concerns and limited debt repayment prospects, but could consider favorable actions over the longer-term through a successful integration effort and greater than expected de-leveraging. Conversely, negative rating actions could be prompted by: * the inability to sustain sales and profit levels due to unexpected integration/restructuring challenges, * failed product development efforts, or * severe pricing pressures, especially if these issues constrain the company's borrowing access. Moreover, negative rating actions would likely result if Riddell Bell deviates from its near-term strategic objectives of integration and debt-reduction, and engages in additional debt- financed acquisitions. In particular, Moody's would likely consider negative rating actions if credit metrics (excluding seasonal impacts) decline such that leverage increases beyond 5.5x, interest coverage declines below 2.0x, or free cash flow turns negative. The SGL-3 rating recognizes the adequate liquidity provided by Riddell Bell's proposed $50 million revolving credit facility. Moody's believes that the size of the facility provides sufficient borrowings to meet the company's seasonal working capital demands under normal operating conditions. Further, Moody's anticipates customary covenant levels (set around 18-20% relative to FY2004 projections), thereby providing an adequate cushion for smooth borrowing access should the company experience moderate operating challenges. However, the SGL rating is materially constrained by modest cash flow generation expectations and minimal cash balances, which heighten the company's reliance on the facility both for seasonal purposes and potentially to meet unexpected operating expenses. The SGL rating is further constrained by Riddell Bell's limited alternative liquidity sources, as the vast majority of the company's assets will be pledged to the rated facilities. The senior secured credit facilities are rated at the B1 senior implied level due to their significant position in the pro forma debt structure and the fact that tangible asset support may not be sufficient to fully cover borrowings in a distressed scenario. However, Moody's notes that the company's powerful brands could provide intangible asset support. The facilities will be guaranteed by an intermediate parent holding company and by domestic subsidiaries, and will be will be secured by all tangible and intangible assets of the company and guarantors. In addition, the facilities will be secured by 100% of the capital stock of the company and its domestic subsidiaries, by 65% of the capital stock of foreign subsidiaries, and by all inter-company debt. Financial covenants will include minimum interest coverage, maximum capital expenditures, and maximum leverage. Mandatory prepayments will be initially set at 75% of excess cash flow, subject to reduction to 50% if certain leverage levels are met. The B3 rating on the senior subordinated notes reflects their contractual and effective subordination to a material amount of senior secured debt. As such, a high EBITDA multiple would be required to fully-return principal under a distressed scenario. Riddell Bell Holdings, Inc., is the prospective owner of Riddell Sports Group, Inc., and Bell Sports Corporation, which are the leading brands in football and bike helmets, respectively. Pro forma sales for the twelve-month period ended June 2004 were approximately $323 million. RIDDELL BELL: S&P Assigns B+ Corporate Credit Rating ---------------------------------------------------- Standard & Poor's Ratings Services assigned a 'B+' corporate credit rating to sporting goods company Riddell Bell Holdings Inc., a new entity formed from the combination of Riddell Sports Group, Inc., and Bell Sports Corp. A series of debt offerings will be used to help finance the acquisition of Bell Sports and repay existing debt at Riddell Sports Group, a subsidiary of the newly formed entity. An investor group led by financial sponsor Fenway Partners Inc. will make a $69 million common equity contribution to help fund the transaction and then own the new company. Standard & Poor's has assigned a 'BB-' senior secured bank loan and '1' recovery rating to Riddell Bell's planned $160 million senior secured bank facility, issued as part of the transaction. The '1' recovery rating indicates a high expectation of full recovery of principal (100%) in the event of a default. Standard & Poor's also assigned a 'B-' rating to Riddell Bell's planned $140 million senior subordinated note offering due 2012. This offering will be issued under Rule 144A with registration rights. The ratings are based on preliminary information and subject to review upon receipt of final documentation. The outlook is negative. About $254 million of total debt will be outstanding at Riddell Bell upon closing of the transaction. "The ratings reflect the new entity's high debt leverage," said Standard & Poor's credit analyst Patrick Jeffrey. "They also reflect Riddell Bell's participation in the highly competitive sporting goods industry, its narrow product focus, its customer concentration, and the risks of integrating the two operations. These risks are mitigated somewhat by the company's leading market positions in football and bike helmets and related accessories." The highly competitive sporting goods industry is fragmented in both its manufacturing and in its retail distribution. Meanwhile, Riddell Bell has a somewhat narrow product focus in football and bike helmets and accessories, its primary product offerings. Combined, these product categories represent about 77% of the company's total sales, and the rest is generated by snow helmets, fitness products, and other items. Product liability remains a significant business and financial risk that requires the company to maintain adequate insurance in order to cover potential claims against its products. Organic growth in the football and bike helmet segments is expected to be moderate but stable in the intermediate term, yet the company could also grow with tuck-in acquisitions and extensions of existing products. The ratings do not anticipate any further large, debt-financed acquisitions. RUSSELL CORP: Names Robert Koney, Jr., Chief Financial Officer -------------------------------------------------------------- Russell Corporation (NYSE: RML) named Robert D. Koney, Jr. chief financial officer for the company. Koney, 47, will be responsible for all corporate financial areas as well as investor relations. He will join the company September 15 and it is anticipated that he will be elected a senior vice president of the corporation at the Board of Directors meeting in October. "We are extremely pleased to have someone with Bob's experience in corporate finance joining our team," said Jack Ward, chairman and CEO. "His extensive involvement in all areas of finance will certainly be beneficial to Russell as we go forward with our efforts to build a global sporting goods company." Koney will be joining Russell from Goodrich Corporation, where he has been since 1986. He joined Goodrich as general accounting manager in the specialty chemicals group and then moved to the aerospace segment as assistant controller. In 1994, he was promoted to vice president and controller of the aircraft wheel and brake operations for BF Goodrich Aerospace. After four years in that position, he was named vice president, controller and chief accounting officer for the corporation and has remained in that position since 1998. Prior to Goodrich, Koney had been manager of federal taxation with Picker International for four years and a senior tax accountant. He began his career as a staff auditor with Arthur Andersen & Company in 1978. Koney graduated cum laude from the University of Notre Dame with a B.B.A. degree in accounting and earned his M.B.A. degree from Case Western Reserve University. He received his Certified Public Accountant designation in 1980. Russell Corporation is a leading branded athletic and sporting goods company with over a century of success in marketing athletic uniforms, apparel and equipment for a wide variety of sports, outdoor and fitness activities. The company's brands include: Russell Athletic(R), JERZEES(R), Spalding(R), AAI(R), Huffy Sports(R), Mossy Oak(R), Bike(R), Moving Comfort(R), Dudley(R), Cross Creek(R) and Discus(R). The company's common stock is listed on the New York Stock Exchange under the symbol RML and its website address is http://www.russellcorp.com/ * * * As reported in the Troubled Company Reporter on June 4, 2004, Standard & Poor's Ratings Services lowered its corporate credit rating on athletic apparel manufacturer Russell Corp. to 'BB' from 'BB+'. At the same time, the senior unsecured debt rating was lowered to 'BB-' from 'BB'. The unsecured debt is rated one notch below the corporate credit rating, reflecting its junior position in the capital structure relative to the secured bank debt. The outlook is stable. Total debt outstanding was about $335 million at April 4, 2004. The ratings downgrade follows Standard & Poor's review of Russell Corp., reflects the company's weakened financial measures for fiscal 2003, and incorporates the uncertainty as to when credit measures will recover. The company, in furthering its goal of becoming an athletic and activewear company, has completed three acquisitions in a relatively short period. These transactions represent a more aggressive financial policy with related integration risk. Although Russell's revenues for fiscal 2003 increased by 1.9% due to unit volume gains, operating margins declined by 300 basis points as a result of a very competitive pricing environment within Russell's Artwear and mass retail channels, excess industry capacity within Artwear, higher raw material costs, and the weak economy. Standard & Poor's expects these trends to persist throughout 2004. Furthermore, Russell continues to face intense competition in the athletic market, at times from much larger and financially stronger players, such as NIKE Inc. and Reebok International Ltd. The ratings on Atlanta, Georgia-based Russell reflect the company's participation in the highly competitive and volatile apparel industry, a narrow product focus, and some commodity-like products within the company's portfolio. Somewhat mitigating these factors is the company's well-known brand name, its strong market position, and its moderate financial profile. SANRE REALTY CORPORATION: Voluntary Chapter 11 Case Summary ----------------------------------------------------------- Debtor: Sanre Realty Corporation 1562 Minford Place, Suite 5 Bronx, New York 10460 Bankruptcy Case No.: 04-15870 Type of Business: Real Estate Chapter 11 Petition Date: September 9, 2004 Court: Southern District of New York (Manhattan) Judge: Burton R. Lifland Debtor's Counsels: Stuart Irwin Davis, Esq. 2931 Westchester Avenue Bronx, New York 10461 Tel: (718) 319-1388 Fax: (718) 931-7606 Total Assets: $1,500,200 Total Debts: $$750,000 The Debtor did not file a list of its 20 largest creditors. SCOTT ACQUISITION: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------------- Cherry Leading Debtor: Scott Acquisition Corp. 5300 Recker Highway Winter Haven, Florida 33880 Bankruptcy Case No.: 04-12594 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Scotty's, Inc. 04-12595 Type of Business: The Debtors are retailers of a wide range of building materials and home improvement products serving the "do-it-yourself" market for individual homeowners, as well as the professional builder and commercial markets. See http://www.scottys.com/ Chapter 11 Petition Date: September 10, 2004 Court: District of Delaware (Delaware) Judge: Peter J. Walsh Debtor's Counsels: Brendan Linehan Shannon, Esq. Young, Conaway, Stargatt & Taylor The Brandywine Building 1000 West Street, 17th Floor PO Box 391 Wilmington, Delaware 19899-0391 Tel: 302 571-6600 Fax: 302-571-1253 Total Assets: $45,681,000 Total Debts: $30,068,000 Debtors' 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Florida Self-Insurers Workmans' $4,300,000 Guaranty Association Inc. Compensation 200 West College Avenue Insurance Claims Suite 115 Tallahassee, Florida 32301-7710 Do-It-Best Corporation Trade Debt $3,700,000 PO Box 868 Fort Wayne, Indiana 46801-0868 Bluelinx Corporation Trade Debt $500,000 PO Box 102110 Atlanta, Georgia 30368-0110 CCA Financial LLC Equipment Leases $347,434 PO Box 25549 7275 Glen Forrest Drive Suite 100 Richmond, Virginia 23278 Coast to Coast Building P Trade Debt $180,925 Weyerhaeuser Company, Inc. Trade Debt $116,977 Crawford & Company General Liability $134,340 Insurance Claims Great Southern Woods Pres. Trade Debt $112,393 Aljoma Lumber Trade Debt $96,740 AMW Brevard LLC Landlord $94,580 Bill Williams A/C Trade Debt $87,600 Quikrete of Florida Trade Debt $84,664 Broad and Cassel Trade Debt $84,001 Anne And Gabriel Willie Landlord $61,133 Nextel Trade $60,791 Tarmac America LLC Trade Debt $58,685 Fountain Court Landlord $57,954 Acquisition Limited Wayne Associates Landlord $55,025 Rand Industries, Inc. Landlord $51,940 2323 Tamiami LLC Landlord $45,743 SPIEGEL: Eddie Bauer Opens Outlet at The Shops at Briargate ----------------------------------------------------------- Eddie Bauer, a premium outdoor-inspired casual wear brand, opened at The Shops at Briargate on August 25, 2004. The newest Eddie Bauer location offers outdoor-inspired apparel for men and women, along with outerwear, gadgets and travel accessories. The Briargate store features wrinkle-resistant shirts in five styles and seven lush colors for women and men's styles in solids, stripes and plaid poplins. "A city like Colorado Springs, set in the midst of world famous natural beauty, is a natural location for Eddie Bauer, the premium outdoor-inspired casual wear brand. We are excited to be opening at The Shops at Briargate and look forward to providing the residents of Colorado Springs with apparel to live, work and play in," said Lisa Erickson, Eddie Bauer spokesperson. The Shops at Briargate location is Eddie Bauer's second location in Colorado Springs. The company also operates an apparel store at Citadel Mall and at more than 300 locations throughout North America. Eddie Bauer's 4235-square foot store is located at 1845 Briargate Parkway, Suite 411. Store hours are Monday to Saturday from 10 a.m. to 9 p.m. and Sunday from 11 a.m. to 6 p.m. For more information on The Shops at Briargate location, call 719-265- 6869. Headquartered in Downers Grove, Illinois, Spiegel, Inc. -- http://www.spiegel.com/-- is a leading international general merchandise and specialty retailer that offers apparel, home furnishings and other merchandise through catalogs, e-commerce sites and approximately 560 retail stores. The Company filed for Chapter 11 protection on March 17, 2003 (Bankr. S.D.N.Y. Case No. 03-11540). James L. Garrity, Jr., Esq., and Marc B. Hankin, Esq., at Shearman & Sterling represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $1,737,474,862 in assets and $1,706,761,176 in debts. SOLUTIA INC: Reports Status of Flexsys Related Litigation --------------------------------------------------------- Antitrust authorities in the United States, Europe and Canada are investigating past commercial practices in the rubber chemicals industry. In a recent filing with the Securities and Exchange Commission, Solutia, Inc., relates that Flexsys America, LP, its 50/50 joint venture with Akzo Nobel N.V., is a subject of such investigation and has been fully cooperating with the authorities. In addition, a number of purported class actions have been filed against Flexsys and other producers of rubber chemicals. Actions Against Flexsys A purported class action has been filed in the Massachusetts State Court against Flexsys and other past and present rubber chemical producers on behalf of all indirect consumers of rubber chemicals for damages sustained as a result of alleged anti-competitive practices in the sale of rubber chemicals. In addition to the Massachusetts case, 13 state court actions filed by retail tire purchasers against Flexsys and other producers of rubber chemicals remain pending either on appeal or at the trial court level in preliminary motion phases. On July 15, 2004, RBX Industries, Inc., filed a lawsuit against Flexsys and other producers of rubber chemicals in the United States District Court for the Western District of Pennsylvania. RBX alleges that from 1995 to 2001 Flexsys and other defendants conspired through marketing and sales practices to cause RBX to pay supra-competitive prices. RBX seeks treble damages from Flexsys and other defendants. Solutia is not a named defendant in any of these cases. In May 2004, two purported class actions were filed in the Province of Quebec Canada against Flexsys and other rubber chemical producers alleging that collusive sales and marketing activities of the defendants damaged all persons in Quebec during July 1995 through September 2001. Statutory damages of CN$14,600,000 along with exemplary damages of CN$25 per person are being sought. A hearing is tentatively scheduled to determine which case will be allowed to go forward. Solutia is not a named defendant in either of these class actions. Class Action Against Solutia Certain individuals brought a consolidated class action before the U.S. District Court for the Northern District of California against Solutia and certain other individual defendants. These individuals alleged that they purchased Solutia stock at inflated prices as a result of the incorporation of Solutia's share of Flexsys' financial results, which were purportedly inflated as a result of anticompetitive collusion between Flexsys and other rubber chemical producers during the period December 1998 through October 2002. The consolidated action has been automatically stayed with respect to Solutia by virtue of Section 362(a) of the Bankruptcy Code but has not been stayed with respect to the individual defendants. On July 28, 2004, the California District Court granted the individual defendants' request to dismiss the complaint for failure to state a claim but also granted the plaintiffs 10 days to file an amended compliant. 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. (Solutia Bankruptcy News, Issue No. 22; Bankruptcy Creditors' Service, Inc., 215/945-7000) SUMMITVILLE TILES: Files Chapter 11 Plan of Reorganization ---------------------------------------------------------- Summitville Tiles, Inc., delivered its chapter 11 Plan of Reorganization to the U.S. Bankruptcy Court for the Northern District of Ohio, Eastern Division. A full-text copy of the Plan is available for a fee at: http://www.researcharchives.com/bin/download?id=040812020022 The Plan groups creditors and interest holders into eight classes and describes the treatment of each: Class Treatment ----- --------- 1 - State of Ohio Claim Unimpaired. Loan agreements between the Director and Debtor will reinstated on the Effective Date. 2 - Other Secured Claims Unimpaired. After the Effective Date, holders will receive in full satisfaction its Allowed Claim at the option of the reorganized Debtor: a) the net proceeds of the sale of the property securing such Claim, up to the amount of the Allowed Secured Claim; b) the return of the property securing such Claim; c) payments in accordance with the provisions of any agreement relating to the property, on substantially the same terms as such agreement; or d) cash equal to the value of the property securing such Claim, up to the amount of the Allowed Secured Claim of such holder. In the event that property securing such Claim is returned or sold and, after the proceeds thereof are paid to such holder, a portion of the amount owed to such holder remains unpaid, such unpaid portion will be treated as an Unsecured Claim. 3 - OBWC Claim Unimpaired. Will be paid in full either: a) cash i) equal to the value of the property securing the Claim; ii) equal to the amount of all claims secured by liens senior to any lien of OBWC, to be paid in 15 days of the date of determination of such amount by the Bankruptcy Court; or b) cash in an amount agreed to by the OBWC and the Debtor, to be paid on the later of the Effective Date or two days following such agreement. 4 - Other Priority Claims Unimpaired. At the reorganized Debtor's option, each Allowed Claim either: a) have its Allowed Claim reinstated and paid pursuant to its terms; or b) receive cash equal to the amount of its Allowed Claim. 5 - Lender's Claim Impaired. The Lenders will receive, in full satisfaction of their Allowed Claim, the following: a) on the Effective Date, a note evidencing the Term Loan A (defined in Article VI of the Plan); b) on the Effective Date, a note evidencing the Term Loan B (defined in Article VI of the Plan); c) on the Effective Date, a note evidencing the Reorganized Debtor's obligations under the Revolving Credit Loan; d) repayment of the Bridge Loan from funds received by the Debtor from the Director; e) in about 6 months from the Effective Date, the net proceeds generated from the sale of the slow moving inventory; f) in about 9 months from the Effective Date, the net proceeds generated from the sale of the North Carolina Equipment; and g) in about 12 months from the Effective Date, the first $1.3 million in net proceeds plus half of whatever excess generated from the sale of the North Carolina Plant plus all net proceeds generated from the sale of the North Carolina Plant in excess of $1.8 million. All such proceeds will be applied first to Term Loan A and then to Term Loan B. 6 - Unsecured Claims Impaired. Holders will receive on a pro rata basis the proceeds of or distributions on the following: a) the Excess Cash Flow note; b) the Agent Note; and c) one half of the Net Proceeds in excess of $1.3 generated from the sale of the North Carolina Plant up to $250,000. 7 - Related Party Claims Impaired. Remains under the obligation of the reorganized Debtor but subordinated to Lenders and Agent's Claims. The Johnson Secured Debt will be paid prior to the payment of any other Related Party Claim. No payments will be made to cover tax liabilities until the Debtor's net operating losses or other Subchapter S tax attributes are exhausted. 8 - Interests Impaired. On the Effective Date, the existing Common Stock of the Debtor will be cancelled and the holders will receive new Common Stock of the reorganized Debtor. Headquartered in Summitville, Ohio, Summitville Tiles, Inc., manufactures tile and installation products including a complete line of grouts, mortars, epoxies, furan, latex, water proofing and tile care products. The Company filed for chapter 11 protection on December 12, 2003 (Bankr. N.D. Ohio Case No. 03-46341). Matthew A Salerno, Esq., and Shawn M Riley, Esq., at McDonald, Hopkins, Burke & Haber Co LPA, represent the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it estimated debts and assets of more than $10 million. SUPERIOR NAT'L: Liquidation Cues Moody's to Withdraw Junk Ratings ----------------------------------------------------------------- Moody's Investors Service has withdrawn its ratings on Superior National Insurance Group, Inc., and its subsidiaries. Interest payments on the company's guaranteed senior secured term loan facility and trust preferred securities, both rated C prior to withdrawal, have been suspended since April of 2000. These ratings have been withdrawn because the company has been and remains in liquidation since September 26, 2000. Please refer to Moody's Withdrawal Policy on http://moodys.com/ These ratings were withdrawn: * Superior National Insurance Group, Inc. -- guaranteed senior secured term loan facility at C and senior subordinated notes at C; * Superior National Insurance Company -- insurance financial strength at Ca; * Superior Pacific Casualty Company -- insurance financial strength at Ca; * California Compensation Insurance Company -- insurance financial strength rating at Ca; * Commercial Compensation Insurance Company -- insurance financial strength rating at Ca; * Combined Benefits Insurance Company -- insurance financial strength rating at Ca; * Superior National Capital Trust I -- trust preferred securities at C. TNP ENTERPRISES: Acquisition by PNM to Strengthen Fin'l Positions ----------------------------------------------------------------- PNM Resources' (NYSE: PNM) acquisition of TNP Enterprises will strengthen the financial positions of both companies and provide savings resulting in modest rate decreases, according to filings made with regulators in New Mexico and Texas. Fort Worth-based TNP Enterprises is the parent company of Texas- New Mexico Power Co., which serves 48,000 customers in southern New Mexico and is the transmission and distribution company for 205,000 customers in Texas' competitive electric market. In July, PNM Resources agreed to acquire the company. "This transaction will provide a very real opportunity to return TNP Enterprises to a healthier financial condition with no adverse effect on PNM Resources or PNM the utility," said Bill Real, PNM Resources senior vice president of Public Policy. "The acquisition will result in savings in administrative and overhead costs." According to the filing, cost of service rate reductions of less than $1 per year for PNM gas customers would go into effect immediately following the acquisition. PNM electric customers, whose rates were cut 4 percent in 2003 and will see rates decrease another 2.4 percent in 2005, will receive a rate credit from the acquisition savings in January 2008, when the existing moratorium on rate changes expires. The filings ask for approval of the acquisition from the New Mexico Public Regulation Commission and a finding from the Public Utility Commission of Texas that the acquisition is in the public interest. Additional federal approvals also are needed. PNM Resources believes that all regulatory approvals can be obtained in about six months due to the simple nature of the acquisition. Real said the administrative savings would come from consolidating administrative and overhead costs, such as computer systems, licensing, software, insurance costs, bill printing, benefits administrative fees, purchasing efficiencies and duplicative positions. According to the filing, PNM Resources will identify any possible benefits of combining the utility operations of PNM and TNMP-New Mexico and might propose to combine the operations when it files for its next general electric rate proceeding. About PNM Resources PNM Resources is an energy holding company based in Albuquerque, N.M. PNM, the principal subsidiary of PNM Resources, serves about 459,000 natural gas customers and 405,000 electric customers in New Mexico. The company also sells power on the wholesale market in the Western United States. PNM Resources stock is traded primarily on the NYSE under the symbol PNM. About TNP Enterprises TNP Enterprises' primary subsidiary, Texas-New Mexico Power Co., was created in 1935. It provides community-based electric service to 85 cities and more than 252,000 customers in Texas and New Mexico. First Choice Power, TNP Enterprises' other primary subsidiary, is a retail electric provider with more than 59,000 customers in Texas. First Choice began providing retail electric service to Texas customers in 2002 in response to the Texas Electric Choice Act. Headquartered in Fort Worth, Texas, the company has 37 offices throughout its service areas and approximately 750 employees in two states. More information about the company can be found at http://www.tnpe.com/ * * * As reported in the Troubled Company Reporter on July 28, 2004, Standard & Poor's Ratings Services said that its 'BB+' corporate credit ratings on utility holding company TNP Enterprises Inc. and unit Texas-New Mexico Power Co. (TNMP) will remain on CreditWatch, but that it will revise the CreditWatch implications to developing from negative. The rating action follows TNP's announcement that the utility holding company and its units, TNMP and retail electric provider, First Choice Power (FCP), will be sold to PNM Resources Inc. (BBB/Stable/A-2) for $1.024 billion. The CreditWatch developing listing indicates that ratings may be raised, lowered or affirmed. The action affects about $800 million of rated debt and $175 million of preferred stock at the Fort Worth, Texas-based company. "The revision of the CreditWatch listing to developing from negative reflects the potential for a ratings upgrade based on the stronger credit profile of PNM Resources," said Standard & Poor's credit analyst Rajeev Sharma. "However, the developing implications also reflect the pending nature of the transaction, as regulatory approvals are required to successfully complete the acquisition," he continued. Without the successful completion of the sale, scheduled for the end of 2005, TNP's ratings would be lowered due to the recent adverse regulatory ruling associated with TNMP's 2004 true-up proceeding with the Public Utility Commission of Texas (PUCT). The PUCT order authorizes TNMP to recover $87 million in stranded costs, as opposed to TNMP's request of $266 million in stranded- cost recovery. Standard & Poor's is concerned that the order would weaken credit metrics at the utility and holding company, and delay the company's debt-reduction plans. These concerns would be alleviated if the acquisition of TNP and its units are consummated in a timely fashion. Standard & Poor's will resolve the CreditWatch listing following a meeting with TNP's and PNM's management and a full review of the proposed transaction and financing plan. TRICO MARINE: 67% of Sr. Noteholders Support Chapter 11 Pre-pack ---------------------------------------------------------------- Trico Marine Services, Inc. (Nasdaq: TMAR) says more than 67% percent of the holders of the Company's $250 million 8-7/8 senior notes due 2012 have agreed to support a consensual financial restructuring of the Company. "Friday's agreement is very positive news for all of Trico's employees, customers and vendors. It will allow Trico to convert 100% of the Senior Notes into equity, which reduces the Company's debt balance by $250 million and will permit Trico to emerge as a financially stronger, more efficient company, giving us a competitive advantage in the long run," said Thomas Fairley, Chief Executive Officer of the Company. The parties to the restructuring agreement have signed binding agreements to support the restructuring on proposed terms, subject to finalization of definitive agreements and related documentation and the satisfaction of certain specified conditions. Based on these agreements, the Company believes it has the support of the requisite body of the holders of the Senior Notes to implement the restructuring through a prepackaged or prearranged bankruptcy case. Terms of the financial restructuring are: -- Each holder of the Senior Notes would receive, in exchange for its total claim (including principal and interest), its pro rata portion of 100% of the fully diluted new common stock of reorganized Trico Marine Services, Inc., before giving effect to: (i) the exercise of the warrants found below, and (ii) a new employee option plan. -- Holders of the Company's existing common stock would receive, on a basis to be determined, equity warrants that are exercisable into, in the aggregate, 10% of Reorganized TMAR's common stock (before giving effect to the new employee option plan). The equity warrants would be structured as: * One tranche of warrants exercisable into 5% of Reorganized TMAR's common stock (before giving effect to the new employee option plan), with a five-year term beginning on the consummation of a plan of reorganization, and set at a strike price equivalent to an equity valuation of $187.5 million. * One tranche of warrants exercisable into 5% of Reorganized TMAR's common stock (before giving effect to the new employee option plan), with a three-year term beginning on the consummation of a plan of reorganization, and set at a strike price equivalent to an equity valuation of $250 million. -- On the effective date of a plan of reorganization, the sole equity interests in Reorganized TMAR would consist of new common stock issued to the holders of the Senior Notes, the equity warrants described above, and equity interests to be issued to employees. -- The Company's obligations under existing operating leases, or trade credit extended to the Company by its vendors and suppliers, would be unimpaired. -- All of the respective obligations of the Company and its subsidiaries pursuant to its $55 million U.S. term loan would be unimpaired. -- The Norwegian credit facility, including the NOK 150 Million Term Loan and the NOK 800 Million Term Loan, both obligations of Trico's Norwegian subsidiaries/affiliates, would be unimpaired by the restructuring. -- The MARAD notes issued by the domestic subsidiaries of Trico would be unimpaired by the restructuring. Under the terms of the restructuring agreement, Thomas Fairley will continue as Trico's Chief Executive Officer and Trevor Turbidy will continue as Trico's Chief Financial Officer. Joseph Compofelice will remain as Trico's non-executive Chairman of the Board of Directors. The financial restructuring would be effectuated through a prepackaged or prearranged Chapter 11 plan of reorganization of TMAR, Trico Marine Assets, Inc. and Trico Marine Operators, Inc. The Company does not anticipate, nor does the agreement contemplate, that any of its foreign subsidiaries, affiliates or assets would be subject to any Chapter 11 filing, bankruptcy proceeding or any other similar reorganization or insolvency proceeding. "With this level of support from our noteholders, I am very optimistic that Trico will emerge quickly from Chapter 11," said Fairley. "This restructuring should have little, if any, impact on Trico's day-to-day operations. In particular, the restructuring process should in no way compromise or disrupt our ability to serve our customers throughout the world." The Company expects to begin negotiating the final forms of the relevant documents with the holders of the Senior Notes immediately. The Company plans to commence the formal process of soliciting acceptances from all parties entitled to vote on the restructuring plan within a few weeks. If the Company receives the required acceptances from the holders of the Senior Notes, it intends to commence a voluntary chapter 11 case in the fourth quarter of 2004, with the objective of consummating the restructuring in the first quarter of 2005. The restructuring agreement reached between Trico and the applicable holders of the Senior Notes covers the broad economic terms of the financial restructuring and not all material terms expected to be contained in a plan of reorganization. The parties to the restructuring agreement have signed binding agreements to support the restructuring on the proposed terms, subject to finalization of definitive agreements and documentation and the satisfaction of certain specified conditions. Full-text copies of the term sheet and Plan Support Agreements are fully described in the Company's Form 8-K filed with the Securities and Exchange Commission at: http://www.sec.gov/Archives/edgar/data/921549/000090628004000372/0000906280- 04-000372-index.htm In connection with the proposed financial restructuring of the Company, the Company has been represented by Lazard Freres & Co. LLC as financial advisors and Kirkland & Ellis LLP as legal advisors. Trico provides a broad range of marine support services to the oil and gas industry, primarily in the Gulf of Mexico, the North Sea, Latin America, and West Africa. The services provided by the Company's diversified fleet of vessels include the marine transportation of drilling materials, supplies and crews, and support for the construction, installation, maintenance and removal of offshore facilities. Trico has principal offices in Houma, Louisiana and Houston, Texas. Please visit our website at http://www.tricomarine.com/ * * * As reported in the Troubled Company Reporter on August 19, 2004, Trico Marine Services, Inc.'s independent registered public accounting firm reissued its report on the Company's financial statements for the year ended December 31, 2003 with a going concern explanatory paragraph in the Company's amendment to its Form 10-K for the fiscal year ended December 31, 2003. The Company originally filed its 2003 Form 10-K on March 15, 2004 and filed the Form 10-K amendment on August 9, 2004 in order to respond to comments received from the staff of the Securities and Exchange Commission regarding the classification of indebtedness under the Company's Norwegian revolving credit facility. Due to the Company's 10-K amendment, the Company's independent registered public accounting firm was required to reissue its 2003 audit report. As previously announced, during the second quarter of 2004, the Company defaulted under its $250 million senior unsecured notes indenture and, due to cross-default provisions, its $55 million secured term loan facility. Although neither the maturity of the senior unsecured notes nor that of the secured term loan facility has been accelerated as of the date of this announcement, in the opinion of the Company's independent registered public accounting firm, these events raised substantial doubt about the Company's ability to continue as a going concern. UNITED AIR: Names Sean Donohue United Express & Ted Vice-President ------------------------------------------------------------------ United Airlines (OTC Bulletin Board: UALAQ) reported that the two United Express groups -- operational and business management -- will be combined into a single organization, effective immediately. Sean Donohue will head the organization as vice president-United Express and Ted. "I'm pleased that Sean Donohue is able to take on this additional responsibility while continuing to direct the operation of Ted, which has consistently delivered positive results since its launch this past February," said Glenn Tilton, Chairman, Chief Executive Officer and President. "United Express is a key element of our product portfolio, and will greatly benefit from Sean's leadership and what we've learned from the highly successful launch of Ted." Greg Kaldahl, director-United Express and Cindy Szadokierski, managing director-United Express, will report to Donohue. "The new United Express organization provides a single point of contact for our United Express carriers, and it solidifies the value of partnership that will drive business and product improvements," said Donohue. "The new organization will leverage the expertise and resources that exist throughout United Airlines, and we look forward to working with these groups to support the consistent delivery of operational and customer excellence with our United Express product." Headquartered in Chicago, Illinois, UAL Corporation -- http://www.united.com/-- through United Air Lines, Inc., is the holding company for United Airlines -- the world's second largest air carrier. The Company filed for chapter 11 protection on December 9, 2002 (Bankr. N.D. Ill. Case No. 02-48191). James H.M. Sprayregen, Esq., Marc Kieselstein, Esq., David R. Seligman, Esq., and Steven R. Kotarba, Esq., at Kirkland & Ellis, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $24,190,000,000 in assets and $22,787,000,000 in debts. US AIRWAYS: Files for Chapter 22 Protection in E.D. Virginia ------------------------------------------------------------ September 12, 2004 / PR Newswire US Airways Group, Inc. (Nasdaq: UAIR) and certain of its subsidiaries filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code. The Company said that yesterday's action will provide the nation's seventh-largest airline the opportunity to implement its Transformation Plan built on lower costs, a simplified fare structure, and expanded service in the eastern U.S., the Caribbean, Latin America and Europe. "We have devoted the last six months to building and implementing a Transformation Plan that leverages our strengths and allows us to compete successfully in a changing airline industry," said US Airways President and Chief Executive Officer Bruce R. Lakefield. "Since we still lack the new labor agreements that are needed for the Transformation Plan to succeed, we must preserve the Company's cash resources that are required to implement the Plan. We have made the difficult but necessary decision to complete this process with the help of the Court." Customers should notice no changes to flight operations or customer service programs because of the filing. The company intends to ask the Court to allow it to assume all key agreements related to its Dividend Miles program and the co-branded Bank of America/ Dividend Miles credit card. In addition, employees will be paid and their benefits will continue, and the operation of usairways.com will be unaffected. Vendors will be paid in ordinary course for goods and services provided going forward. US Airways faced Sept. 30 covenant tests relating to its Air Transportation Stabilization Board loan. Additionally, expiring financing agreements with General Electric, Bombardier and Embraer, among others, required that the key elements of its Transformation Plan -- including lower labor costs -- be implemented by September 30. With cash obligations quickly coming due and the potential for defaults with some creditors imminent, the Chapter 11 filing became necessary to preserve cash and allow the Court to oversee the Company's continued restructuring, including reaching new labor agreements. Despite efforts undertaken for several months with its major work groups, the company was unable to reach out-of-court negotiated agreements. Mr. Lakefield said that US Airways has made tremendous strides since its emergence from Chapter 11 in March 2003, and that the key elements of that original plan, such as lower labor costs, the expansion of RJ flying, participation in the Star Alliance, and lower aircraft lease and vendor costs, all contributed to US Airways successfully securing a federal loan guarantee from the ATSB. The airline had already reduced annual operating expenses by almost $2 billion during its 2002-2003 restructuring, but the dramatic growth of low-cost carriers (LCCs), unabated fuel price increases and the public's demand for lower, simpler fares requires that the Company do more to achieve an even more competitive cost structure that is competitive to LCCs. As a result of these external factors, US Airways' 2004 fuel costs are expected to be approximately $300 million higher than envisioned in the confirmed plan of reorganization, and mainline passenger revenues are expected to be $450 million lower than forecast, as overall industry unit revenue continues to decline. "We are facing the difficult choices and the pressures that every legacy airline is going to be facing over the next several years," said Mr. Lakefield. "It is no fun being first, and we take no pleasure in asking our employees to make additional sacrifices. However, we have come too far and accomplished too much to simply stop the process and not succeed. With our strong position on the East Coast and our growing presence in Europe, the Caribbean and Latin America, our dedicated employees, and more than 4 million active Dividend Miles members, a restructured US Airways with low costs and low fares will be a dynamic competitor." The Company filed its petitions on Sunday afternoon in the U.S. Bankruptcy Court for the Eastern District of Virginia in Alexandria. The Company's petitions listed assets of approximately $8.8 billion, including $2.5 billion of Goodwill, and liabilities of approximately $8.7 billion. The Court has scheduled a hearing on the Company's first day motions for 10:30 a.m. in Courtroom #1 at the Martin Bostetter, Jr. U.S. Courthouse. Information on the filing and related matters can be found at http://www.transformingusairways.com/ The Company has been operating with cash obtained from a $1 billion loan, $900 million of which was guaranteed by the ATSB. The ATSB and the other lenders (Retirement Systems of Alabama Holdings LLC (RSA) and Bank of America, N.A.) have agreed to authorize US Airways continued use of those funds. Therefore, in lieu of debtor-in-possession financing, US Airways will have access to a portion of $750 million in cash -- which serves as one component of the collateral supporting the ATSB loan -- as working capital. The agreement between US Airways, the ATSB and the other lenders will be presented to the Court at today's hearing. In following bankruptcy procedures, a final order on operating cash would then be presented to the Court at a later date. The Company's current cash position is approximately $1.45 billion in cash, cash equivalents and short-term investments. The outstanding portion of the ATSB loan is $717.6 million. "We have made it clear to union leaders and employees that we must have competitive costs," said Mr. Lakefield. "Labor cost reductions, including participation by senior management, are no exception. We are committed to reaching new labor agreements consensually because that is always in the best interest of all parties, but if not, we will need to consider the other alternatives provided for under the law." Mr. Lakefield added that while the employee sacrifices are difficult, they are necessary in the changing airline industry, where low costs and low fares are proving to be the most successful business formula. "Our employees continue to do an outstanding job for this airline and for our customers," said Mr. Lakefield. "We have spent a tremendous amount of time on this Transformation Plan because we want our loyal and dedicated employees to continue to have a company and a career at US Airways. The alternative is to have these jobs exported to a new generation of low-cost airlines, where any employees hired would start at entry-level wages and without seniority," said Mr. Lakefield. The Company's Transformation Plan is built on several aspects of proven success in the airline industry, beyond the necessary lower labor costs. Those include: -- Lower, simplified pricing and lower distribution costs. US Airways has already taken steps to simplify its fares by introducing its GoFares pricing plan in many markets served from Philadelphia, Washington, D.C., and Fort Lauderdale, and has stated its intent to expand that pricing plan across its system in conjunction with achieving lower costs. A redesigned Web site and more airport technology will also lower distribution costs, enhance customer service and improve airport processing. -- Enhanced low-cost product offering. US Airways customers will continue to benefit from many product offerings that are unique among low-cost carriers, including two-class service, international flights to Europe, the Caribbean, Latin America and Canada, service to airports that business travelers prefer, access to a global network via the Star Alliance, a premium frequent flyer program and competitive onboard service. -- Network enhancements. Leveraging its strong positions in the major markets of Boston, New York, Philadelphia and Washington, D.C., US Airways intends to use its airport slot and facilities assets to offer nonstop service to more major business and leisure destinations. -- Lower operating costs. In conjunction with more point-to- point flying, the airline will fly its fleet more hours per day as it decreases the time aircraft sit on the ground at hubs, waiting for connecting passengers. US Airways is the nation's seventh-largest airline, serving nearly 200 communities in the U.S., Canada, Europe, the Caribbean and Latin America. US Airways, US Airways Shuttle and the US Airways Express partner carriers operate over 3,300 flights per day. For more information on US Airways flight schedules and fares, contact US Airways online at usairways.com, or call US Airways Reservations at 1-800-428-4322. As part of the Company's timetable to emerge from Chapter 11 reorganization, US Airways intends to file its disclosure statement and plan of reorganization by the end of this year. There has been no determination as to whether the Company's existing equity securities will be preserved in any such plan of reorganization, and there can be no assurance at this time as to what values, if any, will be ascribed to the Company's existing common stock and/or other equity securities. Accordingly, the Company urges that the appropriate caution be exercised with respect to existing and future investments in any of these securities. Investors and other interested parties can monitor the progress of the reorganization via the Internet at http://www.transformingusairways.comIn addition, the investor relations section of the Company's web site can be accessed under the "about US Airways" section of http://www.usairways.com RSA Chief Executive Comments on Chapter 11 Filing Dr. David G. Bronner, chief executive of the Retirement Systems of Alabama (RSA), said that the decision by the US Airways Board of Directors to file for Chapter 11 protection was a "difficult but necessary decision." Dr. Bronner serves as non-executive chairman of the US Airways Board of Directors, and RSA holds a 36.2 percent stake in US Airways, as the result of its $240 million equity investment in the company when it emerged from a previous Chapter 11 reorganization in 2003. Dr. Bronner will continue to serve as chairman of the board during the judicial restructuring. "I remain convinced that a restructured US Airways with competitive costs and its route network focused on the eastern half of the U.S. and the Caribbean is an attractive investment," said Dr. Bronner. "Unfortunately, the airline industry changed dramatically at about the same time as RSA made its investment. While the airline has done a lot of things right since it emerged from Chapter 11 last year, the business plan that we thought would succeed proved to be insufficient as low-cost carriers have turned the industry on its head over the past year." Dr. Bronner said it has been terribly frustrating as US Airways' chairman to watch as management and labor have been unable to resolve their differences and reach new labor agreements. "I believe that the labor representatives sitting on the Board of Directors clearly understand the challenges the company faces, and I know with certainty that the management team is doing everything it can. I have tremendous empathy for US Airways employees who are dealing with the changes in the industry, but the reality is that US Airways must transform into a low-cost carrier. And to be a low-cost carrier means the airline has to have low costs, and that includes labor costs," said Dr. Bronner. "The reluctance of union negotiators to agree to concessions is understandable, but their refusal to acknowledge the realities of the airline industry is a mystery. There are thousands of jobs at stake, but if any of them are going to be saved, then all employees are going to have to make sacrifices, as difficult as that might be," added Dr. Bronner. "There is only one way for the company to emerge from Chapter 11, and that involves lower costs, including lower labor costs." It is uncertain whether RSA will recover any or all of its investment in US Airways, but Dr. Bronner said that the $240 million investment represents less than one percent of RSA's total portfolio. "The public service employees and retirees have been well served by our overall investment strategies over the years, and our track record has resulted in changing a 25 percent funded system with $500 million in assets to a 91 percent funded system with $25 billion in assets, which means a safe and secure pension for RSA members," said Dr. Bronner. "RSA has been an active investor in the aviation business for over 25 years, and that has benefited the state in numerous ways, including our public pension funds. It is a tough business, but there are ways to make money in the airline industry. It is obvious, however, that low costs are the name of the game." RSA said that further media inquiries about the US Airways restructuring should be directed to US Airways Corporate Affairs at 703-872-5100. Court Okays Bridge Orders to Assure Routine Operations The U.S. Bankruptcy Court entered a series of "bridge" orders on Sunday evening, which will assure routine operations while the Court hears the Company's first day motions today, Sept. 13, 2004. Under the interim relief granted by the Court, US Airways received permission to, among other things: * Pay employee wages and continue benefits, such as medical and dental insurance. * Honor pre-petition obligations to customers and continue customer programs including US Airways' Dividend Miles program. * Pay for fuel under existing fuel supply contracts, and honor existing fuel supply, distribution and storage agreements. * Assume contracts relating to interline agreements with other airlines. * Pay pre-petition obligations to foreign vendors, foreign service providers and foreign governments. * Continue maintenance of existing bank accounts and existing cash management systems. The Company filed its Chapter 11 petitions in the U.S. Bankruptcy Court for the Eastern District of Virginia in Alexandria. The Honorable Stephen Mitchell has been assigned to the case. A hearing on the Company's first day motions has been scheduled before Judge Mitchell at 10:30 a.m. today, Sept. 13 in Courtroom #1 at the Martin V. B. Bostetter, Jr. United States Courthouse in Alexandria. The case number is 04-13819. "We are very pleased that the Court has granted this important relief with respect to our employees, customers and vendors, which ensures the seamless launch of our restructuring under Chapter 11," said Bruce Lakefield, US Airways president and chief executive officer. "We look forward to the Court's timely consideration of our full slate of first-day orders at tomorrow's hearing." Mr. Lakefield said customers should notice no changes to flight operations or customer service programs because of the filing. All bookings will be honored, and ticketing policies are unchanged. Existing marketing partnerships with other airlines remain in place. Vendors will be paid in ordinary course for provided goods and services going forward. In the future, if there are any changes to schedules or policies, they will be announced in advance. Headquartered in Arlington, Virginia, 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. 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. US Airways and its subsidiaries filed another chapter 11 petition on September 12, 2004 (Bankr. E.D. Va. Case No. 04-13820). Brian P. Leitch, Esq., Daniel M. Lewis, Esq., and Michael J. Canning, Esq. at Arnold & Porter LLP, and Lawrence E. Rifken, Esq. and Douglas M. Foley, Esq. at McGuireWoods LLP represent the Debtors in its restructuring efforts. In the Company's second bankruptcy filing, it lists $8,805,972,000 in total assets and $8,702,437,000 in total debts. US AIRWAYS GROUP: Case Summary & 95 Largest Unsecured Creditors --------------------------------------------------------------- Lead Debtor: US Airways Group, Inc. 2345 Crystal Drive Arlington, Virginia 22227 Bankruptcy Case No.: 04-13820 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- US Airways, Inc. 04-13819 PSA Airlines, Inc. 04-13821 Piedmont Airlines, Inc. 04-13822 Material Services Company, Inc. 04-13823 Type of Business: The Debtor operates a major network air carrier through its ownership of the common stock of US Airways, Inc., PSA Airlines, Inc., Piedmont Airlines, Inc., Material Services Company, Inc., and Airways Assurance Limited. See http://www.usairways.com/ Chapter 11 Petition Date: September 12, 2004 Court: Eastern District of Virginia (Alexandria) Judge: Stephen S. Mitchell Debtors' Counsels: Lawrence E. Rifken, Esq. Douglas M. Foley, Esq. Daniel F. Blanks, Esq. John H. Maddock III, Esq. Joseph S. Sheerin, Esq. McGuireWoods LLP 1750 Tysons Boulevard, Suite 1800 McLean, VA 22102-3915 Tel: 703-712-5000 Fax: 703-712-5250 - and - Brian P. Leitch, Esq. Daniel M. Lewis, Esq. Michael J. Canning, Esq. Arnold & Porter LLP 370 Seventeenth Street, Suite 4500 Denver, CO 80202 Tel: 303-863-1000 - and - 555 Twelfth Street, NW Washington, DC 20004 Tel: 202-942-5000 - and - 399 Park Avenue New York, NY 10022 Tel: 212-715-1000 Total Assets Total Debts ------------ ----------- US Airways Group, Inc. $8,805,972,000 $8,702,437,000 US Airways, Inc. $8,606,323,000 $8,600,458,000 PSA Airlines, Inc. $10 M to $50 M $10 M to $50 M Piedmont Airlines, Inc. More than $100 M $50 M to $100 M Material Services Company, $10 M to $50 M $10 M to $50 M Inc. A. US Airways Group, Inc.'s 5 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Embraer - Empresa Future Aircraft $1,465,218,623 Brasileira De Aeronautica SA Commitments 12 227-901 Sao Jose Dos Campos - SP Brazil Bombardier Inc. Bombardier Future Aircraft $947,998,195 Aerospace Regional Aircraft Commitments 123 Garratt Boulevard Downsview, Ontario Canada M3K 1Y5 AVSA, S.A.R.L. Future Aircraft $88,000,000 2, Rond-Point Maurice Commitments Bellonti 31700 Blagnac, France General Electric Company, Future Aircraft $57,083,950 acting through its Aircraft Commitments Engines Divisions (2) One Neumann Way - F17 Cincinnati, OH 45215-1988 United Technologies Accounts Payable $1,211,353 Corporation Pratt & Whitney Division 400 Main Street E. Hartford, CT 06108 B. US Airways, Inc.'s 30 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ GE Capital Corporation (2) Debt $149,754,160 C/O GE Capital Aviation Services 201 High Ridge Road Stanford, CT 06927 GE Engine Services, Inc. (2) Debt and Accounts $129,448,218 1 Neumann Way Payable MD F112 Cincinnati, OH 45215 Electronic Data Accounts Payable $16,411,439 Systems Corporation 5400 Legacy Drive H1-3F-43 Plano, TX 75024 Sabre, Inc. Accounts Payable $6,539,579 3150 Sabre Drive, MD 8311 Southlake, TX 76092 Worldspan Accounts Payable Airline Sales and Marketing $4,111,644 300 Galleria Parkway, NW Suite 400 Atlanta, GA 30339 Philadelphia International Accounts Payable $4,061,362 Airport Terminal E Philadelphia, PA 19153 Amadeus USA Accounts Payable $3,306,715 9250 NW 36th Street Ac53 Miami, FL 33178 Rolls Royce, Inc. Accounts Payable $2,994,369 P. O. Box 31 Derby, DE24 8BJ United Kingdom Charlotte Douglas Accounts Payable $2,832,686 International Airport P.O. Box 19066 Charlotte, NC 28219 Galileo - Cedant Corporation Accounts Payable $2,686,783 9700 West Higgins Road Rosemont, IL 60018 LSG Skychefs Accounts Payable $2,616,713 P.O. Box 7247-6009 Philadelphia, PA 19170-6009 Transportation Security Accounts Payable $2,224,081 Administration 614 Frelinghuysen Avenue Newark, NJ 07114 Eurocontrol (Belgium) Accounts Payable $1,726,315 Rue de la Fusee 96 Bruxelles B1130 Belgium The Port Authority of Accounts Payable $1,542,333 NY & NJ LaGuardia Airport Flushing, NY 11371 American Express Accounts Payable $1,300,000 3 World Financial Center 200 Vessey Street Maildrop 01-42-04 New York, NY 10285 Allegheny County Accounts Payable $1,143,644 Airport County of Allegheny Pittsburgh International Airport Landslide Terminal Suite 4000 P.O. Box 12370 Pittsburgh, PA 15231 Massachusetts Port Accounts Payable $972,685 Authority P.O. Box 5853 Boston, MA 02206 Gate Gourmet Accounts Payable $867,321 Amsterdam BV P.O. Box 7528 Schiphol East 0 1117 ZG Netherlands The Boeing Company, Accounts Payable $828,706 Commercial Aircraft Division P. O. Box 3707 MS 6X UI Seattle, WA 98124 Primeflight Aviation Accounts Payable $826,922 Services, Inc. 7135 Charlotte Park Nashville, TN 37209 Navitaire Inc. Accounts Payable $797,874 901 Marquette Ave Suite 600 Minneapolis, MN 55402-3210 NAAS Accounts Payable $796,000 111 W. Sunrise Hwy Freeport, NY 11520 McCann Relationship Accounts Payable $700,000 (MRM) 622 Third Avenue New York, NY 10017 Metropolitan Accounts Payable $695,748 Washington Airports Authority Washington National Airport Washington, DC 20001 Air General Accounts Payable $600,000 One Intercontinental Way Peabody, MA 01968 Huntleigh USA Corporation Accounts Payable $524,239 1704 Paysphere Circle Chicago, IL 60674 Fleet Business Credit Administrative Claim $487,000 As agent for Loan From Previous Participants Bankruptcy Case c/o Vedder Price Kaufman 222 N. Lasalle St, Ste. 2600 Chicago, IL 60601-1003 Coca Cola USA Accounts Payable $363,050 P.O. Box 75890 Charlotte, NC 28275 Honeywell International Inc. Accounts Payable $326,697 101 Columbia Road Morristown, NJ 07962 Hamilton Sundstrand Accounts Payable $318,023 Headquarter One Hamilton Road Windsor Lock, CT 06096-1010 C. PSA Airlines, Inc.'s 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Anthem Blue Cross Accounts Payable $215,134 Blue Shield Standard Aero Accounts Payable $175,056 GE Engine Services Accounts Payable $172,516 Distribution, LLC (2) Giliberti, Inc. Accounts Payable $75,075 Composite Specialties, Inc. Accounts Payable $65,888 AAR Aircraft Component Accounts Payable $58,729 Services Aviall, Inc. Accounts Payable $54,642 Tri-Cities Airport Accounts Payable $52,167 Commission Thales Avionics, Inc. Accounts Payable $42,421 Metropolitan Knoxville Accounts Payable $39,797 Airport-Authority Holiday Inn Accounts Payable $39,037 Dayton Airport Hotel Accounts Payable $32,969 Castle Aviation, Inc. Accounts Payable $29,930 Gearbuck Aviation Services Accounts Payable $29,461 Anthony Business Forms Accounts Payable $28,845 Four Points Barcelo Accounts Payable $28,394 Hotel Pittsburgh Ramada Hotel Airport - Accounts Payable $22,563 Montreal Avcraft Aerospace GmbH Accounts Payable $22,430 Jeppesen Sanderson, Inc. Accounts Payable $22,044 Honeywell - NJ Accounts Payable $20,353 D. Piedmont Airlines, Inc.'s 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Pratt & Whitney Canada, Inc. Accounts Payable $1,183,899 1000 Marie-Victorin Longueuil, Quebec J4G1A1 Canada Bombadier Aeorspace, Accounts Payable $511,733 Canadair Ops Center Accts Payable Dept 620 P.O. Box 6087 Station Centre-Ville Montreal, Quebec H3C3G9 Canada Bombadier Services Corp Accounts Payable $450,083 3959 Collections Center Drive Chicago, Illinois 60693 Bombadier Aerospace - Accounts Payable $125,156 West Virginia Air Center WASP, Inc. Accounts Payable $119,651 Honeywell International, Inc. $67,399 Piedmont Aviation Accounts Payable $60,206 Component Services PPG Industries, Inc. Accounts Payable $57,745 Cognisa Security, Inc. Accounts Payable $51,641 Honeywell Inc. Accounts Payable $50,406 Treasurer Monroe County Accounts Payable $48,141 Airport Authority Honeywell International Accounts Payable $42,625 Bortek Industries, Inc. Accounts Payable $39,470 Alleghany County Accounts Payable $37,394 Airport Authority Aviall Accounts Payable $34,377 Ikon Office Solutions Accounts Payable $32,851 City of Syracuse, Accounts Payable $32,495 Department of Aviation Express Catering Inc. Accounts Payable $31,422 Roanoke Regional Accounts Payable $30,924 Airport Commission Inair Aviation Services Accounts Payable $29,065 E. Material Services Company's 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Stevens Aviation, Inc. Accounts Payable $23,099 FBO Avcenter Accounts Payable $21,893 Jacksonville Flying Accounts Payable $20,088 Services, Inc. Phoenix Metal Products Inc. Accounts Payable $18,672 Asheville Jet Center Accounts Payable $17,130 Penn State University Accounts Payable $12,501 Tac Air Accounts Payable $12,349 First Air Accounts Payable $8,721 Irving Oil Terminals Accounts Payable $8,509 Air Wilmington, Inc. Accounts Payable $8,049 White Crown Aviation Accounts Payable $7,578 FBO Avecenter Accounts Payable $7,492 Montgomery Aviation Accounts Payable $7,293 Sowell Aviation Co., Inc. Accounts Payable $5,509 Mercury Air Center Accounts Payable $5,060 Carolina Air Center Accounts Payable $4,701 Pitt-Greenville Airport Accounts Payable $4,161 Authority Maine Instrument Flight Inc. Accounts Payable $3,858 Tri-City Aviation, Inc. Accounts Payable $3,810 Raytheon Aircraft Accounts Payable $3,024 Services, Inc. U.S. CANADIAN: Purchases 1.66% More Interest in CMKM Diamonds ------------------------------------------------------------- U.S. Canadian Minerals Inc. (OTCBB: UCAD) has exercised a portion of its option with CMKM Diamonds Inc. (Pink Sheets: CMKX) to purchase an additional 1.66% interest in all of CMKX's mineral claims for $2,500,000. Under the agreement reached in July, UCAD has a one-year option agreement to purchase up to an aggregate total of 10% interest in all of the mineral claims held by CMKX for a total of $15 million payable to CMKM Diamonds Inc. With the exercise of this portion of the option and previous option exercises and transactions with CMKX, UCAD currently holds 9.16% of all of CMKX's mineral claims. Should UCAD exercise its remaining portion of its option, the company will hold 15% of all of the CMKX mineral claims. Rendal Williams, CEO of UCAD, stated, "The company expects to exercise additional percentages under the option as we move forward, increasing our holdings and asset base with the acquisition of potentially high revenue properties." About UCAD U.S. Canadian Minerals is a multi-dimensional, mineral-based corporation headquartered in Las Vegas, Nevada. On its own and through Joint Ventures, U.S. Canadian Minerals is looking to expand and develop mining properties throughout the world. U.S. Canadian Minerals has already begun work on several projects, all of which are in various stages of development. * * * As reported in the Troubled Company Reporter on July 30, 2004, the Board of Directors of U.S. Canadian Minerals, Inc., dismissed Beckstead and Watts, LLP, as its independent public accountants on June 11, 2004. The Company's Board of Directors participated in and approved the decision to dismiss Beckstead and Watts, LLP. Beckstead and Watts, LLP had been the Company's certifying accountant for the prior year. During the past year, Beckstead and Watts, LLPs' report on the Company's financial statements contained an explanatory paragraph questioning the Company's ability to continue as a going concern. U.S. CANADIAN: Gets $3 Million of Funding Via Private Placement --------------------------------------------------------------- U.S. Canadian Minerals Inc. (OTCBB: UCAD) has received $3,000,000 of funding by means of a private placement. Rendal Williams, CEO of UCAD, stated, "This funding will allow the company to move forward on several fronts in the execution of its current plans and future development of the company's financial growth as dictated by the board of directors." A U.S. Canadian Minerals Inc. executive team, with other strategic partners, will arrive in South America this week to explore the development of several key acquisition possibilities that have been targeted on previous trips. Williams further stated, "Many of the due diligence packages are nearing completion, revealing incredible potential results, which demands an additional research trip to conclude the feasibility of Level 1 priority for expanded operations inside South America." As reported in the Troubled Company Reporter on Sept. 2, members of the Company's management team have recently returned from Ecuador, where several of its operational employees are working diligently to increase the efficiency of the current operation. During this trip, management met with local attorneys to resolve all outstanding regulatory and tax matters and bring the facility's reporting system up to UCAD approved standards. In addition, management reached an agreement with Nevada Minerals' Ecuadorian subsidiary for joint operations in the Yellow River region. Rendal Williams, UCAD's CEO, stated, "We are extremely excited to have confirmation that all governmental and regulatory issues have been resolved and that the company is in good standing." Mr. Williams continued, "I am confident in the expertise of our joint operational partner here in Ecuador." Alejandro Diaz Silvia, geologist and operations manager for Nevada Minerals' Ecuadorian subsidiary, commented, "This further enhances the company's ability to increase its extraction and processing of gold ore from the Yellow River mine." About UCAD U.S. Canadian Minerals is a multi-dimensional, mineral-based corporation headquartered in Las Vegas, Nevada. On its own and through Joint Ventures, U.S. Canadian Minerals is looking to expand and develop mining properties throughout the world. U.S. Canadian Minerals has already begun work on several projects, all of which are in various stages of development. * * * As reported in the Troubled Company Reporter on July 30, 2004, the Board of Directors of U.S. Canadian Minerals, Inc., dismissed Beckstead and Watts, LLP, as its independent public accountants on June 11, 2004. The Company's Board of Directors participated in and approved the decision to dismiss Beckstead and Watts, LLP. Beckstead and Watts, LLP had been the Company's certifying accountant for the prior year. During the past year, Beckstead and Watts, LLPs' report on the Company's financial statements contained an explanatory paragraph questioning the Company's ability to continue as a going concern. VENTAS INC: Appoints Christopher T. Hannon to Board of Directors ---------------------------------------------------------------- Ventas, Inc. (NYSE: VTR) has appointed Christopher T. Hannon, senior vice president and chief financial officer of Province Healthcare Company (NYSE: PRV), to its Board of Directors, effective immediately. "As a senior executive with one of the nation's largest non-urban hospital companies, Chris brings to our Board deep experience and credibility in the hospital sector and in healthcare finance," Ventas Chairman, CEO and President Debra A. Cafaro said. "He will be an important asset to Ventas, particularly as we continue our growth and diversification efforts. "With the appointment of Chris, six of our seven Board members are independent Directors. This underscores our commitment to best practices in corporate governance, which we believe is an important component for building shareholder value," Ms. Cafaro added. Since 2002, Mr. Hannon, who is 42, has been senior vice president and chief financial officer of Province, which he joined in 1997. (Province has recently announced that it has agreed to be acquired by LifePoint Hospitals, Inc. (Nasdaq: LPNT).) Prior to 1997, Mr. Hannon was a vice president with SunTrust Banks, Inc. where he was a senior healthcare lender. Mr. Hannon will serve on the Company's Audit and Compliance Committee. He will replace Jay M. Gellert, who will continue to chair Ventas's Executive Committee and sit on its Nominating and Governance Committee. Ventas was assisted in its search by Heidrick & Struggles. Ventas, Inc. is a leading healthcare real estate investment trust that owns healthcare and senior housing assets in 39 states. Its properties include hospitals, nursing facilities and assisted and independent living facilities. More information about Ventas can be found on its website at http://www.ventasreit.com * * * As reported in the Troubled Company Reporter on June 30, 2004, Standard & Poor's Ratings Services raised its corporate credit ratings on Ventas Inc., its operating partnership Ventas Realty L.P., and Ventas Capital Corp. to 'BB' from 'BB-'. In addition, ratings are raised on the company's senior unsecured debt, which totals $366 million. Concurrently, the outlook is revised to stable from positive. "The upgrades acknowledge the company's steady improvement in both its business and financial profiles," said Standard & Poor's credit analyst George Skoufis. "Recent acquisitions have targeted improving Ventas' diversification, foremost its concentration with its primary tenant Kindred Healthcare Inc. Growing cash flow and profits, and lower leverage have contributed to stronger debt protection measures. Credit weaknesses remain, however, including Ventas' continued reliance on un-rated Kindred, the risk of future changes to government reimbursement, and constrained, but improved, financial flexibility." VENTAS INC: Closes New $300 Million Secured Credit Facility ----------------------------------------------------------- Ventas Realty, Limited Partnership, a subsidiary of Ventas, Inc. (NYSE: VTR), closed its new $300 million secured revolving credit facility initially priced at 125 basis points over LIBOR. The new credit facility replaces the Company's previous revolving credit facility and term loan that were priced at 250 basis points over LIBOR. "The significant improvement in the pricing of our credit facility reflects upgrades in our credit ratings and the success of our diversification program, increased cash flows and profits, and lower leverage. We are delighted that these accomplishments are being recognized through this extremely attractive credit facility," Ventas Chairman, President and CEO Debra A. Cafaro said. "With a lower cost of capital, we can continue to execute our business strategy of diversifying our asset base and revenue sources within the healthcare and senior housing sector." The Company's new credit facility matures in three years and gives the Company a one-year extension option to September 2008. It includes a $150 million "accordion feature" that permits the Company to expand its borrowing capacity to a total of $450 million. The Company's LIBOR margin under the credit agreement will adjust as the Company's leverage changes. Finally, the Company reduced the number of properties pledged as collateral under its new credit facility. Ventas said the initial amount drawn under the new credit facility was $149 million and the proceeds were used to repay all outstanding indebtedness under the Company's existing credit agreement. It expects to record an expense of $1.4 million in the third quarter representing the write-off of unamortized deferred financing fees related to its prior credit facility, which expense is excluded from the Company's previously announced 2004 normalized FFO guidance. Banc of America Securities, LLC was the sole lead arranger for the credit facility. Bank of America, N.A., Merrill Lynch & Co., Merrill Lynch Pierce Fenner & Smith Incorporated, UBS Securities LLC, Calyon New York Branch, JPMorgan Chase Bank and Citicorp North America, Inc. participated in the facility in various agent capacities. Ventas Declares Regular Quarterly Dividend Ventas' Board of Directors declared a regular quarterly dividend of $0.325 per share, payable in cash on September 30, 2004, to stockholders of record on September 20, 2004. The dividend is the third quarterly installment of the Company's 2004 annual dividend. The Company has approximately 84.2 million shares of common stock outstanding. Ventas, Inc. is a leading healthcare real estate investment trust that owns healthcare and senior housing assets in 39 states. Its properties include hospitals, nursing facilities and assisted and independent living facilities. More information about Ventas can be found on its website at http://www.ventasreit.com * * * As reported in the Troubled Company Reporter on June 30, 2004, Standard & Poor's Ratings Services raised its corporate credit ratings on Ventas Inc., its operating partnership Ventas Realty L.P., and Ventas Capital Corp. to 'BB' from 'BB-'. In addition, ratings are raised on the company's senior unsecured debt, which totals $366 million. Concurrently, the outlook is revised to stable from positive. "The upgrades acknowledge the company's steady improvement in both its business and financial profiles," said Standard & Poor's credit analyst George Skoufis. "Recent acquisitions have targeted improving Ventas' diversification, foremost its concentration with its primary tenant Kindred Healthcare Inc. Growing cash flow and profits, and lower leverage have contributed to stronger debt protection measures. Credit weaknesses remain, however, including Ventas' continued reliance on un-rated Kindred, the risk of future changes to government reimbursement, and constrained, but improved, financial flexibility." VISTEON CORP: Moody's Reviewing Low-B Ratings & May Downgrade ------------------------------------------------------------- Moody's Investors Service has placed the long-term debt ratings of Visteon Corporation under review for possible downgrade, and lowered the company's speculative grade liquidity rating to SGL-2 (good liquidity) from SGL-1 (very good liquidity). The rating actions are prompted by the prospects for further shortfalls in the company's operating performance due to slowing auto production rates, and by Visteon's announcement that it will write-down its deferred tax asset of between $825 mm and $900 mm, and withdraw its previous guidance on 2004 earnings and cash flow. Although the company continues with substantial liquidity of $1 billion in cash and marketable securities at June 30, 2004 and had un-drawn bank facilities of $1.3 billion, Moody's is concerned about the weaker outlook for Visteon's free cash flow and the resultant coverage levels for debt and related fixed costs. The lowered SGL rating considers the weaker prospects for internally generated funds and the potential for reducing headroom under Visteon's financial covenants depending upon the extent to which EBITDA declines over the next several quarters. Ratings under review for possible downgrade include: * Visteon Corporation -- Senior Implied, Ba1, -- Senior Unsecured, Ba1, -- Issuer ratings, Ba1, -- Shelf registration for: (a) senior unsecured, (P)Ba1, (b) subordinated, (P)Ba2, and (c) preferred, (P)Ba3. * Visteon Capital Trust I -- Shelf registration for guaranteed trust preferred securities at (P)Ba2. Ratings lowered are: * Visteon Corporation -- Speculative Grade Liquidity Rating to SGL-2 from SGL-1. The company's Not Prime rating for commercial paper is unaffected. The write-down of the deferred tax asset represents a non-cash charge. It results from historical losses in 2002 and 2003 and the likely consequences of lower than expected North American production in 2004. Combined with the withdrawal of previous guidance on 2004 earnings and cash flow resulting from lower automotive production and raw material cost increases, it is doubtful that Visteon will have meaningful positive free cash flow in 2004. The deferred tax write-down will lower Visteon's book net worth, which was $1.83 billion at June 30, 2004 to $1.0 billion or under on a pro forma basis. Debt to capitalization will similarly increase from 51% to roughly 66% on a pro forma basis at June 30, 2004. Visteon's previous SGL rating had anticipated that the company would report significant free cash flow in 2004. However, with the removal of earnings and cash flow guidance the company's ability to internally fund its investment requirements has been diminished. The company continues to hold significant cash balances and remains compliant with its bank financial covenant of a maximum ratio of net debt/EBITDA of 3.5 to 1. Nevertheless, with reduced earnings guidance the lower SGL rating considers the potential for the degree of headroom under this covenant to weaken over time. The company renewed in June its 364-day bank credit facility for $565 million and continues with a longer-term revolver currently set to mature in June 2007. Ford represents approximately 71 % of Visteon's revenues with much of this based in North America. While the company has made progress in reducing its dependence on Ford over the last few years, Ford continues as the principal driver of Visteon's revenues and earnings. The review will focus on the potential implication to Visteon's business of lower North American automotive production rates and the company's ability to adapt to a more challenging business environment. Moody's will consider the resultant level of future earnings, free cash flow and the degree to which debt protection ratios may be weakened, and the extent and outcome of any Ford and Visteon discussions. Visteon Corporation is a leading full-service supplier that delivers consumer-driven technology solutions to automotive manufacturers worldwide and through multiple channels within the global automotive aftermarket. Visteon has approximately 72,000 employees and a global delivery system of more than 200 technical, manufacturing, sales and service facilities located in 25 countries. W.R. GRACE: Objects to Massachusetts Environmental Claims --------------------------------------------------------- David W. Carickhoff, Jr., Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, P.C., in Wilmington, Delaware, informs the U.S. Bankruptcy Court for the District of Delaware that on March 31, 2003, the Massachusetts Department of Environmental Protection filed proofs of claim against: (a) W.R. Grace & Co. -- Claim No. 12848 (b) W.R. Grace & Co.-Conn. -- Claim No. 12849 (c) Grace Energy Corporation -- Claim No. 13487 The MADEP Claims seek recovery for oversight, contractor, and future-remediation costs that are allegedly owed by the Debtors to the MADEP in connection with eight sites within the Commonwealth of Massachusetts: * Former Zonolite Plant Site * Daramic Plant Site * W.R. Grace Plant Superfund Site * Cambridge Plant Site * Woburn, MA, Source Area and Central Area * Blackburn & Union Privileges Site * Parcel 2322 Debris Area off Knox Trail Site * the MMR Pipeline Site According to Mr. Carickhoff, the MADEP Claims are allegedly based on federal and state laws, including: * the Comprehensive Environmental Response, Compensation, and Liability Act of 1980; * the Massachusetts Oil and Hazardous material Release Prevention and Response Act; * the Massachusetts Contingency Plan; and * the Timely Action Schedule and Fee Provisions. The MADEP Claims assert $42,134,987 in unsecured claims, including $799,419 for allegedly unreimbursed prepetition response costs and fees. General Objections (A) Duplicative Claims The Debtors ask Judge Fitzgerald to disallow Claim Nos. 12848 and 13487 because they are entirely duplicative of Claim No. 12849. Claim No. 12848 asserts exactly the same liability as Claim No. 12849, except that Claim No. 12848 is asserted against W.R. Grace & Co., and Claim No. 12849 is asserted against W.R. Grace & Co.- Conn. Claim No. 13487 raises exactly the same claims that are already asserted in Claim No. 12849, except that Claim No. 13487 is asserted against Grace Energy Corporation. The Debtors believe that the amounts sought in these Claims are properly asserted only against W.R. Grace & Co.-Conn., which is the entity that controls the business of its parent, W.R. Grace & Co., which is a holding company. Furthermore, it is highly unlikely that the specific entity named in each of the MADEP Claims will be relevant for purposes of any potential distribution pursuant to the Debtors' anticipated Chapter 11 Plan. The Debtors anticipate that the Plan will provide for the substantive consolidation of all of the Debtors. Accordingly, all of the Debtors' collective assets will likely be available to satisfy their collective liabilities. The Debtors anticipate filing their Plan no later than the Court's October 14, 2004 deadline. Given the likelihood that the Debtors' estates will be substantially consolidated for purposes of their Plan, the two claims should be disallowed. (B) Alleged Priority The Debtors object to each of the MADEP Claims to the extent that they seek any sort of administrative or other priority under Section 507 of the Bankruptcy Code. Mr. Carickhoff points out that it is unclear whether the MADEP believes it is entitled to administrative or other priority for any of the amounts sought in the MADEP Claims. The MADEP Claims marked the "Unsecured Non-Priority Claims" box on the face of each Proof of Claim Form. The supporting documentation for each of the MADEP Claims, however, states that, "The Commonwealth is entitled to administrative expense priority, and may file an administrative expense application at the appropriate time, for the cost of postpetition response action costs it incurs in connection with property of the estate, costs of complying with the Debtors' injunctive obligations, postpetition Annual Compliance Assurance Fees, and for any postpetition penalties. The remainder of the Commonwealth's claim is filed as a general unsecured claim." Therefore, it is unclear what, if any, portion of the MADEP Claims are being asserted as administrative or other priority claims. Mr. Carickhoff asserts that the MADEP is not entitled to administrative or other priority for any of the asserted amounts. The MADEP has not provided any information or documentation that would support the proposition that any portion of the MADEP Claims constitute, "actual, necessary costs and expense of preserving the estate, including wages, salaries, or commissions for services rendered after the commencement of the case" as required for administrative priority under Section 503(I)(A) of the Bankruptcy Code. Furthermore, the MADEP could not satisfy this burden because all of the asserted claims relate to the Debtors' prepetition conduct and, therefore, the asserted amounts arose before the Petition Date and are prepetition claims. Specific Objections (1) Former Zonolite Plant Site Claim No. 12849 asserts unsecured non-priority claims totaling $195,456 for the Debtors' Former Zonolite Plant Site. In particular, the MADEP seeks: (i) $150,000 for future remediation costs; (ii) $1,300 for postpetition compliance assurance fees; (iii) $42,293 for prepetition oversight costs; and (iv) $1,863 for postpetition oversight costs. The Debtors object to the asserted future remediation costs because these costs are duplicative of claims that have been asserted against their estates by the current owners of the affected property. The Debtors do not own the Former Zonolite Site, and the current owner, Olden Limited Partnership, also filed a claim for this site. Therefore, the MADEP may never actually expend funds to clean up this site, and, to the extent the MADEP does not expend these funds, they may call on Olden Limited for reimbursement. The Debtors object to the asserted postpetition claims for annual compliance and oversight costs. These claims relate to prepetition liabilities and are no more than prepetition, non- priority, unsecured claims. Therefore, with respect to the Former Zonolite Plant Site, the Debtors ask the Court to reduce Claim No. 12849 by $151,300 and allow an unsecured non-priority claim for $44,156. (2) Daramic Plant Site Claim No. 12849 asserts unsecured non-priority claims for the Daramic Plant Site totaling $130,200. In particular, the MADEP seeks: (i) $125,000 for future remediation costs; and (ii) $5,200 for annual compliance assurance fees. The Debtors object to the future remediation amounts because: -- the Debtors own the Daramic Plant Site; -- they are currently performing remediation at this site; -- they are subject to closure requirements under the Massachusetts Contingency Plan obligating them to complete this remedy; and -- they are committed to continuing their investigation and remediation at this site. Therefore, it is highly unlikely that the MADEP will ever incur these costs, and Claim No. 12849 should be reduced by $125,000 with respect to Daramic Plant Site. The Debtors object to the asserted $3,900 in postpetition annual compliance fees. The Claim is related to prepetition liability and is no more than a prepetition, non-priority unsecured claim. Thus, with respect to the Daramic Plant Site, the Debtors ask the Court to reduce Claim No. 12849 by $125,000 and allow an unsecured non-priority claim for $5,200. (3) W.R. Grace Plant Superfund Site Claim No. 12849 asserts unsecured non-priority claims totaling $25,741,003 for the W.R. Grace Plant Superfund Site in Atcom, Massachusetts. In particular, the MADEP seeks: (i) $25,000,000 for future remediation costs; (ii) $244,542 for prepetition contractor costs; (iii) $465,099 for prepetition oversight costs; (iv) $18,367 for postpetition contractor costs; and (v) $12,993 for postpetition oversight costs. The Debtors object to the future remediation amounts because: -- they own the property where the release occurred; -- they are currently performing remediation at this site; and -- they are subject to a judicially approved consent decree with the Environmental Protection Agency and an administrative order issued by the MADEP, both of which require the Debtors to perform necessary response actions. Therefore, it is remote and highly speculative that the MADEP will ever incur these costs. Claim No. 12849 should be reduced by $25,000,000. Mr. Carickhoff contends that the $244,543 sought for prepetition contractor costs should also be disallowed. Approximately $208,000 of the claim relates to costs that were allegedly incurred by the MADEP prior to 1998 and were resolved by the terms of a 1997 Partial Consent Decree between the Debtors and the EPA, which settled past response costs through December 31, 1997, including state oversight costs. In addition, to the extent the MADEP seeks contractor oversight costs incurred between January 1, 1998 and the Petition Date, the Court should deny MADEP's claim because the agency has not stated a basis for its right to the recovery and has previously stated to the Debtors that the contractor costs are not recoverable. The MADEP has never sought recovery for contractor costs, and, during multiple conversations with the Debtors, the MADEP has repeatedly stated that it did not intend to seek those costs. The Court should also expunge $461,848 of the $465,099 claim that the MADEP has asserted for prepetition oversight costs, which includes: * $300,412 for master operable unit; * $163,318 for operable unit 01; and * $1,368 for operable unit 03. The Debtors object to all but $3,251 of the amounts sought for the master operable unit for three reasons: -- Almost all of the costs were incurred prior to 1998, and resolved pursuant to the 1997 Partial Consent Decree; -- The Debtors have already paid for the oversight costs incurred during 1998. Specifically, the Debtors paid to EPA $29,491 for state oversight costs that were billed by EPA under the state oversight costs portion of the EPA oversight invoice for 1998; and -- The Debtors disputed the 1999 state oversight costs with the EPA, along with other costs, and posted an escrow for any prospective liability. The EPA subsequently returned the escrowed amount to the Debtors. The Debtors also object to the MADEP's prepetition claims for operable unit 01 and operable unit 03 because the Debtors are not liable for any of the amounts sought. These alleged costs relate to the period prior to 1998 and have been resolved pursuant to the 1997 Partial Consent Decree. The Debtors object to the postpetition contractor costs because the MADEP has not stated a basis for its right to the recovery and has previously stated that the contractor costs are not recoverable. Therefore, with respect to the W.R. Grace Plant Superfund Site, the Debtors ask the Court to reduce Claim No. 12849 by $25,724,758 and allow an unsecured non-priority claim for $16,244. (4) Cambridge Plant Site Claim No. 12849 asserts unsecured non-priority claims for the Cambridge Plant Site. In particular, the MADEP seeks: (i) an unspecified amount for future remediation costs; and (ii) $3,900 for annual compliance assurance fees. The Debtors object to any future remediation amounts because they own the Cambridge Plant Site, they are currently performing remediation at this site, and they are committed to continuing their investigation and remediation at this site. Therefore, the basis for the MADEP's claim for these costs is remote and highly speculative. Claim No. 12849 should be disallowed to the extent it seeks any future remediation costs for the Cambridge Plant Site. Therefore, with respect to the Cambridge Plant Site, the Debtors ask the Court to disallow any request for future remediation costs and to allow an unsecured non-priority claim for $3,900 with respect to Claim No. 12849. (5) Woburn, MA, Source Area and Central Area Claim No. 12849 asserts unsecured non-priority claims totaling $12,023,788 for the Woburn Source Area and Central Area. In particular, the MADEP seeks: (i) $12,000,000 for future remediation costs; (ii) $17,337 for prepetition oversight costs; and (iii) $6,450 for postpetition oversight costs. The Debtors believe that the MADEP Claims with respect to this site should be reduced to $1,457. The Debtors object to the future remediation amounts because they own the Source Area property, they are currently performing remediation at their Source Area property, and they are committed to fulfilling their obligations under a consent decree with the EPA for the Woburn site. Therefore, the MADEP's claim for these costs is remote and highly speculative. Claim No. 12849 should be reduced by $12,000,000. The $17,337 in prepetition oversight costs includes: -- $16,553 for the Debtors' master operable unit; and -- $784 for the Debtors' operable unit 01. The Debtors believe that the $16,553 in asserted prepetition oversight costs for the master operable unit should be reduced to $1,457. The MADEP's figure includes $15,039 for costs that relate to 1996, and these amounts have been paid previously. In particular, the Debtors paid the Source Area/Management of Migration, Central Area, and Wells G&H non-allocable bills for the MADEP's oversight through September 1996. Similarly, the $784 in prepetition oversight costs for operable unit 01 should be eliminated because it also relates to the period before September 1996, and, therefore, has been covered by the previously paid oversight bills. The $6,450 in asserted postpetition oversight costs includes $2,704 for the master operable unit and $3,746 for operable unit 03. The Debtors are not liable to the MADEP for any of these costs that allegedly relate to the master operable unit because the costs are not validly associated with the Debtors' Source Area property. The Debtors also object to the asserted postpetition oversight costs for operable unit 03 -- Aberjona River -- because they have no legal liability for costs associated with the Aberjona River Study. Therefore, with respect to Woburn Source Area and Central Area, the Debtors ask the Court to disallow all requests for future remediation costs and postpetition oversight costs, and allow an unsecured non-priority claim for prepetition oversight costs for $1,457 with respect to Claim No. 12849. (6) Blackburn & Union Privileges Site Claim No. 12849 asserts unsecured non-priority claims totaling $4,005,981 for the Blackburn & Union Privileges Site. In particular, the MADEP seeks $4,000,000 for future remediation costs and $5,981 for oversight costs. The Debtors object to the MADEP's claim for $4,000,000 in future remediation costs because it is based on speculative and remote improbabilities, not on costs that the MADEP realistically has any potential to incur. The Debtors do not own the Blackburn & Union Privileges Site, which is a federal superfund site at which a different private, potentially responsible entity, Tyco Healthcare, is currently undertaking an investigation and remedial action feasibility study. In the event that either Tyco Healthcare or the property-owner should fail to complete the requisite remedial work, then the EPA -- not the MADEP -- would ultimately be responsible for any necessary future remediation costs. Therefore, the MADEP's claim for future remediation costs is unfounded and should be disallowed. With respect to the Blackburn & Union Privileges Site, the Debtors ask the Court to disallow all requests for future remediation costs and to allow an unsecured non-priority claim for prepetition oversight costs for $5,981 with respect to Claim No. 12849. (7) Parcel 2322 Debris Area off Knox Trail Site (Concord Debris Area) Claim No. 12849 asserts an unsecured non-priority claim for the Knox Trail Site. In particular, the MADEP seeks an unspecified amount for future remediation costs and $1,950 for postpetition annual compliance assurance fees. The Debtors believe that the MADEP Claims with respect to this site should be limited to $1,950. The Debtors object to any future remediation amounts because: -- they own the Concord Debris Area; -- they are currently performing remediation at this site; and -- they are subject to closure requirements under the Massachusetts Contingency Plan, which requires them to complete this remedy. Therefore, it is very unlikely that the MADEP will ever incur those costs. Claim No. 12849 should be disallowed to the extent it seeks any future remediation costs for the Concord Debris Area. The Debtors acknowledge the MADEP's claim for $1,950 in oversight costs, and they agree that the Court may allow an unsecured non- priority claim for $1,950 with respect to the oversight costs for the Concord Debris Area that are asserted in Claim No. 12849. (8) MMR Pipeline Site (Sandwich, MA) Claim No. 12849 asserts an unsecured prepetition claim for the MMR Pipeline Site. In particular, the MADEP seeks: (i) an unspecified amount for future remediation costs and natural resource damages; (ii) $24,165 for prepetition oversight costs; and (iii) $8,543 for postpetition oversight costs. The Debtors believe that they have no liability to the MADEP with respect to this site. Therefore, the Debtors ask the Court to disallow all these amounts. Mr. Carickhoff explains that the Debtors are not liable to the MADEP for the MMR Pipeline Site because Samson Hydrocarbons is the party that signed the Tier 1A permit for investigation and remediation of the site and, therefore, the party from whom the MADEP should seek recovery for the asserted amounts. Furthermore, the Debtors are presently involved in litigation over this site with Kaneb Pipeline Operating Partnership. A Texas District Court recently held that KPOP owns the pipeline. Therefore, the MADEP can also seek recovery from KPOP, the site's current owner. All amounts sought in Claim No. 12849 with respect to the MMR Pipeline Site should be expunged. Headquartered in Columbia, Maryland, W.R. Grace & Co., -- http://www.grace.com/-- supplies catalysts and silica products, especially construction chemicals and building materials, and container products globally. The Debtors filed for chapter 11 protection on April 2, 2001 (Bankr. Del. Case No: 01-01139). James H.M. Sprayregen, Esq., at Kirkland & Ellis and Laura Davis Jones, Esq., at Pachulski, Stang, Ziehl et al. represent the Debtors in their restructuring efforts. (W.R. Grace Bankruptcy News, Issue No. 70; Bankruptcy Creditors' Service, Inc., 215/945- 7000) WAVING LEAVES: Hires David Wilson as Accountants ------------------------------------------------ The Honorable Russ Kendig of the U.S. Bankruptcy Court for the Northern District of Ohio, Eastern Division, approved the employment of David J. Wilson & Associates, LLC, as Waving Leaves, Inc., and its debtor-associates' accountants. Richard W. Dyer, a partner at Wilson & Assoc. tells the Court that the Firm did prepetition accounting work for the Debtors. Mr. Dyer adds that the Firm will waive any prepetition payment owed by the Debtors. The Debtors believe that Wilson is well qualified to deal effectively with potential accounting issues and problems that may arise in these cases. Wilson professionals bill these hourly rates for their services: Designation Rate ----------- ---- Partners $150 to $200 Associates $80 to $125 Paraprofessionals $50 to $65 To the best of the Debtors knowledge, Wilson & Associates is disinterested as that term is defined in Section 101(14) of the Bankruptcy Code. Headquartered in Wooster, Ohio, Waving Leaves and its debtor- affiliates, filed for chapter 11 protection on December 3, 2004 (Bankr. N.D. Ohio Case No. 03-66524). Jeffrey W. Krueger, Esq., and R. Timothy Coerdt, Esq., at Wegman, Hessler & Vanderburg, represent the Debtors in their restructuring efforts. When the Company filed for protection, it listed $6,806,785 in total assets and $8,178,503 in liabilities. WEST PENN: Plans to Transition Bellevue Hospital to AGH ------------------------------------------------------- Officials of the West Penn Allegheny Health System reported plans to transition Suburban General Hospital in Bellevue to a northern campus of Allegheny General Hospital. The new entity, to be called AGH Suburban Campus, will afford residents of Pittsburgh's northern communities enhanced access to AGH's nationally recognized acute care services. According to Jerry Fedele, President and CEO of WPAHS, the merger of AGH and SGH, is a development that will significantly benefit the system, both hospitals, and most important, patients served by the institutions. "Clearly we believe that we can enhance our clinical capabilities through a more synergistic integration of our respective hospitals' strengths. For more than a century, Suburban General and its staff have provided an outstanding level of care for the people of Bellevue and its adjacent neighborhoods. We maintain, however, that in addition to the current services provided, it has even greater potential as a community resource and value to our system as a center for select specialty services and post-acute care programs. Restructuring the hospital as a campus of AGH will better enable us to achieve that goal," said Jerry Fedele, WPAHS President and Chief Executive Officer. Suburban General is a 154-bed hospital offering a full spectrum of medical and surgical services, including emergency, orthopedic, rehabilitation, cardiac and intensive care. Other notable programs include a recently opened neurological rehabilitation unit, a sleep disorders center and an institute for pain medicine. Each year, more than 13,000 patients receive care in the hospital's emergency department and more than 4,000 patients are admitted. Over the past four years, AGH and SGH have become more closely affiliated through a number of shared clinical programs, such as urology, radiology, emergency medicine, integrated medicine and anesthesiology. Mr. Fedele stressed that, among other programs, emergency medicine will continue to be a vital component of the services offered at the AGH Suburban Campus. Additionally, though many specific details relative to the ultimate configuration of clinical programs at the facility still need resolution, employment will remain the same as or possibly grow as a result of the transition. "This move will not only maintain the employee base at Suburban General, but may in fact expand it through the development of new clinical programs," Mr. Fedele said. "The announcement is great news for the community, the employees of Suburban General and for the entire WPAHS family. The close proximity between AGH and Suburban General has helped facilitate greater collaboration between our respective staffs in recent years to the significant benefit of the patients we serve. As we examined the advantages of this evolving relationship relative to the hospital's mission it became apparent that a more formal strategic alliance would further advance the clinical capabilities we present to our service area," said Melinda Meighan, chairperson of SGH's Board of Directors. "On the eve of our centennial anniversary, this transition marks a rebirth for Suburban General into a new, stronger entity that will define and guide its mission through the next century." The integration of SGH and AGH will entail completion of a full corporate merger between the two entities, including creation of a single board of directors and integrated medical staffs. "Given the significant level of clinical collaboration that has been established between AGH and Suburban General over the past couple of years, this new relationship is a natural transition that will further benefit the communities served by both hospitals," said Herbert Ellish, chairman of AGH's board of directors. WPAHS will make a substantial investment in the AGH Suburban Campus, including information technology upgrades, building infrastructure renovations, aesthetic improvements and clinical upgrades. "We are extremely excited about the possibilities of this merger, particularly the new equity that it brings to our position as a preferred healthcare provider in the northern region. Given our existing partnerships with the AGH medical staff, this move is a natural transition that will further benefit the patients we care for and strengthen the relationships we have with independent physician groups in the region who have also played an important role in our success throughout the years," said David Reed, M.D., president of SGH's medical staff. "We, too, are enthused with the development of the Suburban Campus," commented Michael White, M.D., president of AGH's medical staff. "The collaborative efforts of our medical staffs coupled with enhancements in clinical programming at the hospital will be of great benefit to residents in the northern suburbs." The system has also pledged to maintain the Suburban Health Foundation's mission of directing charitable donations to the Suburban Campus facility and its programs, Ms. Meighan said. "It is our intent to maintain in every way possible the tradition and culture of care that exists at Suburban General and the unique relationship that it has forged with its community," Ms. Meighan said. Clinical program development at the Suburban campus will begin in the spring of 2005. Included among these is the transition to the site of several key components of AGH's orthopedic surgery program, including its division of adult reconstruction/joint replacement surgery and division of physical medicine and rehabilitation. Under the direction of Nicholas Sotereanos, M.D., AGH's joint replacement program is among the most advanced and busiest programs in the state. "Joint reconstruction is a cornerstone of our nationally recognized orthopedic surgery program and we are enthusiastic about its transition to the AGH suburban campus," said Patrick DeMeo, Vice Chairman of AGH's Department of Orthopedic Surgery. Following outstanding performance for AGH in fiscal 2004, the merger with Suburban General represents a significant opportunity for continued growth of the north side hospital's tertiary services, said Connie Cibrone, AGH President and CEO. "The unification of AGH and Suburban General will be remembered as another important milestone for AGH," she said. "This merger not only improves access to our clinical programs in the growing northern communities, but enhances patient care at our north side campus as well by expanding its ability to accommodate increasing surgical volumes, demand for ICU beds and other patient care needs." Cibrone said that the transitioning of select inpatient and outpatient surgical services to the Suburban Campus will allow AGH to open its capacity in a number of key clinical areas. WPAHS expects to complete the merger of the two hospitals by January 1, 2005. * * * As reported in the Troubled Company Reporter on August 2, 2004, Standard & Poor's Ratings Services revised its outlook to positive from stable on West Penn Allegheny Health System (West Penn), Pa.'s outstanding bonds issued by various issuers, reflecting expectations that the rating will be raised within the year if current financial and operating performance is sustained. In addition, Standard & Poor's affirmed its 'B' underlying rating (SPUR) and 'B' standard long-term rating on West Penn's debt. "The positive outlook reflects successful management efforts to stabilize and improve the financial and operating profile of this credit, although it is still at a non-investment-grade rating level," said Standard & Poor's credit analyst Cynthia Keller Macdonald. "Although challenges remain, the current management seems committed to continued profitability improvement, which, if sustained, is likely to result in a higher rating in the near term," she added. * Accountants Face New Concerns Says Cendrowski Corporate Advisors ------------------------------------------------------------------ A recent revision of standards for accounting review services could put many practitioners at risk, according to experts on business fraud at Cendrowski Corporate Advisors (CCA). Although the revised standard is designed to help accountants improve their professional review, it can pose certain pitfalls for accountants, says CCA founder Harry Cendrowski. The revision, called SSARS 10 (Statements on Standards for Accounting and Review Services), affects reviews of financial statements ending on or after December 15, 2004. It was recently issued by the American Institute of Certified Public Accountants (AICPA) and is an expansion of previous guidelines on analytical procedures and other review procedures. Most notably, the new standard requires accountants to make inquiries regarding fraud in a review process and to obtain added input from a client's management regarding fraud, Cendrowski notes. It also includes an implied responsibility for understanding the internal controls for fraud deterrence within the organization. Cendrowski warns that accountants who are not prepared to properly judge responses to these inquiries in order recognize the warning signs of fraud, and communicate them to a client company's owners, could be exposed to professional liability, whether the company is public or privately held. "Fraud studies consistently show that strong internal controls are the most important defense against fraud," Cendrowski notes. "Accountants will need to develop a mindset for fraud awareness and deterrence in order to manage the risk associated with the performance of a review." "Fraud continues to be recognized as a major problem for business, and the accounting profession will continue to modify professional standards to consider the impacts of fraud," he says. "The new standards dictated by the Sarbanes-Oxley Act raised the bar for governance and financial reporting. These practices are now becoming a benchmark for private companies and nonprofits as well." The risk to accountants is that they may not uncover a fraudulent situation, given the often-subversive means used to conceal fraud. Under the new standard, the accountant could be held responsible for not discovering it. For this reason, accountants will need to fully understand the many elements of fraud when providing review services under the new standard. In 2003, Cendrowski and senior manager Jim Martin developed and licensed the training program for the Certified Fraud Deterrence (CFD) professional designation offered by the National Association of Certified Valuation Analysts (NACVA). The CFD program is the first new fraud designation by any national professional organization in the past 20 years. The objectives of the training program mirror those of the Sarbanes-Oxley Act as well as recent statements by Securities and Exchange Commission leaders about proactive deterrence of fraud for both private and public companies. The CFD program includes 40 hours of classroom instruction, an eight-hour exam and a comprehensive written case analysis incorporating CCA's unique proactive measures to deter fraud in an organization. The fraud- deterrence training program is now held across the country and attended by professionals from corporate, private, government and non-profit organizations. Cendrowski Corporate Advisors provides consulting services to private, public and non-profit organizations, including forensic accounting; internal control assessment and fraud deterrence; fraud investigation and remediation; expert witness; fraud deterrence training & education; business valuation; risk assessment; operational review; litigation support; internal audit; business continuity planning, and bankruptcy and fiduciary. * Gregory Ford Joins Alvarez & Marsal as Director ------------------------------------------------- Alvarez & Marsal, a diversified global professional services firm, announced that Gregory T. Ford, a real estate capital market transaction specialist, has joined the firms Real Estate Advisory Services group as a Director. With more than 13 years of experience in real estate structured finance, consulting and accounting, Mr. Ford brings a proven track record of addressing critical real estate business decisions. Prior to joining A&M, he served as a Vice President in the real estate structured finance group of a major Wall Street investment bank, where he was responsible for underwriting over $2.5 billion of commercial real estate transactions, including office, retail, multi-family, industrial, medical office and self storage properties. Over the course of his career, he also gained significant experience in commercial real estate lending, having participated in a $2.2 billion acquisition of a manufactured housing portfolio one of the largest commercial mortgage backed securities transactions. Greg brings an outstanding background in real estate finance and accounting to Alvarez & Marsal,said William BiffMcGuire, an A&M Managing Director and head of the firms Real Estate Advisory Services group. His substantial experience and expertise in real estate-related mortgage banking and capital market activities will be invaluable in enhancing our breadth of offerings and serving the needs of a broad array of clients. Based in A&Ms Atlanta office, Mr. Ford will oversee business development within the Southeastern United States. HeHe He holds a masters degree in finance, with a concentration in real estate finance from the University of Central Florida in Orlando, FL. Mr. Ford is also a Certified Commercial Investment Member (CCIM) candidate. Alvarez & Marsals Real Estate Advisory Services group provides independent and objective consultation and analysis to real estate owners, investors, lenders and corporate users. A&M professionals work closely with clients to develop and execute sophisticated real estate strategies aimed at improving operations, unlocking value or shedding risk. The groups mortgage banking and capital market services include: offering memorandums for debt placement; debt sourcing (including fixed, floating and mezzanine debt); loan underwriting services (including single asset and portfolio loans); and property inspections. About Alvarez & Marsal Founded in 1983, Alvarez & Marsal is a global professional services firm that helps businesses organizations in the corporate and public sectors navigate complex business and operational challenges. With professionals based in locations across the US, Europe, Asia, and Latin America, Alvarez & Marsal delivers a proven blend of leadership, problem solving and value creation. Drawing on its strong operational heritage and hands-on approach, Alvarez & Marsal works closely with organizations and their stakeholders to help navigate complex business issues, implement change and favorably influence results. For more information about the firm, please visit http://www.businessconsulting.alvarezandmarsal.com/> www.businessconsulting.alvarezandmarsal.com or contact Rebecca Baker, Chief Marketing Officer at 212.759.4433. To find out more about the Business Consulting Group of Alvarez & Marsal, contact Tom Elsenbrook, Managing Director at 713.259.7080. * BOND PRICING: For the week of September 13 - September 17, 2004 ---------------------------------------------------------------- Issuer Coupon Maturity Price ------ ------ -------- ----- American & Foreign Power 5.000% 03/01/30 72 AMR Corp. 4.500% 02/15/24 69 AMR Corp. 9.000% 08/01/12 68 AMR Corp. 9.000% 09/15/16 69 AMR Corp. 10.200% 03/15/20 62 Burlington Northern 3.200% 01/01/45 56 Calpine Corp. 7.750% 04/15/09 63 Calpine Corp. 8.500% 02/15/11 64 Calpine Corp. 8.625% 08/15/10 65 Calpine Corp. 8.750% 07/15/07 75 Comcast Corp. 2.000% 10/15/29 41 Continental Airlines 4.500% 02/01/07 71 Delta Air Lines 7.700% 12/15/05 48 Inland Fiber 9.625% 11/15/07 48 Level 3 Comm. Inc. 2.875% 07/15/10 68 National Vision 12.000% 03/30/09 65 Northern Pacific Railway 3.000% 01/01/47 55 Northwest Airlines 7.875% 03/15/08 70 Northwest Airlines 8.700% 03/15/07 74 Northwest Airlines 9.875% 03/15/07 72 US West Capital 6.500% 11/15/18 72 US West Capital Fdg. 6.875% 07/15/28 71 Zurich Reinsurance 7.125% 10/13/23 74 ********* Monday's edition of the TCR delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR editor holds some position in the issuers' public debt and equity securities about which we report. Each Tuesday edition of the TCR contains a list of companies with insolvent balance sheets whose shares trade higher than $3 per share in public markets. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. A list of Meetings, Conferences and Seminars appears in each Wednesday's edition of the TCR. Submissions about insolvency- related conferences are encouraged. Send announcements to conferences@bankrupt.com. Each Friday's edition of the TCR includes a review about a book of interest to troubled company professionals. All titles are available at your local bookstore or through Amazon.com. Go to http://www.bankrupt.com/books/to order any title today. Monthly Operating Reports are summarized in every Saturday edition of the TCR. For copies of court documents filed in the District of Delaware, please contact Vito at Parcels, Inc., at 302-658-9911. For bankruptcy documents filed in cases pending outside the District of Delaware, contact Ken Troubh at Nationwide Research & Consulting at 207/791-2852. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland USA. Yvonne L. Metzler, Emi Rose S.R. 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 ***