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/raid1/www/Hosts/bankrupt/TCR_Public/040915.mbx T R O U B L E D C O M P A N Y R E P O R T E R Wednesday, September 15, 2004, Vol. 8, No. 198 Headlines ABC DISTRIBUTING: Case Summary & 6 Largest Unsecured Creditors ADELPHIA COMMS: Hires UBS Investment & Allen as M&A Advisors ADVOCAT INC: Settles All Outstanding Claims with State of Arkansas AINSWORTH LUMBER: Offering $450 Mil. Notes for Private Placement AIR CANADA: Jetsgo Asks WestJet to Cooperate in Release of Info AMC ENT: Gives Up Right to Redeem Preferred Stock on Default AQUILA INC: Moody's Raises Three Junk Ratings to Single-B ARCAP: Fitch Puts BB Rating on $28M Notes & B Rating on $24M Notes AVIATION & GENERAL INSURANCE: Court Grants Permanent Injunction BEAR STEARNS: S&P Pares Class G Certificates' Rating to BB+ BRODER BROS: S&P Affirms B+ Corporate Credit & Debt Ratings COLEMAN CABLE: S&P Rates $110M Sr. Unsecured Notes at B- COLEMAN CABLE: Gets Moody's Low-B Senior Implied & Issuer Ratings COUNCIL TRAVEL: Files Second Amended Joint Plan of Liquidation COVANTA ENERGY: Covanta Lake II Files Plan & Disclosure Statement CREST CLARENDON: Fitch Assigns BB Rating to $10M Class D Notes CROSSGEN INTELLECTUAL PROPERTY: Voluntary Chapter 11 Case Summary CSFB MORTGAGE: Fitch Assigns Low-B Ratings to Four Cert. Classes CULLIGAN INT'L: S&P Assigns B+ Corp. Credit & Bank Loan Ratings DIGITALNET: S&P Places B+ Corporate Credit Rating on CreditWatch DOE RUN RESOURCES: Hires Crowe Chizek as Independent Auditors DT INDUSTRIES: Court Extends Exclusive Period to File Plan EARTHMOVERS INC: Wants to Hire Cosgrove Webb as Bankruptcy Counsel EXIDE TECHNOLOGIES: Restructures Senior Management Team EXIDE: Asks Court to Extend Claims Objection Deadline to March 1 FRANK'S NURSERY: Taps Keen to Dispose of Real Estate Portfolio FRIEDMAN'S INC: Must Comply With Six Key Financial Tests G-STAR 2003-3: Fitch Places BB Ratings on $24M Preferred Shares GRAHAM PACKAGING: S&P Affirms B Corporate Credit Ratings HEADWATERS INC: Moody's Puts B1 Rating on Sr. Credit Facilities HECLA MINING: Moody's Raises Senior Implied Rating to Caa1 HOMESTEADS AT NEWTOWN: Voluntary Chapter 11 Case Summary LAIDLAW INTERNATIONAL: Vicki A. O'Meara Resigns as Director LEGENDS VILLAGE: Case Summary & 2 Largest Unsecured Creditors LNR CDO: Fitch Puts BB & B Ratings on $74 Million of Notes MARINER: MHG Asks Judge Walrath to Disallow Howard's $1M Claim MEADOWS OPERATIONS: Case Summary & 17 Largest Unsecured Creditors MERGANSER CAPITAL: Case Summary & 4 Largest Unsecured Creditors MIRANT CORPORATION: Court Approves Sullivan Settlement Agreement MISSION HEALTH: Wants Durham Jones as Bankruptcy Counsel MIV THERAPEUTICS: Successfully Completes HAp Coating Safety Trials NORTEL NETWORKS: Twenty-Six Customers Adopt Networking Solutions NRG ENERGY: Inks Pact to Sell Kendall Generating Station in Ill. OREGON STEEL: Files Registration Statement for Proposed Offering OREGON STEEL: Completes Final Settlement of Labor Dispute Pact OWENS CORNING: Uses Intelligroup's SAP's CRM 3.0 for HOMExperts PARMALAT USA: Taps Mahoney Cohen & Company as Accountants PATHMARK STORES: S&P Shaves Corp. Credit Rating One Notch to B+ RCN CORP: Wants Court to Set Solicitation & Voting Procedures ROGERS COMMS: Acquiring AT&T Wireless' Stake in Rogers Wireless ROGERS COMMS: Moody's Reviewing Low-B Ratings & May Downgrade SEITEL: E&Y Resigns as Independent Accountants After 4-Year Tenure SOLUTIA: CPFilms Wants to Acquire Clear View Assets for $240,000 SOUTHWEST HOSPITAL: Case Summary & 20 Largest Unsecured Creditors SPECTRASITE INC: S&P Upgrades Corporate Credit Rating to B+ SURGICARE: Files Definitive Proxy Materials for Shareholder Vote US AIRWAYS: Court Approves Limited Use of Lenders' Cash Collateral US AIRWAYS: CIT Group Discloses $14 Million Financial Relationship US AIRWAYS: Flight Attendants Decry Finger-Pointing Labor Groups US AIRWAYS: Bankruptcy Filings Prompts S&P's Default Ratings VIAD CORP: Union Members Approve New Labor Agreement VISTEON CORP: S&P Places BB Corporate Credit Rating on CreditWatch VIVA INTERNATIONAL: Nears Completion of C.T. Industries' Sale W.R. GRACE: Asks Court to Approve Akzo Settlement Agreement WEIRTON STEEL: Will Pay Minteq Int'l.'s Mechanic Liens for $600K WHOLE FOODS: S&P Raises Debt Rating to BB+ & Credit Rating to BBB- XEROX CORP: Wins $23+ Million HSBC Document Services Contracts XEROX CORP: Meets Growing Demand for Imaging Services in Arkansas YELLOW ROADWAY: Moody's Puts Ba1 Rating on $500M Credit Facility * Alvarez & Marsal Launches Tax Advisory Services Group * Upcoming Meetings, Conferences and Seminars ********* ABC DISTRIBUTING: Case Summary & 6 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: ABC Distributing, Inc. 122 Bonham Street Paris, Texas 75460 Bankruptcy Case No.: 04-30275 Chapter 11 Petition Date: September 7, 2004 Court: Eastern District of Texas (Paris) Judge: Brenda T. Rhoades Debtor's Counsel: Bill F. Payne, Esq. Moore Law Firm, L.L.P. 100 North Main Street Paris, TX 75460-4222 Tel: 903-784-4393 Total Assets: Unstated Total Debts: $1 Million to $10 Million Debtor's 6 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ BancorpSouth $881,931 P.O. Box 789 Tupelo, MS 38802 Longhorn Whse $60,000 AB Coker Co. $39,900 Blankenship Oil $15,800 VSA Vistar Corp. $5,500 Southwestern Bell Co. $1,350 ADELPHIA COMMS: Hires UBS Investment & Allen as M&A Advisors ------------------------------------------------------------ The United States Bankruptcy Court for the Southern District of New York approved the hiring of UBS Investment Bank and Allen & Company, LLC, as financial advisors for the Adelphia Communications Corporation (OTC: ADELQ) sale process. "We are pleased that the Court has approved UBS and Allen as our financial advisors for the sale process, as we continue our efforts to maximize value for all Adelphia stakeholders," said Bill Schleyer, chairman and CEO of Adelphia. "We have been working diligently with UBS and Allen since early July to assemble appropriate documents and information to accelerate the sales process. Based on preliminary widespread interest, we expect a robust sales process." Adelphia will accept bids for the whole company as well as for designated clusters through a formal process to be launched later this month. As part of that formal process, an information memorandum will be distributed to parties that have signed a confidentiality agreement with Adelphia. It is expected that final bids will be received by year-end. Headquartered in Coudersport, Pennsylvania, Adelphia Communications Corporation (OTC: ADELQ) is the fifth-largest cable television company in the country. Adelphia serves customers in 30 states and Puerto Rico, and offers analog and digital video services, high-speed Internet access and other advanced services over its broadband networks. The Company and its more than 200 affiliates filed for Chapter 11 protection in the Southern District of New York on June 25, 2002. Those cases are jointly administered under case number 02-41729. Willkie Farr & Gallagher represents the ACOM Debtors. ADVOCAT INC: Settles All Outstanding Claims with State of Arkansas ------------------------------------------------------------------ Advocat, Inc., (NASDAQ OTC:AVCA) reached an agreement with the Attorney General for the State of Arkansas to settle all civil claims filed against the Company by the State for alleged violations by the Company in Arkansas. In the agreement, the Company did not admit or agree, to any degree, any violation of any statute nor any standard of care. In consideration of the settlement with the State of Arkansas, Advocat will pay the State $400,000 in monthly payments over 24 months and agreed to pay at least $600,000 to install sprinkler systems in nursing homes owned by the Company in the State of Arkansas. The settlement also included $300,000 in funds already expended by the Company for additional training of nursing home staff. "We are pleased to reach the settlement with Arkansas," stated William R. Council, III, Chief Executive Officer of Advocat. "We did not agree with the Attorney General's assertions in their lawsuits and were prepared to fight them vigorously. However, we understand and agree that this is a compromise settlement of doubtful and disputed claims. We appreciate the willingness of the Arkansas Attorney General to work with us on a settlement and believe it is in the best interest of our residents in Arkansas and our shareholders. The safety and security of our residents was our primary goal and I believe this settlement with the State of Arkansas underscores our commitment to providing quality care," concluded Mr. Council. Advocat, Inc., -- http://www.irinfo.com/avc/-- provides long-term care services to nursing home patients and residents of assisted living facilities in 9 states, primarily in the Southeast, and three provinces in Canada. At June 30, 2004, Advocat, Inc.'s balance sheet showed a $37,372,000 stockholders' deficit, compared to a $42,759,000 deficit at December 31, 2003. AINSWORTH LUMBER: Offering $450 Mil. Notes for Private Placement ---------------------------------------------------------------- Ainsworth Lumber Co. Ltd. intends to offer US$450 million aggregate principal amount of fixed rate senior unsecured notes due 2012 and floating rate senior unsecured notes due 2010 pursuant to a private placement under Rule 144A. Ainsworth intends to use the net proceeds of the offering of the Senior Notes, together with cash on hand, to fund its previously announced acquisition from Potlatch Corporation of three OSB facilities located in northern Minnesota. The acquisition is expected to close later this month. Ainsworth Lumber Co., Ltd., a British Columbia corporation headquartered in Vancouver, Canada, is a publicly traded integrated OSB producer that also manufactures specialty overlaid plywood and finger-jointed lumber. Post the Potlatch acquisition, Ainsworth will have a 13% market share in OSB, and OSB sales will represent approximately 97% of total revenues. * * * As reported in the Troubled Company Reporter on August 31, 2004, Moody's Investors Service placed the B1 ratings of Ainsworth Lumber Co. Ltd. on review for possible downgrade on news of the company's agreement to purchase Potlatch Corporation's oriented strandboard -- OSB -- assets for US$459.5 million in cash. Moody's anticipates that Ainsworth will use the proceeds of new debt plus some amount of cash on hand to fund the acquisition. Pending satisfaction of closing conditions, the transaction is expected to close in September. Moody's expects to complete its review concurrent with the completion of definitive financing arrangements. This is expected to occur prior to or approximately concurrent with closing. Ratings Placed on Review Outlook: Stable Senior Implied: B1 Issuer Rating: B1 US$320 million senior unsecured 6.75% Notes due March 15, 2014: B1 Ainsworth's existing B1 ratings reflect: * the company's relatively small size, * limited product and geographic diversity, * high level of debt, and * the extremely volatile pricing of its core OSB product line. Near term pricing for OSB is expected to remain strong until either or both of declining housing starts and new OSB capacity additions cause pricing to revert to more normalized levels. Consequently, while near term results are expected to remain exceptionally strong, mid-to-long results are expected to remain quite volatile with Ainsworth's cash generation expected to vary widely within relatively short periods of time. Moody's ratings also reflected the sound quality of the company's modern OSB mills (three of which are wholly owned with a third being a 50% joint venture) together with solid fiber supply and liquidity arrangements. In addition to its impact on the above-noted factors, Moody's review will, among other things, consider: * the capital structure of the company following the acquisition, * the level of achievable synergies and the corresponding effect on margins, * the anticipated performance of the combined company over the intermediate term, and * plans for future strategic growth and plans for debt reduction. AIR CANADA: Jetsgo Asks WestJet to Cooperate in Release of Info --------------------------------------------------------------- The following is the text of a letter sent to WestJet President and CEO Clive Beddoe from Michel Leblanc, President and CEO of Jetsgo. "By letter dated September 7, 2004 to Air Canada President Robert Milton, Jetsgo has requested a copy of certain documents that were recovered from the garbage or recycling of WestJet's then Vice President Mark Hill, which apparently contain confidential information relating to Jetsgo. "Air Canada has now confirmed that these reconstructed documents relate to Jetsgo's business and are in the possession of Air Canada's counsel. We understand that one such document is specifically identified in the Court materials as 'Jetsgo November 2003 Summary of Domestic L/F (Load Factors)'. "Air Canada has advised that it is prepared to provide Jetsgo with a copy of this documentation with the consent of WestJet and Mr. Hill. However, we have not yet received your consent. "As you can appreciate, in the circumstances of the serious allegations of misuse of confidential information made against WestJet and Mr. Hill, Jetsgo is investigating the nature of the documentation that was apparently in the possession of Mr. Hill. "We hope that WestJet will help bring this inquiry to a quick conclusion by providing your consent. We look forward to your reply by September 20, 2004. "'Air Canada's timely cooperation in this matter is appreciated,' said Leblanc. 'We're now asking WestJet to cooperate with our investigation.'" Air Canada alleges that WestJet and Mr. Hill improperly accessed an employee travel Web site, which contained confidential information for use by current and former Air Canada employees and retirees. That Web site, according to Air Canada, contained confidential information about its passenger bookings. As part of an Air Canada investigation, shredded documents relating to Jetsgo's business were found in the garbage or recycling of Mr. Hill, co-founder and then Vice President of WestJet. The documents were reconstructed, and the existence of the Jetsgo information was made public in Court filings made in the Air Canada-WestJet proceedings. The documents themselves were not filed with the Court by Air Canada, apparently because of their confidential nature. In a Sept. 7, letter to Robert Milton, President and CEO of Air Canada, Mr. Leblanc requested that Air Canada make the documents available to Jetsgo to assist the company with its investigation into the nature of the information contained in the recovered documents. 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. AMC ENT: Gives Up Right to Redeem Preferred Stock on Default ------------------------------------------------------------ On July 29, 2004, AMC Entertainment, Inc., entered into an Agreement and Consent with the holders of its Series A Convertible Preferred Stock pursuant to which the Company has agreed to relinquish its right to redeem the Preferred Stock during such time as an "Event of Default" exists and remains uncured and the holders of the Preferred Stock have exercised their right to elect a majority of the Board of Directors of the Company pursuant to the rights granted by the Certificate of Designations for the Preferred Stock. As a result, the Company believes that there are no circumstances that would require the Preferred Stock to be redeemed for cash or other assets upon the occurrence of an event, which is outside the control of the Company. The Company will continue to classify its Preferred Stock within permanent equity in its financial statements. AMC Entertainment -- http://www.amctheatres.com/-- is the largest movie exhibitor in the U.S. based on revenue and the second- largest based on screen count. It has one of the industry's most modern theater circuits due to its rapid expansion and consistent disposition activity since 1995. * * * As reported in the Troubled Company Reporter on August 5, 2004, Standard & Poor's Ratings Services revised its outlook on AMC Entertainment, Inc., to stable from positive, based on the increased leverage that will result from the pending sale and recapitalization of the company. At the same time, Standard & Poor's affirmed its ratings, including its 'B' corporate credit rating, on the company. In addition, Standard & Poor's assigned its 'B' corporate credit rating to Marquee Holdings Inc. and its subsidiary Marquee Inc. Upon completion of the sale of AMC, Marquee, Inc., will be merged with AMC. All of these companies are analyzed on a consolidated basis. In addition, Standard & Poor's assigned 'B-' ratings to Marquee Inc.'s proposed $150 million in senior unsecured notes due 2012 and its proposed $305 million in senior unsecured floating rate notes due 2011, and a 'CCC+' rating to Marquee Holdings' proposed $170 million senior discount notes due 2014 (HoldCo notes). The senior unsecured notes will be supported by operating subsidiary guarantees and are rated one notch below the corporate credit rating due to the proportion of higher priority secured debt. The HoldCo notes are rated two notches below the corporate credit rating because they will be structurally subordinate to AMC's existing and proposed debt. Proceeds from the new debt issues, about $335 million in existing cash, the rollover of about $750 million in existing debt and capital leases, and a $785 million cash equity contribution will be used to fund the purchase of the Kansas City, Missouri-based movie exhibitor by funds controlled by J.P. Morgan Partners and Apollo Management LP. Pro forma as of July 1, 2004, AMC will have about $3.6 billion in consolidated lease-adjusted debt. "The ratings on AMC reflect its financial risk from its heavy reliance on expensive lease financing which results in high lease- adjusted leverage and fixed costs, its weak EBITDA margins, and its exposure to the mature and competitive U.S. motion picture exhibition industry," said Standard & Poor's credit analyst Steve Wilkinson. "The ratings also reflect AMC's modern theater circuit, positive discretionary cash flow, and more stable market conditions over the past few years." AQUILA INC: Moody's Raises Three Junk Ratings to Single-B --------------------------------------------------------- Moody's Investors Service upgraded Aquila's: * Senior Implied rating to B2 from B3; * Issuer Rating to B2 from Caa1; * senior unsecured debt to B2 from Caa1; and * the subordinated debt to Caa1 from Caa3. In addition, Moody's has assigned a B2 rating to the company's planned $200 million senior unsecured term loan and its $100 million senior unsecured revolving credit facility. These credit facilities are being syndicated and are expected to close on September 16. The B2 rating on Aquila's existing $430 million secured term loan is being withdrawn because this facility will be terminated concurrent with the closing of the new credit facilities. The rating outlook is stable. The upgrade of the Senior Implied rating to B2 reflects substantial improvement in Aquila's liquidity position and the resolution of disputes related to several large gas supply contracts. In August, the company raised about $112 million in proceeds from the sale of common equity and sold $334 million of mandatorily convertible senior notes. The company also paid approximately $585 million to terminate three natural gas supply contracts and to settle surety agreements that were the subject of litigation. The upgrade also considers expected improvement in cash flow generation and debt reduction, and a reduced level of business risk following the company's exit from most non-regulated investments and energy trading activities. The rating of Aquila's senior unsecured debt was upgraded to the level of the Senior Implied rating due to the pending termination of the $430 million term loan, which will eliminate almost all of the company's secured debt. The narrowing of the notching of Aquila's debt ratings and its Issuer Rating relative to the Senior Implied rating incorporates an expectation that the company will not incur a substantial amount of secured debt in the future. Aquila, Inc., headquartered in Kansas City, Missouri, is a regulated electric and gas utility, and owns other energy assets. ARCAP: Fitch Puts BB Rating on $28M Notes & B Rating on $24M Notes ------------------------------------------------------------------ Fitch Ratings affirms all of the rated notes issued by ARCap 2003-1 Resecuritization, Inc. The affirmation of these notes is a result of Fitch's annual rating review process. These rating actions are effective immediately: -- $54,800,000 class A 'AAA'; -- $36,000,000 class B 'AA'; -- $20,500,000 class C 'A'; -- $15,400,000 class D 'A-' ; -- $36,100,000 class E 'BBB+'; -- $13,000,000 class F 'BBB'; -- $45,000,000 class G 'BBB'; -- $9,000,000 class H 'BBB-'; -- $28,000,000 class J 'BB'; -- $24,000,000 class K 'B'. ARCap 2003-1 is a collateralized debt obligation -- CDO, which closed Aug. 27, 2003, supported by a static pool of non-investment grade commercial mortgage-backed securities -- CMBS. Fitch has reviewed the credit quality of the individual assets comprising the portfolio. According to the Aug. 20, 2004 trustee payment report the combined class A, B, C, D, E, F, G, and H overcollateralization -- OC -- was 180.3% relative to the minimum test level of 100%. The CDO has not experienced any credit migration and there has been no change in weighted average rating factor since issuance. The collateral was selected and is administered by ARCap REIT, Inc., rated 'CAM2' by Fitch for structured finance collateral management. Also, ARCap Servicing, Inc. is rated 'CSS1-' and is the special servicer on all the underlying CMBS transactions. Fitch has discussed ARCap 2003-1 with ARCap REIT and will continue to monitor ARCap 2003-1 closely to ensure accurate ratings. Based on the stable performance of the underlying collateral and the OC test, Fitch affirms all rated liabilities issued by ARCap 2003-1. Fitch will continue to monitor this transaction. AVIATION & GENERAL INSURANCE: Court Grants Permanent Injunction --------------------------------------------------------------- The Honorable Stuart M. Bernstein of the U.S. Bankruptcy Court for the Southern District of New York entered a permanent injunction sought by the Board of Directors of Aviation & General Insurance Company Limited against its U.S. creditors. The U.S. Bankruptcy Court directs that all U.S. Creditors must comply with the Scheme of Arrangements filed in the High Court of Justice of England and Wales and the Schemes have full force and effect in the United States. Copies of the Schemes are available from: Howard Seife, Esq. Francisco Vasquez, Esq. Chadbourne & Parke, LLP 30 Rockefeller Plaza New York, NY 10112 Telephone (212) 408-5100 Headquartered in London, England, Aviation & General Insurance Company Limited provides aviation insurance in 37 states and wrote United States surplus lines business. The Company filed a Sec. 304 Petition on May 21, 2004 (Bankr. S.D.N.Y. Case No. 04-13499). Howard Seife, Esq. at Chadbourne & Parke, LLP, represents the Board of Directors in the Sec. 304 Proceeding. Aviation & General reports more than $50 million in assets and debts. BEAR STEARNS: S&P Pares Class G Certificates' Rating to BB+ ----------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on five classes of Bear Stearns Commercial Mortgage Securities Inc.'s commercial mortgage pass-through certificates from series 2003- WEST and removed them from CreditWatch. Concurrently, the rating on class B is affirmed and removed from CreditWatch. The six ratings were placed on CreditWatch with negative implications March 30, 2004. At the same time, the ratings on three other classes are affirmed. Standard & Poor's placed its ratings on the six classes on CreditWatch due to concerns regarding the decline in operating performance of this all-lodging mortgage pool. While it was expected that the extensive Property Improvement Plan -- PIP, embarked on in 2003, would disrupt business, the decline in performance was steeper than expected. Full year 2003 net cash flow -- NCF -- of $21.9 million for the portfolio was substantially lower than Standard & Poor's underwritten NCF of $36.4 million. However, the portfolio has started to realize the benefits of the PIP and the repositioning of several of its assets, as NCF for the first six months of 2004 was 22% above the same period of last year. Notwithstanding this, Standard & Poor's does not expect NCF to return to underwritten levels during the remaining term of the loan. This transaction consists of one loan secured by 11 cross- collateralized and cross-defaulted full-service hotels: the Hilton Huntington, Marriott Troy, Marriott Tyson's Corner, Marriott Philadelphia West, Hyatt Newporter, Hilton Delmar, Marriott Houston Greenspoint, Valley River Inn, Radisson Fort Magruder, Doubletree Minneapolis, and Radisson Englewood. The loan matures January 2006, and there are two, one-year extensions available. Prior to closing of the loan, the debt service coverage ratio -- DSCR -- fell below 1.10x (the default determination ratio), triggering a DSCR excess cash sweep event. Pursuant to the loan agreement, all excess cash is held until the default determination ratio is achieved for two consecutive quarters. If the funds have not been released to the borrower(s) prior to the loan maturity date, the funds may be applied to the loan payoff. In addition, the borrower is permitted to use funds from the cash trap to fund PIP requirements. As a result, the cash trap balance, which was $1.7 million in March 2004, has been reduced to $0.6 million as of August 2004. Ratings Lowered and Removed from Creditwatch Bear Stearns Commercial Mortgage Securities Inc. Commercial mortgage pass-thru certs series 2003-WEST Rating Class To From ----- -- ---- C A- A/Watch Neg D BBB+ A-/Watch Neg E BBB BBB+/Watch Neg F BBB- BBB/Watch Neg G BB+ BBB-/Watch Neg Rating Affirmed and Removed from Creditwatch Bear Stearns Commercial Mortgage Securities Inc. Commercial mortgage pass-thru certs series 2003-WEST Rating Class To From ----- -- ---- B AA AA/Watch Neg Ratings Affirmed Bear Stearns Commercial Mortgage Securities Inc. Commercial mortgage pass-thru certs series 2003-WEST Class Rating ----- ------ A AAA X-1 AAA X-2 AAA BRODER BROS: S&P Affirms B+ Corporate Credit & Debt Ratings ----------------------------------------------------------- Standard & Poor's Ratings Services revised the outlook on printable sportswear distributor Broder Bros Co to negative from stable. At the same time, the 'B+' long-term corporate credit and 'B-' unsecured debt ratings on the company were affirmed. Total debt outstanding at Philadelphia, Pennsylvania-based Broder Bros was about $277 million on June 26, 2004. "The outlook revision follows Standard & Poor's review of Broder and reflects the company's weaker-than-expected operating results and credit protection measures for the 12 months ended June 26, 2004," said Standard & Poor's credit analyst Susan Ding. "Credit measures have deteriorated as a result of higher debt levels and lower margins. In addition, the company experienced softer demand than expected for the second half of 2003, and operating costs for the period rose, primarily because of additional one-time costs associated with the company's integration of the Alpha Shirt Company, acquired in September 2003. Operating margins, meanwhile, suffered from an unfavorable product mix and intensely competitive industry conditions." The outlook revision also reflects potential integration risk associated with the company's proposed acquisition of NES Clothing Company, which is mostly in the same business. A major portion of NES' revenue, however, is concentrated in the Northeast U.S., an area that will provide Broder with significant scale. Despite the risk of integration, Standard & Poor's believes that this transaction will be beneficial to the company in the intermediate term because of NES' size and its potential cost synergies. NES reported revenues of about $130 million for the last 12 months, and EBITDA of $5.5 million. The ratings on Broder Bros currently reflect the company's highly leveraged financial profile following the acquisition of Alpha, its top competitor, in a transaction that added significant incremental debt to its balance sheet. The ratings also reflect Broder's weak volume growth, the integration risk, and the highly competitive operating environment. Somewhat mitigating these factors are the company's leading domestic market positions in imprintable sportswear and accessories following the Alpha acquisition. Broder also benefits from a national distribution infrastructure and a diverse customer base. With the Alpha and NES transactions, Broder will consolidate its position as the leading U.S. distributor of imprintable sportswear (including "blank" products such as T-shirts, sweat shirts, golf shirts, and headwear) and accessories (including "blank" sports bags, totes, and towels). Broder expects to realize cost savings from its strengthened purchasing leverage, the consolidation of its back-office operations, and the rationalization of its facilities. Nevertheless, integration risk remains a rating factor. COLEMAN CABLE: S&P Rates $110M Sr. Unsecured Notes at B- -------------------------------------------------------- Standard & Poor's Ratings Service assigned its 'B+' corporate credit rating to Waukegan, Illinois-based Coleman Cable Inc., and assigned its 'B-' rating to the company's proposed $110 million senior unsecured notes. The outlook is stable. Coleman, a manufacturer of wire and cable products, is expected to use the proceeds from the note issue, along with a drawdown on a new $75 million asset-based secured revolving bank facility, to refinance all existing funded debt, and make a distribution of $11 million to equity sponsors and for management bonuses. The senior unsecured notes are rated two notches below the corporate credit rating, reflecting the material amount of secured debt in the capital structure. "The corporate credit rating reflects the company's modest scale in the highly competitive, relatively low value-added wire and cable manufacturing industry and high leverage," said Standard & Poor's credit analyst Joshua Davis. These factors partially are offset by strong market positions in higher-profit, niche segments, and a broad overall mix of end markets, products, and customers, resulting in less operating volatility than for many other wire and cable manufacturers. Coleman's product line extends across a variety of niche electric and specialty wire and cable market segments, including electrical cords, power cables, heating and ventilation wires, and others. Many of these market segments are smaller--but more profitable-- than larger commodity cable markets. Adjusted EBITDA margins have remained steady at between 10% and 11% in each of the last three fiscal years, despite changing economic conditions and rapidly rising materials prices. Broad exposure across retail, contractor, and industrial end markets--although providing limited organic growth opportunities--results in less-cyclical volatility than for wire and cable manufacturers that supply data, telecom, and cable television markets. Coleman's nonmaterials adjusted annual revenues have fluctuated narrowly over the past three fiscal years, at between $234 million and $244 million. COLEMAN CABLE: Gets Moody's Low-B Senior Implied & Issuer Ratings ----------------------------------------------------------------- Moody's Investors Service has assigned initial ratings to Coleman Cable, Inc., including a B3 rating to the company's $110 million senior unsecured note issue. At the same time, the rating agency assigned a B2 senior implied rating, a B3 issuer rating and a SGL-3 -- speculative grade liquidity -- rating. The ratings reflect Coleman Cable's broad product portfolio, diverse customer base and flexible and cost efficient operating model that has resulted in a stable track record of earnings and solid margin performance. The rating actions also anticipate the continuation of the company's ability to pass on rising copper prices through periodic price increases. Challenges and concerns encompassed by the ratings include a relatively small revenue base in relation to peers, modest free cash flow generation, limited liquidity and relatively high initial leverage. The outlook is stable. Coleman Cable, a manufacturer of specialty wire and cable, operates as both an operating and holding company for domestic and international subsidiaries. Revenues for the latest twelve months ended June 30, 2004 totaled $257 million with EBITDA of $27 million. Markets served include irrigation, HVAC, electrical, security/home automation and retail and automotive. Coleman Cable has historically focused on niche markets where its wide array of products rank in the top three of many industry channels. The company offers more than 26,500 SKUs to over 8,500 active customers including Wal Mart and John Deere. Concentration to one customer is not a significant concern as the top twenty customers account for less than 40% of total sales, however a major retailer does comprise almost 6% of that total. To date, the company has been able to pass on rising raw material costs, thereby allowing it to maintain solid margins for the wire and cable industry. In addition, the company has effectively sourced internationally and consolidated manufacturing facilities, which have further bouyed returns. The $110 million notes have a maturity of eight years, are non- callable for four years and will benefit from the guarantees of domestic subsidiaries. Net proceeds from the notes, augmented by borrowings under a new senior secured bank revolving credit facility (not rated by Moody's) will be used to refinance existing indebtedness and fund a $10.5 million distribution to shareholders. The notes will be sold in a privately negotiated transaction without registration under the Securities Act of 1933 under circumstances reasonably designed to preclude a distribution thereof in violation of the Act. The issuance has been designed to permit resale under Rule 144A. Certain covenants will apply to the notes including a debt incurrence test based on fixed charge coverage of at least 2x as well as standard language regarding change in control, asset sales and sale and leaseback transactions. Ratings assigned with a stable outlook: * Coleman Cable -- B2 senior implied rating; -- B3 issuer rating; -- B3 senior unsecured rating; and -- SGL-3 rating. Upon close of the proposed notes and senior secured credit facility, Coleman Cable's leverage will be relatively high. The $110 million notes will comprise the bulk of the company's debt structure with borrowings under the $75 million revolving credit facility fluctuating depending on asset balances. Availability under the revolver will be governed by a borrowing base calculation. Estimated availability based on June 30, 2004 balances is approximately $26 million. Pro forma fiscal year-end 2004 debt-to-EBITDA will be just over 5x with balance sheet debt- to-capitalization in the mid-90% range. Moody's notes that leverage measures should show steady improvement beyond 2004 as free cash flow generation gains momentum. Pro forma EBIT measures are expected to remain solid, covering cash interest expense by over 2x and generating a return on assets in excess of 12% in 2004 and approaching 2.5x and 13%, respectively, in 2005. Free cash flow is expected to recover in the second half of 2004, resulting in near breakeven free cash flow and debt paydown for the year. Beyond 2004, free cash flow should range in the mid-to-high single digits as a percentage of total balance sheet debt over the next several years. The outlook and ratings may be subject to upward revision if Coleman Cable demonstrates the sustained ability to significantly expand the revenue base above and beyond GDP-like annual growth without eroding operating margins and sacrificing free cash flow generation and debt reduction. Moody's notes that Coleman Cable's key competitors have significantly larger revenue bases and consequently greater access to resources in managing through industry downturns. The agency also acknowledges that Coleman Cable's operating model is quite different when considering markets served and its diverse customer base. Conversely, ratings may be negatively impacted if free cash flow generation and leverage metrics do not show steady improvement beyond 2004. The SGL-3 rating recognizes the company's adequate liquidity to fund the cash needs of the business including working capital requirements and capital expenditures over the next twelve months. As noted previously, free cash flow generation will be modest. The secured bank facility will be utilized on a regular basis with availability governed by a borrowing base. Covenants under this facility provide adequate cushion for the continuation of availability at this time. Substantially all of the assets of the borrower and its subsidiaries will be pledged under this revolving credit facility, thereby limiting alternate liquidity from the sale of non-core assets. Coleman Cable, Inc., headquartered in Waukegan, Illinois, is a leading designer, developer, manufacturer and supplier of specialty wire and cable products in the United States. COUNCIL TRAVEL: Files Second Amended Joint Plan of Liquidation -------------------------------------------------------------- Council Travel Services, Inc., and its debtor-affiliates filed with the U.S. Bankruptcy Court for the Southern District of New York their Second Amended Disclosure Statement explaining their Joint Plan of Liquidation. A full-text copy of the Disclosure Statement and the Plan is available for a fee at: http://www.researcharchives.com/download?id=040812020022 The Debtors filed an initial Disclosure Statement and Joint Chapter 11 Plan of Liquidation in March 4, 2004. The U.S. Trustee objected to the Disclosure Statement on the ground that the document did not contain adequate information. A first amended Disclosure Statement was filed on May 4 containing four modifications requested by the U.S. Trustee: a) the Disclosure Statement states the amount of assets currently on hand; b) the Creditor Trustee will obtain a bond and proper notification will be given before such bond is terminated; c) the Disclosure Statement will set forth the compensation for the Creditor Trustee and members of the Plan Oversight Committee; d) the Disclosure Statement provides that releases, exculpations and limitations of liability will not apply to governmental entities. A second amendment was necessary to set an explicit standard in determining the limitation of liabilities. The Plan groups claims and interests in five classes and describes the treatment of each: Class Treatment ----- --------- 1 - Priority Claims Unimpaired. Each Allowed Priority Claim will be fully paid in cash from the Adminstrative and Priority Reserve on the Effective Date or as soon as practicable after the conversion of a Priority Claim into an Allowed Priority Claim. 2 - Miscellaneous Unimpaired. On the Effective Date, the Secured Claims Creditor Trustee will: a) if available, distribute to each holder of an Allowed Secured Claim, the proceeds of the sale of the assets, less expenses of sale, that secured such Allowed Secured Claim; or if unavailable, at the option of the Creditor Trustee and each holder of a Secured Claim not later than ten days prior to the Effective Date, either the assets on which such holder has a lien or the value of such assets in cash; or b) notify each holder of an Allowed Secured Claim will be abandoned by the Debtors pursuant to section 554 of the Bankruptcy Code, at which time such holder is authorized to effect an offset in the amount set forth in such notice and may exercise any and all rights and remedies with respect to such assets. 3 - Unsecured Claims Impaired. Will receive payment on a pro rata basis after settlement of the first 2 classes. Initial payment will be given on the first Distribution Date to be set by the Creditor Trustee and final payment will be given on the Final Distribution Date. Estimated to recover from 5 percent to 15 percent of its Claims. 4 - Convenience Claims Impaired. Will receive an amount equal to 40 percent of Allowed Convenience Claim on the Effective Date or as soon as practicable. 5 - Interests Impaired. Interest will receive no distribution and the stock and equity interests of each Debtor will be deemed cancelled on the Effective Date. Headquartered in Manhattan, New York, Council Travel Services, Inc., provides student and budget travel packages. The Company and its debtor-affiliates filed for chapter 11 protection on February 5, 2002 (Bankr. S.D.N.Y. Case No. 02-10509). Schuyler Glenn Carroll, Esq., at Olshan Grundman Frome Rosenzweig & Wolosky LLP, represents the Debtors in their restructuring efforts. When the Debtor filed for protection from its creditors it estimated $10 million in assets and debts. COVANTA ENERGY: Covanta Lake II Files Plan & Disclosure Statement ----------------------------------------------------------------- Debtor Covanta Lake II, Inc., successor by way of merger to Covanta Lake, Inc., delivered a plan of reorganization and disclosure statement to the Court on September 10, 2004. The overriding purpose of the Plan is to enable Covanta Lake II to implement a settlement agreement with Lake County, Florida, and emerge from Chapter 11 for purposes of operating a waste-to-energy facility located in Okahumpa, Lake County, Florida. Overview of Covanta Lake's Operations Before the Petition Date, Covanta Lake entered into a contract with Lake County to design, construct and operate the Okahumpa Facility. Pursuant to the Service Agreement, the County agreed to pay to Covanta Lake service and other fees for processing waste delivered to the Facility. The construction of the Facility was financed by the issuance of $70,000,000 of federally tax-exempt private activity bonds and $9,000,000 of federally taxable private activity bonds under an Indenture of Trust dated November 1, 1988, between Lake County and Southeast Bank, National Association, together with an equity contribution from Covanta Energy Corporation. Pursuant to a November 1, 1988 loan agreement, the County loaned to Covanta Lake the funds raised by the issuance of the 1988 Bonds to finance the construction of the Facility. The 1988 Bonds were subsequently refinanced and replaced with Series 1993A and 1993B bonds. The Series 1993B Bonds have been retired and only the Series 1993A Bonds remain outstanding. Under a November 1, 1988 Mortgage and Security Agreement, Covanta Lake mortgaged and granted to Lake County a security interest in the Facility, the 15-acre Facility site, the Service Agreement, certain of the Facility's revenues, and certain other property. The County assigned its interests in the Mortgage and Security Agreement to the Indenture Trustee as security for payment of the Bonds. The County also assigned its interest in the Loan Agreement to the Indenture Trustee. Covanta guaranteed Covanta Lake's performance under the Service Agreement. The guarantee does not apply to the Loan Agreement or Covanta Lake's obligations under the Mortgage and Security Agreement. Upon its emergence from bankruptcy in March 2004, Covanta rejected the Guaranty and its obligations thereunder. Dispute with Lake County Beginning in 1998, Covanta Lake and Lake County commenced negotiations to modify their obligations under the Service Agreement. Those negotiations were not fruitful and, in October 2000, the County filed a lawsuit before the Circuit Court for Lake County, Florida, against Covanta Lake seeking a declaration, inter alia, that the Service Agreement was void as being in violation of Florida law. The County sought recovery of all amounts previously paid to Covanta Lake. The County Prepetition Litigation was stayed by operation of law when Covanta Lake filed for bankruptcy. As a result of the prepetition action, Covanta Lake received insufficient amounts from Lake County to operate profitably. On June 20, 2003, Covanta Lake commenced an adversary proceeding alleging that the County had breached the Service Agreement and owed the Estate more than $8,000,000. Covanta Lake asked the Bankruptcy Court to declare the Service Agreement to be a valid and binding contract and to disallow all of the County's proofs of claim, which total more than $81,000,000. Following extensive negotiations, the parties agreed to settle their disputes to avoid the continued expense, uncertainty, and delay of litigation. Proposed Settlement Agreement Covanta Lake II developed the Reorganization Plan to implement the Settlement Agreement and thereby maximize the value of its Estate. The Plan provides for the restructuring of Covanta Lake II while conforming to the requirements and agreements set forth in the Settlement Agreement. The Settlement Agreement and the Plan provide, among others, that after Plan confirmation, Lake County and Covanta Lake II will terminate the Service Agreement and enter into a new waste disposal and electricity generating agreement, which will govern the parties' relationship going forward. The Settlement Agreement also provides that Lake County will refund, satisfy, and retire the Bonds as soon as practicable after the Effective Date. As part of and to facilitate the Bond Refunding, Reorganized Covanta Lake II will enter into certain agreements, pledges and other documents pursuant to which it will grant liens on certain of its assets and commit to pay certain future obligations. The Mortgage and Security Agreement will be assigned by the Indenture Trustee to the County and either modified, cancelled or delivered to a new lender as security for repayment of the amounts advanced under the New Financing Agreements. Specifically, the Settlement Agreement will provide that: (a) The County will immediately pay Covanta Lake II all undisputed amounts due under the Service Agreement and all property taxes which have accrued and remain unsatisfied, including all interest and penalty charges, and that Covanta Lake will then satisfy those outstanding taxes and charges; (b) The County will pay Covanta Lake II $100,000 per month from September 2003 through the date of the closing of the Settlement Agreement; (c) Pursuant to the Waste Disposal Agreement, the County will pay Covanta Lake II three payments of $850,000 each as reimbursement for certain capital expenses; (d) The County's claim for property taxes will be withdrawn upon the payment of the accrued property taxes under the Service Agreement; (e) Reorganized Covanta Lake II will execute the New Financing Agreements and Covanta will execute an agreement with the County to guarantee Reorganized Covanta Lake II's obligations under the Waste Disposal Agreement up to a total of $10,000,000; (f) The County will be subject to a "put-or-pay" obligation to provide 163,000 tons of acceptable waste per year to the Facility, pro-rated for the first calendar year if necessary; (g) Certain of the fees payable to Reorganized Covanta Lake II under the Waste Disposal Agreement will escalate on an annual basis in relation to the rate of inflation for the prior 12-month period; (h) All outstanding claims and disputes between the County and Covanta Lake II and its affiliates will be settled under the terms of the Settlement Agreement. The parties will release all monetary claims each has or may have against the other as of the Closing Date; (i) Reorganized Covanta Lake II is not to be deemed a public agency; (j) Reorganized Covanta Lake II will make various categories of records available to the County to monitor performance under the Waste Disposal Agreement; (k) The County will obtain the consents of the Bondholders and the Indenture Trustee, if any, required to implement the Waste Disposal Agreement, the Plan, the Bond Refunding and the New Parent Guarantee; (l) The County will be responsible for the payment of pass- through costs, which includes: * costs arising under any tax compliance agreements with the County; * sales, use and discriminatory taxes; * costs of increased environmental testing; * incremental costs relating to the provision of service at other-than-agreed hours; * utility consumption; * Indenture Trustee fees and financing costs; and * ash residue disposal costs; and (m) The County will be responsible for capital and cost increases relating to changes in law, force majeure, or extra-contractual requests. The New Parent Guarantee will be terminable if the Plan is reversed on appeal. The New Parent Guarantee will require that Covanta cause another subsidiary to operate and maintain the Facility for the County in such an event. The Closing Date will not occur unless and until certain conditions, are satisfied, including: -- The County arranges for all appropriate consents of the Bondholders and the Indenture Trustee; -- The Court approves a stipulation by and between Covanta Lake II and the County wherein the parties agree that the Service Agreement, the Settlement Agreement, and the Waste Disposal Agreement are each constitutional and legal, and that the County had and continues to have the authority to enter into the Waste Disposal Agreement, the Settlement Agreement and the Service Agreement; -- Covanta Lake II's contract with F. Browne Gregg is terminated on terms satisfactory to Covanta Lake II; -- The Plan is confirmed; and -- The Bond Refunding will be irrevocable. Termination of Gregg Contract Before the Petition Date, Covanta Lake entered into a contract with F. Browne Gregg and others, pursuant to which Covanta Lake acquired the right (i) to the Facility and certain related assets and (ii) to operate the Facility under the Service Agreement. Covanta Lake paid Mr. Gregg $6,000,000 at the time it entered into the Gregg Contract. Through the Petition Date, Covanta Lake had paid Mr. Gregg more than $4,000,000 in additional amounts. Mr. Gregg's compensation under the Gregg Contract was to be calculated under a set of formulae. The Gregg Contract provides that it terminated upon the termination of the Service Agreement. Covanta guaranteed Covanta Lake's performance under the Contract. The Plan contemplates that, upon the effectiveness of the Waste Disposal Agreement and the termination of the Service Agreement, the Gregg Contract will be deemed terminated by Covanta Lake II without any further notice, action or order, with no claim against or liability of Covanta Lake II or Reorganized Covanta Lake II arising by virtue of the termination. Covanta Lake II, however, will remain liable for any unpaid postpetition amounts owed to Mr. Gregg under the Contract, if any, relating to all postpetition periods preceding the termination of the Service Agreement. Feasibility of the Plan To confirm the Plan, the Court must find that confirmation of the Plan is not likely to be followed by the liquidation or the need for further financial reorganization of Covanta Lake II, unless and to the extent liquidation is contemplated by the Plan. Covanta Lake II believes that it will be able to timely perform all obligations described in the Plan, and, therefore, that the Plan is feasible. Covanta Lake will present at the hearing to confirm the Plan financial projections through December 31, 2007, to demonstrate the feasibility of the Plan. The Projections, according to Covanta Lake II President Anthony J. Orlando, will indicate that Reorganized Covanta Lake II will have sufficient cash flow to fund its operations. Better Recovery Under the Plan While there can be no assurance that the Court will find that the Plan meets the requirements for confirmation, Covanta Lake II asserts that the Plan will not be followed by a need for further financial reorganization and that non-accepting holders within each class under the Plan will receive distributions at least as great as would be received under a liquidation of the Estate pursuant to Chapter 7 of the Bankruptcy Code, when taking into consideration all administrative claims and costs associated with a Chapter 7 case. The Plan meets the "best interests" test of Section 1129(a)(7). Mr. Orlando explains that creditors will receive a better recovery through the distributions contemplated by the Plan because the continued operation of Covanta Lake II as a going concern, rather than a forced liquidation, will provide additional value. In the event of liquidation, the aggregate amount of unsecured claims will no doubt increase significantly, and the claims will be subordinated to priority claims that will be created. A Chapter 7 liquidation would also give rise to additional administrative claims. The resulting increase in both general unsecured and priority claims will no doubt decrease percentage recoveries to unsecured creditors. To support its case, Covanta Lake II will present a liquidation valuation analysis at a later date. Disclosure Statement Hearing on October 20 Covanta Lake II will bring their Disclosure Statement to the Court for approval on October 20, 2004, at 2:00 p.m. At the hearing, Judge Blackshear will review whether the Disclosure Statement contains adequate information as required by Section 1125 of the Bankruptcy Code to enable a hypothetical creditor to make an informed decision whether to vote to accept or reject Covanta Lake II's Plan. A free copy of Covanta Lake II's Plan is available at: http://bankrupt.com/misc/covlakeII_reorgplan.pdf A free copy of the Disclosure Statement is available at: http://bankrupt.com/misc/covlakeII_disclosurestatement.pdf Headquartered in Fairfield, New Jersey, Covanta Energy Corporation -- http://www.covantaenergy.com/-- is a publicly traded holding company whose subsidiaries develop, own or operate power generation facilities and water and wastewater facilities in the United States and abroad. The Company filed for Chapter 11 protection on April 1, 2002 (Bankr. S.D.N.Y. Case No. 02-40826). Deborah M. Buell, Esq., and James L. Bromley, Esq., at Cleary, Gottlieb, Steen & Hamilton represent the Debtors in their restructuring efforts. When the Debtors filed for protection from its creditors, they listed $3,280,378,000 in assets and $3,031,462,000 in liabilities. (Covanta Bankruptcy News, Issue No. 65; Bankruptcy Creditors' Service, Inc., 215/945-7000) CREST CLARENDON: Fitch Assigns BB Rating to $10M Class D Notes -------------------------------------------------------------- Fitch Ratings affirms all of the rated notes issued by Crest Clarendon Street 2002-1, Limited. The affirmation of these notes is a result of Fitch's annual rating review process. These rating actions are effective immediately: -- $228,000,000 class A notes 'AAA'; -- $29,000,000 class B-1 notes 'A-'; -- $10,000,000 class B-2 notes 'A-'; -- $15,000,000 class C notes 'BBB'; -- $10,000,000 class D notes 'BB'. Crest Clarendon 2002-1 is a collateralized debt obligation -- CDO, which closed Sept. 19, 2002, supported by a static pool of real estate investment trusts -- REITs 54.9% -- and commercial mortgage-backed securities -- CMBS; 45.1%. Fitch has reviewed the credit quality of the individual assets comprising the portfolio. According to the Aug. 31, 2004 trustee report: Class Overcollateralization Test Level ----- --------------------- ---------- Class A 131.6% 118.00% Class B 112.4% 106.00% Class C 106.4% 102.30% Class D 102.7% 101.0% MFS Investment Management selected the initial collateral and serves as the collateral administrator. Fitch has discussed Crest Clarendon 2002-1 with MFS Investment and will continue to monitor Crest Clarendon 2002-1closely to ensure accurate ratings. Based on the stable performance of the underlying collateral and over-collateralization tests, Fitch affirms all of the rated liabilities issued by Crest Clarendon Street 2002-1, Limited. Fitch will continue to monitor this transaction. CROSSGEN INTELLECTUAL PROPERTY: Voluntary Chapter 11 Case Summary ----------------------------------------------------------------- Lead Debtor: CrossGen Intellectual Property, LLC 4023 Tampa Road, Suite 2400 Oldsmar, Florida 34677 Bankruptcy Case No.: 04-17768 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- CrossGen Technologies, LLC 04-17772 Type of Business: The Debtors are affiliates of CrossGen Entertainment, Inc. The Debtors publish and distribute comic books in printed form and on- line. See http://www.crossgen.com/ Chapter 11 Petition Date: September 9, 2004 Court: Middle District of Florida (Tampa) Judge: Alexander L. Paskay Debtor's Counsel: Rod Anderson, Esq. Holland & Knight LLP PO Box 1288 Tampa, Florida 33601 Tel: 813-227-6525 Total Assets Total Debts ------------ ----------- CrossGen Intellectual Property Unstated $1,436,622 CrossGen Technologies, LLC Unstated $1,086,622 The Debtors do not have unsecured creditors. CSFB MORTGAGE: Fitch Assigns Low-B Ratings to Four Cert. Classes ---------------------------------------------------------------- Fitch Ratings affirms Credit Suisse First Boston Mortgage Securities Corp.'s commercial mortgage pass-through certificates, series 2001-CK1, as follows: -- $75.0 million class A-1 at 'AAA'; -- $149.0 million class A-2 at 'AAA'; -- $498.4 million class A-3 at 'AAA'; -- Interest-only class A-X at 'AAA'; -- Interest-only class A-CP at 'AAA'; -- Interest-only class A-Y at 'AAA'; -- $42.9 million class B at 'AA'; -- $45.4 million class C at 'A'; -- $12.6 million class D at 'A-'; -- $12.6 million class E at 'BBB+'; -- $20.2 million class F at 'BBB'; -- $17.7 million class G at 'BBB-'; -- $17.5 million class H at 'BB+'; -- $27.4 million class J at 'BB'; -- $7.5 million class K at 'BB-'; -- $7.5 million class L at 'B+'. Fitch does not rate the following classes: class M; class N; and class O. The ratings affirmations reflect the transaction's overall stable performance and one loan in special servicing representing 0.2%. Fitch is concerned with the 16.3% of the portfolio that reported declines in debt service coverage ratios. As of year-end 2003, 14.3% reported below 1.0x. Included as a Fitch loan of concern is the second largest loan in the pool, 150 Spear Street (7.7%), which is secured by a 256,438 square foot -- sf -- class A office building located in San Francisco, California. Although the loan remains current, the property has suffered a decline in performance as a result of decreased market asking rents and market occupancy levels. The DSCR as of YE 2003 was 0.77 times (x), with an occupancy of 82.0%, compared with 1.29x and 95.0% at issuance. As of the August 2004 distribution date, the transaction has paid down 3.1% to $966.1 million from $997.1 million at issuance. The portfolio is geographically concentrated, with 33% of the outstanding balance located in California. Office properties total 41.4% of the pool's outstanding balance. Key Commercial Mortgage Corp., the master servicer, collected YE 2003 financials for 96.0% of the pool balance. According to the information provided, the YE 2003 weighted average debt service coverage ratio -- WADSCR -- is 1.41x. Fitch reviewed operating statement analysis reports and other performance information provided by the master servicer of the portfolio's two credit assessed loans, Stonewood Center Mall (7.9%) and 747 Third Avenue (3.6%). The Fitch-stressed DSCR for the loans are calculated based on a Fitch-stressed net cash flow -- NCF -- and a stressed debt service based on the current loan balance and a hypothetical mortgage constant. Both loans remain investment grade. Stonewood Center Mall is secured by a leasehold interest in a 930,000 sf regional mall located in Downey, California. The center is anchored by: * J.C. Penney, * Robinson May, * Sears, and * Mervyn's. As of May 2004, occupancy has increased to 98.0%, compared with 94.0% at issuance. The Fitch-stressed DSCR, as of YE 2003 was 1.35x, compared with 1.34x at issuance. 747 Third Avenue is secured by a leasehold interest in a 405,000 sf office property located in midtown Manhattan. As of July 2004, the occupancy has increased to 94.7%, compared with 92.5%. Despite the increase in occupancy since issuance, Fitch is concerned with the large amount of lease expirations occurring in the near future, with 10.5% of the net rentable area -- NRA -- and 15.6% of the NRA, respectively, expiring in 2004 and 2005. The weighted average rents for the tenants whose leases expire in 2004 and 2005 are below market. Fitch will continue to monitor the leasing activity at the property. The Fitch-stressed DSCR as of YE 2003 was 1.71x, compared with 1.58x at issuance. CULLIGAN INT'L: S&P Assigns B+ Corp. Credit & Bank Loan Ratings --------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B+' corporate credit rating to Northbrook, Illinois-based water services provider Culligan International Company. At the same time, Standard & Poor's assigned its 'B+' bank loan rating and a recovery rating of '3' to the company's proposed $325 million senior secured credit facilities, indicating the expectation of a meaningful (50%-80%) recovery of principal in the event of default. The issue is part of a financing plan in which Culligan will be acquired by Clayton, Dubilier & Rice. The ratings are based on preliminary offering statements and are subject to review upon final documentation. Standard & Poor's has also assigned a 'B-' rating to Culligan's proposed Euro- denominated $225 million senior subordinated notes due 2014. The outlook is positive. Pro forma for the transaction, total debt will be about $453 million. In a deal announced in July 2004, Clayton, Dubilier & Rice agreed to acquire the Culligan Group from Water Systems Group & Applications, a subsidiary of Veolia Environnement S.A., for a total of $650 million. The plan includes the aforementioned debt and a cash equity contribution of $200 million. Proceeds will be used to purchase the existing owners' equity and pay transaction fees. "The ratings on Culligan reflect its leveraged financial profile, under-performing North American operations, and low barriers to entry," said Standard & Poor's credit analyst Paul Blake. "These factors are partially mitigated by its significant amount of recurring revenue, unique distribution network, and global presence." With sales of approximately $700 million, Culligan is a global provider of water treatment products and services for household and commercial applications. Its products include "point of entry" water conditioning systems such as softeners and water filtration devices as well as "point-of-use" water filtration systems. DIGITALNET: S&P Places B+ Corporate Credit Rating on CreditWatch ---------------------------------------------------------------- Standard & Poor's Ratings Services placed its 'B+' corporate credit and 'B' senior unsecured debt ratings of Herndon, Virgnia- based DigitalNet, Inc., on CreditWatch with positive implications. The CreditWatch listing follows the announced acquisition of DigitalNet by BAE Systems (BBB/Stable/A-2). DigitalNet is a leading provider of networking, seat management, and desktop outsourcing solutions to the U.S. federal government. The transaction is valued at approximately $600 million, including the assumption of approximately $94 million of DigitalNet's outstanding debt. The transaction, which must be approved by shareholders, is expected to close by the end of the year, pending regulatory reviews. "Standard & Poor's will monitor the progress of the transaction and determine whether DigitalNet's ratings will be equalized with BAE Systems' following completion of the acquisition," said Standard & Poor's credit analyst Ben Bubeck. DOE RUN RESOURCES: Hires Crowe Chizek as Independent Auditors ------------------------------------------------------------- The Doe Run Resources Corporation decided to replace KPMG LLP as the Company's independent auditors effective with KPMG's completion of its review of the Company's financial statements for the three months ended January 31, 2004. The decision to dismiss KPMG was unanimously approved by Doe Run's Board of Directors. Doe Run's Board has authorized the retention of Crowe Chizek and Company LLC to be Doe Run's new independent auditors. Going Concern Doubt The reports by KPMG on Doe Run's financial statements contained in its Form 10-K filed with the Securities and Exchange Commission for its fiscal years ended October 31, 2002 and October 31, 2003 expressed doubt as to Doe Run's ability to continue as a going concern. The Doe Run Resources Corporation mines, processes, recycles and fabricates high quality lead and lead products. Its facilities in Missouri, Washington, Arizona, and Peru integrate all phases of metal production and provide the foundation for the development of many products vital to modern lifestyle. DT INDUSTRIES: Court Extends Exclusive Period to File Plan ---------------------------------------------------------- The Honorable Lawrence S. Walter of the U.S. Bankruptcy Court for the Southern District of Ohio, Western Division, extends until December 8, 2004, the period within which DT Industries, Inc., and its debtor-affiliates have the exclusive right to file their chapter 11 Plan. The Debtors are also granted the exclusive right to solicit votes and obtain acceptances of that plan through February 6, 2005. Headquartered in Dayton, Ohio, DT Industries, Inc. -- http://www.dtindustries.com/-- is an engineering-driven designer, manufacturer and integrator of automated systems and related equipment used to manufacture, assemble, test or package industrial and consumer products. The Company and its debtor-affiliates, filed for chapter 11 protection on May 12, 2004 (Bankr. S.D. Ohio Case No. 04-34091). Ronald S. Pretekin, Esq., at Coolidge Wall Womsley & Lombard represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $150,593,000 in assets and $142,913,000 in liabilities. EARTHMOVERS INC: Wants to Hire Cosgrove Webb as Bankruptcy Counsel ------------------------------------------------------------------ Earthmovers, Inc., asks the U.S. Bankruptcy Court for the District of Kansas for authority to hire Charles T. Engel, Esq., and John T. Houston, Esq., of the firm Cosgrove, Webb & Oman and its associates to represent them in their Chapter 11 cases. Cosgrove Webb will: a) provide legal advice to the Debtor-in-Possession with respect to its power and duties in the continued operation of its business and management of its properties; and b) provide all other legal services to the Debtor-in- Possession that are necessary or advisable in this case or that require the services of an attorney. Earthmovers, Inc., will pay: a) $150 per hour for services performed by Partners Charles T. Engel, Esq., and John T. Houston, Esq.; b) $120 per hour for services performed by Associates; c) $45 per hour for paralegal services; and d) $40 per hour for services performed by clerks. The Debtors will reimburse the Firm for all out-of-pocket expenses, litigation expenses and filing fees to be paid by the bankruptcy estate as approved by the Court. To the best of the Debtor's knowledge, Cosgrove Webb is "disinterested" as the term is defined in Section 101(14) of the Bankruptcy Code. Headquartered in Washington, Kansas, Earthmovers, Inc., -- http://www.earthtrucks.com/-- specializes in the sales and service of medium to heavy trucks. Earthmovers filed for Chapter 11 protection on September 2, 2004 (Bankr. D. Kan. Case No. 04-42477). When the company filed for bankruptcy protection, it estimated assets of up to $10 million and estimated debts of up to $10 million. EXIDE TECHNOLOGIES: Restructures Senior Management Team ------------------------------------------------------- Exide Technologies (NASDAQ: XIDE), a global leader in stored electrical-energy solutions, reported changes to its senior management team. "As part of our continuing effort to streamline and simplify the organization, we are refocusing our operational management on a regional basis and eliminating layers of management," said Craig H. Muhlhauser, President and CEO of Exide Technologies. The consolidation of operational leadership has resulted in the elimination of the President position for Exide's Transportation global business. David Enstone, President of the Transportation business unit, has left the company to pursue other interests. In addition, Exide eliminated the position of Executive Vice President of Quality and EXCELL, consolidating those initiatives under Mitch Bregman. Robert Weiner, former Executive Vice President, also has left the company to pursue other interests. "Restructuring is never easy, but the continued market pressures require that we accelerate our efforts to become the supplier of choice for our customers. More often than not, attaining that goal requires change," Mr. Muhlhauser said. "I want to extend my sincere best wishes to David and Bob, and thank them for the significant contributions they have made at Exide -- particularly supporting our emergence from Chapter 11. "Our continued pursuit of excellence requires that we become more cost competitive and increase responsiveness to our customers," Mr. Muhlhauser said. "This restructuring is a natural progression in evolution of the new Exide." Headquartered in Princeton, New Jersey, Exide Technologies is the world-wide leading manufacturer and distributor of lead acid batteries and other related electrical energy storage products. The Company filed for chapter 11 protection on April 14, 2002 (Bankr. Del. Case No. 02-11125) and emerged from chapter 11 under a confirmed plan on May 5, 2004. Matthew N. Kleiman, Esq., and Kirk A. Kennedy, Esq., at Kirkland & Ellis, represent the Debtors in their restructuring efforts. EXIDE: Asks Court to Extend Claims Objection Deadline to March 1 ---------------------------------------------------------------- There are about 5,400 proofs of claims filed in Exide Technologies and its debtor-affiliates' Chapter 11 cases to date. The Debtors have filed five omnibus objections to claims and two objections to claims where they objected to 410 claims. The Debtors are in the process of reviewing the claims to accurately object to improper claims and to allow valid claims. By this motion, the Debtors ask the Court to extend their claims objection deadline through and including March 1, 2005. Sandra G. McLamb, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, P.C., in Wilmington, Delaware, asserts that an extension will provide the Debtors with the necessary time to effectively evaluate the Claims filed against their estates, prepare and file additional objections to Claims, and where possible, consensually resolve claims. The Court will convene a hearing on September 23, 2004, to consider the Debtors' request. By application of Del.Bankr.LR 9006-2, the Debtors' deadline to file objections to claims is automatically extended through the conclusion of that hearing. Headquartered in Princeton, New Jersey, Exide Technologies is the world-wide leading manufacturer and distributor of lead acid batteries and other related electrical energy storage products. The Company filed for chapter 11 protection on April 14, 2002 (Bankr. Del. Case No. 02-11125). Matthew N. Kleiman, Esq., and Kirk A. Kennedy, Esq., at Kirkland & Ellis, represent the Debtors in their restructuring efforts. On April 14, 2002, the Debtors listed $2,073,238,000 in assets and $2,524,448,000 in debts. (Exide Bankruptcy News, Issue No. 52; Bankruptcy Creditors' Service, Inc., 215/945-7000) FRANK'S NURSERY: Taps Keen to Dispose of Real Estate Portfolio -------------------------------------------------------------- Frank's Nursery & Crafts, Inc., obtained Bankruptcy Court approval on Friday, September 10, 2004, to retain Keen Realty, LLC, to market and dispose of the company's owned and leased properties located throughout the northeast, midatlantic and midwest. Frank's filed for Chapter 11 protection on September 8, 2004, in the United States Bankruptcy Court Southern District of New York. Keen Realty, LLC, is a real estate consulting firm specializing in maximizing the value of its clients' real estate assets nationwide. "We are pleased to offer these properties for sale, as they are located in excellent locations throughout quality markets in the northeast and midwest," said Mike Matlat, Keen Realty's Vice President. "We expect there to be a tremendous amount of interest in these locations. The properties, owned and leased, represent an excellent opportunity for users and investors. The marketing will begin shortly; however, we recommend all interested parties check our Website -- http://www.keenconsultants.com/-- as we will be posting information on the locations and sale process as it becomes available. Additionally, interested parties can be added to the mailing list by faxing me their contact information at 516-482-5764," Mr. Matlat added. Available to interested parties are 61 owned and 108 leased properties. The properties range in size from approximately 20,000 to 80,000 sq. ft. The owned locations are situated on 1.0 to 11.5 acre(s) of land. The properties are located in: * Connecticut, * Florida, * Illinois, * Indiana, * Kentucky, * Maryland, * Michigan, * Minnesota, * Missouri, * New Jersey, * New York, * Ohio, * Pennsylvania, and * Virginia. For over 22 years, Keen Consultants has had extensive experience solving complex problems and evaluating and selling real estate, leases and businesses. Keen Consultants, a leader in identifying strategic investors and partners for businesses, has consulted with hundreds of clients nationwide, evaluated and disposed of over 250,000,000 square feet square of properties, and repositioned nearly 13,000 retail stores across the country. Recent clients include: * Spiegel/Eddie Bauer, * Arthur Andersen, * Cable & Wireless, * Breuners Home Furnishings, * Tommy Hilfiger, * Warnaco, * Penn Traffic, and * JP Morgan Chase. For more information regarding the disposition of these properties for Frank's Nursery, contact: Keen Realty, LLC 60 Cutter Mill Road, Suite 407 Great Neck, New York 11021 Telephone: 516-482-2700 Fax: 516-482-5764 E-mail: mmatlat@keenconsultants.com Attn: Michael Matlat Headquartered in Troy, Michigan, Frank's Nursery & Crafts, Inc. -- http://www.franks.com/-- specializes in nursery products, lawn and garden hardlines, floral decor, custom bows & floral arrangements, and Christmas merchandise. Frank's and its parent company, FNC Holdings, Inc., each filed a voluntary chapter 11 petition in the U.S. Bankruptcy Court for the District of Maryland on February 19, 2001. The companies emerged under a confirmed chapter 11 plan in May 2002. Frank's filed another chapter 11 petition on September 8, 2004 (Bankr. S.D.N.Y. Case No. 04-15826). In the company's second bankruptcy filing, it lists $123,829,000 in total assets and $140,460,000 in total debts. FRIEDMAN'S INC: Must Comply With Six Key Financial Tests -------------------------------------------------------- As previously reported in the Troubled Company Reporter, Friedman's, Inc., (OTC non-BB: FRDM.PK), completed the restructuring of its senior secured credit facility and obtained the approval of its lenders and an informal vendor committee of a secured trade credit program. Under a Second Amended And Restated Credit Agreement, dated as of September 7, 2004: * Bank of America, N.A., and * The CIT Group/Business Credit, Inc., and provide the company with access to up to $67.5 million of Revolving Credit; and * Jewelry Investors II, L.L.C., an affiliate of Farallon Capital Management, L.L.C., extends a $67.5 million Term Loan. The Revolving Facility matures on December 15, 2006 and the junior term loan matures on August 31, 2007. A full-text copy of the new credit agreement is available at no charge at: http://www.sec.gov/Archives/edgar/data/911004/000095017204002146/frex10-1.tx t Section 7.11 of the Credit Agreement requires Friedman's compliance with six key financial covenants: (a) a minimum Fixed Charge Coverage Ratio; (b) minimum sales levels ($118,700,000 in 2004, with at least $66,900,000 in cash sales); (c) Minimum (and increasing) EBITDA targets; (d) Minimum Ratios of Accounts Payable to Inventory; (e) Minimum Ratios of Installment Contract Collections to Installment Contracts; and (f) limitations on Capital Expenditures; Free full-text copies of the Vendor Intercreditor Agreement, dated as of September 8, 2004, and related Secured Trade Credit Program Letter Agreement are available at: http://www.sec.gov/Archives/edgar/data/911004/000095017204002146/exhibit10_6 .txt - and - http://www.sec.gov/Archives/edgar/data/911004/000095017204002146/exhibit10_7 .txt Under the Company's secured trade credit program, participating vendors will be granted a lien in the same assets as, but junior to, the liens which secure the obligations under the restructured senior secured credit facility. Subject to the terms of the secured trade credit program, the vendor lien would generally secure amounts past due to participating vendors as of July 31, 2004 (which would be repaid over a fifteen month period ending on December 31, 2005) and amounts due for new shipments (which would be paid in the ordinary course of business) from participating vendors which are delivered by the earlier of the duration of a vendor's participation in the trade credit program or December 31, 2005. The Company has agreed that up to $9.5 million of availability under its secured credit facility will be reserved pending the receipt of vendor agreements under the secured trade credit program totaling up to $15 million in obligations owed by Friedman's as of July 31, 2004. About Friedman's Founded in 1920, Friedman's, Inc., is a leading specialty retailer based in Savannah, Georgia. The Company is the leading operator of fine jewelry stores located in power strip centers and regional malls. For more information, see http://www.friedmans.com/ The company's most recently published balance sheet -- dated June 28, 2003 -- shows $496 million in assets and $190 million in liabilities. The Company explains that its year-end closing process was delayed because of an investigation by the Department of Justice, a related informal inquiry by the Securities and Exchange Commission, and its Audit Committee's investigation into allegations asserted in a August 13, 2003, lawsuit filed by Capital Factors Inc., a former factor of Cosmopolitan Gem Corporation, a former vendor of Friedman's, as well as other matters. Ernst & Young has been working on a restatement of the company's financials. The company's signaled that a 17% or greater increase to allowances for accounts receivable can be expected. Also, Friedman's Inc. has been notified that the New York Stock Exchange (NYSE) has made a determination to delist the company's Class A Common Stock that traded under the ticker symbol FRM on the NYSE effective May 11, 2004. Friedman's is evaluating an appeal of the decision of the NYSE. The Company noted that while it is disappointed with the NYSE's decision, the delisting from the Exchange does not affect Friedman's day-to-day business operations. The Company also noted that although its common stock is not eligible for trading on the NASD over-the-counter bulletin board -- OTC, the Company understands that market makers have independently begun to make market in the company's common stock on the Pink Sheets under the symbol "FRDM." G-STAR 2003-3: Fitch Places BB Ratings on $24M Preferred Shares --------------------------------------------------------------- Fitch Ratings affirms all classes of the notes co-issued by G-Star 2003-3, Ltd. /G-Star 2003-3 Corp. The affirmations are the result of Fitch's review process. These rating actions are effective immediately: -- $340,000,000 class A-1 notes 'AAA'; -- $48,000,000 class A-2 notes 'AAA'; -- $18,000,000 class A-3 notes 'AA'; -- $5,000,000 class B-1 notes 'A'; -- $15,000,000 class B-2 notes 'BBB'; -- $24,000,000 preferred shares 'BB'. G-Star 2003-3 is a collateralized debt obligation -- CDO -- which closed March 13, 2003 and is supported by a managed pool of commercial mortgage-backed securities -- CMBS; 41.5%, residential mortgage-backed securities -- RMBS; 31.2%, real estate investment trusts -- REIT; 14.9%, asset-backed securities -- ABS; 8.2%, and CDOs; 4.9%. The collateral is managed by GMAC Institutional Advisors. Fitch has reviewed the credit quality of the individual assets compromising the portfolio. According to the July 2004 trustee report the class A overcollateralization -- OC -- was 111.2%, the class B-1 OC was 109.8% and the class B-2 OC was 106.0%, relative to test levels of 104%, 103% and 101%, respectively. The CDO has not experienced any significant credit migration and minimal change in the weighted average rating factor. Fitch has discussed G-Star 2003-3 with GMAC Institutional Advisors, rated 'CAM1' by Fitch for structured finance collateral management. Fitch will continue to monitor G-Star 2003-3 closely to ensure accurate ratings. Based on the stable performance of the underlying collateral and the OC tests, Fitch affirms all of the rated liabilities issued by G-Star 2003-3. GRAHAM PACKAGING: S&P Affirms B Corporate Credit Ratings -------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'B' corporate credit ratings on Graham Packaging Holdings Co. and its 100%-owned operating subsidiary, Graham Packaging Co., and removed the ratings from CreditWatch where they were placed on July 29, 2004. The outlook is positive. York, Pennsylvania-based Graham had total debt of about $1.1 billion at June 30, 2004. Pro forma for the acquisition of Owens-Illinois Inc.'s plastic container business, total debt will increase to about $2.5 billion, at closing of the transaction. The CreditWatch placement followed the company's announcement that it had signed a definitive agreement to acquire Owens-Illinois' plastic container business for about $1.2 billion. Standard & Poor's assigned its 'B' bank loan rating and a recovery rating of '3' to Graham Packaging Co.'s proposed $250 million revolving credit facility due 2010 and $1.35 billion first lien term loan B due 2011, based on preliminary terms and conditions. The 'B' rating is the same as the corporate credit rating; this and the '3' recovery rating indicate an expectation of meaningful recovery (50%-80%) of principal in the event of default. Standard & Poor's also assigned its 'CCC+' bank loan rating and a recovery rating of '5' to the company's proposed $350 million second lien term loan C due 2012. The 'CCC+' rating is two notches below the corporate credit rating; this and the '5' recovery rating indicate an expectation of negligible recovery (0%-25%) of principal in the event of default. At the same time, Standard & Poor's assigned its 'CCC+' rating to Graham Packaging Co. and co-issuer GPC Capital Corp. I's proposed $350 million senior unsecured notes due 2012 and $375 million senior subordinated notes due 2014, which are to be issued under Rule 144A with registration rights. Proceeds from the debt financing will be used to finance the acquisition of Owens-Illinois' blow-molded plastic-container business and to repay Graham's existing credit facility. "If the company successfully integrates the proposed acquisition and generates positive free cash for debt reduction, ratings could be raised in the intermediate term. The expected improvement to credit measures could be further supported by completion of an IPO, with proceeds applied to debt reduction," said Standard & Poor's credit analyst Liley Mehta. The ratings on Graham reflect its average business profile as a leading producer of value-added plastic containers (following completion of the acquisition of the Owens-Illinois plastic container business) and a very aggressive financial profile resulting from high debt leverage. HEADWATERS INC: Moody's Puts B1 Rating on Sr. Credit Facilities --------------------------------------------------------------- Moody's Investors Service assigned a B1 rating to Headwaters Incorporated's senior secured credit facilities, a B3 rating to its second lien term loan, and a B1 senior implied rating. Headwaters is using the term loans under the credit facilities to finance the $715 million acquisition of Tapco Holdings, Inc., a manufacturer of building products and professional tools used in exterior residential remodeling and construction projects. Tapco reported EBITDA of $63 million in its fiscal year ended October 31, 2003, and is targeting EBITDA of $82 million this year. The rating outlook is stable. Moody's assigned the following ratings to Headwaters: (i) B1 rating to its guaranteed senior secured (first lien) credit facilities, which consist of a $75 million five- year revolving credit facility and a $640 million term loan B facility maturing April 30, 2011, (ii) B3 rating to the $150 million guaranteed second lien eight-year term loan, (iii) B1 senior implied rating, and (iv) Caa1 senior unsecured issuer rating. Moody's ratings for Headwaters exclude, almost entirely, cash flow derived from the company's Covol Fuels synfuels-based business unit due to the uncertainty associated with Section 29 tax credits and their scheduled expiry after 2007. Therefore, Moody's ratings are based on the ability of Headwaters' other businesses to service its pro forma $972 million of debt. In fiscal 2004 (the year ending September 30), these other businesses are expected to account for approximately two-thirds of Headwaters' pro forma EBITDA, or roughly $140 million, which should be adequate to cover interest, capex, and small amounts of debt reduction. Headwaters' ratings reflect its: * high leverage, * relatively few tangible assets (approximately $300 million), * the challenges of integrating and managing the growth potential of the many diverse businesses that the company has acquired since September 2002, and * the possibility for further acquisitions. More specifically, Moody's ratings also consider: * a high degree of customer concentration at the ISG operations and Tapco, * exposure to cyclical and seasonal construction markets, and * coal combustion product -- CCP -- transportation cost pressures due to high fuel costs. However, the ratings are supported by the organic growth potential and strong market positions held by ISG and Tapco, the stability of the construction markets they serve, and these businesses' modest capex requirements. Earnings stability is enhanced by ISG's long-term CCP management contracts and by Tapco's low-cost manufacturing capabilities, leading market share for vinyl shutters, and the breadth of its offerings of exterior residential building products. While there are likely to be some synergies between ISG, Tapco, and some of the concrete-based construction materials companies that Headwaters' has recently acquired (such as Eldorado Stone and Southwest Concrete Products), Moody's also takes comfort in the fact that each of these businesses can be run independently. The stable rating outlook reflects: * favorable demand prospects for Headwaters' businesses (again, excluding Covol Fuels), * the ability of ISG and Tapco to grow with relatively minor fixed asset and working capital investments and, therefore, facilitate debt reduction, and * Headwaters' reasonably good liquidity, which is comprised of a $75 million revolving credit facility and $35 million of cash. The ratings could be upgraded if debt is reduced to a level whereby cash flow from all sources other than Covol Fuels indicates sustainable leverage of less than approximately 4x EBITDA or retained cash flow to debt of 15-20% and the earnings power of Headwaters' other businesses remain favorable. If current business plans for Covol Fuels continue without disruption, Headwaters could generate nearly an additional $100 million per year of cash through 2007, which if applied fully to debt reduction would accelerate debt reduction and Headwaters' upgrade potential. Headwaters' ratings or rating outlook could be pressured downward by: * sizable debt-funded acquisitions, * the reduction of trend growth, * margins or cash flow from Headwaters' ISG and construction materials segments, * integration problems, * adverse regulatory changes regarding the use and disposal of CCPs, and * the emergence of material losses or lawsuits related to Covol Fuels, which has otherwise been excluded from Moody's ratings. The B1 rating for Headwaters' first lien credit facilities reflects their first priority lien and security interest in all of the company's assets and stock of the borrower and guarantors, and the dominant role of this class of debt in Headwaters' capitalization. The second lien term loan was rated B3, two notches below the first lien debt, to reflect: * the modest proportion of loss-absorbing equity in the pro forma capital structure, * the second priority secured position of the term loan, which ranks behind at least $640 million of outstanding first lien debt (and $715 million of commitments), and * the limited value, approximately $300 million, of the tangible assets supporting Headwaters' secured credit facilities. The senior unsecured issuer rating of Caa1 reflects the absence of security and subsidiary guarantees for this class of debt. Headwaters Incorporated is headquartered in South Jordan, Utah. For the twelve months' ended June 30, 2004, it had sales of $462 million. Sales were an estimated $800 million, pro forma for recently completed acquisitions and the pending acquisition of Tapco. HECLA MINING: Moody's Raises Senior Implied Rating to Caa1 ---------------------------------------------------------- Moody's Investors Service raised the senior implied rating of Hecla Mining Company to Caa1 from Caa2. At the same time, Moody's withdrew the single C preferred stock rating for the company due to the small amount of outstanding preferred shares. The rating outlook is stable. The rating upgrade reflects the company's improved cash flow generation, increased liquidity, and relatively stronger balance sheet. The ratings continue to incorporate: * the relatively modest scale of Hecla's operations, * its history of negative cash flow, and * its vulnerability to lower precious metal prices. The ratings also reflect the short indicated life of its gold operations, based on current proven and probable reserves, and political risk related to the Venezuelan gold operations. Hecla also faces great uncertainty regarding environmental liabilities and potentially sizable costs for remediation and environmental compliance. However, over the past two years, Hecla has benefited significantly from higher prices for silver and gold as well as increased ore production at some of its mines. The average market price for silver and gold increased to $4.91/oz and $364/oz, respectively, in 2003, versus average prices of $4.36/oz and $272/oz in 2001. In addition, the improved market conditions have allowed Hecla to strengthen its liquidity and balance sheet. Hecla completed a public equity offering in 2003, for approximately $91 million, with the majority of the proceeds placed on its balance sheet. The company also initiated an exchange offer in 2004 in which each share of preferred stock could be exchanged for 7.94 shares of common stock. The offering resulted in 274,000 shares of preferred stock being exchanged and a corresponding reduction in preferred dividends. As a result of these transactions and improved operating performance, as of June 30, 2003, Hecla's balance sheet liquidity (cash, cash equivalents, and marketable securities) was approximately $108 million, while total debt was $2.5 million, and the liquidation value of outstanding preferred stock was about $10 million. At the company's silver operations of San Sebastian in Mexico and Greens Creek in Alaska, where gold is treated as a by-product and reduces the overall cost (cash cost) of producing silver, a combination of higher realized gold prices and increased production significantly lowered cash costs in 2002 and 2003. At the San Sebastian mine, gold by-product credits were approximately $4.25/oz in 2003 and $3.76/oz in 2002, resulting in total cash costs at the mine of negative $0.25/oz in 2003 and $1.09/oz in 2002. At Greens Creek, higher by-product credits, predominantly gold, resulted in total cash costs of approximately $1.18/oz in 2003 and $1.81/oz in 2002. Higher gold prices also helped to offset a 24% reduction in ore grade at the La Camorra mine in Venezuela, the company's only designated gold operation. The overall improvement in cash costs helped to increase Hecla's operating profit, excluding asset write downs, to approximately $16 million and $10 million in fiscal years 2003 and 2002, versus operating losses for the prior several years. The ratings also incorporate the relatively modest size of Hecla's operations compared with other rated mining companies. Hecla currently has three wholly owned mining operations (Lucky Friday, San Sebastian, and La Camorra) and a 30% ownership interest in the Greens Creek mine, that on a consolidated basis generated revenue of approximately $116 million in 2003, which is up from $85 million in 2001. Historically, the company's silver operations have experienced total production costs, excluding by- product credits, in excess of market prices. As a result, the company has been unable to generate a profit over the last ten years, excluding asset write downs, until 2002 and 2003. Hecla's only designated gold operations are in Venezuela, a region with a history of significant political and economic instability. Indicated reserve life is also very limited in Venezuela. The La Camorra mine produced approximately 127,000 ounces of gold in 2003, and proven and probable ore reserves declined to 221,000 ounces of contained gold at year-end. Hecla has plans to begin production at the Isidora mine within the La Camorra property and there are other mineralized areas in the vicinity of La Camorra. Currently, the Isidora mine is estimated to have proven and probable ore reserves containing approximately 421,000 ounces of gold as of May 2004. Although to date the company has been relatively successful in operating in Venezuela, there continues to be significant challenges to operating in this region. Hecla's environmental liabilities for costs associated with mine closure, land reclamation, and other environmental matters could increase significantly and remain a concern for Moody's. As of June 30, 2004, the company had reserved approximately $70 million for these costs. The most significant potential environmental liability is associated with the Coeur d' Alene River Basin in northern Idaho, where EPA studies estimate clean-up costs at about $360 million, but where third party claims for natural resource damages range from $900 million to $1.8 billion. Phase II of this trial, which is supposed to address natural resource damages and an appropriate clean-up plan, is scheduled to commence in April 2005. Hecla and one other mining company are the only two defendants in this litigation. The stable rating outlook reflects the company's improved balance sheet, significant cash balances, and the likelihood that liquidity over the next 12 to 18 months should remain reasonable. Factors that could negatively impact the ratings and /or outlook would be a deterioration in operating cash flows or a decrease in liquidity or an increase in debt levels as a result of a sizable acquisition or unfavorable rulings regarding environmental liabilities. Hecla Mining Company, headquartered in Coeur d' Alene, Idaho, is a precious metals company with mining operations in the United States, Mexico, and Venezuela. HOMESTEADS AT NEWTOWN: Voluntary Chapter 11 Case Summary -------------------------------------------------------- Debtor: The Homesteads at Newtown, LLC 497 Three Corners Road Guilford, Connecticut 06437 Bankruptcy Case No.: 04-34262 Type of Business: The Debtor is an affiliate of The Homestead Community at Newton, LLC. Chapter 11 Petition Date: September 10, 2004 Court: District of Connecticut (New Haven) Judge: Lorraine Murphy Weil Debtor's Counsel: Mark R. Jacobs, Esq. Jacobs Partners LLC Merritt View 383 Main Avenue Norwalk, Connecticut 06851 Tel: (203) 846-6622 Estimated Assets: $10 Million to $50 Million Estimated Debts: $1 Million $10 Million The Debtor did not file a list of its 20 largest creditors. LAIDLAW INTERNATIONAL: Vicki A. O'Meara Resigns as Director ----------------------------------------------------------- Laidlaw International (NYSE:LI) reported the resignation of Vicki A. O'Meara from its Board of Directors. Ms. O'Meara, the Chief of Corporate Operations for Ryder Systems, Inc., resigned for personal business reasons. Peter E. Stangl, Chairman of the Board of Directors of Laidlaw International, said, "On behalf of the Board and the management team, I would like to recognize and thank Vicki for the many contributions she made to Laidlaw International in the first year following its reorganization. We will miss her and the insights she provided to the Board." Headquartered in Arlington, Texas, Laidlaw, Inc., now known as Laidlaw International, Inc., -- http://www.laidlaw.com/-- is North America's #1 bus operator. Laidlaw's school buses transport more than 2 million students daily, and its Transit and Tour Services division provides daily city transportation through more than 200 contracts in the US and Canada. The Company filed for chapter 11 protection on June 28, 2001 (Bankr. W.D.N.Y. Case No. 01-14099). Garry M. Graber, Esq., at Hodgson Russ LLP represents the Debtors. Laidlaw International emerged from bankruptcy on June 23, 2003. LEGENDS VILLAGE: Case Summary & 2 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Legends Village, L.P. 5225 Village Creek Drive, Suite 400 Plano, Texas 75093 Bankruptcy Case No.: 04-44186 Chapter 11 Petition Date: September 7, 2004 Court: Eastern District of Texas (Sherman) Judge: Brenda T. Rhoades Debtor's Counsel: Barton M. Reeder, Esq. William L. Wolf, P.C. 5949 Sherry Lane, Suite 550 Dallas, TX 75225 Tel: 214-750-1395 Fax: 214-368-1395 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 2 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Huffcut & Associates Engineering services $15,000 performed Pate Engineers Northwest Engineering services $5,000 performed LNR CDO: Fitch Puts BB & B Ratings on $74 Million of Notes ---------------------------------------------------------- Fitch Ratings affirmed the ratings of 13 class of notes issued by LNR CDO 2003-1, Ltd./Corp., which closed July 2, 2003. These rating actions are effective immediately: -- $99,160,000 class A notes affirmed at 'AAA'; -- $78,184,000 class B notes affirmed at 'AA'; -- $34,000,000 class C-FL notes affirmed at 'A'; -- $9,860,000 class C-FX notes affirmed at 'A'; -- $5,000,000 class D-FL notes affirmed at 'A-'; -- $40,766,000 class D-FX notes affirmed at 'A-'; -- $48,000,000 class E-FL notes affirmed at 'BBB'; -- $41,626,000 class E-FX notes affirmed at 'BBB'; -- $6,000,000 class F-FL notes affirmed at 'BBB'; -- $44,724,000 class F-FX notes affirmed at 'BBB'; -- $12,204,000 class G notes affirmed at 'BBB-'; -- $30,511,000 class H notes affirmed at 'BB'; -- $43,478,000 class J notes affirmed at 'B'. LNR CDO 2003-1 is a static collateralized debt obligation -- CDO -- managed by Lennar Partners, Inc. The collateral of LNR CDO 2003-1 is composed of non-investment grade and unrated collateralized mortgage-backed securities -- CMBS. Payments are made on the 23rd of each month. Included in this review, Fitch discussed the current state of the portfolio with the asset manager and its portfolio management strategy. According to the August 23, 2004 trustee report, the credit quality of the portfolio has improved since the closing date, as illustrated by a decrease in the Fitch average rating distribution test from 60.55 to 59.23 (B+/B). LNR CDO 2003-1 is passing all of its overcollateralization -- OC, supplemental OC and interest coverage tests. Unrated assets and assets rated 'CCC+' or lower represented approximately 23.96% of the collateral. The ratings of the class A, B, C-FL and C-FX notes address the likelihood that investors will receive full and timely payments of interest, as per the governing documents, as well as the stated balance of principal by the stated maturity date. The ratings of the class D-FL, D-FX, E-FL, E-FX, F-FL, F-FX, G, H and J notes address the likelihood that investors will receive ultimate and compensating interest payments, as per the governing documents, as well as the stated balance of principal by the stated maturity date. Fitch will continue to monitor LNR CDO 2003-1 closely to ensure accurate ratings. MARINER: MHG Asks Judge Walrath to Disallow Howard's $1M Claim -------------------------------------------------------------- Pursuant to Section 502 of the Bankruptcy Code and Rule 3007 of the Federal Rules of Bankruptcy Procedure, the Reorganized Mariner Health Group, Inc. Debtors object to Claim No. 1054 filed by Katherine Howard, as it is time-barred under the applicable state statute of limitations. The MHG Debtors ask Judge Walrath to disallow Ms. Howard's Claim. According to Mark D. Collins, Esq., at Richards Layton & Finger, P.A., in Wilmington, Delaware, the automatic stay has previously been lifted on November 26, 2002, and Ms. Howard has failed to bring suit within the applicable two-year limitations period as extended by Section 108(c) of the Bankruptcy Code. The statute of limitations for the Claim expired on December 26, 2002, which is 30 days after the stay was lifted. Ms. Howard is, therefore, not entitled to seek recovery from the Debtors. Ms. Howard filed Claim No. 1054 for $1,000,000 on September 6, 2000, seeking recovery for alleged personal injury or wrongful death. Ms. Howard's Claim alleges that the date of loss was July 16, 1999. (Mariner Bankruptcy News, Issue No. 61; Bankruptcy Creditors' Service, Inc., 215/945-7000) MEADOWS OPERATIONS: Case Summary & 17 Largest Unsecured Creditors ----------------------------------------------------------------- Debtor: Meadows Operations, Inc. dba Elk Meadows Ski & Summer Resort P.O. Box 511 Beaver, Utah 84713 Bankruptcy Case No.: 04-34702 Type of Business: The Debtor is a resort that provides full services ski and snowboard rentals. See http://www.elkmeadows.com/ Chapter 11 Petition Date: September 10, 2004 Court: District of Utah (Salt Lake City) Judge: William T. Thurman Debtor's Counsel: Jeffrey N. Walker, Esq. Holman & Walker 9537 South 700 East Sandy, UT 84070 Tel: 801-990-4990 Estimated Assets: $10 Million to $10 Million Estimated Debts: $10 Million to $10 Million Debtor's 17 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Jerry Case Promissory note $250,000 EMSSD SID bond payment and $170,025 services (water, snow, etc.) Beaver County Treasure Property taxes $101,054 John Hubbard Promissory note $75,000 Wooded Ridge Homeowners Association dues $23,211 W. W. Clyde Construction services $20,824 Snowflake Homeowners Association dues $4,055 Utah Power Electricity $2,654 Dopplemayr CTEC, Inc. Chairlift services $2,651 Keith Hutchinson Rental of signboard $2,250 Holly Ridge Homeowners Association dues $2,150 Stonewood Homeowners Association dues $1,320 Cornelius Online Website services $900 Riverside Storage Storage fees $515 Scholzen Products Equipment rental $444 Amerigas Propane $374 Jones Waldo, Holbrook & Legal services $202 McDonough MERGANSER CAPITAL: Case Summary & 4 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Merganser Capital Corporation 50 Briar Hollow Lane, Suite 210 East Houston, Texas 77027 Bankruptcy Case No.: 04-42925 Type of Business: Real Estate Chapter 11 Petition Date: September 7, 2004 Court: Southern District of Texas (Houston) Judge: Marvin Isgur Debtor's Counsel: Richard L. Fuqua, II, Esq. Fuqua & Keim 2777 Allen Parkway, Suite 480 Houston, TX 77019 Tel: 713-960-0277 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 4 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ ARCOA Advisors, LLC $50,000 Badger Law Office $10,000 Briggs & Veselka Co. $2,250 Thomas L. Easley, CPA $1,750 MIRANT CORPORATION: Court Approves Sullivan Settlement Agreement ---------------------------------------------------------------- Judge Lynn of the U.S. Bankruptcy Court for the Northern District of Texas approved the Settlement Agreement, dated July 28, 2004, among: * Mirant New York, Inc., a Mirant Corporation debtor-affiliate on behalf of itself and Mirant NY-Gen, LLC; * the Town of Bethel, the Town of Forestburgh, the Town of Lumberland; * the Monticello Central School District and the Eldred Central School District; * the Assessor for each of the Towns; * the Board of Assessment Review of each of the Towns; and * Sullivan County. Ian T. Peck, Esq., at Haynes and Boone, LLP, in Dallas, Texas, relates that in July 1999, the Debtors purchased the Bethel Power Plant, the Forestburgh Power Plant and the Lumberland Power Plant, along with other power plants in New York State, from O&R and Consolidated Edison Company of New York, Inc. Of the $475,000,000 paid for the assets, the Debtors allocated $15,321,594 to the Sullivan Power Plants. The Sullivan Power Plants are capable of generating a combined 26 megawatts of electricity at peak operations. Because the Sullivan Power Plants are located in the Towns, they are subject to yearly ad valorem taxes by the Sullivan Tax Authorities. After the Debtors' purchase, the Sullivan Power Plants have been taxed on these equalized assessments of value: Year Bethel Forestburgh Lumberland ---- ------ ----------- ---------- 2000 $8,137,572 $18,357,364 $39,173,060 2001 8,487,425 18,823,930 39,378,901 2002 8,659,612 22,409,729 55,537,408 2003 8,400,745 23,385,212 40,395,709 Mr. Peck informs Judge Lynn that there were no capital improvements on any of the Sullivan Power Plants between 2000 and 2003. For each year from 2000 to 2003, the Sullivan Tax Authorities levied real property taxes against the Sullivan Power Plants in excess of $2,000,000. In 2003, those taxes accounted for 58% of the Sullivan Power Plants' combined operating expenses. For what the Debtors saw to be an enormous disparity between the $15,321,594 aggregate book value of the Sullivan Power Plants in 1999 and the aggregate assessed value in subsequent years, Mirant NY timely commenced tax certiorari proceedings in New York state court to challenge the valuation by the Sullivan Tax Authorities. In the Sullivan State Proceedings, Mirant NY claimed a reduction in the assessed values of the Sullivan Power Plants, which would result in refunds of about $5,512,526. According to Mr. Peck, the Sullivan State Proceedings did not materially progress in state court. Indeed, from 2000-2002, the Sullivan State Proceedings were not assigned to a judge, no discovery had taken place and no motions were filed. Also, the Sullivan State Proceedings were essentially suspended while Mirant and the Town of Haverstraw, New York negotiated and executed a settlement agreement presumably resolving a similar real property tax dispute. Mirant believed that the Haverstraw Settlement would serve as a model settlement for the Sullivan State Proceedings. However, Haverstraw reneged within a week of signing the Haverstraw Settlement. Mirant sought to enforce the Haverstraw Settlement, but in April 2003, the New York Appellate Division reversed the trial court decision and refused to enforce the Haverstraw Settlement. To ensure the efficient administration of the Debtors' bankruptcy estates and to provide accelerated visibility to the ongoing financial viability of their generation assets in New York, the Debtors asked the Bankruptcy Court to determine their correct New York real property tax liabilities related to the New York Power Plants, including the Sullivan Power Plants. The Sullivan Tax Authorities opposed the Court's exercise of jurisdiction over the 505 Motion. On January 8, 2004, the Court established its jurisdiction over the 505 Motion, and ruled that it would exercise that jurisdiction. The January 8 Order was crafted to allow the Sullivan State Proceedings to proceed to trial in New York provided, among other things, that they could be timely adjudicated. In any event, the Court ensured a timely adjudication of the Debtors' tax disputes with the Towns under the 505 Motion by scheduling a trial beginning on September 20, 2004. To preserve its rights under the Bankruptcy Code, including its setoff rights under Section 558 of the Bankruptcy Code, Mirant NY did not pay its 2003 tax bills of $2,223,404 issued by the Sullivan Tax Authorities: (a) County/Town tax bills issued for the tax period January 1, 2003 to December 31, 2003, totaling $921,119; and (b) School District tax bills issued for the tax period July 1, 2003 to June 30, 2004, totaling $1,232,285. On April 1, 2004, the County paid the $2,223,404 of Unpaid 2003-2004 Sullivan Taxes to the Towns and the School Districts. Absent the Settlement Agreement, Mirant NY could eventually owe the County $2,223,404 for the assessment year 2003 plus applicable penalties and interest at a 12% annual statutory rate. Under the January 8 Order, the dispute between the Debtors and the Sullivan Tax Authorities are to be tried either by the Bankruptcy Court or the New York Court no later than September 2004. Given the Court's directive, the Debtors immediately began to prepare for trial in state court. The Debtors sought to depose Forestburgh's and Lumberland's assessors concerning the value of the Forestburgh Power Plant and the Lumberland Power Plant by notices of deposition dated May 14, 2004. Despite Forestburgh and Lumberland's protest, on June 23, 2004, the Court authorized the Debtors to depose the Forestburgh and Lumberland assessors for a limited time and scope. The Sullivan Tax Authorities proposed adjourning the depositions to discuss settlement of the Sullivan State Proceedings, which the Debtors agreed. The settlement discussions resulted in the parties' entry of a settlement agreement, which: (a) resolves the pending 2000, 2001, 2002 and 2003 real property tax disputes; (b) establishes a value for real property tax purposes for the Sullivan Power Plants through 2006, the maximum look- forward permitted by law; (c) reduces the equalized assessed value for the Bethel Power Plant by more than 66%, from $8,400,744 to $2,800,248; (d) reduces the equalized assessed value for the Forestburgh Power Plant by more than 66%, from $23,385,211 to $7,795,058; (e) reduces the equalized assessed value for the Lumberland Power Plant by more than 60%, from $40,395,709 to $16,058,700; and (f) reduces the tax assessments of the Sullivan Power Plants based on the "Original Assessments" as they appear on the New York tax assessment rolls by about 66% for 2002 to 2004 Assessment and 33% for 2001 Assessment. The Settlement Agreement does not change the Original Assessments for 2000. The Sullivan Tax Authorities owe Mirant NY $2,186,604 in refunds for the years 2000, 2001 and 2002. The Settlement Agreement further provides that: (1) The Sullivan Tax Authorities will waive all penalties and interests resulting from Mirant NY's non-payment of 2003 taxes, provided Mirant NY makes payment, by way of offset, no later than January 31, 2005; (2) The Sullivan Tax Authority Entities will release the Mirant Entities from the filed proofs of claim and any tax, penalty, interest or charge levied prior to 2004 on the Sullivan Power Plants, including the Unpaid 2003-2004 Sullivan Taxes; (3) The Mirant Entities will release the Sullivan Tax Authority Entities from all claims in the Sullivan State Proceedings and the 505 Action; and (4) The parties will use their best efforts to obtain timely entry of a New York State Court order dismissing the Sullivan State Proceedings with prejudice by executing a stipulation of discontinuance. Mr. Peck contends that the Settlement Agreement is favorable to the Debtors because: (i) it provides the Debtors with refunds for past years and an 83% tax reduction for current and future years; (ii) it provides a means by which to avoid the litigation costs associated with the tax disputes concerning the Sullivan Power Plants, which are not inconsiderable; (iii) Mirant NY will be able to close its books on all pre-2004 real property taxes relating to the Sullivan Power Plants without penalties and interests on the Unpaid 2003-2004 Sullivan Taxes; (iv) the Debtors avoid the risk of an adverse ruling on the valuation method applied; (v) the Debtors will have additional annual cash flow of about $4,555,806 for 2004 through 2006 based on the reduction of real property taxes; and (vi) it avoids additional cost in litigating the dispute. Moreover, the portion of the 505 Action in relation to the Sullivan Power Plants is dismissed with prejudice. 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) MISSION HEALTH: Wants Durham Jones as Bankruptcy Counsel -------------------------------------------------------- Mission Health Services asks the U.S. Bankruptcy Court for the District of Utah, Central Division, for permission to employ Durham Jones & Pinegar as its bankruptcy counsel. Durham Jones will: a) give the Debtor advice of its rights, powers and duties as a debtor-in-possession; b) give the Debtor advice in fulfilling its duties; c) prepare on behalf of the Debtor or assist in preparing motions, applications, reports, pleadings and papers in connection with this case; and d) assist and advise the Debtor on matters as the Debtor sees fit. Kenneth L. Cannon II, Esq., and Penrod W. Keith, Esq., will be the lead attorneys in this proceeding. Mr. Cannon discloses that the Debtor paid a $200,000 retainer. For their professional services, Mr. Cannon will bill the Debtor at an hourly rate of $270 while Mr. Keith will charge at $250 per hour. Associates who will provide assistance will charge the Debtor from $130 to $175 and paralegals will bill at $100 per hour for their services. Durham & Jones does not have any interest adverse to the Debtor or its estate. Headquartered in Layton, Utah, Mission Health Services, operates a nursing and rehabilitation facilities. The Company filed for protection on August 30, 2004 (Bankr. D. Utah Case No. 04-34063). When the Debtor filed for protection from its creditors, it estimated more than $1 million in assets with more than $10 million in debts. MIV THERAPEUTICS: Successfully Completes HAp Coating Safety Trials ------------------------------------------------------------------ MIV Therapeutics Inc. (MIVT:OTCBB), successfully completed in vivo safety studies on its proprietary, biocompatible Hydroxyapatite (HAp) nano-film coating, designated for passive application on cardiovascular stents and other implantable medical devices. The results of this study have shown that the stent coating is safe and did not cause any adverse arterial response. The scientific panel conducting the study concluded that "HAp coated stents passed all outlined safety criteria and there were no signs of adverse reaction to the coating. After the 28-day implant, coated stents performed favourably against control stents in that they displayed an advanced stage of healing, with complete endothelialization, a stable neointima and very few luminal monocytes. Dr. Tom Troczynski, Ph.D., MIVT Vice President of Coatings and Professor of Ceramics at The University of British Columbia stated, "Positive results from these animal safety studies performed on our passive, nano-film HAp coating provide a sound foundation for our other advanced coating technologies which are intended to broaden the scope of potential applications to include a range of implantable medical devices. These devices and implants may greatly benefit from the unique and completely biocompatible properties of Hydroxyapatite. Our research and development program at the University of British Columbia is in the final stages of developing HAp coatings with considerable drug eluting capabilities. HAp coated stainless steel and cobalt-chromium coronary stents were evaluated through in vivo tests in rabbit iliac arteries to determine implant safety and tissue response. Stents were examined after 3 days to determine both sub-acute thrombosis and the overall short-term response. Another group of animals was dedicated to the analysis of neointimal hyperplasia and medium-term healing effects 28 days after implantation. MIV Therapeutics collaborated with DISA Vascular (Pty.) Ltd., to plan and supervise the study. DISA Vascular has a successful record in the design and development of coronary and peripheral arterial stents. The animal trial titled "In Vivo testing of Hydroxyapatite-coated Stents" was conducted at the University of Cape Town. The histology studies were supervised by Dr. Benedict J. Page, Ph.D., at the Department of Anatomy and Histology, Faculty of Health Sciences of Stellenbosch University, South Africa. Neither of these institutions, nor the investigators involved in the above study, had any vested interest in the sponsors of the study. The study was conducted in line with recommendations provided in U.S. FDA 21 CFR, part 58, GLP (Good Laboratory Practices) regulations, ISO 14630: 1997, EN 12006-3:1999 prEN 14299: 2001 and additional guidelines provided by leading stent researchers (Scwartz and Edelman, Circulation 2002;106:1867-1873), in compliance with CE Mark and FDA requirements. Dr. Page noted: "Acute vessel injury and the physical presence of a stent in the vasculature stimulate the recruitment of inflammatory cells to the site of injury, the migration and proliferation of smooth muscle cells and resultant neointimal hyperplasia. These processes present tremendous opportunities for novel stent coatings such as MIV Therapeutics' hydroxyapatite coating. The histology results in this study have shown that the stent coating does not cause any adverse arterial response and has demonstrated safety in the rabbit model." Dr. Greg Starke, Ph.D., of DISA Vascular summarized: "The tests showed that the hydroxyapatite-coated stents passed all defined safety criteria and there were no signs of excessive inflammation, thrombosis or other adverse reactions to the coating." Alan Lindsay, Chairman, President and CEO of MIVT commented, "We are excited by the positive outcome of these preliminary animal studies which were executed and validated by independent experts in our field of investigation. The successful completion of these studies performed on our proprietary nano-film coating marks another critical milestone in the history of our company. The results support our firm belief in the exceptional performance of our biocompatible coating technologies. We are now ready to proceed to the next phase of development that will bring us closer to the commercialization of our coating technology." About DISA Vascular (Pty.) Ltd. DISA Vascular (Pty) Ltd., is an ISO 9001 and EN ISO 13485 certified company that specializes in the design and development of stents and related technologies, and has expertise in performing preclinical evaluations of stents and stent coating technologies, facilitated by research relationships with top research institutions in South Africa. About the Stellenbosch University Stellenbosch University is a leading academic and scientific research institution in South Africa. The University is ranked among the top four higher education institutions in South Africa in research productivity and is the forerunner in South Africa in establishing industry partnerships mostly through the South African government-supported funding. About the University of Cape Town The University of Cape Town is one of the leading research universities in South Africa due to the high number of researchers seen as world leaders in their fields. UCT's Faculty of Health Sciences is the oldest medical school in Southern Africa and, together with Groote Schuur Hospital, has been responsible for the world's first heart transplant in 1967, and for pioneering research that led to the development of the CAT scanner and the resultant award of the Nobel Prize in Physiology or Medicine to Allan Cormack in 1979. About MIV Therapeutics MIV Therapeutics is developing a "next generation" line of advanced biocompatible coatings for passive and drug-eluting application on cardiovascular stents and other implantable medical devices. MIV's ultra-thin coating has been designed to inhibit inflammatory response and restenosis. A Collaborative Research Agreement (CRA) between MIVI and the University of British Columbia received a research and development grant from the Natural Sciences and Engineering Research Council of Canada (NSERC) in 2002 for the development of HAp as a drug eluting coating. Hydroxyapatite is a biocompatible, porous material that makes up the bone mineral and the matrix of teeth. It is widely used as a bone substitute material and for coating implantable fixation devices in orthopedic, dental and other applications. MIVT's ultra-thin coating formulation is designed primarily to protect surrounding tissue from the chemical interaction of metal stents. The Company has progressed to the next development stage, which is expected to finalize the drug-eluting research and development program. Going Concern Doubt As reported in the Troubled Company Reporter on August 10, 2004, the report of MIV Therapeutics, Inc.'s former accountants, Morgan & Company, noted that MIV has suffered losses from operations and has a working capital deficiency that raises substantial doubt about its ability to continue as a going concern. NORTEL NETWORKS: Twenty-Six Customers Adopt Networking Solutions ---------------------------------------------------------------- Nortel Networks (NYSE:NT)(TSX:NT) reported that key customers in a number of industries and from across the globe who are adopting networking solutions that enable multimedia applications to be shared across an enterprise seamlessly. The benefit is the elimination of geographic constraints so that employees who travel or are located at branch offices, home offices and other areas outside of the headquarters facilities can have a work presence virtually identical to that of their headquarters-based counterparts. Nortel Networks presented a collection of new communications solutions designed to enable further freedom from geographic restraint for enterprise workers Industry-leading companies, government entities and institutions worldwide are deploying these solutions to increase productivity and integrate more tightly with customers, partners and stakeholders, including: * Andrade Gutierrez; * Barton HealthCare System; * BASF; * Cadence Design Systems; * City of Coquitlam; * City of Seattle; * Erlanger Health System; * Federal Express Institute of Technology at the University of Memphis; * Franklin W. Olin College of Engineering; * Greater Manchester Police; * Kaiser Permanente; * Korean Broadcasting Service; * Universidade Metodista; * Memorial Healthcare; * Monster Worldwide Technologies; * Nomura International Plc.; * San Francisco Giants; * Sigue Corp.; * Sixbell; * SK Telecom; * State of Washington; * Sutter Health; * Texas A&M University; * University of Connecticut, School of Business; and * the Virginia State Police. "Regardless of what industry vertical an entity serves, the ability to tightly integrate the extended workforce, customers, partners and constituents enables a more responsive enterprise," said Zeus Kerravala, vice president, Enterprise Infrastructure, Yankee Group. "In the private sector, that provides the impetus for greater customer loyalty, thus providing greater market differentiation. For government customers, it enables them to serve the populace in the most responsive manner possible, increasing collaboration to provide better and more responsive municipal services. The Virtual Enterprise is a powerful tool for those who have adopted this approach and represents the future of how enterprises will conduct business." The virtual enterprise solution based on Nortel Networks MCS 5100 has enabled Monster Worldwide Technologies to provide collaborative multimedia communication services to a geographically distributed workforce, including remote workers. Monster Worldwide Technologies is the parent company of Monster(R), the leading global online careers property, and is the world's largest Yellow Pages advertising agency, one of the world's largest recruitment advertising agency networks, and a provider of direct marketing services. "The ability for our people to communicate with one voice, regardless of where they are and how they connect to the network, enables us to serve our customers with unprecedented familiarity, and that leads to unprecedented loyalty," said Brian Farrey, president, Monster Worldwide Technologies. "Nortel Networks MCS 5100 provides the most innovative set of applications to deliver truly consolidated, multimedia capabilities in a well-designed comprehensive solution." Healthcare companies are realizing the benefits of the Virtual Enterprise as well. Erlanger Health System has teamed with Nortel Networks to help healthcare professionals better serve their patients and provide a more responsive information system that provides critical data where it is needed in a timely fashion. Drawing together the many campuses and facilities of the Erlanger Health System enables them to operate as a single entity to ensure that patient information can be sent to the proper authority without undue delay, which is of particular importance in the healthcare industry. The cost savings from the deployment was another key benefit. "Teaming with Nortel Networks has allowed us to put the information tools in the hands of our staff to improve patient care and that is the most important consideration in this industry," said John Haltom, Erlanger Health System. "After we deployed the gear, it was obvious that it was not only a nice fit for our organization but ultimately and -- most importantly -- would greatly reduce the cost of providing services to our staff and community. Our biggest benefit was the immediate feeling that we -- our IT staff -- are now in control of the network, not the other way around." Tom Ogg, vice president and chief information officer, Memorial Healthcare, said, "We are very excited about this new technology. It allows us to address our security concerns while accomplishing our goals of providing timely, mobile, and comprehensive healthcare information at the patient's bedside. It helps us increase our quality of care by increasing our speed of care." Government agencies are better equipped to serve their constituents and maximize stewardship of public funds by adopting this approach. The City of Seattle is a national leader in its use of technology to inform and engage citizens in governmental affairs. The City chose Nortel Networks as a key partner in executing their mission of providing Seattle's citizens with increased access to City staff, departments, agencies and their services. "The City operates as a virtual contact center in the constituent's eyes, so we count on our communications technologies to help us enable voice, data, and contact center solutions that make sense. Using these technologies, the City can be more responsive to the needs of our citizens and improve communications across departments. Nortel products are used extensively to meet these goals," said Dean Louis Arnold, Director of Communications Technologies - Information Technology, City of Seattle. The City of Coquitlam, a fast-growing, affluent city in British Columbia, Canada, strives to be a leader and innovator in delivering municipal services. "We needed a completely new network with leading-edge technologies to support our vision," said Rick Adams, manager of Information and Communications Technology, City of Coquitlam. That leading-edge technology came from Nortel Networks Communications Server 1000 Release 4.0, converging widespread city departments and facilities into a unified communication network with new levels of convenience, productivity and performance for city employees and residents and saving an estimated CDN $250,000 a year in operational expense, Adams said. Leading educational institutions are also providing greater integration among stakeholders by adopting the Virtual Enterprise. Texas A&M University is using Nortel Networks equipment to provide collaborative capabilities for researchers, faculty, staff and students, enabling them to tap the Internet to further the goals of education. Universidade Metodista de Sao Paulo has been upgrading their network and plans to implement Nortel Networks IP multimedia solutions to enable new academic management applications that will allow students and faculty to interact with the University and among themselves, through theme forums and other collaborative tools. The University will also offer new specialization courses based on the Internet (e-learning), IP telephony service, video streaming and inclusion of its students' projects via the Internet like the Radio Metodista, programming produced by its Radio and TV production students. "Besides the new services, the new infrastructure will also offer improved security, improved time of response and enable new projects like Business Intelligence, previously limited by the network capability," said Celso Ide, project manager for the University. Mauricio Pelanda, Telecom and Networks manager, Universidade Metodista said, "In a Virtual Enterprise environment, our students and staff can access the network at anytime, no matter where they are. This level of mobility and flexibility will truly enhance the educational experience at our University." Franklin W. Olin College of Engineering's Virtual Enterprise will provide their faculty and students with Nortel Networks converged desktop capabilities, allowing them to access their networks regardless of time, location or device. "As one of the top engineering schools, we need to ensure that we employ the cutting- edge technologies to ensure our faculty and students have access to the resources they need to conduct research and study in a highly-competitive environment," said Joanne Kossuth, chief information officer, Franklin W. Olin College of Engineering. "That includes students cross registering from institutions that we have articulation agreements with. Our ability to recruit and retain the nation's best and brightest is predicated on our ability to not only offer a top-notch curriculum, but also to implement the network resources that enable us to 'walk the walk' when it comes to demonstrating the promise of technology in higher education and providing the resources for cutting-edge study and research." Creating one of the most technologically-advanced business schools in New England, the University of Connecticut School of Business US$27 million research and learning Financial Accelerator Laboratory provides students with multimedia and Web capabilities to support a variety of advanced eLearning programs focused on cutting-edge financial research. "The multimedia networking solution will really differentiate our Business School, creating the most cutting-edge facilities for our students and faculty to break new ground in financial research and modeling," said Michael Vertefeuille, IT director, University of Connecticut School of Business. Federal Express Institute of Technology at the University of Memphis is using MCS 5100 to provide a collaborative environment among its researchers and scientists to become the 'Workplace of the Future.' By provisioning IP Telephony and multimedia applications to all staff, researchers can now use their laptops and answer their phones from a single number regardless of location - office, lab or even a hotel room. With the implementation of MCS 5100, all users can easily set up applications, including videoconferencing, instant messaging, white boarding and file exchange. As a global innovation leader, Nortel Networks enriches consumer and business communications worldwide by offering converged multimedia networks that eliminate the boundaries among voice, data and video. These networks use innovative packet, wireless, voice and optical technologies and are underpinned by high standards of security and reliability. For both carriers and enterprises, these networks help to drive increased profitability and productivity by reducing costs and enabling new business and consumer services opportunities. Nortel Networks does business in more than 150 countries. For more information, visit Nortel Networks on the Web at http://www.nortelnetworks.com/ * * * As reported in the Troubled Company Reporter on August 18, 2004, the Integrated Market Enforcement Team of the Royal Canadian Mounted Police recently advised Nortel that it will commence a criminal investigation into the Company's financial accounting situation. As reported in the Troubled Company Reporter on August 12, 2004, Nortel's directors and officers, and certain former directors and officers are facing allegations from certain shareholders in the U.S. District Court for the Southern District of New York that the directors and officers breached fiduciary duties owed to the Company during the period from 2000 to 2003. NRG ENERGY: Inks Pact to Sell Kendall Generating Station in Ill. ---------------------------------------------------------------- NRG Energy, Inc., (NYSE:NRG) has reached an agreement for the sale of its 1,160 megawatt generating plant in Minooka, Illinois to an affiliate of LS Power Associates, L.P. NRG has the right to reacquire a 40 percent interest in the project within a 10-year period, for a nominal amount. The transaction will result in the deconsolidation of approximately $450 million in debt from NRG's consolidated balance sheet. In addition, NRG will receive $1 million in cash proceeds. The transaction is expected to close during the fourth quarter of 2004, subject to completion of conditions precedent, including obtaining necessary lender consents and regulatory approvals. Given NRG's right to reacquire the 40 percent interest in the project, the transaction will be treated as a partial sale for accounting purposes. NRG expects to record a nonrecurring non- cash loss in the third quarter of approximately $22 million as a result of this agreement. "The sale of Kendall, once completed, will mark another major milestone in our effort to reduce the debt on NRG's balance sheet, while preserving the strength of our portfolio in our core regions," said David Crane, NRG's President and Chief Executive Officer. "With the sale of Kendall, we are nearing the end of our noncore asset divestment initiative enabling us to focus on managing our core assets intensively, implementing further cost control measures and seeking to enhance our ability to supply the load serving entities in our core regions." LS Power Associates, L.P., is managed by LS Power Development, LLC, and is the business successor to LS Power Corporation and LS Power, LLC. LS Power and its predecessors have developed and owned over 5,000 MW of generation capacity with an aggregate cost basis of approximately $2.9 billion. NRG Energy, Inc., owns and operates a diverse portfolio of power- generating facilities, primarily in the United States. Its operations include baseload, intermediate, peaking, and cogeneration facilities, thermal energy production and energy resource recovery facilities. The company, along with its affiliates, filed for chapter 11 protection (Bankr. S.D.N.Y. Case No. 03-13024) on May 14, 2003. The Company emerged from chapter 11 on December 5, 2003, under the terms of its confirmed Second Amended Plan. James H.M. Sprayregen, P.C., Matthew A. Cantor, Esq., and Robbin L. Itkin, Esq., at Kirkland & Ellis, represented NRG Energy in its $10 billion restructuring. OREGON STEEL: Files Registration Statement for Proposed Offering ---------------------------------------------------------------- Oregon Steel Mills, Inc., (NYSE:OS) filed a registration statement on Form S-3 with the U.S. Securities and Exchange Commission relating to a proposed public offering of 7,500,000 shares of its common stock and an additional 1,125,000 shares that may be purchased by the underwriters to cover over-allotments. All of the shares will be issued and sold by the Company. The Company intends to use the net proceeds from the offering to satisfy the obligation in connection with the Settlement of the labor dispute at its majority-owned CF&I Steel L.P. d.b.a. Rocky Mountain Steel Mills, and to construct a spiral weld pipe mill at an estimated cost of $35 million, for general corporate purposes, among others. A registration statement relating to these securities has been filed with the SEC but has not yet become effective. The securities may not be sold under this registration nor may offers to buy be accepted prior to the time the registration statement becomes effective. This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any state in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state. The registration statement and all other SEC filings by the Company are available for review at http://www.sec.gov/A written prospectus, when available, meeting the requirements of Section 10 of the Securities Act of 1933 may also be obtained from: L. Ray Adams Vice President Finance Oregon Steel Mills, Inc. 1000 SW Broadway, Suite 2200 Portland, Oregon 97205 Oregon Steel Mills, Inc., is organized into two divisions. The Oregon Steel Division produces steel plate, coil, welded pipe and structural tubing from plants located in Portland, Oregon, Napa, California and Camrose, Alberta, Canada. The Rocky Mountain Steel Mills Division, located in Pueblo, Colorado, produces steel rail, rod, bar, and tubular products. * * * As reported in the Troubled Company Reporter on May 28, 2004, Standard & Poor's Ratings Services revised its outlook on Oregon Steel Mills, Inc., to stable from negative. At the same time, Standard & Poor's affirmed its ratings on the Portland, Oregon- based company. The company has about $310 million in total debt. "The outlook revision reflects the improvement to the company's financial profile due to the strong and rapid rebound in the steel industry," said Standard & Poor's credit analyst Paul Vastola. Favorable market conditions should remain at least through most of 2004 and enable the company to bolster its liquidity and financial performance. The corporate credit rating on OSM is affirmed at 'B'. Also affirmed are the 'B' rating on the company's $305 million first mortgage notes due 2009, and the 'B+' rating on a $65 million senior secured credit facility due June 30, 2005. OREGON STEEL: Completes Final Settlement of Labor Dispute Pact -------------------------------------------------------------- Oregon Steel Mills, Inc., (NYSE:OS) finalized the settlement of the labor dispute at its majority-owned CF&I Steel L.P. d.b.a. Rocky Mountain Steel Mills. The Settlement ends a labor dispute that has been ongoing for more than six years between RMSM and the United Steelworkers of America and implements new five-year collective bargaining agreements. The Settlement was conditioned on: (1) its approval by stockholders of New CF&I, Inc., a majority-owned subsidiary of the Company and the general partner of RMSM; (2) ratification of new collective bargaining agreements between RMSM and the Union; (3) approval of the Settlement by the National Labor Relations Board and the dismissal of cases pending before the NLRB related to the labor dispute; and (4) various pending legal actions between the Company, New CF&I and RMSM and the Union being dismissed. The Settlement resulted in the dismissal of all court actions between the Company and the Union and the NLRB's issuance of an Order Withdrawing Complaints and Conditionally Approving Withdrawals of Charges related to the labor dispute and includes the ratification of new five-year collective bargaining agreements at RMSM. The Settlement called for the establishment of a trust and on September 10, 2004, the Rocky Mountain Steel Mills -- United Steelworkers of America Back Pay Trust was established. As part of the tentative settlement, the Company, on behalf of RMSM, had originally planned to issue four million shares of Company common stock to the Trust. On September 10, 2004, the parties agreed instead that the Trust would receive cash in an amount equal to the gross proceeds from the sale of four million shares of Company common stock in an underwritten stock offering. The Company, after consultation with the Union, will determine the price at which the four million shares of common stock will be sold in the offering. The other terms and conditions of the Settlement have not changed from those disclosed in the Company's quarterly report on Form 10-Q for the quarter ended June 30, 2004. For additional details of the Settlement please review the Company's Registration Statement on Form S-3 filed today with the Securities and Exchange Commission. As in prior quarters, the Company will continue to adjust the Settlement charges for the change in the price of the Company's common stock through the date of pricing of the offering. In addition, as previously disclosed, the Settlement includes an early retirement option with immediate enhanced pension benefit for certain bargaining unit employees, based on seniority. As employees accept the early retirement benefits, the Company expects to record an additional charge during the remainder of 2004 estimated at approximately $6.8 million related to these benefits. The enhancements to pension and post retirement medical benefits for non-early retirees will be accounted for prospectively on the date at which plan amendments occur pursuant to the new five-year collective bargaining agreements in accordance with SFAS No. 87 and SFAS No. 106. Oregon Steel Mills, Inc., is organized into two divisions. The Oregon Steel Division produces steel plate, coil, welded pipe and structural tubing from plants located in Portland, Oregon, Napa, California and Camrose, Alberta, Canada. The Rocky Mountain Steel Mills Division, located in Pueblo, Colorado, produces steel rail, rod, bar, and tubular products. * * * As reported in the Troubled Company Reporter on May 28, 2004, Standard & Poor's Ratings Services revised its outlook on Oregon Steel Mills Inc. to stable from negative. At the same time, Standard & Poor's affirmed its ratings on the Portland, Oregon- based company. The company has about $310 million in total debt. "The outlook revision reflects the improvement to the company's financial profile due to the strong and rapid rebound in the steel industry," said Standard & Poor's credit analyst Paul Vastola. Favorable market conditions should remain at least through most of 2004 and enable the company to bolster its liquidity and financial performance. The corporate credit rating on OSM is affirmed at 'B'. Also affirmed are the 'B' rating on the company's $305 million first mortgage notes due 2009, and the 'B+' rating on a $65 million senior secured credit facility due June 30, 2005. OWENS CORNING: Uses Intelligroup's SAP's CRM 3.0 for HOMExperts --------------------------------------------------------------- Intelligroup, Inc., (Nasdaq: ITIG), a leading global provider of strategic IToutsourcing services, reported the successful implementation of SAP's CRM 3.0 for HOMExperts, the home improvement, maintenance and repair division of Owens Corning. Intelligroup worked with Owens Corning to integrate disparate customer billing information into their core CRM system to significantly improve customer service, cost tracking, and accounts payable and receivable controls. "Effectively managing our customer contracts is fundamental to our business success and essential for our growth," said Paul Fortner, Director Enterprise Architecture at Owens Corning. "Intelligroup was instrumental in our strategy to create a new, robust CRM system that allows us to better manage regional, line-of-business, and job cost profitability for competitive advantage." Intelligroup upgraded CRM functionality to support customer contract management and work scheduling, including job tracking, revenue/cost planning, payroll hours, and billing. SAP R/3 Financials, Controlling, and Material Management modules were implemented throughout nine U.S. locations to provide purchasing and inventory management functionality. SAP CRM and R/3 were integrated with BW 3.0 to provide business intelligence reporting. Technical development was supported by Intelligroup's offshore Advanced Development Center (ADC) in Hyderabad, India. By leveraging Intelligroup's onsite/offshore delivery model, the aggressive four-month delivery schedule was cost-effectively met without compromise to quality. "Clients like Owens Corning are often surprised by how significant business process improvement results can be with CRM systems," said Santosh Menon, Director, CRM Practice, Intelligroup, Inc. "It's gratifying to work on strategic projects like these that have such an impact on our clients' businesses." About Intelligroup Intelligroup is a strategic outsourcing partner to the world's largest companies. Its proven onsite/offshore delivery model has enabled hundreds of customers to accelerate results and reduce costs by up to 50 percent. With deep expertise in industry- specific enterprise solutions, Intelligroup has earned a reputation for consistently exceeding client expectations. Intelligroup develops, implements and supports IT solutions for some of the largest U.S. school systems and global corporations including Colgate Palmolive, Eastman Chemical, Hitachi and Steelcase. 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 USA: Taps Mahoney Cohen & Company as Accountants --------------------------------------------------------- Parmalat USA Corporation and its U.S. debtor-affiliates sought permission from the U.S. Bankruptcy Court for the Southern District of New York to employ Mahoney Cohen & Company, CPA, P.C., as their accountants, nunc pro tunc to July 26, 2004. As reported in the Troubled Company Reporter on September 7, 2004, Mahoney will: -- provide tax compliance services, consisting of preparation of 2003 and 2004 federal, state and local corporate tax returns, tax consulting services; -- represent the U.S. Debtors before various taxing authorities; -- perform an audit of the Debtors' financial statements for the year ended December 31, 2004, and, if needed, the year ended December 31, 2003; and -- perform any other services that it deems necessary in its role as accountants to the Debtors or that may be requested by the Debtors or their professionals. The U.S. Debtors believe that Mahoney is well qualified and able to represent them in a cost-effective, efficient and timely manner. Since July 26, 2004, Mahoney has provided substantial work for the Debtors, including an analysis of net operating losses, an analysis of the tax consequences of various prepetition transactions, and tax compliance work. Mahoney has also worked with various government agencies, including the Internal Revenue Service -- which is currently conducting an audit of the Debtors -- the State of New York, and the State of New Jersey to represent the Debtors' interests. Mahoney is a middle market certified public accounting and management consulting firm in the New York metropolitan area that has been ranked among the top 35 CPA firms nationally. Mahoney promotes its audit services as rigorous and thorough, with stringent quality controls that conform to generally accepted auditing standards. The firm's audit methodology analyzes a company's business within the context it its industry, providing a value-added service, looking for areas where savings can be realized, cost controls can be introduced and unforeseen business opportunities may exist. Mahoney also provides a wide range of tax compliance and planning solutions to businesses, trusts, private foundations and individuals, ensuring compliance requirements are fulfilled while every opportunity to minimize tax liabilities is explored. Steven E. Golden, a partner and director of Bankruptcy Taxation at Mahoney, will lead the Mahoney team assigned to the U.S. Debtors. Mr. Golden is a certified public accountant and a licensed attorney with extensive experience working with insolvent businesses ranging in size from small, privately held companies to large, publicly traded corporations throughout the United States. Before joining Mahoney, Mr. Golden was a tax partner and director of Bankruptcy Taxation at BDO Seidman, LLP. He has worked closely with bankruptcy attorneys and trustees on various issues relating to the liquidation or reorganization of bankrupt companies, including the cases of Starter Corp., Loehmanns, Inc., Artha Management, Sasson Jeans and Cuyahoga. Mr. Golden has also been called upon to provide expert testimony in numerous matters, including Celotex's bankruptcy litigation. Mr. Golden is a published author and noted speaker. The U.S. Debtors will compensate Mahoney for its services in accordance with the firm's normal hourly rates: Professional Hourly Rate ------------ ----------- Shareholders and directors $365 - 435 Managers and senior managers 210 - 280 Senior accountants and staff 115 - 205 The Debtors will also reimburse the firm for all reasonable and necessary out-of-pocket expenses. Mahoney has agreed to cap the fees for the tax compliance services relating to the year ended December 31, 2003 at $45,000. 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) PATHMARK STORES: S&P Shaves Corp. Credit Rating One Notch to B+ --------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on Pathmark Stores Inc. The corporate credit rating was lowered to 'B+' from 'BB-'. The downgrade reflects Pathmark's continued disappointing results and weaker credit measures. The outlook is negative due to the continued highly competitive environment and deteriorating operating profitability trends. Pathmark reported disappointing second-quarter results. While same-store sales grew 1.3% for the quarter and total sales increased 1.6% year over year, operating margins were hurt significantly by increased promotional activity, higher SG&A costs, higher health care expenses, and continued higher prices of dairy and protein products. Gross profit margins declined by 30 basis points to 28%, and operating margins declined to 1.4% for the quarter. Trailing 12-month operating lease-adjusted EBITDA margins declined to 5.3%, from 5.8% at the end of 2003. As a result, credit measures deteriorated: Lease-adjusted debt to EBITDA is now at 4.7x and EBITDA coverage of interest it at 2.1x on a trailing 12-month basis. "We anticipate that credit measures will continue to weaken as the year progresses, especially since management recently lowered its 2004 guidance," said Standard & Poor's credit analyst Stella Kapur. While the same-store sales forecast remained at flat to 1%, EBITDA is now anticipated to be $154 million-$165 million, compared with prior guidance of $170 million-$180 million. Given expectations that the competitive environment will remain challenging and that management will continue with its aggressive promotional activities, Standard & Poor's anticipates EBITDA will likely be at the lower end of the company's guidance. In addition, free cash flow is expected to be modestly negative during the next two years as the company maintains increased levels of capital expenditures to improve its store base. The ratings on Pathmark reflect the company's participation in the highly competitive supermarket industry, its regional concentration, and its continued need to make improvements to its store base since its emergence from bankruptcy in September 2000. These risks are mitigated by the company's good market position in the greater New York metropolitan area. RCN CORP: Wants Court to Set Solicitation & Voting Procedures ------------------------------------------------------------- RCN and its debtor-affiliates ask the U.S. Bankruptcy Court for the Southern District of New York to establish procedures for the solicitation and tabulation of votes to accept or reject their Reorganization Plan. The Debtors also ask the Court to approve: * ballot forms for submitting Plan votes; * the proposed deadline for submission of ballots; * the solicitation packages and non-voting packages and the procedures for distribution to creditors and other parties-in-interest; and * the proposed record date for Plan voting. Record Date & Voting Deadline Pursuant to Section 105(a) of the Bankruptcy Code, the Debtors ask the Court to set the date that is two days before the Disclosure Statement Hearing as the record date for determining: (i) creditors and equity holders entitled to receive Non-Voting Packages; and (ii) creditors entitled to vote to accept or reject the Plan. Plan votes will be due five days before the hearing to consider the confirmation of the Plan. The Debtors may extend the Voting Deadline, if and when necessary. Solicitation Packages & Ballots Within five Business Days after the Court approves the Disclosure Statement, the Debtors will mail: (A) To the holders of Claims in Classes 3, 5 and 7, and all parties identified on the Master Service List, including the Office of the United States Trustee and the counsel for the indenture trustees for the Debtors' outstanding debt securities, a solicitation package containing: (a) a notice of: * the Plan Confirmation Hearing; * the deadline and procedures for filing objections to confirmation of Plan; * deadline and procedures for temporary allowance of claims for voting purposes; * treatment of certain unliquidated, contingent or disputed claims for notice and voting purposes; * Solicitation Record Date; * Voting Deadline; and * the releases; (b) a notice and procedures for assuming or rejecting executory contracts and unexpired leases; (c) a copy of the Disclosure Statement and the Plan and related exhibits; and (d) the Order approving the Disclosure Statement. The Solicitation Package for Creditors holding Claims in Classes 3, 5 and 7 will also include a ballot and a pre- addressed, postage-prepaid return envelope, appropriate for the specific creditor. (B) To the holders of Claims in Classes 1, 2, 4 and 6, and the holders of Claims or Interests in Classes 8, 9 and 10, a solicitation package containing copies of: (a) the Confirmation Hearing Notice; and (b) a notice of non-voting status with respect to Unimpaired Class 1 Other Priority Claims, Class 2 Bank Claims, Class 4 Other Secured Claims, and Class 6 Subsidiary General Unsecured Claims to holders of Claims in Classes 1, 2, 4 and 6; or (c) the notice of non-voting status with respect to Impaired Class 8 Equity Interests, Class 9 Subordinated Claims, Class 10 Warrant Interests, to holders of Claims or Interests in Classes 8, 9 and 10. (C) A copy of the Confirmation Hearing Notice to: (a) any known holder of an Administrative Claim; (b) any known holder of a Priority Tax Claim; (c) all 50 state attorneys general and secretaries of state; (d) ordinary course professionals or professionals retained by the Debtors; (e) workers' compensation agencies; (f) relevant regulatory agencies; (g) the Pension Benefit Guarantee Corporation; and (h) parties whose executory contracts or unexpired leases are being assumed or assumed and assigned or rejected. The Confirmation Hearing Notice will direct anyone wishing to review the Disclosure Statement or the Plan to (i) access http://www.rcnplan.com/or (ii) call Financial Balloting Group LLC at (646) 282-1800. Thus, any party wishing to review the complete Plan or the Disclosure Statement will have ample opportunity to do so well in advance of the deadline for filing and serving Plan Confirmation objections and before the Voting Deadline. Parties entitled to vote on the plan will receive the Solicitation Package, which includes a complete copy of the approved Disclosure Statement and the Plan. Non-Voting Parties as well as other parties-in-interest wishing to review the Plan and Disclosure Statement may obtain a copy of either or both documents at the Debtors' expense. To avoid duplication and reduce expenses, creditors who filed duplicate claims in any given Class will receive only one Solicitation Package and one Ballot for voting their Claims with respect to that Class. Similarly, Claimholders in Classes 1, 2, 4, 6, 8, 9 and 10, who have filed duplicate proofs of claim or interest will receive only one Non-Voting Package with respect to the Claims or Interests. The appropriate Ballot forms will be distributed to the holders of Claims in Classes 3, 5 and 7 who are entitled to vote on the Plan: Ballot E-1 Ballot for Class 3 Evergreen Claims Ballot E-2 Ballot for Class 5 General Unsecured Claims, other than claims on account of the Senior Notes Ballot E-3 Beneficial Owner Ballot for Holders of 10% Senior Notes due October 15, 2007 Ballot E-4 Beneficial Owner Ballot for Holders of 11-1/8% Senior Discount Notes due October 15, 2007 Ballot E-5 Beneficial Owner Ballot for Holders of 9.8% Senior Discount Notes due February 15, 2008 Ballot E-6 Beneficial Owner Ballot for Holders of 11% Senior Discount Notes due July 1, 2008 Ballot E-7 Beneficial Owner Ballot for Holders of 10-1/8% Senior Notes due January 15, 2010 Ballot E-8 Ballot for Class 7 Holders of Preferred Interests Each Ballot is consistent with the appropriate official form and satisfies the requirements of Rule 3017(d) of the Federal Rules of Bankruptcy Procedure. The Ballots also give notice of the Voting Deadline. The Debtors will distribute an election form to the holders of Class 5 RCN General Unsecured Claims who are also holders of the Senior Notes. The Election Form will enable the holders of Class 5 Claims to make an election between receiving their Pro Rata share of the New Common Stock or Cash equal to a certain percentage of their RCN General Unsecured Claims -- the Cash Component. The Ballot for holders of Class 5 Claims who are not holders of Senior Note Claims permits the holders to elect to receive the Cash Component on their Ballot. Accordingly, a separate Election Form is not necessary for the holders of Class 5 Claims. Procedures for Transmittal to Record Holders of Public Securities Because of the complexity and difficulty associated with reaching the beneficial owners of publicly traded securities, many of which hold their securities indirectly in brokerage or other custodian accounts and through several layers of ownership, the Debtors will mail the Solicitation Packages and Non-Voting Packages, as appropriate, to: (a) each holder of record of the Debtors' publicly held debt and equity securities as of the Solicitation Record Date; and (b) each bank, brokerage or other custodian firm or nominee -- Security Intermediary -- identified by the Debtors' voting agent as an entity through which beneficial owners indirectly hold Debt Securities or equity securities. Labels for Record Holders To facilitate the mailing, the Debtors ask the Court to compel: (i) JPMorgan Chase Bank, as administrative agent for the Bank Claims; (ii) HSBC Bank USA, as indenture trustee for the Senior Notes; and (iii) Mellon Investor Services, the transfer agent for the Common Stock -- or other trustee or transfer agent as may be presently maintaining the records -- to provide the Voting Agent, within three Business Days after the approval of the Disclosure Statement with the names, addresses, account numbers and holdings of the record holders as of the Solicitation Record Date, in electronic file on disc or via e-mail or, if not available electronically, in written form. Dissemination to Beneficial Holders The Debtors ask the Court to direct the Security Intermediaries, through which beneficial owners hold Debt Securities or equity securities, to promptly distribute the Solicitation Packages and Non-Voting Packages to the holders and cooperate with the Voting Agent to accomplish the distribution. Voting by Beneficial Holders of Debt Securities The Debtors ask the Court to authorize the appropriate Security Intermediaries to obtain the votes of beneficial owners of Debt Securities by: (a) forwarding the Solicitation Package to each beneficial owner of the applicable Debt Security for voting and include a postage-prepaid, return envelope provided by and addressed to the Security Intermediary so that the beneficial owner may return the completed beneficial owner Ballot to that entity; or (b) pre-validating the Ballot by signing it and by indicating on the Ballot the record holder of the Debt Securities voted, the principal amount and the appropriate account number and by forwarding the Solicitation Package along with the pre-validated Ballot to the beneficial owner of the Debt Security for voting, so that the beneficial owner may return the completed Ballot directly to the Voting Agent in the return envelope provided in the Solicitation Package. If the Ballots forwarded by a Security Intermediary are not pre- validated, the Security Intermediary will summarize the individual votes of its beneficial owners from their beneficial owner Ballots on an appropriate master Ballot, and then return the Master Ballots to the Voting Agent for the Debtors' Debt Securities. This procedure adequately recognizes the complex structure of the securities industry, enables the Debtors to transmit materials to the holders of their publicly traded securities, and affords the holders a fair and reasonable opportunity to vote. The appropriate Master Ballot forms will be distributed with respect to Class 5: Master Ballot E-9 Master Ballot for Holders of the 10% Senior Notes due October 15, 2007 Master Ballot E-10 Master Ballot for Holders of the 11-1/8% Senior Discount Notes due October 15, 2007 Master Ballot E-11 Master Ballot for Holders of the 9.8% Senior Discount Notes due February 15, 2008 Master Ballot E-12 Master Ballot for Holders of the 11% Senior Discount Notes due July 1, 2008 Master Ballot E-13 Master Ballot for Holders of the 10-1/8% Senior Notes due January 15, 2010 The Debtors will serve a copy of the Solicitation Procedures Order on each indenture trustee and Security Intermediary identified by the Voting Agent as an entity through which beneficial owners hold Debt Securities and equity securities to ensure that they have advance notice of these procedures. In addition, the Debtors seek the Court's authority to reimburse the entities for their reasonable out-of-pocket expenses incurred in performing the tasks upon written request by the entities. No Notice or Transmittal Necessary The Debtors will not to give notice or service of any kind to any person to whom the Debtors have mailed notices and received the notices or pleadings back marked as "undeliverable as addressed," "moved -- left no forwarding address," "forwarding order expired," unless the Debtors have been informed in writing by that person of its new address. Procedures for Vote Tabulation (A) Votes Counted Any Ballot timely received that contains sufficient information to permit the identification of the claimant and the vote cast will be counted and deemed to be cast as an acceptance or rejection, as the case may be, of the Plan. The failure of a holder of a Claim in Classes 3, 5 and 7 to deliver a duly executed Ballot will be deemed to constitute an abstention by the holder with respect to voting on the Plan. The abstention will not be counted as a vote for or against the Plan. To avoid inconsistent treatment and provide guidance to the Debtors and the Voting Agent, each record holder or beneficial owner of any Debt Security who voted on the Plan will be deemed to have voted the full principal amount of its Claim relating to the Debt Security, notwithstanding anything to the contrary on any Ballot. (B) Votes Not Counted These Ballots or Master Ballots will not be counted or considered for any purpose in determining whether the Plan has been accepted or rejected: (a) Any Ballot or Master Ballot received after the Voting Deadline; (b) Any Ballot or Master Ballot that is sent by facsimile transmission, is illegible, or contains insufficient information to permit the identification of the claimant; (c) Any Ballot that indicates neither an acceptance of the Plan nor a rejection, or indicates both an acceptance and rejection, of the Plan; (d) Any Ballot cast by a person or entity that does not hold a Claim in a Class that is entitled to vote on the Plan; (e) Any form of Ballot or Master Ballot other than the official form sent by the Voting Agent or a copy of it; (f) Any Ballot or Master Ballot without an original signature; (g) Any Ballot, other than a Master Ballot, that casts part of its vote in the same class to accept the Plan and part to reject the Plan; or (h) Any Ballot or Master Ballot received that the Voting Agent cannot match to an existing database record. (C) Withdrawal of Vote Any party who has delivered a valid Ballot for the acceptance or rejection of the Plan may withdraw, subject to the Debtors' right to contest the validity of any withdrawal, the acceptance or rejection by delivering a written notice of withdrawal to the Voting Agent at any time before the Voting Deadline. To be valid, a notice of withdrawal must: (a) contain a description of the Claim to which it relates and the aggregate principal amount represented by the Claim; (b) be signed by the withdrawing party in the same manner as the Ballot being withdrawn; (c) contain a certification that the withdrawing party owns the Claim and possesses the right to withdraw the Ballot sought to be withdrawn; and (d) be received by the Voting Agent before the Voting Deadline. (D) Changing Votes Whenever two or more Ballots, including Master Ballots, are cast voting the same Claim before the Voting Deadline, the Ballot or Master Ballot dated latest but received prior to the Voting Deadline will be deemed to reflect the voter's intent and, thus, supersede any prior Ballots. Nothing, however, will affect the Debtors' right to: (a) object to the validity of the second Ballot or Master Ballot on any basis permitted by law; and (b) if the objection is sustained, to count the first Ballot or Master Ballot for all purposes. (E) No Division of Claims or Votes The Debtors propose that: (a) voting creditors may not divide their Claims or the votes associated with the claims, except as it may relate to the procedures with respect to Master Ballots; (b) holders of Claims who vote must vote all of their Claims within a particular class either to accept or reject the Plan; and (c) a Ballot partially accepting and partially rejecting the Plan will not be counted for any purpose. (F) Procedures for Counting Ballots from Holders of Debt Securities Unless the Ballots are pre-validated, all Security Intermediaries through which beneficial owners hold Debt Securities will be required to receive and summarize on a Master Ballot all beneficial owner Ballots cast by the beneficial owners they serve and then return the Master Ballot to the Voting Agent. Security Intermediaries will be required to retain for inspection by the Court the Ballots cast by beneficial owners for one year following the Solicitation Record Date. Votes cast by the beneficial owners through a Security Intermediary and transmitted by means of a Master Ballot will be applied against the positions held by the Security Intermediary as evidenced by the list of record holders of the applicable Debt Security, or through participation in a securities depository. Votes submitted by a Security Intermediary on a Master Ballot will not be counted in excess of the position maintained by the respective Security Intermediary on the Solicitation Record Date. To the extent that conflicting votes or over-votes are submitted on Master Ballots or pre-validated ballots, the Voting Agent will attempt to resolve the conflicting votes or over-votes before the Voting Deadline to ensure that the votes of beneficial owners of Debt Securities are accurately tabulated. To the extent that the conflicting votes or over-votes are not reconcilable before the Voting Deadline, the Voting Agent will count votes in respect of the Master Ballots or pre- validated ballots in the same proportion as the votes to accept and reject the Plan submitted on the Master Ballots or pre-validated ballots that contained the conflicting votes or over-votes, but only to the extent of the applicable Security Intermediary's position on the Solicitation Record Date in the Debt Security. Security Intermediaries generally vote on behalf of the beneficial owners or entitlement holders for whom they hold securities. The Master Ballots that they fill out merely reflect the voting instructions given by those beneficial owners or entitlement holders. In this regard, the Debtors ask the Court to direct the Security Intermediaries to complete multiple Master Ballots. The votes reflected by the multiple Master Ballots should also be counted, except to the extent that they are duplicative of other Master Ballots. If two or more Master Ballots submitted are inconsistent in whole or in part, the latest Master Ballot received before the Voting Deadline will, to the extent of the inconsistency, supersede and revoke any prior Master Ballot. The Debtors will retain their right to object to the validity of the second Master Ballot on any basis permitted by law and, if the objection is sustained, the first Master Ballot will then be counted. Treatment of Holders of Class 8 Equity Interests Under the Plan, the holders of Equity Interests are not entitled to, and will not receive or retain, any property or interest in property on account of their Equity Interests. However, upon the affirmative vote of the holders of Class 5 RCN General Unsecured Claims, whose claims are senior to those of the holders of Class 8 Equity Interests, the Plan provides that each holder of Equity Interests will receive their Pro Rata share of New Warrants representing about 0.25% of the Reorganized Debtors' outstanding New Common Stock, subject to dilution. The proposed distribution to Class 8 Equity Interests is the product of a negotiated agreement between the Debtors, the Senior Secured Lenders and certain holders of the Senior Notes. Absent the agreement and affirmative vote of the holders of Class 5 RCN General Unsecured Claims, the holders of Equity Interests would not receive any distribution under the Plan because the valuation of the Debtors set forth in the Disclosure Statement establishes that the holders of these Interests are "out of the money." Given that the holders of Equity Interests are not legally entitled to a distribution under the Plan on account of their interests, and consistent with the language in Section 1126(g), Class 8 Equity Interests may be deemed to have rejected the Plan, notwithstanding any distribution proposed for the Classes under the Plan. Accordingly, notwithstanding the "gift" they are to receive under the Plan, the Debtors are not required to solicit the holders of Class 8 Equity Interests. The agreement of the holders of the Senior Notes and other RCN General Unsecured Claims to permit a distribution to the holders of Equity Interests should not result in a requirement that the Debtors solicit votes from the holders. Instead, the Debtors will provide the holders of Class 8 Equity Interests with the Non-Voting Package and an opportunity to object to the Plan. This procedure will give the Class 8 Equity Interests ample opportunity to voice their legitimate concerns to the Plan, if any. Temporary Allowance of Claims Bankruptcy Rule 3018(a) provides in relevant part that "[n]otwithstanding objection to a claim or interest, the court after notice and hearing may temporarily allow the claim or interest in an amount which the court deems proper for the purpose of accepting or rejecting a plan." The Debtors ask the Court to direct affected claimants to file and serve Rule 3018(a) Motions 20 days before the Confirmation Hearing. Any party timely filing and serving a Rule 3018(a) Motion will be provided a Ballot and permitted to cast a provisional vote. If, and to the extent that, the Debtors and the party are unable to resolve the issues raised by the Rule 3018(a) Motion before the Voting Deadline, the Rule 3018(a) Motion will be considered by the Court at the Confirmation Hearing. The Court will determine whether the provisional Ballot should be counted as a vote on the Plan and, the amount, if any, in which the party filing the Rule 3018(a) Motion will be entitled to vote. Unliquidated, Contingent or Disputed Claims Creditors whose Claims were not scheduled or who hold Claims which were scheduled as unliquidated, contingent or disputed are required to timely file a proof of claim to be treated as creditors with respect to the Claims for voting and distribution purposes. Otherwise, the creditors will be denied treatment with respect to the Claims for purposes of: (i) voting on the Plan; (ii) receiving distributions under the Plan; and (iii) receiving notices, other than by publication. Any Claim, or a portion of the Claim, to which an objection has been filed before the Confirmation Hearing will neither be entitled to vote on the Plan nor be counted in determining whether the requirements of Section 1126(c) have been met with respect to the Plan, unless: -- the Claim has been temporarily allowed for voting purposes; or -- the objection to the Claim has been resolved in favor of the creditor asserting the Claim. For purposes of voting, the Debtors propose that the amount of a Claim used to calculate acceptance or rejection of the Plan under Section 1126 be: (a) the Claim amount that has been scheduled by the Debtors; (b) the liquidated amount specified in a proof of claim that was or is deemed timely filed under applicable law and any applicable Court orders and that was: -- not objected to; or -- otherwise allowed by a final Court order; or (c) the amount temporarily allowed by the Court for voting purposes pursuant to a Rule 3018(a) Motion. The Ballots cast by holders of Claims who timely file proofs of claim in wholly unliquidated or unknown amounts that are not the subject of an objection filed before the Confirmation Hearing will be counted for purposes of satisfying the numerosity requirement of Section 1126(c). The Ballots cast will not be counted toward satisfying the aggregate amount, unless temporarily allowed by the Court in a specific amount for voting purposes pursuant to Rule 3018(a). Confirmation Hearing Pursuant to Bankruptcy Rule 3017(c), the Debtors ask Judge Drain to schedule the Confirmation Hearing 60 days after the Disclosure Statement is approved. The Confirmation Hearing may be continued or adjourned from time to time. Parties who wish to object to the confirmation of the Debtors' Plan must file their objections 10 days before the Confirmation Hearing Date. Only timely filed and served written objections will be considered. The Debtors will publish the Confirmation Hearing Notice on or before five days after the approval of the Disclosure Statement in The Wall Street Journal, national edition. Headquartered in Princeton, New Jersey, RCN Corporation -- http://www.rcn.com/-- provides bundled Telecommunications services. The Company, along with its affiliates, filed for chapter 11 protection (Bankr. S.D.N.Y. Case No. 04-13638) on May 27, 2004. Frederick D. Morris, Esq., and Jay M. Goffman, Esq., at Skadden Arps Slate Meagher & Flom LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $1,486,782,000 in assets and $1,820,323,000 in liabilities. (RCN Corp. Bankruptcy News, Issue No. 11; Bankruptcy Creditors' Service, Inc., 215/945-7000) ROGERS COMMS: Acquiring AT&T Wireless' Stake in Rogers Wireless --------------------------------------------------------------- Rogers Communications, Inc., entered into an agreement with JVII General Partnership, a partnership owned by AT&T Wireless Services, Inc., whereby Rogers Communications has agreed to purchase all of JVII's 27,647,888 Class A Multiple Voting shares and 20,946,284 Class B Restricted Voting shares of Rogers Wireless Communications Inc. for a cash purchase price of C$36.37 per share. Closing of the transaction is expected to occur on October 13,2004, with Rogers Communications entitled to accelerate that date upon written notice to JVII. Upon closing, JVII will convert the Class A shares into Class B shares of Rogers Wireless. Also upon closing, the shareholders' agreement among Rogers Communications, Rogers Wireless and JVII dated August 16, 1999, as amended, and the registration rights agreements between RWCI and JVII, also dated August 16, 1999, will terminate. Under the purchase agreement, JVII has agreed that its consent is not required under the shareholders' agreement in order for Rogers Communications or Rogers Wireless to offer to purchase or acquire shares or assets of Microcell Telecommunications, Inc. This provision is to enhance the flexibility of Rogers Communications and Rogers Wireless as it pertains to their ongoing review of current wireless industry developments and consolidation activities and the related possibility of offering to purchase, alone or with others, shares or assets of Microcell Telecommunications, Inc. Neither Rogers Communications nor Rogers Wireless has made any decision in respect of any such matters and there is no assurance that any such initiative will be pursued. Rogers Communications plans to fund the approximate C$1,767.4 million cash purchase price for the 48.6 million Rogers Wireless shares through a bridge financing facility of up to two years with a group of Canadian financial institutions. AT&T Wireless' sale of its shares of Rogers Wireless does not impact or change the extensive North American wireless voice and data roaming capabilities between the companies. Customers of both Rogers Wireless and AT&T Wireless will continue to enjoy the powerful benefits of seamless wireless roaming between Canada and the U.S. on North America's largest combined GSM/GPRS network. Rogers Communications currently owns 62,820,371 Class A Multiple Voting shares representing approximately 69.4% of such class of shares and 16,317,644 Class B Restricted Voting shares of Rogers Wireless representing approximately 31.1% of such class of shares. After giving effect to the purchase by Rogers Communications and the conversion by JVII of the Class A shares, Rogers Communications will own 62,820,371 Rogers Wireless Class A Multiple Voting shares representing all of such class of shares and 64,911,816 Rogers Wireless Class B Restricted Voting shares representing approximately 80.9% of such class of shares. Rogers Communications will acquire ownership and control over all of such shares and is not acting with any joint actor in connection with the purchases or the ownership of such shares. The Class A shares and Class B shares are being acquired for investment purposes. Rogers Communications has no current intention of acquiring ownership of or control or direction over any additional Class B shares. Rogers Communications, Inc., (Moody's, B2, Senior Unsecured) is a communications holding company that owns 100% of Rogers Cable Inc., Canada's largest cable company, 56% of Rogers Wireless Communications, Inc., which wholly owns Rogers Wireless Inc., one of Canada's three largest wireless cellular operators, and 100% of Rogers Media Inc., which owns radio, TV and publishing assets. All companies are headquartered in Toronto, Ontario, Canada. ROGERS COMMS: Moody's Reviewing Low-B Ratings & May Downgrade ------------------------------------------------------------- The ratings of Rogers Communications, Inc., Rogers Wireless Inc. and Rogers Cable, Inc., have all been put under review for possible downgrade following Rogers Communications's announcement of an agreement with AT&T Wireless Services Inc. to purchase AT&T Wireless' 34% stake in Rogers Wireless Communications, Inc. -- sole owner of Wireless -- for approximately C$1.8 billion. If funded only with debt, Moody's estimates that Rogers Communications's consolidated net debt (including fair value of derivatives) would increase to approximately C$7.9 billion at the end of this year on a pro-forma basis. At the same time the estimated annualized interest expense of C$100 million associated with the acquisition might drive Rogers Communications's consolidated 2004 cash use (cash from operations less capital expenditures and dividends) from approximately C$150 million to C$250 million, in Moody's estimation. The review will focus on: (1) Rogers Communications's plans to finance the acquisition; (2) the ability of Rogers Communications to freely move funds amongst itself and all of its subsidiaries, including Wireless; and (3) the potential for Rogers Communications or Rogers Wireless Communications to make a bid for Microcell Telecommunications, as recently announced by them to be a possibility. To date, Moody's has analysed Rogers Communications, Cable and Media on a combined basis and considered 56%-owned Wireless as an investment with its own self-supported financing and little cash flow implications between Wireless and Rogers Communications. If Rogers Communications increases its ownership position in Wireless to 90%, Moody's will consider evaluating the companies on a consolidated basis, bearing in mind any restrictions of the flow of funds amongst the companies and recognizing that there are no guarantees of debt between any of the companies. Debt affected by this action: Rogers Communications Inc. (1) Senior Unsecured, rated B2: * Convertible Debentures -- 5.75% due November 2005 US$225 million * Senior Notes -- 10.5% due February 2006 C$ 75 million Rogers Cable Inc. (1) Senior Secured, rated Ba2: * Senior Secured Second Priority Notes and Debentures -- 10.0% due March 2005 US$292 million -- 7.60% due February 2007 C$450 million -- 7.875% due May 2012 US$350 million -- 6.25% due June 2013 US$350 million -- 5.50% due March 2014 US$350 million -- 8.75% due May 2032 US$200 million (2) Senior Subordinated, rated Ba3: * Senior Subordinated Guaranteed Debentures -- 11% due December 2015 US$114 million Rogers Wireless Inc. (1) Senior Secured, rated Ba3: * Senior Secured Notes -- 10.5% due June 2006 C$160 million -- 9.625% due May 2011 US$490 million -- 9.75% due June 2016 US$155 million -- 6.375% due February 2014 US$750 million Rogers Communications, Inc., is a communications holding company that owns 100% of Rogers Cable Inc., Canada's largest cable company, 56% of Rogers Wireless Communications, Inc., which wholly owns Rogers Wireless Inc., one of Canada's three largest wireless cellular operators, and 100% of Rogers Media Inc., which owns radio, TV and publishing assets. All companies are headquartered in Toronto, Ontario, Canada. SEITEL: E&Y Resigns as Independent Accountants After 4-Year Tenure ------------------------------------------------------------------ Ernst & Young LLP has served as independent accountants and has audited the consolidated financial statements of Seitel, Inc., for each of the four years ended December 31, 2003. On July 26, 2004, E&Y informed Seitel that it would resign as independent accountants for Seitel following the filing of Seitel's Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2004, as a result of E&Y's annual review of E&Y's client portfolio. E&Y did not consult with Seitel's audit committee regarding the foregoing and, therefore, Seitel's audit committee did not recommend or approve E&Y's decision to so advise Seitel. Seitel's audit committee has commenced an immediate search for a new independent accountant. Weak Internal Controls In May 2004, E&Y advised Seitel's then audit committee and management of an item that E&Y considered to be a reportable condition and material weakness in Seitel's internal controls under standards established by the American Institute of Certified Public Accountants. E&Y reported that during the first quarter of 2004, AICPA Statement of Position No. 90-7, "Financial Reporting by Entities in Reorganization Under the Bankruptcy Code", required an adjustment of $1 million of deferred issue costs in respect of Seitel's $255 million outstanding principal amount of senior unsecured notes. Specifically, Seitel concluded and E&Y concurred that such deferred issue costs should have been accelerated and expensed at the time the senior notes became a claim "allowed" by the bankruptcy court on March 30, 2004. Additionally, certain prepetition claims totaling $426,000 which Seitel disputes and that are not probable of resulting in allowed claims should have been correspondingly reduced at March 31, 2004. Seitel amended its Form 10-Q for the quarter ended March 31, 2004 to reflect these adjustments. The requirement to adjust the financial statements for the quarter ended March 31, 2004 was viewed by E&Y as requiring the issuance of a Report on Reportable Conditions and therefore classified with respect solely to that issue, as a material weakness in Seitel's internal controls. These matters were discussed and reviewed among management, Seitel's then audit committee and E&Y. Seitel assigned the highest priority to addressing these matters and believes that it has implemented appropriate procedures to ensure that any such weakness that existed in the past does not recur in the future. To strengthen Seitel's internal monitoring and oversight function, and to further enhance its internal accounting and reporting functions, Seitel hired a new chief financial officer in May 2004 with extensive corporate finance and accounting experience and plans to continue to add additional staff in its internal accounting department. Seitel's professional accounting staff participates in continuing professional education as required by their applicable licensing authority. Seitel's then audit committee and its principal financial and accounting officers undertook an extensive review of SOP 90-7, as well as relevant accounting literature and technical journals on the subject, with E&Y to ensure full awareness and understanding of the provisions and applications of SOP 90-7, and such officers reviewed their reporting and certification obligations under the Exchange Act and the Sarbanes Oxley Act of 2002 and consulted in that report with Seitel's outside counsel. As a matter of practice in connection with and prior to the filing of all future periodic reports, Seitel's principal financial officer and principal executive officer intend to specifically review with Seitel's new audit committee and with Seitel's outside auditors the application of all accounting policies applicable to Seitel. Seitel's corporate finance and accounting personnel also determined that if any necessary revisions or changes to reported financial information arises in the future because of the application of future accounting principles, such matters promptly will be brought to the attention of Seitel's internal general counsel and its external counsel to facilitate all required disclosure in a timely manner. Therefore, in light of the foregoing, Seitel's management believes that any weakness that existed in the past has been corrected and that appropriate prophylactic procedures have been implemented. About Seitel Seitel is a leading provider of seismic data and related geophysical services to the oil and gas industry in North America. Seitel's products and services are used by oil and gas companies to assist in the exploration for and development and management of oil and gas reserves. Seitel has ownership in an extensive library of proprietary onshore and offshore seismic data that it has accumulated since 1982 and that it offers for license to a wide range of oil and gas companies. Seitel believes that our library of onshore seismic data is one of the largest available for licensing in the United States and Canada Seitel's seismic data library includes both onshore and offshore three- dimensional (3D) and two-dimensional (2D) data and offshore multi-component data. Seitel has ownership in over 32,000 square miles of 3D and approximately 1.1 million linear miles of 2D seismic data concentrated primarily in the major North American oil and gas producing regions. Seitel markets its seismic data to over 1,300 customers in the oil and gas industry, and it has license arrangements with in excess of 1,000 customers. At June 30, 2004, Seitel Inc.'s balance sheet showed a $2,946,000 stockholders' deficit, compared to $3,722,000 of positive equity at December 31, 2003. SOLUTIA: CPFilms Wants to Acquire Clear View Assets for $240,000 ---------------------------------------------------------------- CPFilms, Inc., a Solutia, Inc., and its debtor-affiliate asks the U.S. Bankruptcy Court for the Southern District of New York to approve its acquisition of certain assets from Clear View Shade of Chicago, Inc., pursuant to an Asset Purchase and Sale Agreement. M. Natasha Labovitz, Esq., at Gibson, Dunn & Crutcher, LLP, in New York, relates that Clear View Shade is a small Chicago-based company established in 1947 that manufactures and sells transparent, pull-down interior window shades. The window shades, which are marketed under the nationally known Clear-View brand name, have developed a reputation for reducing energy costs, eliminating glare and reducing UVA-UVB rays. In 2003, Clear View Shade's national and local customer base led to sales of about $776,000. Over the past several years, CPFilms has explored entering into the window shades market to capitalize on synergies that would result from its existing business of manufacturing and selling window shade components, like its Vista(R) window film. Based on its market studies, CPFilms believes that the North American window shade market has the potential to yield $60,000,000 annually in sales. About a year ago, CPFilms launched its Halcyon(TM) Shades line of business to capture a share of the window shades market. Since that time, CPFilms has sought to increase its merchandising and expand its window shades line of business to a national level. CPFilms determined that entering into one or more limited asset acquisitions was a potential low-risk method of accomplishing these goals, which merited further exploration. In June 2003, CPFilms began initial discussions with Clear View Shade to purchase the Clear View Shade Assets. The discussions intensified in January 2004 and led to the negotiation of the Purchase Agreement and the Consulting Agreement. CPFilms believes that the acquisition of the Clear View Shade Assets will further CPFilms' efforts to grow its window shades line of business by adding a reputable brand name and both national and local customer lists. Acquiring the Clear View Shade Assets is contemplated by the Debtors' business plan and is permitted under the Debtors' amended postpetition financing agreement. According to Ms. Labovitz, CPFilms will purchase the Clear View Shade Assets for $240,000 plus the aggregate cost of all items of inventory that are designated as part of the Clear View Shade Assets. The Clear View Shade Assets will be comprised of furniture, fixtures, equipment, inventory, intellectual property and all assignable or transferable permits and licenses related to the business of Clear View Shade. The Clear View Shade Assets also will include Clear View Shade's customer and supplier lists, Web site, 800 and local telephone numbers. Ms. Labovitz clarifies that under the Purchase Agreement, CPFilms will not purchase any real estate owned by Clear View Shade or any accounts receivable that accrued before the acquisition date. Furthermore, CPFilms will not assume any of Clear View Shade's employment contracts or liabilities. Although the Purchase Agreement contemplates that CPFilms may be assigned certain of Clear View Shade's contracts, CPFilms estimates that any contracts that it may assume will have minimal future liabilities, if any. CPFilms will not assume any liabilities that accrued before the acquisition date under an assigned contract. CPFilms expects to relocate the Clear View Shade Assets to its plant in Martinsville, Virginia. The integration of the Clear View Shade business with CPFilms' is expected to occur over a period between one and three months, during which time CPFilms employees will observe the business process at Clear View Shade and will be trained with respect to Clear View Shade's systems and shade assembly processes. Ms. Labovitz tells the Court that the acquisition of the Clear View Shade Assets will provide CPFilms with a solid customer base, proprietary knowledge, and a well-regarded brand name in the industry without a significant cost. 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) SOUTHWEST HOSPITAL: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------------- Debtor: Southwest Hospital and Medical Center, Inc. 501 Fairburn Road, Southwest Atlanta, Georgia 30331 Bankruptcy Case No.: 04-74967 Type of Business: The Debtor operates a hospital. Chapter 11 Petition Date: September 9, 2004 Court: Northern District of Georgia (Atlanta) Judge: James E. Massey Debtor's Counsel: G. Frank Nason, IV, Esq. Lamberth, Cifelli, Stokes & Stout, PA Suite 550 3343 Peachtree Road, Northeast Atlanta, Georgia 30326 Tel: 404-262-7373 Total Assets: $10 to $50 million Total Debts: $10 to $50 million Debtor's 20 largest unsecured creditors: Entity Claim Amount ------ ------------ Morehouse School of Medic $327,358 Business Office 720 West View Drive, Southwest Atlanta, Georgia 30310-1495 Maxim Healthcare Services, Inc. $282,052 12559 Collection Center Drive Chicago, Illinois 60693 Georgia Gwinnett Medical Service, Inc. $238,455 Fulton Emergency Physicians, LLC $235,769 Amerisource Bergen $212,234 Progressive Nursing $199,853 Productivity Network Innovations, LLC $178,477 Quest Diagnostics $165,292 RLS-Med Support, Inc. $162,149 Medical Care Associates $135,965 ATS Health Services $122,131 Precision Anesthesia & Associates, LLC $115,750 Coventry Healthcare of Georgia $102,746 South Fulton Medical Center $79,384 Georgia Medical Business Services, Inc. $78,030 Medline Industries, Inc. $74,227 The Saint Paul Companies $58,212 GHA Workers' Comp Self In $54,479 McKesson $52,234 Georgia Power Company $51,213 SPECTRASITE INC: S&P Upgrades Corporate Credit Rating to B+ ----------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on Cary, North Carolina-based wireless tower operator SpectraSite, Inc. and its related entities. The corporate credit rating was raised to 'B+' from 'B'. The rating on SpectraSite Communications Inc.'s bank loan was raised to 'BB-' from 'B+'. A recovery rating of '1' was assigned to the bank loan, indicating a high expectation for full recovery of principal in the event of a default. The rating on SpectraSite's senior unsecured debt (which was raised to 'B-' from 'CCC+') is two notches lower than the corporate credit rating due to the large amount of bank debt in the capital structure relative to the company's overall asset base. The ratings outlook is positive. At June 30, 2004, the company had total debt outstanding of about $640 million. "The upgrade reflects the company's successful track record of consistently increasing operating cash flows from SpectraSite's wireless tower business since February 2003, when the company emerged from bankruptcy," said Standard & Poor's credit analyst Catherine Cosentino. "This has translated into ongoing improvement in its financial profile." Primarily through increases in wireless tower revenues and operating cash flow of about 12% and 21%, respectively, on a year- over-year basis for the second quarter of 2004, the company was able to lower its overall debt to annualized EBITDA metric to about 4x for the three months ended June 30, 2004, from about 5x for the comparable period in 2003 (including operating lease adjustments). Such revenue growth has been accomplished through increased co-location on the company's towers, as well as contract price escalations for existing tenants. Moreover, with the completion of the SBC purchase commitment, the company is positioned to accomplish even further improvement in its overall financial profile. SURGICARE: Files Definitive Proxy Materials for Shareholder Vote ---------------------------------------------------------------- SurgiCare, Inc., (AMEX:SRG), a Houston-based ambulatory surgery company, has filed definitive proxy materials with the Securities and Exchange Commission relating to a meeting of stockholders on Oct. 6, 2004, beginning at 5:30 p.m. (CDT) at the principal office of SurgiCare Inc., located at 10700 Richmond Avenue, Suite 300, Houston, Texas 77042. The shareholders of record as of Sept. 10, 2004 have the right to vote at the meeting. At the meeting, stockholders will consider whether to: -- restructure the Company in a series of transactions that will result in a change of control of the Company through the acquisition of three new businesses and issuance of new equity securities for cash, a portion of which will be used to pay indebtedness owed by SurgiCare and one of the acquired businesses to a subsidiary of the investor. -- approve a reverse stock split and change SurgiCare Inc.'s name to Orion HealthCorp Inc. The Company's board of directors has approved all of these actions and recommends that the stockholders approve them. "I would like to thank the stockholders and physician partners for their support during this long and arduous process of restructuring SurgiCare," commented Keith G. LeBlanc, chief executive officer. "With the potential of this merger, the Company will stand poised to have a significant impact on outpatient healthcare delivery. We look forward to a phase of consistent and strategic growth." About Surgicare, Inc. SurgiCare, Inc., was incorporated in Delaware on February 24, 1984 as Technical Coatings Incorporated. On September 10, 1984, its name was changed to Technical Coatings, Inc. Immediately prior to July 1999, TCI was an inactive company. On July 11, 1999, TCI changed its name to SurgiCare Inc., and at that time changed its business strategy to developing, acquiring and operating freestanding ambulatory surgery centers. On July 21, 1999, SurgiCare acquired all of the issued and outstanding shares of common stock of Bellaire SurgiCare, Inc. in exchange for the issuance of 9.86 million shares of common stock, par value $.005 per share and 1.35 million shares of Series A Redeemable Preferred Stock, par value $.001 per share, of SurgiCare to the holders of Bellaire's common stock. For accounting purposes, this reverse acquisition was effective July 1, 1999. At June 30, 2004, Surgicare, Inc.'s balance sheet showed a $42,441 stockholders' deficit, compared to a positive equity of $4,688,994 at December 31, 2003. * * * As reported in the Troubled Company Reporter on August 17, 2004, Surgicare proposed a transaction to American International Industries, Inc., whereby SRG will redeem the $4,500,000 Series AA Preferred Shares owned by AII. In consideration for that redemption, SRG will issue to AII 8,750,000 shares of SRG common stock, and, as additional consideration (since the market value of the 8,750,000 shares of SRG common stock is approximately $3,000,000), SRG will sell to AII the five parcels of real estate (all originally appraised at $6,000,000). AII agreed to assume a first lien balance outstanding secured by the properties in the amount of approximately $1,100,000 and further, AII would pay SRG approximately $300,000 in cash at time of closing. The SRG proposal to issue to AII 8,750,000 shares of SRG common stock was subject to the listing of such SRG shares by the AMEX. The agreement between the parties further stated that in the event the 8,750,000 shares could not be listed on the AMEX, then the $4,500,000 evidenced by the Preferred Shares owned by AII will continue to be paid based on the previous scheduled payments of $1,500,000 in each year 2004, 2005, 2006. The real estate part of the transaction closed on July 29, 2004. AII proceeded to sell the properties to an unaffiliated third party which sale included the assumption by third party of the $1,100,000 first lien and the $300,000 cash payment. As additional consideration for the sale of the properties to third party, the purchaser executed a $5,000,000 secured Promissory Note to AII, and the Note is further secured by second liens on the real estate. The Note is payable in five years and bears interest of three percent per annum. Using conservative accounting principles, AII determined that it will record a reserve of $1,000,000 in connection with said Note. The sale of the real estate to third party purchaser will add substantially to AII's earnings per share. US AIRWAYS: Court Approves Limited Use of Lenders' Cash Collateral ------------------------------------------------------------------ To finance their first exit from chapter 11, US Airways, Inc., and its debtor-affiliates obtained a $1 billion term loan from a consortium of lenders. Under the Air Transportation Safety and System Stabilization Act, the Air Transportation Stabilization Board guarantees $900 million of that loan. The ATSB Loan is guaranteed by each of the Debtors. The ATSB Loan is also secured by substantially all of USAir's otherwise unencumbered assets. The Original Loan Agreement has been amended four times, on December 18, 2003, March 12, 2004,May 21, 2004, and June 30, 2004. The Debtors owe $717,567,888 under the ATSB Loan. The Tranche A Lenders are owed $645,811,099 and $71,756,789 is owed to the Tranche B Lenders. The Tranche B Lenders are Bank of America, N.A. (which funded $25 million of the Tranche B Loan) and Retirement Systems of Alabama Holdings LLC (which funded $75 million). To continue operating its business in chapter 11, US Airways needs continued working capital financing. Virtually all of the company's cash and cash equivalents are pledged to secure repayment of the prepetition ATSB Loan. The Debtors do not contest the validity of the Lenders' liens. Without Court permission to continue using the Lenders' Cash Collateral, the Debtors will be unable to continue operation of their businesses. The Lenders have given their consent to limited, continued use of the Cash Collateral. BACK Aviation Solutions says that the fair market value of the assets as of December 31, 2003, was: Fair Market Collateral Value ---------- ----------- Airport Slots $355,200,000 Aircraft and Engines 185,000,000 Ground Service Equipment 31,500,000 Spare Parts Inventory 133,700,000 Flight Simulators 36,500,000 Real Property 10,400,000 Airport Gate Leaseholds 97,900,000 ------------ Total $850,200,000 American Appraisal Associates, Inc., values the assets at fair market value and in a distressed scenario, as of September 3, 2004, at: Fair Market Distressed Collateral Value Value ---------- ----------- ---------- Airport Slots $462,200,000 $346,700,000 Aircraft and Engines 160,600,000 121,400,000 Ground Service Equipment 38,200,000 13,600,000 Spare Parts Inventory 154,300,000 61,700,000 Flight Simulators 30,700,000 20,800,000 Real Property 8,500,000 8,000,000 Airport Gate Leaseholds 28,800,000 14,700,000 ------------ ------------ Total $883,300,000 $586,900,000 The Debtors' Cash Collateral consists of: $259,060,000 of high-grade commercial paper issued by domestic corporations with maturities of less than 90 days and by issuers that at the time of acquisition had a Standard & Poor's rating of at least A-1 or a Moody's rating of at least P-1; 329,200,000 of United States Treasury bills with maturities of less than 90 days; 2,622,000 in shares of money market mutual funds registered with the SEC, guaranteeing same-day liquidity and with net assets of over one billion dollars; and 159,471,000 in deposit accounts. ------------ $750,353,000 The Debtors tell Judge Mitchell that under any scenario, the Lenders are overcollateralized and adequately protected. Even to the extent that the Debtors are authorized to use some portion of the Cash Collateral, the Debtors say, a substantial portion of the Cash Collateral will remain unused. The Debtors assure the Court that there is virtually no risk of a decline in value for that portion of the Cash Collateral because it is either cash or highly liquid and secure investments with short-term maturities. To make the Lenders even more comfortable, the Debtors propose to grant the Lenders postpetition replacement liens. The Debtors' use of Cash Collateral is appropriate, Brian P. Leitch, Esq., at Arnold & Porter, LLP, argues, and USAir should be authorized under Section 363(c)(2) of the Bankruptcy Code, which provides that the Debtors may use, sell or lease cash collateral if "(A) each entity that has an interest in such cash collateral consents; or (B) the court, after notice and hearing, authorizes such use, sale, or lease in accordance with the provisions of this section." In order to use cash collateral in accordance with Section 363(2)(B) of the Bankruptcy Code in situations where the collateral holders do not consent, the Debtors are required to provide each party with an interest in the cash collateral, to the extent applicable, adequate protection for such use of cash collateral, as contemplated by Section 361 of the Bankruptcy Code. In these cases, Mr. Leitch stresses, the parties that have an interest in and would be potentially affected by the Debtors' use of Cash Collateral are the Lenders and the ATSB. All of these parties have consented to the financing arrangement. The Debtors sought and obtained overnight authority from Judge Mitchell to use the Lenders' Cash Collateral through the conclusion of a First Day Hearing at 10:30 a.m. on Monday, Sept. 13, 2004. At that First Day Hearing, the Debtors will present Judge Mitchell with an Interim Cash Collateral Order continuing their authority to use the Lenders' cash collateral through October 14, 2004. The Debtors anticipate that these cash collateral orders will carry them into January 2005. The Debtors agree to restrict their use of the Cash Collateral to payments for the ordinary and reasonable expenses of operating their businesses, including, without limitation, payroll and benefit expenses, aircraft and engine debt and lease payments, purchase of fuel and supplies, government security and inspection fees, advertising, utility services, payroll taxes, insurance, supplies and equipment (excluding the purchase or other acquisition of aircraft), vendor and supplier services, and other expenditures as are necessary for operating their businesses, and to make payments required under other typical First Day Orders. Additionally, the Debtors agree to maintain Unrestricted Cash Balances of no less than: At the Close of Business Friday Minimum Cash Balance ------------------------------- -------------------- Week Ended 09/17/04 $600,000,000 Week Ended 09/24/04 $600,000,000 Week Ended 10/01/04 $550,000,000 Week Ended 10/08/04 $575,000,000 Week Ended 10/15/04 $585,000,000 The Lenders are represented in this matter by: Robert Coulter, Esq. Assistant United States Attorney Civil Division - and - U.S. Department of Justice Andrea Horowitz Handel, Esq. Brendan Collins, Esq. U.S. Department of Justice in Washington P. O. Box 875 Ben Franklin Station Washington, D. C. 20044 (202) 307-0358 Steven J. Reisman, Esq. Daniel R. Lenihan, Esq. CURTIS, MALLET-PREVOST, COLT & MOSLE LLP 101 Park Avenue New York, New York 10178-0061 (212) 696-6000 Attorneys for the ATSB as Government Guarantor of the Tranche A Loans David S. Walls, Esq. David L. Eades, Esq. Stephen E. Gruendel, Esq. MOORE & VAN ALLEN, PLLC 100 North Tryon St., 47th Floor Charlotte, N.C. 28202 (704) 331-1000 - and - Monique D. Almy, Esq. Steven Tave, Esq. SWIDLER BERLIN FRIEDMAN, LLP The Washington Harbour 3000 K Street, NW, Suite 300 Washington, DC 20007 (410) 685-1120 Attorneys for the Collateral Agent, the Agent, and Bank of America as a Tranche B Lender Retirement Systems of Alabama Holdings LLC 135 South Union Street Montgomery, Alabama 36104 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 Bankruptcy News, Issue No. 63; Bankruptcy Creditors' Service, Inc., 215/945-7000) US AIRWAYS: CIT Group Discloses $14 Million Financial Relationship ------------------------------------------------------------------ CIT Group, Inc., (NYSE: CIT) disclosed its current financing relationship with US Airways. US Airways Group, Inc., and certain of its subsidiaries had filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code. Under existing agreements, CIT has operating leases where US Airways is the lessee of two 737-300, CIT-owned aircraft, for a total net investment of approximately $14 million. About CIT CIT Group, Inc., (NYSE: CIT), a leading commercial and consumer finance company, provides clients with financing and leasing products and advisory services. Founded in 1908, CIT has nearly $50 billion in assets under management and possesses the financial resources, industry expertise and product knowledge to serve the needs of clients across approximately 30 industries. CIT, a Fortune 500 company, holds leading positions in vendor financing, factoring, equipment and transportation financing, Small Business Administration loans, and asset-based lending. CIT, with its principal offices in Livingston, New Jersey and New York City has approximately 5,800 employees in locations throughout North America, Europe, Latin and South America, and the Pacific Rim. For more information, visit http://www.cit.com/ 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: Flight Attendants Decry Finger-Pointing Labor Groups ---------------------------------------------------------------- The Association of Flight Attendants--CWA strongly took issue with US Airways holding labor groups responsible in part for its filing for bankruptcy on Sunday. "AFA was not surprised about the filing due to public comments the company has made in recent weeks," said Perry Hayes, president of the union's Master Executive Council at US Airways. "We were however surprised that the company would actually lie in papers it filed with the U.S. bankruptcy court." Despite management's contention that it had been discussing its transformation plan with labor groups for several months, AFA did not receive a proposal from the company until August 17-18, and it took nearly two weeks after that to provide a partial costing of that proposal. Even now, flight attendants lack a complete costing of the company's latest proposal. "The company cannot expect any labor group to negotiate blindly without the necessary information, which it alone controls," Mr. Hayes said. In contrast to management's contention that it pursued negotiations "with diligence and vigor," the company elected to have one team of negotiators to deal with AFA and the pilots' union. "Once the company was engaged with the Airline Pilots, we barely heard from them for a week," said Hayes. "That is 'vigor and diligence?'" AFA is urging US Airways to actually negotiate with the labor groups on the property instead of performing the "cram-down" tactics of recent weeks. If there is to be any chance of reaching consensual agreements with employees, management will have to demonstrate it is intent on working with labor. A big step would be to tell employees what sacrifices management is willing to take, cut management salaries, increase supervisor productivity and block the use of title changes and sham promotions to gain increases, as happened during the last round of concessionary talks. More than 46,000 flight attendants, including 5,200 at US Airways, join together to form AFA, the world's largest flight attendant union. AFA is part of the 700,000 member strong Communications Workers of America, AFL-CIO. Visit us at http://www.afanet.org/ 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: Bankruptcy Filings Prompts S&P's Default Ratings ------------------------------------------------------------ Standard & Poor's Ratings Services lowered its ratings on US Airways Group Inc. and its US Airways Inc. subsidiary, including lowering the corporate credit ratings to 'D' from 'CCC-', following yesterday's bankruptcy filing by both entities. Rated enhanced equipment trust certificates -- EETCs -- are still current, despite the bankruptcy filing, due to availability of dedicated liquidity facilities and/or bond insurance. Downgrades of some noninsured EETCs reflect increased risk of eventual default, based on an assessment of collateral coverage and the likelihood of US Airways reorganizing. "US Airways enters Chapter 11 with relatively limited cash available, and will have to move quickly to secure cost-saving labor agreements," said Standard & Poor's credit analyst Philip Baggaley. Because all of the company's assets are already pledged as collateral, it will have to rely on existing unrestricted cash. US Airways reached an agreement with the Air Transportation Stabilization Board -- ATSB, which guarantees a $717.6 million loan, providing access to "a portion of $750 million in cash," which forms part of the collateral backing that loan. Management states that it will seek to negotiate new agreements with its unions consensually, but is prepared to ask the bankruptcy court to impose new contracts if necessary. US Airways Inc., the seventh-largest U.S. airline, has a route system concentrated in the eastern U.S. with major hubs at Charlotte, North Carolina, and Philadelphia, Pennsylvania. The company is expected to pursue basically the same "transformation plan" that it had begun to implement in recent months. The plan includes a substantial reduction in operating costs, a simplified and lower fare structure (already introduced on many routes from Philadelphia in response to competition from Southwest Airlines Co.), more point-to-point flights (rather than connecting through hubs), and further shrinkage of its former Pittsburgh hub. Opportunities for further debt reduction in bankruptcy are limited, as most debt is in the form of leases or secured aircraft debt, rather than unsecured debt, and some was already renegotiated in the previous Chapter 11 process. VIAD CORP: Union Members Approve New Labor Agreement ---------------------------------------------------- Viad Corp's (NYSE:VVI) convention services company, GES Exposition Services, along with Freeman Decorating Company and the Las Vegas Teamsters Local 631 have reached a labor agreement, ending a strike that began September 4, 2004. Union members voted on Saturday, Sept. 11, to accept the contract offered jointly by GES and Freeman and recommended by union leadership. The new three-year contract will expire in 2007. "We're extremely pleased that the union membership has approved the new contract," said Paul Dykstra, GES president and chief executive officer. "We are ready to get back to business as usual and we believe that the contract will be beneficial to the union membership, GES and the Las Vegas convention industry." Viad noted that a detailed contingency plan was quickly implemented by GES, enabling the company to successfully service several trade shows while mitigating the financial impact of the week-long strike. Nonetheless, although not yet quantified, third quarter and full year 2004 earnings have been negatively affected. Las Vegas-based GES Exposition Services -- http://www.gesexpo.com/ -- a subsidiary of Viad Corp, has offices in every major convention market across North America. GES provides a wide range of services including tradeshow planning, exhibit rental and fabrication, material handling, staging and rigging, temporary electrical equipment, signs and graphics manufacturing, installation and dismantling, carpet and furnishings, shipping and automated freight and package receiving. GES produces many well- known shows including the Consumer Electronics Show, International Council of Shopping Centers and MAGIC. Viad is an S&P SmallCap 600 company. Major subsidiaries include GES Exposition Services of Las Vegas, Exhibitgroup/Giltspur of Chicago, Brewster Transport Company Limited of Banff, Alberta, Canada, and Glacier Park, Inc., of Phoenix. For more information, visit the company's Web site at http://www.viad.com/ * * * As reported in the Troubled Company Reporter on July 5, 2004, Standard & Poor's Ratings Services lowered its ratings on Phoenix, Arizona-based Viad Corp, including its long- and short-term corporate credit ratings, which were lowered to 'BB' and 'B', respectively, from 'BBB' and 'A-2'. In addition, the ratings were removed from CreditWatch, where they were placed on July 24, 2003. All ratings for Viad were subsequently withdrawn. "The ratings action follows Viad's spin-off of MoneyGram International Inc., its payment services business, to its shareholders," said Standard & Poor's credit analyst Steven Picarillo. Since announcing the spin-off of MoneyGram and concurrent with the transaction, Viad has tendered the vast majority of its public debt. All ratings on Viad have been withdrawn, as Standard & Poor's will no longer rate this company. VISTEON CORP: S&P Places BB Corporate Credit Rating on CreditWatch ------------------------------------------------------------------ Standard & Poor's Ratings Services placed its 'BB+' corporate credit rating for Visteon Corp. on CreditWatch with negative implications. "The CreditWatch reflects concerns about the auto supplier's ability to improve its poor profitability and cash flow generation in the wake of uncertain industry conditions," said Standard & Poor's credit analyst Martin King. These include lower-than- expected sales to its largest customer, Ford Motor Co. (BBB- /Stable/A-3), and high raw-material costs. Dearborn, Michigan-based Visteon has total debt of about $2.2 billion, including securitized accounts receivable and capitalized operating leases, and its total underfunded pension and other postretirement employee benefits -- OPEB -- obligations were $1.8 billion as of Dec. 31, 2003. VIVA INTERNATIONAL: Nears Completion of C.T. Industries' Sale ------------------------------------------------------------- Viva International, Inc., (OTCBB:VIVI) was nearing completion of the agreement to sell its wholly owned subsidiary, C. T. Industries, Inc., to Legends Group Holdings Corporation (f/k/a Adventure Group Holdings Corporation). Legends has agreed to assume up to $250,000 of liabilities and will tender a 20% shareholder equity interest in the reorganized C. T. Industries, Inc. The Legends Group consists of Legends Productions Company, a radio and television productions company and Legend Marketing Company, an event production and marketing company. LEC has relationships with thousands of former professional athletes from all the major sporting venues via its partnership with "City of Legends", a Florida based organization that provides "Quality of Life" services to existing and retired athletes. City of Legends was founded five (5) years ago by, "Sudden" Sam McDowell a famous former major league baseball pitcher. LPC recently launched, "Legends on Sports and other stuff", a sports radio talk-show produced weekly LIVE from the ESPN Club at Disney's (NYSE:DIS) Boardwalk hosted by veteran radio announcer, Glen Dehmer and Sam McDowell. A spokesman for Viva, stated, "We are pleased to be able to move forward with this transaction as it frees up an inactive subsidiary and allows us to focus our energies exclusively on our Caribbean airline project. The sale of or spin-off of C T Industries, Inc., also allows us to via a stock dividend reward our shareholders for their past support and gives them the opportunity to share in the Legends project." Jan Richard, President and CEO of Legends was quoted, "In our opinion, our acquisition of C. T. Industries, Inc., is intended to put us 'front and center' in place to be able to take advantage of many exciting entertainment and sports related opportunities and this transaction offers us an unique way to present our opportunities to the financial community." About the Company Viva International, Inc., is a holding company seeking to provide passenger and cargo services to various destinations from its commercial hub in Sto. Domingo, Dominican Republic. * * * Liquidity Concerns At June 30, 2004, Viva International, Inc., had no cash. Since inception the Company has accumulated a deficit of approximately $15,113,663. Viva International, Inc., has previously estimated that it will require a minimum of $3,000,000 of working capital to complete Viva Airlines, Inc.'s transition from a development stage company to full operation. However, Company management has scaled back its business plan to a level that that will enable it to begin providing air services so long as it is able to raise a minimum of $500,000. Viva International, Inc., does not currently have the funds necessary to provide working and expansion capital to Viva Airlines, Inc. Viva International, Inc., will only be able to provide the needed capital by raising additional funds. As a result of this scaling back, the Company believes that it has improved its chances of raising the minimum levels of financing required. However, an inability to raise funds or a continued lack of funds could result in the failure to complete needed acquisitions of certain aviation assets or payment of certain related expenses that would delay or prevent the commencement of the operation of Viva Airlines, Inc. W.R. GRACE: Asks Court to Approve Akzo Settlement Agreement ----------------------------------------------------------- W.R. Grace & Co., and its debtor-affiliates asks the U.S. Bankruptcy Court for the District of Delaware to approve a Settlement and Release Agreement with Akzo Nobel, Inc. Laura Davis Jones, Esq., at Pachulski, Stang, Ziehl, Young, Jones, & Weintraub, P.C., in Wilmington, Delaware, relates that months after the Petition Date, W.R. Grace & Co.-Conn. received a letter from Akzo, which notified Grace that Akzo believes that certain of Grace's products infringed on three of Akzo's utility patents. These patents concern products or methods relating to the use of hydrotalcite containing materials in combination with catalysts to treat SO2 or SO2-containing emissions from hydrocarbon cracking processes. In particular, Akzo alleged that certain of Grace's products contained hydrotalcite and, therefore, infringed on the Akzo Patent Rights. In response to Akzo's letter, the Debtors conducted an internal investigation and eventually concluded that certain of their products may have included small amounts of hydrotalcite. However, to the extent that any of the Grace Additives did contain hydrotalcite, the Debtors also concluded they had no knowledge, prior to May 1, 2002, of this occurrence, and that any inclusion was inadvertent. The Debtors' investigation further revealed that any hydrotalcite in the Grace Additives was solely the result of a change in the manufacturing process, which was unrelated to the Akzo Patents. The Debtors assure the Court that they had taken measures to ensure that hydrotalcite would no longer be present in any of the Grace Additives in the future, and they anticipated disposing of their existing inventories -- which may have contained hydrotalcite -- by March 31, 2003. On June 13, 2003, the parties met to discuss the Debtors' alleged infringement of the Akzo Patent Rights. During this meeting, Akzo believed that the scope of the Debtors' inclusion of hydrotalcite in the Grace Additives was substantially broader than the discoveries made during the Debtors' internal investigation. To correct Akzo's misunderstanding, the Debtors offered more information concerning the possible causes of the alleged hydrotalcite formation in the Grace Additives. The parties, therefore, conducted subsequent settlement negotiations concerning the scope and timing of the Debtors' alleged infringement of the Akzo Patent Rights. These settlement discussions culminated in the Settlement Agreement, which requires the Debtors to pay Akzo $1,800,000 in exchange for Akzo's agreement to: * release Grace from any liability for any violation of the Akzo Patent Rights; and * withdraw, with prejudice, its claim for patent infringement -- Claim No. 9561 -- that Akzo filed on March 27, 2003. Ms. Jones asserts that Judge Fitzgerald should approve the Settlement Agreement because: (a) Akzo is likely to establish some patent infringement liability for sales of the Grace Additives; (b) there are substantial inherent uncertainties in the outcome of patent litigation and, in any event, the Debtors will incur substantial costs to defend any litigation; and (c) the Debtors would like to avoid the distractions that defending against Akzo's claims will cause them during their reorganization efforts. Ms. Jones explains that for infringement of a utility patent, the patent owner is entitled to recover damages, pursuant to Section 284 of 35 U.S.C., that are "adequate to compensate" the patent holder. These amounts are measured by either the patent owner's actual damages or a so-called "reasonable royalty" which has been defined as the amount that a person who desired to manufacture, use, or sell a patented product would have been willing to pay as a royalty and yet be able to make a reasonable profit. As a result, the "reasonable royalty" determination requires the finder of fact to engage in a "hypothetical negotiation" conducted at arm's length between a willing licensor and a willing licensee as of the date when the infringement began. 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) WEIRTON STEEL: Will Pay Minteq Int'l.'s Mechanic Liens for $600K ---------------------------------------------------------------- On June 19, 2003, Minteq International, Inc., filed a Notice of Mechanic's Lien with the County Clerk of Hancock County in West Virginia, against certain of Weirton Steel Corporation's buildings and property. According to Julia A. Chincheck, Esq., at Bowles Rice, McDavid, Graff & Love, LLP, in Charleston, West Virginia, the Mechanic's Lien was filed to secure certain unpaid invoices for materials that Minteq provided to Weirton before the Petition Date for use in Weirton's industrial steel-making operations. The total amount Minteq asserted on account of the outstanding invoices covered by the Mechanic's Lien was $836,889. Minteq also asserts a claim for $842,053, which includes the $836,889 secured by the Mechanic's Lien. Ms. Chincheck asserts that Weirton's default constitutes a breach in its purchase orders, invoices contracts and agreements with Minteq. Ms. Chincheck maintains that Minteq's Notice of Mechanic's Lien was properly filed and perfected in accordance with applicable West Virginia law and has not been cancelled or discharged. Minteq has performed all conditions of its contracts and agreement with Weirton. Minteq asks the Court to dismiss Weirton's complaint pursuant to Rule 7012 of the Federal Rules of Bankruptcy Procedure. Ms. Chincheck argues that the Complaint fails to state a claim upon which relief can be granted against Minteq. In addition, the Complaint is barred: (a) by the doctrines of laches, waiver and estoppel; (b) because if a contract exists between the parties, Minteq did not breach it nor did it waive its rights to file a Mechanic's Lien; (c) due to the Debtor's breaches of its agreements with Minteq; (d) due to failure and lack of consideration; and (e) pursuant to the terms and conditions set forth in Minteq's invoices. Minteq also asks Judge Friend to: (1) declare that Weirton breached their agreements by not paying for the material and labor Minteq supplied; (2) declare that Weirton breached their agreements and, accordingly, Weirton cannot rely on the language contained in its purchase orders referring to an alleged waiver of Minteq's right to file a Mechanic's Lien. Minteq's standard conditions of sale do not include any provision which waives its right to file a Mechanic's Lien; (3) declare that the provisions in the purchase orders Weirton issued, which are alleged to constitute a waiver of Minteq's right to file a Mechanic's Lien, are void and unenforceable because they are against public policy of the State of West Virginia and State of New York; (4) declare that the Notice of Mechanic's Lien it filed on June 19, 2003, constitutes a valid, fully perfected, lien against Weirton's real property and buildings; (5) declare that Minteq is a secured creditor; (6) declare that that any sale of Weirton's assets must provide for a $836,889 payment to Minteq, together with interest, in satisfaction of Minteq's Mechanic's Lien; and (7) grant Minteq an allowed secured claim for $836,889, together with interest. Parties Stipulate Pursuant to the ISG Asset Purchase Agreement between Weirton and ISG Weirton, Inc., ISG Weirton agreed to assume "all liabilities and obligations of [Weirton] as of the Closing Date for the mechanics liens that are as a matter of law held to be valid and property perfected and that are set forth on Schedule 1.3)g)" of the Asset Purchase Agreement. ISG Weirton has replaced Weirton as plaintiff in the Adversary Proceeding. The Mechanic's Lien asserted by Minteq is included on Schedule 1.3(g) of the Asset Purchase Agreement. Minteq, Weirton and ISG Weirton have actively engaged in arm's- length discussions regarding the Mechanic's Lien, the Proof of Claim and the parties' obligations, and have reached a settlement regarding certain matters. The parties stipulate that: (a) ISG Weirton will pay Minteq $600,000 in full satisfaction of the Mechanic's Lien and ISG Weirton's obligations under Section 1.3(g) of the Asset Purchase Agreement with respect to the Mechanic's Lien; (b) Minteq will have an allowed general unsecured claim against Weirton for $242,053, representing the amount asserted in the Proof of Claim less the $600,000 ISG Weirton paid. Minteq's Claim will be deemed amended to reflect the reduced amount; (c) Minteq will not assert any additional claims related to the liabilities against Weirton, ISG Weirton, and their affiliates. Weirton will be fully responsible for the satisfaction of the Allowed Unsecured Claim pursuant to its Chapter 11 Plan or otherwise, and will not assert any claim against ISG Weirton under Section 1.3(g) of the Asset Purchase Agreement, on account of any distribution made to Minteq as a result of the Allowed Unsecured Claim. The parties will bear their costs and attorney's fees; (d) Upon payment of the Settlement Amount to Minteq, the Adversary Proceeding will be deemed dismissed with prejudice. The parties will take all reasonable actions to document and provide notice of the dismissal with prejudice of the Adversary Proceeding and the Counterclaims and any and all causes of actions, claims and counterclaims asserted. In addition, Minteq will make all necessary filings to reflect the satisfaction and termination of the Mechanic's Lien; and (e) Nothing in the Stipulation prejudices, impairs or otherwise affects any other claims that Minteq may have against Weirton, including the Administrative Claim for $269,059 Minteq asserted against Weirton. Judge Friend approves the parties' Stipulation. Headquartered in Weirton, West Virginia, Weirton Steel Corporation was a major integrated producer of flat rolled carbon steel with principal product lines consisting of tin mill products and sheet products. The company was the second largest domestic producer of tin mill products with approximately 25% of the domestic market share. The Company filed for chapter 11 protection on May 19, 2003 (Bankr. N.D. W. Va. Case No. 03-01802). Judge L. Edward Friend, II administers the Debtors cases. Robert G. Sable, Esq., Mark E. Freedlander, Esq., David I. Swan, Esq., James H. Joseph, Esq., at McGuireWoods LLP represent the Debtors in their liquidation. Weirton sold substantially all of its assets to Wilbur Ross' International Steel Group. (Weirton Bankruptcy News, Issue No. 35; Bankruptcy Creditors' Service, Inc., 215/945-7000) WHOLE FOODS: S&P Raises Debt Rating to BB+ & Credit Rating to BBB- ------------------------------------------------------------------ Standard & Poor's Ratings Services raised its corporate credit rating on Whole Foods Markets, Inc., to 'BBB-' from 'BB+'. The subordinate debt rating was raised to 'BB+' from 'BB-'. The outlook is stable. Total debt outstanding at July 4, 2004, was $169 million. "The upgrade reflects Whole Food's good profitability and stable revenue growth trends, as well as credit measures that are expected to remain solidly characteristic of investment-grade levels," said Standard & Poor's credit analyst Stella Kapur. "The ratings are based on the company's strong business profile as the clear leader in the highly fragmented natural food retailing sector, with favorable growth fundamentals, consistent operating performance, and credit measures in line with current ratings. This is mitigated by increasing competition (driven by the attractiveness of this market) and the company's more aggressive store development plans." Whole Foods operates within the rapidly growing natural food retailing sector. Increased sales are being driven by rising consumer preoccupation over the purity and safety of food, environmental concerns, and healthier eating patterns. During the difficult economic environment of recent years, the company continued to achieve strong same-store sales growth in the high single-digit to low double-digit percentage range. Both average ticket and customer counts also continue to be positive. Growth prospects should remain favorable, as Whole Foods continues to expand in the top 50 largest U.S. metropolitan markets. Geographic diversification is expected to continue to increase over the next several years as the company fills in existing markets and expands into new ones. About 43% of Whole Foods' store base was located in California, Massachusetts, and Texas as of its fiscal 2003 year-end (Sept. 28, 2003). XEROX CORP: Wins $23+ Million HSBC Document Services Contracts -------------------------------------------------------------- Based on a record of delivering high performance at competitive cost, Xerox Corporation (NYSE: XRX) has signed more than $23 million in new, long-term contracts to provide document equipment, services and support at the Brazilian and United Kingdom banking offices of HSBC, one of the world's largest international banks. In Brazil, using Xerox office-assessment tools, Xerox do Brasil re-designed work processes at HSBC's primary administrative locations, projecting more than 20 percent savings in printing costs per year. To achieve the savings, Xerox removed 3,000 competitive, mostly inkjet printers at offices in Curitiba, Rio de Janeiro and Sao Paulo and replaced them with 200 Xerox WorkCentre(R) Pro multifunction systems and about 70 Xerox Phaser(R) color printers. The contract is valued at $11 million over five years. In the United Kingdom, HSBC signed contracts totaling more than $12 million to provide Xerox equipment and services for branches as well as high-volume printing services for a key customer operation. The agreements cover five-year and four-year periods respectively. "These wins demonstrate how global reach, innovative technology, and Lean Six Sigma analytical skills can uncover solid, verifiable savings opportunities for large enterprises like HSBC and generate long-term revenue streams for Xerox," said Thomas J. Dolan, president, Xerox Global Services. Brazilian Offices Studied for Efficiency HSBC selected Xerox over competitors including HP, IBM and Lexmark to analyze its printing environment and provide a plan to improve HSBC's enterprise-wide document efficiency and productivity. "We had very little quantifiable information about how much we had been spending to print millions of documents per month," said Guy Millar, chief operating officer, HSBC Brasil. "We asked Xerox to analyze this situation and supply a more effective print environment so we could improve the productivity of our workgroups. After a convincing analysis, we agreed that Xerox should supply new, more cost-efficient solutions and services that meet the high standards we hold at HSBC." Xerox do Brasil, the Xerox Brazilian affiliate, is aligned with the corporation's dedicated focus to perform office analyses and help customers lower the high costs of operating their printer networks. "We have worked with more than 200 customers who have had difficulty determining the costs of their printing operations," said Pedro Fabrega, president, Xerox do Brasil. "As much as two- thirds of this cost is not perceptible unless you have the tools and knowledge to find it. Xerox's Global Services team has that knowledge, and that's how we were able to help lower costs and improve efficiency at HSBC." To analyze the actual cost of HSBC's printing, Xerox performed an Office Document Assessment, known in Brazil as "SMARTi." The 45- day study analyzed the bank's print assets and work processes, comparing them to benchmarks in the local financial industry. In administrative areas, the assessment identified thousands of different kinds of decentralized printers and fax machines, some specified for just one worker. Many were inkjet printers, among the most expensive printers to operate because they consume costly ink cartridges at a rapid rate. After compiling the data, Xerox designed a lower-cost, multifunction device-centered print environment for the bank's administrative workers. Partnership the Key in U.K. In the United Kingdom, Xerox and HSBC have signed a series of contracts that provide for a range of services and equipment offerings. Among the largest contracts signed this year are: -- A five-year office fleet management deal that provides for HSBC retail banking establishments to select and install the latest Xerox equipment that meets the needs of that facility. The equipment is consistent with other technology within both the branch and headquarters office environments and compatible with the Xerox infrastructure in HSBC global operations. The contract includes DocuCare on-site specialists to provide equipment maintenance and support activities. -- A four-year contract to provide networked high-volume printing equipment for First Direct, HSBC's telephone banking subsidiary. The equipment, which includes Xerox DocuPrint 180 variable-data printing systems, software and support, is used in part to create customer documentation for immediate dispatch from the operation's critical call centers. HSBC Brasil is part of HSBC, Hong Kong Shanghai Banking Corporation (LSE: HSBC Holdings plc), which has international headquarters in London, operations in 80 countries, and an international network of 8,000 offices and agencies. The bank has 138 years of experience and more than 37 million customers worldwide. With assets in excess of US $746 billion, the HSBC group is one of the most established financiers in the world. About Xerox Corporation Xerox is best known for its copiers, but it also makes printers, scanners, fax machines, software, and supplies, and provides consulting and outsourcing services. The company designs its products for home users, businesses, and high-volume publishers such as newspapers. Customers include Kinkos and the US Army Reserve. Although it plans to expand its color printing offerings, the company still generates two-thirds of its revenue from black and white products. Sales outside the US account for nearly 45% of revenues. Xerox, which has seen its sales and market share slip, has cut jobs and sold assets, including half of its stake in Fuji Xerox. * * * As reported in the Troubled Company Reporter on August 12, 2004, Moody's Investors Service raised the senior implied rating of Xerox Corporation and its financially supported subsidiaries to Ba1 from Ba3. The action reflects expectations that Xerox will continue its good operational execution and generate stable to improving profits and free cash flow, continue to reduce leverage, and maintain solid liquidity after meeting scheduled debt maturities. The outlook is stable. This concludes a review initiated June 29, 2004. Ratings raised include: Xerox Corporation: * Senior implied to Ba1 from Ba3; * Senior unsecured to Ba2 from B1; * Senior unsecured shelf registration (P) Ba2 and (P) B1; * Subordinated to Ba3 from B3; * Subordinated shelf registration to (P) Ba3 from (P) B3; * Preferred to B1 from Caa1 * Preferred shelf registration to (P) B1 from (P) Caa1 Xerox Credit Corporation: * Senior unsecured to Ba2 from B1 (support agreement from Xerox Corporation); * Xerox Capital (Europe) PLC; * Senior unsecured to Ba2 from B1 (guaranteed by Xerox Corporation); XEROX CORP: Meets Growing Demand for Imaging Services in Arkansas ----------------------------------------------------------------- Xerox Corporation's (NYSE: XRX) Global Services division has more than tripled the size of its Imaging Services Center in Hot Springs, Arkansas, to meet increasing customer demand for records retention, improved document processes and disaster recovery planning. The digital scanning and storage facility, which expanded from 51,000 square feet to 162,000 square feet, now has the capacity to handle more than 1 billion color, black-and-white and gray-scale images per year. Customers are using Xerox's Imaging Services Center to improve efficiency. Hormel Foods Corp.'s (NYSE: HRL) accounts payable department turned to Xerox to help digitize paper documents to create an automated, smarter system of coding, matching and validating invoices. "One of our main priorities was to reduce the amount of time spent looking for a paid invoice to accommodate requests from several departments," said Michael J. McCoy, executive vice president and chief financial officer, Hormel Foods Corp. "The Xerox solution has given time back to our staff and provides the company with a more efficient manner to handle internal requests for information." For more than 17 years, Xerox has helped clients around the world digitize and manage massive amounts of information from hardcopy documents. In addition to creating hosted repository Web sites to provide access to electronic information, the Xerox Imaging Services Center now offers high-volume color scanning technology and advanced image compression software allowing clients to store, back-up and access business-critical documents. Leading IT market research and advisory firm IDC projects spending on imaging and document management outsourcing will increase more than 20 percent annually through 2007*. Reflecting this growth, Xerox's Imaging Services Center is increasingly called upon by companies in various industries to support day-to-day business operations. With Xerox's help, for example: -- Healthcare organizations are transitioning hardcopy documents, including patient admittance forms, insurance claims and Medicaid case files, to Web-based archives, allowing staff 24/7 accessibility to critical information. -- Manufacturing and energy companies are capturing unique documents, from large blueprints to faded research notes, and maintaining them in electronic databases to respond to construction bids, preserve R&D findings and accelerate product time-to-market. -- Banking and insurance firms are meeting government regulations and court-ordered production schedules by having business-critical documents digitized, archived and accessible in as quickly as 24 hours. -- Online retailers are providing site visitors higher-quality images that open quickly with either dial-up or broadband Internet connections, allowing more effective displays of products on the Web. "Companies are finding that imaging services deployed to speed workflow, address regulatory requirements and streamline go-to- market initiatives can play a key role in helping increase customer retention, enhance sales and improve worker productivity," said Jerry Wallis, general manager, Global Imaging and Repository Services, Xerox Global Services. The Hot Springs location is Xerox's primary site for converting and uploading content of all types, including office documents, forms, building plans, invoices, contracts and a variety of digital file formats. About Xerox Corporation Xerox is best known for its copiers, but it also makes printers, scanners, fax machines, software, and supplies, and provides consulting and outsourcing services. The company designs its products for home users, businesses, and high-volume publishers such as newspapers. Customers include Kinkos and the US Army Reserve. Although it plans to expand its color printing offerings, the company still generates two-thirds of its revenue from black and white products. Sales outside the US account for nearly 45% of revenues. Xerox, which has seen its sales and market share slip, has cut jobs and sold assets, including half of its stake in Fuji Xerox. * * * As reported in the Troubled Company Reporter on August 12, 2004, Moody's Investors Service raised the senior implied rating of Xerox Corporation and its financially supported subsidiaries to Ba1 from Ba3. The action reflects expectations that Xerox will continue its good operational execution and generate stable to improving profits and free cash flow, continue to reduce leverage, and maintain solid liquidity after meeting scheduled debt maturities. The outlook is stable. This concludes a review initiated June 29, 2004. Ratings raised include: Xerox Corporation: * Senior implied to Ba1 from Ba3; * Senior unsecured to Ba2 from B1; * Senior unsecured shelf registration (P) Ba2 and (P) B1; * Subordinated to Ba3 from B3; * Subordinated shelf registration to (P) Ba3 from (P) B3; * Preferred to B1 from Caa1 * Preferred shelf registration to (P) B1 from (P) Caa1 Xerox Credit Corporation: * Senior unsecured to Ba2 from B1 (support agreement from Xerox Corporation); * Xerox Capital (Europe) PLC; * Senior unsecured to Ba2 from B1 (guaranteed by Xerox Corporation); YELLOW ROADWAY: Moody's Puts Ba1 Rating on $500M Credit Facility ---------------------------------------------------------------- Moody's Investors Service assigned a Ba1 rating to Yellow Roadway Corporation's $500 million unsecured revolving credit facility due 2009. Concurrently, Moody's upgraded the company's senior unsecured and issuer ratings to Ba1, affirmed the senior implied at Ba1, and withdrew the senior secured rating. The rating outlook remains positive. The rating actions reflect the change in relative priority of claim among creditors in Yellow Roadway's capital structure as a result of the replacement of an existing secured bank credit facility with a new unsecured facility. With all of the company's debt now unsecured, Moody's upgraded the senior unsecured and issuer ratings to the senior implied rating of Ba1. Moody's rationale for the ratings and outlook were discussed in greater detail in a press release dated August 28, 2004. The new unsecured revolving credit facility refinanced the old $525 million secured credit facilities. The secured interest supporting the Roadway LLC notes was removed with the release of the collateral by the banks, as described in the terms of the Roadway LLC notes. The convertible notes remained senior unsecured. The new $500 million revolving credit facility due 2009 is guaranteed by all material domestic subsidiaries of Yellow Roadway. The new revolving credit facility ranks pari passu with the outstanding debt of Yellow Roadway as all of the indebtedness is unsecured and has the same guarantee structure. The covenants on the new revolving credit facility include: i) limitations on subsidiary debt, liens, and sale of assets; ii) minimum net worth; iii) minimum fixed charge coverage; and, iv) maximum leverage (Debt to EBITDA). The company will need to represent that no material adverse change has occurred for each advance. The revolving credit facility includes a sublimit of $375 million for Yellow Roadway's standby letters of credit and a sublimit of $60 million for foreign subsidiary borrowings. Rating assigned: * Yellow Roadway Corporation $500 million Bank Credit Facility due 2009 at Ba1 Ratings upgraded: * Yellow Roadway Corporation convertible notes and issuer rating to Ba1 from Ba2 Ratings affirmed: * Roadway LLC senior notes at Ba1 * Yellow Roadway Corporation senior implied at Ba1 Rating withdrawn: * Yellow Roadway Corporation $525 million senior secured credit facilities due 2008 Yellow Roadway Corporation owns four less than truckload trucking companies, Yellow Transportation, Roadway Express, New Penn and Reimer Express. Yellow Roadway Corporation is based in Overland Park, Kansas. * Alvarez & Marsal Launches Tax Advisory Services Group ------------------------------------------------------- Alvarez & Marsal, a global professional services firm, announced it has formed a new Tax Advisory Services group to provide clients with independent advice on tax matters. Joining the firm is a seasoned team of tax professionals led by Alvarez & Marsal Tax Advisory Services Chief Executive Officer, Robert N. Lowe, Jr., who previously spent more than two decades with Arthur Andersens Tax and Business Advisory practice. For more than 20 years, Alvarez & Marsal has been building a global reputation for helping clients in a range of industries address complex business challenges,said Bryan Marsal, co-founder of A&M. As a leader in the turnaround and restructuring industry, our firm made a strategic decision in recent years to expand our capabilities while maintaining our tradition of providing top quality client service. Thus, we are building a team of top- flight industry veterans to create and lead our new service areas and enhance the value we provide to clients. Our new tax practice, led by Bob Lowe, complements A&Ms well- established operational and financial expertise and seeks to address the market demand for tax professionals who will partner with their clients to advise them with absolute integrity regarding tax matters that impact their business,he continued. In the wake of the Sarbanes-Oxley Act and greater scrutiny on corporate tax strategies, companies need to be able to rely on senior-level, objective advice to effectively manage tax liabilities and risks,said Mr. Lowe. As a result, an increasing number of management teams and boards of directors are looking beyond traditional audit firms, which often encounter conflicts of interest. We are aggressively recruiting seasoned tax professionals who will serve as advocates for their clients. A&Ms Tax Advisory Services include: consulting on federal, international, and state and local tax matters, including tax aspects of mergers, acquisitions and dispositions; identifying and managing tax risks; advising on tax technology and process optimization for the tax function; and providing efficient solutions for tax reporting requirements. During his career with Andersen, Mr. Lowe held several leadership positions including Global Managing Partner for Expansions and Alliances, Member of the Global, U.S., and U.S. Tax Leadership Teams, and Managing Partner of the Florida Caribbean Market. Immediately prior to joining A&M, he was a Managing Director and Chief Operating Officer of a private equity firm with $1.5 billion under management. Mr. Lowe holds both a Bachelors and Masters degree in accounting from the University of Florida. In addition to Mr. Lowe, Mike Stokke, who has over 24 years of tax advisory experience, joins the firm as a Managing Director and head of the Tax Advisory Services practice in Atlanta. Prior to joining A&M, Mr. Stokke consulted on corporate tax matters at Arthur Andersen and Deloitte in Houston, Minneapolis and Atlanta. He led Andersens Minneapolis tax practice for seven years, and held national management roles in both Andersen and Deloitte. A graduate of the University of Wisconsin-Eau Claire, Mr. Stokke earned a MBA in management with a specialization in strategy and leadership from the University of Minnesota Carlson School of Business. Joining Mr. Stokke in Atlanta is Jeff Rubin, a Managing Director who spent over 17 years with Arthur Andersen where he led the International Tax and Business Advisory Practice for the Southeast Region. While at Andersen he was responsible for delivering value-added consulting services and tax advice for some of the largest multinational companies in Atlanta and the Southeast. Mr. Rubin also was a member of Andersens team focused on partnership taxation. Immediately prior to joining A&M, Mr. Rubin co-founded and served as a managing member of a venture capital fund, which invested in startup technology companies in the Southeast. Mr. Rubin earned a J.D. from Emory University School of Law and a Bachelors degree in accounting from the University of Florida. Ted McElroy joins the firm as a Managing Director and head of the Tax Advisory Services practice in Houston. Prior to joining A&M he spent 23 years with Arthur Andersen where he led Andersens Gulf Coast Region tax practice. Mr. McElroy has served clients in the oil and gas industry and has authored publications and articles about leading tax issues impacting companies in the oil and gas industry, including the Arthur Andersen Oil and Gas Federal Income Tax Manual. For the last two years, he was the Global and U.S. Oil and Gas Tax Industry leader for Deloitte. Mr. McElroy earned both a Bachelors degree and Masters degree in taxation from Texas A&M University. Kim Barr, who has more than 23 years of tax advisory experience, joins the firm as a Managing Director and head of the San Francisco Tax Advisory Services practice. Prior to joining A&M, he was a partner with Andersen and Deloitte in San Francisco and Seattle. In Seattle, he led Andersens tax practice for several years. In San Francisco, he headed up the regions state and local tax practice for Deloitte. Mr. Barrs experience includes advising clients in such industries as health care, software, publishing and power generation on federal and state and local tax matters. A graduate of the University of North Carolina at Chapel Hill with a Bachelors degree in accounting, he earned a law degree from Duke Law School. Kristin Cobb Fonseca, who spent over ten years with Arthur Andersen, joins the firm as a Managing Director, based in Miami. During her career with Andersen, she advised large corporate clients on mergers and acquisitions and accounting methods matters. Ms. Fonseca also was a member of Andersens Global Expansions and Alliances team where she was responsible for identifying, structuring and negotiating the firms acquisitions, divestitures and alliances. Ms. Fonseca holds both a Bachelors and Masters degree in accounting from the University of Florida. Founded in 1983, Alvarez & Marsal is a global professional services firm that helps businesses and organizations in the corporate and public sectors navigate complex business and operational challenges. With professionals based in locations across the U.S., 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. Its service offerings include Turnaround Management Consulting, Crisis and Interim Management, Creditor Advisory, Financial Advisory, Dispute Analysis and Forensics, Real Estate Advisory, Business Consulting and Tax Advisory. For more information about the firm, please visit http://www.alvarezandmarsal.com/>www.alvarezandmarsal.com * Upcoming Meetings, Conferences and Seminars --------------------------------------------- September 18-21, 2004 AMERICAN BANKRUPTCY INSTITUTE Southwest Bankruptcy Conference The Bellagio, Las Vegas, NV Contact: 1-703-739-0800 or http://www.abiworld.org October 9-10, 2004 INTERNATIONAL WOMEN'S INSOLVENCY & RESTRUCTURING CONFEDERATION IWIRC Annual Fall Conference Nashville, TN Contact: 1-703-449-1316 or www.iwirc.com October 10-13, 2004 NATIONAL CONFERENCE OF BANKRUPTCY JUDGES Seventy Seventh Annual Meeting Nashville, TN Contact: http://www.ncbj.org/ October 15-18, 2004 TURNAROUND MANAGEMENT ASSOCIATION 2004 Annual Convention Marriott Marquis, New York City Contact: 312-578-6900 or www.turnaround.org November 29-30, 2004 BEARD GROUP & RENAISSANCE AMERICAN MANAGEMENT The Eleventh Annual Conference on Distressed Investing Maximizing Profits in the Distressed Debt Market The Plaza Hotel - New York City Contact: 1-800-726-2524; 903-592-5168; dhenderson@renaissanceamerican.com December 2-4, 2004 AMERICAN BANKRUPTCY INSTITUTE Winter Leadership Conference Marriott's Camelback Inn, Scottsdale, AZ Contact: 1-703-739-0800 or http://www.abiworld.org March 9-12, 2005 TURNAROUND MANAGEMENT ASSOCIATION 2005 Spring Conference JW Marriott Desert Ridge, Phoenix, AZ Contact: 312-578-6900 or www.turnaround.org April 28- May 1, 2005 AMERICAN BANKRUPTCY INSTITUTE Annual Spring Meeting J.W. Marriot, Washington, DC Contact: 1-703-739-0800 or http://www.abiworld.org June 2-4, 2005 ALI-ABA Partnerships, LLCs, and LLPs: Uniform Acts, Taxation, Drafting, Securities and Bankruptcy Omni Hotel, San Francisco Contact: 1-800-CLE-NEWS; http://www.ali-aba.org July 14 -17, 2005 AMERICAN BANKRUPTCY INSTITUTE Ocean Edge Resort, Brewster, MA Contact: 1-703-739-0800 or http://www.abiworld.org July 27- 30, 2005 AMERICAN BANKRUPTCY INSTITUTE Southeast Bankruptcy Workshop Kiawah Island Resort and Spa, Kiawah Island, SC Contact: 1-703-739-0800 or http://www.abiworld.org October 19-23, 2005 TURNAROUND MANAGEMENT ASSOCIATION 2005 Annual Convention Chicago Hilton & Towers, Chicago Contact: 312-578-6900 or www.turnaround.org November 2-5, 2005 NATIONAL CONFERENCE OF BANKRUPTCY JUDGES Seventy Eighth Annual Meeting San Antonio, TX Contact: http://www.ncbj.org/ December 1-3, 2005 AMERICAN BANKRUPTCY INSTITUTE Winter Leadership Conference Hyatt Grand Champions Resort, Indian Wells, CA Contact: 1-703-739-0800 or http://www.abiworld.org The Meetings, Conferences and Seminars column appears in the Troubled Company Reporter each Wednesday. Submissions via e-mail to conferences@bankrupt.com are encouraged. ********* 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, Rizande B. Delos Santos, Jazel P. Laureno, Cherry Soriano-Baaclo, Marjorie Sabijon, Terence Patrick F. Casquejo 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 ***