/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/041021.mbx T R O U B L E D C O M P A N Y R E P O R T E R Thursday, October 21, 2004, Vol. 8, No. 229 Headlines ABITIBI-CONSOLIDATED: Moody's Slices Ratings to Ba2 from Ba3 ADELPHIA BUSINESS: Has Until November 8 to Object to Claims ADVERTISING DIRECTORY: S&P Puts 'B-' Rating on Planned $210M Notes AIR CANADA: United Air Lines Sells Claims to Deutsche Bank AMERICAN BONDING: Proofs of Claim Against Insurer Due Feb. 8 AMERICAN RESTAURANT: U.S. Trustee Appoints Creditors' Committee AMES DEPARTMENT: Asks Court to Approve Rocky Hill Bidding Protocol AMES: Has Until February 28 to File a Chapter 11 Plan ATA AIRLINES: Flight Attendants Ratify Concession Package ATA HOLDINGS: Likely Bankruptcy Prompts S&P to Junk Credit Rating BEAR STEARNS: Fitch Puts Low Ratings on Six Mortgage Securities BEATON HOLDING: 8th Cir. BAP Doesn't Disqualify Debtors' Counsel BISHOP GOLD: Sets Oct. 27 as Closing Date for Toodoggone Purchase BMC INDSUTRIES: U.S. Trustee Picks 5-Member Creditors Committee BOWATER INC: Market Issues Prompt Moody's to Slice Ratings to Ba2 CBD MEDIA: Moody's Junks Planned $100 Million Senior Debt Ratings CCC INFO: Delays Earnings Release to Review Warrant Transactions CENTURY/ML CABLE: Has Until Dec. 30 to File Plan of Reorganization CHASE COMMERCIAL: S&P Assigns Low-B Ratings on Three Cert. Classes CHOICE ONE: Hires Bankruptcy Services as Noticing Agent CONSTELLATION BRANDS: Confirms Offer to Purchase Mondavi Corp. CONSTELLATION BRANDS: Mondavi Bid Spurs S&P to Watch Low-B Ratings CRESCENT REAL: Sells Non-Income Producing Land to Houston City DETIENNE ASSOCIATES: Voluntary Chapter 11 Case Summary DIAMOND APPAREL LP: Voluntary Chapter 11 Case Summary DVI, INC.: Judge Walrath Approves Debtors' Disclosure Statement ENDURANCE SPECIALTY: Names Michael Fujii to Lead US-Based Business ENRON CORP: Court Approves ECS Bidding Procedures FEDERAL-MOGUL: Asks Court to Okay $500M Replacement DIP Facility FHC HEALTH: Moody's Junks $100M Sr. Secured Third Lien Term Loan FLINTKOTE CO.: Wants Until Dec. 23 to Make Lease-Related Decision FORT HILL: IP Company Wants Exclusive Period Terminated FORT HILL: Wants Two Creditors Banned from Voting FRIEDMAN'S INC: Elects Peter Thorner to Board of Directors FRONTIER OIL: Negotiating to Begin Caribbean Sector Exploration HANOVER COMPRESSOR: S&P Affirms 'BB-' Corporate Credit Rating HEDSTROM CORP: Case Summary & 31 Largest Unsecured Creditors HIGH VOLTAGE: Reorganized Co. Amends Credit Agreement with Lenders HUFFY CORP: Files for Chapter 11 Protection in S.D. Ohio HUFFY CORPORATION: Case Summary & 20 Largest Unsecured Creditors IGAMES ENTERTAINMENT: Completes Merger & Changes Trading Symbol INTERMET CORP: Court OKs $20MM Interim Funding Under DIP Facility INTERSTATE BAKERIES: Trustee Adds 3 Creditors' Committee Members JAZZ GOLF: Expects to Receive $1 Million from Private Placement JOHN Q. HAMMONS: Moody's Reviewing Low-B Ratings & May Downgrade KRATON POLYMERS: Weak Performance Cues S&P to Pare Rating to 'B+' LB-UBS: Fitch Assigns Low-B Ratings to Six Mortgage Certificates LEVI STRAUSS: Fitch's Ratings Unaffected by Dockers Retention MERIT STUDIOS: Summary & Overview of Amended Chapter 11 Plan MERRILL LYNCH: S&P Affirms Class E's BB Rating MIRANT: Stay Modified to Allow NYISO to Pursue Remand Proceeding MKP CBO: S&P Places B+ Ratings on Classes C-1 & C-2 on CreditWatch MOHEGAN TRIBAL: Acquisition Cues Moody's to Affirm Low-B Ratings MORGAN STANLEY: Fitch Puts Low-B Ratings on Six Cert. Classes NASH FINCH: S&P Assigns 'B+' Rating to $300M Sr. Secured Facility NORSKE SKOG: Moody's Affirms Ba3 Ratings with Negative Outlook NORTHWESTERN CORP: Court Formally Confirms Plan of Reorganization NORTHWESTERN CORP: Fitch Puts Low Ratings on Proposed Sr. Notes NUCENTRIX: Lawyers Get Success Fee, But Financial Advisor Doesn't OGLEBAY NORTON: Wants Court to Reconsider Confirmation Ruling OMEGA HEALTHCARE: Paying $0.19 Common Stock Dividend in 3rd Qtr. OSBORN FARMS: Case Summary & Largest Unsecured Creditor OWENS CORNING: Dr. Peterson Pegs Asbestos Liability at $18.6 Bil. OWENS CORNING: Wants Until June 2005 to Decide on Leases PENN NATIONAL: Racing Commission Grants Unconditional License POLYMER HOLDINGS: Moody's Junks $200M Senior Subordinated Notes PORTOLA PACKAGING: S&P Slices Corporate Credit Rating to 'B' PENN TRAFFIC: Postpones Today's Disclosure Statement Hearing QWEST COMMS: To Release 3rd Quarter Financial Results on Nov. 4 RAMP CORP: Modifies 54.6 Million Warrants to Reduce $982K Debt RCN CORP: Elects to Acquire Remaining 50% D.C. Stake from Pepco RCN CORP: Wants to Assign Leases to Advance Magazine READY MIXED: Moody's Junks Planned $150M Senior Subordinated Notes RELIANCE GROUP: Court Approves $166.5 Million PBGC Settlement ROYAL & SUNALLIANCE: Fitch Affirms BB- Financial Strength Rating SALEM COMMS: Hosting 3rd Qtr. Earnings Teleconference on Nov. 3 SMURFIT-STONE: Moody's Puts Ba3 Rating on $2.2 Billion Facilities TANGO INC: Revenue Projections Show Significant Percentage Gain SHERIDAN HOLDNGS: Moody's Puts B1 Rating on $145MM Sr. Bank Loans THAXTON RBE: Judge Hodges Approves Transfer of Cases to Delaware THAXTON RBE INC: Case Summary & 50 Largest Unsecured Creditors TPS ENTERPRISES: Court Rejects IRS' Excusable Neglect Argument TRM CORP: S&P Puts B+ Rating on Planned $15M Sr. Secured Facility US AIRWAYS: Court Fixes Feb. 3, 2005 as Claims Bar Date US AIRWAYS: Lays Off 308 Workers in Pittsburgh Int'l Airport US AIRWAYS: Committee Hires Vorys Sater as Local Counsel VENTAS INC: Files Amended Shelf Registration Statement VERESTAR INC.: Exclusive Plan-Filing Period Stretched to Jan. 17 WASTECORP. INT'L: Disclosure Statement Hearing Moved to Nov. 9 WEIRTON STEEL: Court Approves WVWCC Settlement Agreement YURWAY TRANSPORTATION: Case Summary & Largest Unsecured Creditors * Piper Rudnick Merging with Gray Cary Effective Jan. 1, 2005 * Scott Hileman Leads A&M's New York Real Estate Group Expansion ********* ABITIBI-CONSOLIDATED: Moody's Slices Ratings to Ba2 from Ba3 ------------------------------------------------------------ Moody's Investors Service downgraded Abitibi-Consolidated Inc.'s senior implied, senior unsecured and issuer ratings to Ba3 from Ba2. Concurrently, the speculative grade liquidity rating was downgraded to SGL-4, which indicates weak liquidity. The outlook remains unchanged and is negative. The rating action reflects systemic newsprint supply and demand issues: (i) Evolving advertising patterns cause newsprint demand to be weak. It appears that more aggressive supply management is required before newsprint prices will increase significantly beyond current levels. (ii) Moody's expects Abitibi to continue to invest capital to reconfigure its asset portfolio and product offering to address this matter. While the likely amounts are not expected to be particularly large, and the investments are expected to have long-term benefits, these divert near term cash flow from debt reduction. (iii) Approximately 30% of newsprint supply is fragmented among a number of smaller producers whose behavior has partially frustrated initiatives to drive price increases through the market and may continue to do so. (iv) Abitibi has made tangible progress in reducing its cash costs of production. However, with the Canadian dollar continuing to appreciate and with energy, wood and other input costs continuing to increase, profit margins continue to be under pressure. Moody's expects the combination of these factors will cause Abitibi's credit protection metrics to remain relatively weak over the near term, and there is the potential they may not reflect through-the-cycle measures appropriate for the rating unless proactive steps to reduce debt are taken. As a consequence, the rating outlook remains negative. Lastly, Abitibi's SGL rating is adversely impacted by a US$401 million debt maturity in August of 2005. Given expectations of near term cash flow, it is unlikely this debt maturity can be fully repaid, and at least a portion will have to be refinanced. Notwithstanding Abitibi's capital markets' access and refinance ability, Moody's methodology characterizes this circumstance as evidencing weak liquidity. Ratings downgraded: -- Abitibi-Consolidated Inc. * Senior Implied: to Ba3 from Ba2 * Issuer: to Ba3 from Ba2 * Senior Unsecured: to Ba3 from Ba2 * Senior Unsecured Shelf Registration: to (P) Ba3 from (P)Ba2 * Speculative Grade Liquidity Rating: to SGL-4 from SGL-3 -- Abitibi-Consolidated Company of Canada * Bkd Senior Unsecured: to Ba3 from Ba2 * Senior Unsecured Shelf Registration: to (P) Ba3 from (P)Ba2 -- Abitibi-Consolidated Finance L.P. * Bkd Senior Unsecured: to Ba3 from Ba2 * Senior Unsecured Shelf Registration: to (P) Ba3 from (P)Ba2 -- Donohue Forest Products Inc. * Bkd Senior Unsecured: to Ba3 from Ba2 Ratings Affirmed: * Outlook: Negative The Ba3 ratings reflect Abitibi's position as North America's leading producer of newsprint and uncoated groundwood paper. Within the segment, Abitibi has a relatively low cost position, supported in part by strong backward integration into timberlands and significant energy self-sufficiency. While Abitibi has no plans to divest its large hydro-electric facilities or its PanAsia joint venture interest, it does have the flexibility to do so. It is likely these would have significant sales value that could be used to significantly reduce debt. Abitibi also has a significant and cost-competitive lumber business. With newsprint and groundwood paper prices gradually increasing, 2004 and 2005 should show some sequential improvement in LTM measures. The factors off-setting these positives begin with a very significant debt burden resulting from a sequence of acquisitions by Abitibi and various predecessor companies that were substantially debt-financed. Moody's estimates Abitibi's annual run-rate for gross sales to be approximately C$5.7 billion (and gradually increasing with each quarter as the sector emerges from a prolonged trough). However, with consolidated debt levels in the mid C$5 billion range (including outstandings under an accounts receivable program), the ratio of debt-to-sales is approximately 1:1. This implies that meaningful debt reduction from internally generated cash flow is likely to occur only over a prolonged period. Aside from relatively depressed newsprint and groundwood paper pricing (the consequence of structural issues itemized in the opening paragraph), Abitibi has had to cope with an appreciation of the Canadian dollar (nearly 25% over the past year-and-a-half), which has adversely affected margins of its Canadian operations, and cash outflows to pay anti-dumping and countervailing duties on softwood lumber exports to the United States. In addition, the company has a significant pension funding deficit that requires cash contributions, and, as noted above, has been investing to reconfigure its asset portfolio and product offering. Given the combination of its cash flow profile and near term debt maturities, Abitibi has weak liquidity. The company maintains a C$800 million revolver that is largely un-drawn and a US$500 million accounts receivable securitization vehicle that is generally more fully utilized. The bank facility matures in June 2006. Moody's views the revolver as adequate back-up for the approximately C$400-to-C$500 million in outstanding receivables' financing, as well as other likely contingent needs. However, with such a large proportion of the bank facility backing up the receivables facility, Abitibi has little capacity to use the bank facility to assist with repaying long-term debt maturities in advance of cash flow from operations being available. With market factors likely to keep cash flow from operations from increasing dramatically from current levels, and with other activities consuming cash (the above-noted strategic capital expenditures as well as pension contributions), it is unlikely that the company's US$401 million August 2005 maturity will be fully repaid and at least a portion of it will be refinanced. Notwithstanding Abitibi's capital markets' access and ability to execute the refinance, this circumstance results in liquidity being characterized as weak. Abitibi is in compliance with its key financial covenants (Maximum Debt-to-Capitalization (64% actual at June 30, 2004 versus = 70% threshold), and Minimum Interest Coverage (1.53x actual versus 1.00x threshold; threshold increases to 1.25x for the 3rd and 4th quarters, 1.50x for each quarter-end in 2005, and 1.75x thereafter)). Moody's estimates that Abitibi could access the entire unused amount of the credit facility without violating its Debt-to- Capitalization covenant. The cushion relative to this test may not be as great in future quarters. However, so long as Abitibi is not required to make material adjustments to the carrying value of certain assets (idled assets whose carrying value has not been written-off), and so long as additional price increases are realized during the course of the year, Abitibi should be able to manage this figure so that compliance is maintained. With Cash Flow from Operations expected to display sequential improvement over the next several quarters, Moody's also expects the Interest Coverage test cushion to increase through 2005. The negative outlook is a reflection of Moody's assessment of the newsprint market, and the resulting expectation that Abitibi's operating performance and credit statistics will remain relatively weak in 2004 and 2005. For a Ba3 rating, Moody's expects average through-the-cycle RCF to be in excess of 10%, with the related FCF measure being in excess of 5%. Given the excess capacity in the newsprint and groundwood paper markets, the very weak capacity utilization rates of Abitibi's customer base (the printing and related services sector; low-to-mid 70% range), and increased energy and recycled fiber prices, there is considerable uncertainty as to the magnitude, sustainability, and impact of the commodity price recovery. It appears there is little hope of a demand-driven price recovery. Consequently, it appears that more aggressive supply management is required. While the top five producers make up 70% of the market, with the other 30% being very fragmented, the market leaders have been disproportionately responsible for supply-side initiatives. This fragmentation may also be partially frustrating initiatives to drive price increases through the market, with behavior of the smaller producers undermining the market. Consequently, it appears management's most pragmatic alternative, i.e. continuing to invest to restructure its asset portfolio and product offering, consumes cash flow at a time when its margins (and ability to repay debt) continue to be under pressure. Accordingly, there is a significant probability of the company's performance not meeting the above performance benchmarks. Either or both of the outlook and ratings could be upgraded if Abitibi takes specific proactive steps to permanently reduce indebtedness or increase profitability so as to ensure the above credit metrics are met or exceeded. Conversely, a downgrade could result if it becomes clear that through-the-cycle performance will not, in Moody's opinion, meet the above benchmarks, if the company pursues material debt-financed acquisitions, or if liquidity arrangements deteriorate significantly. Abitibi-Consolidated Inc., headquartered in Montreal, Quebec, is North America's leader in newsprint and uncoated groundwood paper and also has a significant lumber business. ADELPHIA BUSINESS: Has Until November 8 to Object to Claims ----------------------------------------------------------- At the request of Adelphia Business Solutions, Inc., and its debtor-affiliates, the U.S. Bankruptcy Court for the Southern District of New York extended the time within which the ABIZ Debtors may object to claims through and including Nov. 8, 2004. Judy G. Z. Liu, Esq., at Weil Gotshal & Manges, in New York, relates that the ABIZ Debtors have negotiated and entered into Court-approved settlement agreements resolving the claims filed by: -- CenturyTel Fiber Company II, LLC; -- Grande Communications Networks, Inc.; -- Larry Hart, Carol Hart, Christopher Hart and Danielle Hart, as assignees of RCM Technologies, Inc.; and -- Qwest Corporation. Additionally, on August 13, 2004, the ABIZ Debtors filed an objection addressing various duplicate claims, amended claims, claims not reflected in their books and records, overstated claims, late claims, equity claims, unliquidated claims, and misclassified claims. Ms. Liu says that ABIZ anticipates filing additional objections in the near future. According to Ms. Liu, the extension of the time to object to Claims will allow the ABIZ Debtors sufficient time to complete their evaluation of all outstanding Claims. The ABIZ Debtors have made substantial progress in the claims resolution process. Headquartered in Coudersport, Pa., Adelphia Business Solutions, Inc., now known as TelCove -- http://www.adelphia-abs.com/-- is a leading provider of facilities-based integrated communications services to businesses, governmental customers, educational end users and other communications services providers throughout the United States. The Company filed for Chapter 11 protection on March 27, 2002 (Bankr. S.D.N.Y. Case No. 02-11389) and emerged under a chapter 11 plan on April 7, 2004. Judy G.Z. Liu, Esq., at Weil, Gotshal & Manges LLP represents the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $2,126,334,000 in assets and $1,654,343,000 in debts. (Adelphia Bankruptcy News, Issue Nos. 70 & 71; Bankruptcy Creditors' Service, Inc., 215/945-7000) ADVERTISING DIRECTORY: S&P Puts 'B-' Rating on Planned $210M Notes ------------------------------------------------------------------ Standard & Poor's Ratings Services assigned its 'B+' long-term corporate credit rating to Burnaby, British Columbia-based Advertising Directory Solutions Holdings Inc. In addition, Standard & Poor's assigned its 'B-' rating to ADS Holdings' proposed US$210 million senior unsecured notes due 2012. The notes will be issued under Rule 144A of the Securities Act 1933, with registration rights. ADS Holdings is a holding company that conducts its business exclusively through its operating subsidiary, Advertising Directory Solutions Inc., the second- largest directory publisher in Canada. The outlook is stable. At the same time, Standard & Poor's assigned its 'BB-' bank loan rating and '1' recovery rating to Advertising Directory Solutions' proposed first-lien US$769 million term loan B due 2011 and C$75 million six-year revolving credit facility. These issues are rated one notch higher than the long-term corporate credit rating. The 'BB-' rating and the '1' recovery rating indicate that lenders can expect full recovery of principal in the event of a default or bankruptcy. Standard & Poor's also assigned its 'B-' bank loan rating and '5' recovery rating to the company's proposed US$230 million second- lien senior secured bank loan due 2012. The second-lien bank loan is rated two notches below the long-term corporate credit rating. The 'B-' rating and '5' recovery rating indicate that lenders can expect negligible recovery of principal in the event of a default or bankruptcy. The ratings are based on preliminary documentation and are subject to review on receipt of final documentation. "The ratings on [Advertising Directory Solutions] reflect its weak credit protection measures, high debt leverage, and limited geographic diversity," said Standard & Poor's credit analyst Lori Harris. "Somewhat mitigating these factors is the company's strong market position in the provinces of British Columbia and Alberta as the leading print directory publisher," said Harris. The ratings are supported further by the company's brand equity, including exclusive, long-term licenses for both the Telus and SuperPages brands for use in Canadian directories. Proceeds from the new bank loan and senior unsecured notes will be used to fund Bain Capital LLC's purchase of 100% of the shares of Verizon Information Services Canada through newly formed ADS Holdings from New York-based Verizon Communications, Inc., for C$1.985 billion. The proposed acquisition is expected to be financed with about C$1.5 billion in debt and C$530 million in cash, and will close upon regulatory approval in Canada, which is expected in November 2004. AIR CANADA: United Air Lines Sells Claims to Deutsche Bank ---------------------------------------------------------- United Air Lines sought and obtained permission from the U.S. Bankruptcy Court for the Northern District of Illinois to sell its claims against Air Canada to Deutsche Bank Securities, Inc. United and its 27 debtor-affiliates filed for chapter 11 protection on Dec. 9, 2002. United has two allowed claims, for CN$186,982,800 and CN$2,248,370, against Air Canada. Pursuant to an asset purchase agreement, United will also sell to Deutsche the shares to be received from its conditional exercise in a Rights Offering in ACE Aviation Holdings, Inc. Under Air Canada's Plan of Reorganization, Compromise and Arrangement, general unsecured claim holders will receive a pro rata distribution of common stock in ACE. Air Canada estimates the value of this distribution at 6.17% to 9.25%. United was contacted by Ernst & Young, Inc., and advised that its Claims had been proven and allowed. As a result, United was entitled to receive the stock distribution and participate in the Rights Offering, whereby it could purchase additional ACE shares at a price below that offered to the general public. United had to exercise the rights by August 27, 2004, by depositing CN$19,786,994, which approximates $15,200,000 at current exchange rates. For this amount, United will receive 986,986 additional shares. To monetize the Claims and Shares, United conducted an auction. United notified five sophisticated and active purchasers of Air Canada Claims to gauge interest: (1) Deutsche Bank; (2) Bear Sterns; (3) Merrill Lynch; (4) Goldman Sachs; and (5) Long Acres, LLP Deutsche Bank was the highest bidder, offering 11.875% for the Claims and CN$22.00 for the Shares. This equates to a purchase price of CN$44,184,893, or $33,978,183 at current exchange rates. An escrow agent currently holds $3,081,475 as a good faith deposit. 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. Air Canada 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). Mr. Justice Farley sanctioned Air Canada's CCAA restructuring plan on Aug. 23, 2004. 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. On September 30, 2004, Air Canada successfully completed its restructuring process and implemented its Plan of Arrangement. The airline exited from CCAA protection raising $1.1 billion of new equity capital and, as of September 30, has approximately $1.9 billion of cash on hand. AMERICAN BONDING: Proofs of Claim Against Insurer Due Feb. 8 ------------------------------------------------------------ In 1994, American Bonding Company fell behind in its alleged financial obligations to the policyholders. Insurance regulators in Arizona and California, seeing American Bonding's slide toward insolvency, took action in early 1995. The Arizona Department of Insurance assumed supervision of the Insurer, and petitioned the Superior Court of Arizona in and for the County of Maricopa (Cause No. CV 95-01684) to appoint the Director of Insurance for the State of Arizona as Receiver. On Feb. 2, 1995, the Arizona Superior Court placed ABC in receivership, approved the appointment of Michael J. FitzGibbons as supervisor and special deputy receiver, and asserted its exclusive jurisdiction over ABC's property and assets. The Receiver has spent the past nine years liquidating ABC's assets and businesses, defending lawsuits and compromising causes of action. The Receiver is now ready to evaluate creditors' and policyholders' claims. The Receiver, with Court approval, directs that all persons who may have claims against American Bonding Company must file a verified original Proof of Claim with: Michael J. FitzGibbons Special Deputy Receiver American Bonding Company 8300 N. Hayden Road, #A205 Scottsdale, Arizona 85258 Section 20-628.A. of the Arizona Revised Statutes, provides: All claims against an insurer against which delinquency proceedings have been begun shall set forth in reasonable detail the amount of the claim, or the basis upon which such amount can be ascertained, the facts upon which the claim is based and the priorities asserted, if any. All such claims shall be verified by the affidavit of the claimant, or someone authorized to act on his behalf and having knowledge of the facts, and shall be supported by such documents as may be material thereto. An insured under a liability insurance policy may file a contingent claim for any specific loss or occurrence as to which the insured's liability was not determined as of the liquidation date and such claim becomes absolute on or before the last day for filing a Proof of Claim. Any person or entity having a cause of action against an insured under a liability insurance policy issued by the company may file a claim with the Receiver and such claim may be allowed: (a) if it may be reasonably inferred from the proof presented upon such claim that such person would be able to obtain a judgment upon such cause of action against such insured; and (b) if such person shall furnish suitable proof, unless the Court for good cause shown shall otherwise direct that no further valid claims against such insurer arising out of this cause of action other than those already presented can be made; and (c) if the total liability of such insurer to all claimants arising out of the same act of its insured shall be no greater than its total liability would be were it not in liquidation. The insurer's obligation, if any, to defend or continue the defense of any claim or suit under an insurance policy issued by the Company was terminated upon the entry of the Order of Liquidation. The rights of claimants to share in distribution of assets, if any, of AMERICAN BONDING COMPANY are fixed as of Oct. 8, 2004. Claimants against the company may be entitled to the protection of their state Property & Casualty Insurance Guaranty Fund/Association and are directed to communicate directly with such Guaranty Fund/Association. All such claimants will have their Proof of Claim forwarded to the Guaranty Fund/Association by the Receiver. Multi-part Proof of Claim forms have been distributed to all known persons who may have claims against American Bonding Company, along with instructions. If additional Proof of Claim forms are required, they may be obtained by writing the Special Deputy Receiver at the address set forth above. As cited above, Arizona law requires that all claims against American Bonding Company shall be verified by the affidavit of the claimant, or someone authorized to act on the claimant's behalf. If the claimant is an individual, then the individual must sign. If the claimant is a corporation, then an officer must sign and identify capacity. If the claimant is a partnership, then a partner must sign. In the event a claim is filed by one person on behalf of another, such as an attorney-in-fact, guardian, a receiver, or similar type person, attach to the Proof of Claim evidence or explanation indicating your authorization to act. Proofs of Claims may be filed subsequent to the bar date, Febr. 8, 2005, 5:00 p.m., Mountain Standard Time, however, any such Proof of Claim filed after the bar date will be classified as a late- filed claim. A late-filed claim shall share in a distribution of the assets only after all allowed timely-filed claims (excluding claims of surplus note or certificate of contribution holders or other similar obligations, claims for premium refunds on assessable policies, or claims of shareholders, members or other owners in that capacity), have been paid in full with interest, as applicable. Such distribution will be determined by Chapter 3, Title 20, Section 20-629, Arizona Revised Statutes. THE LAST DAY FOR FILING CLAIMS TIMELY AGAINST THE AMERICAN BONDING COMPANY RECEIVERSHIP is 5:00 p.m., Mountain Standard Time, on Feb. 8, 2005. Claims must be postmarked (not postage meter stamped) no later than 5:00 p.m., Mountain Standard Time, on Feb. 8, 2005. AMERICAN RESTAURANT: U.S. Trustee Appoints Creditors' Committee ---------------------------------------------------------------- The United States Trustee for Region 16 appointed five creditors to serve on an Official Committee of Unsecured Creditors in the chapter 11 proceedings involving American Restaurant Group, Inc., ARG enterprise, Inc., and ARG Property Management Corp.: Ziad Alhassen President of General Partner 100 North Barranca, Suite 900 West Covina, CA 91791-1600 Telephone (626) 974-7683 or (626) 331-0041 Ext. 222 Fax (626) 331-7302 Morton Gray and Christine Gray Owners/Landlord 4700 Foulger Dr. Santa Rosa, CA 95405 Telephone (707) 539-7808 Fax (707) 539-7404 Robert F. Adelman c/o Michael McCann, Esq. Hansen, McCann O'Connor 14405 South Robert Trail Rosemount, MN 55068 Telephone (651) 423-1155 Fax (651) 423-1157 Dennis Keith (Creditor) Landlord of Minnetonka 7460 Margerum Avenue San Diego, CA 92120 Telephone (619) 583-2717 Fax (619) 287-0534 Numair Pirzada Management Consultant c/o Worldwide Produce 1661 McGarry St. Los Angeles, CA 90021 Telephone (714) 745-8231 or (213) 747-4411 Official creditors' committees have the right to employ legal and accounting professionals and financial advisors, at the Debtors' expense. They may investigate the Debtors' business and financial affairs. Importantly, official committees serve as fiduciaries to the general population of creditors they represent. Those committees will also attempt to negotiate the terms of a consensual chapter 11 plan -- almost always subject to the terms of strict confidentiality agreements with the Debtors and other core parties-in-interest. If negotiations break down, the Committee may ask the Bankruptcy Court to replace management with an independent trustee. If the Committee concludes reorganization of the Debtors is impossible, the Committee will urge the Bankruptcy Court to convert the Chapter 11 cases to a liquidation proceeding. Headquartered in Los Altos, California, American Restaurant Group, Inc., through its subsidiaries operating as Stuart Anderson's, specializes in U.S.D.A. Choice fresh-cut steak; seasoned, seared, and slow-roasted prime rib; and a variety of seafood entrees complete with 'all the fixin's'. The company and its debtor- affiliates filed a chapter 11 petition on Sept. 28, 2004 (Bankr. C.D. Cal. Case No. 04-30732). Thomas R. Kreller, Esq., at Milbank, Tweed, Hadley & Mccloy represents the Debtors in their restructuring efforts. When the Debtor filed for bankruptcy protection, it estimated $1 million to $10 million of assets and more than $100 million in total debts. AMES DEPARTMENT: Asks Court to Approve Rocky Hill Bidding Protocol ------------------------------------------------------------------ To maximize the value of their real property in 2418 Main Street in Rocky Hill, Connecticut, Ames Department Stores, Inc., and its debtor-affiliates and subsidiaries ask the U.S. Bankruptcy Court for the Southern District of New York to schedule an auction to sell the Property. Thomas Briggs made an offer for the 12.7 acres of land and the office building with 228,000 square feet of space. The purchase price was $3,700,000. The Debtors also ask Judge Gerber to require that all bids submitted for the Rocky Hill Property must: (a) be on substantially the same terms as set forth in the Purchase Agreement with the stalking horse bidder, Thomas Briggs, except for the Purchase Price; (b) exceed the $3.7 million Purchase Price by at least $100,000; (c) be accompanied by a certified check or money order equal to 10% of the Purchase Price of the bid, which will be delivered and paid to Togut Segal & Segal, LLP, to held in escrow pending the Court's determination of the sale and be: (1) applied toward the Purchase Price of the successful Bidder if its bid is approved by the Court and automatically deemed non-refundable; (2) retained if the Sale to the Bidder is approved by the Court, but the successful Bidder fails to timely close the sale; or (3) refunded in full promptly after the Hearing if the bid is not approved, subject to certain provisions; and (d) provide for a closing to occur not more than 15 days after the Court authorizes the transactions with the over-Bidder, if any, at the Hearing. The Debtors propose to implement these Auction procedures: (a) Bidders will be required to attend the Auction, and their bids will be subject to higher and better offers, if any, made at the Auction. After the initial offers, all bidding at the Auction will be in increments of at least $50,000; (b) All bids made at the Auction will remain open and irrevocable until 11 days after the Hearing; (c) The second best bid, as determined by the Debtors, will remain open and irrevocable until a closing on the Sale, so that it may be accepted and consummated subject to an appropriate Court order, if the bid selected at the Auction and approved by the Court is not consummated at the Closing; (d) All Bidders are deemed to have submitted to the exclusive jurisdiction of the Court with respect to all matters related to the Auction; (e) The Debtors will have the absolute right to modify or waive any terms of the bidding; (f) No bid will be considered unless the Bidder demonstrates to the Debtors' satisfaction that it has the present financial capability to consummate a purchase of the Property; (g) All bids will be "firm offers" and may not contain any contingencies to the validity, effectiveness, or binding nature of the offer, including contingencies for financing, due diligence or inspection; (h) Any initial competing bid must include a $74,000 Break-Up Fee. The purpose of the initial $100,000 overbid amount is to protect the Debtors from the administrative liability for the Break-up Fee, and the additional costs incurred as a result of the auction process; (j) Any party wishing to submit a higher and better offer than that described in the Purchase Agreement with Mr. Briggs should deliver its offer in writing to the Debtors' attorneys, Togut, Segal & Segal LLP, with copies delivered directly to: (1) the Debtors, (2) Otterbourg, Steindler, Houston & Rosen, attorneys for the Committee, (3) Bruce Temkin, Esq., attorney for Mr. Briggs, and (4) Morgan, Lewis & Bockius LLP, attorneys for Kimco, so as to be received no later than October 22, 2004. $74,000 Break-Up Fee In the event that Thomas Briggs is not the successful bidder for their Rocky Hill Property, the Debtors propose to pay a $74,000 break-up fee to Mr. Briggs. Neil Berger, Esq., at Togut, Segal & Segal, in New York, relates that the Break-up Fee, which is 2% of the gross cash consideration in the Purchase Agreement, is a condition of Mr. Brigg's offer and its obligations to close under the Purchase Agreement. Mr. Berger emphasizes that the Break-up Fee will: -- reimburse Mr. Briggs for certain of the expenses he will incur in connection with the proposed transaction, including attorneys' fees; and -- compensate Mr. Briggs for the substantial time and effort he has expended and will continue to expend as a stalking horse for competing bids. If Mr. Briggs submits a competitive bid for the Property at the Auction, then he is deemed to have waived the right to the Break- Up Fee, even if at the conclusion of the Auction, the Debtors select an alternative offer as the best bid for the Property. Mr. Berger assures the Court that there is no relationship between the Debtors and Mr. Briggs other than in the arm's-length negotiation regarding the Property. Furthermore, the nature of the assets subject to the Purchase Agreement and the size of the Break-up Fee demonstrate that the Break-up Fee will not chill the bidding process. Headquartered in Rocky Hill, Connecticut, Ames Department Stores, Inc., is a regional discount retailer that, through its subsidiaries, currently operates 452 stores in nineteen states and the District of Columbia. Ames Department Stores filed for chapter 11 protection on August 20, 2001 (Bankr. S.D.N.Y. Case No. 01-42217). Albert Togut, Esq., Frank A. Oswald, Esq. at Togut, Segal & Segal LLP and Martin J. Bienenstock, Esq., and Warren T. Buhle, Esq., at Weil, Gotshal & Manges LLP represent the Debtors in their restructuring efforts. When the Company filed for protection from their creditors, they listed $1,901,573,000 in assets and $1,558,410,000 in liabilities. (AMES Bankruptcy News, Issue No. 59; Bankruptcy Creditors' Service, Inc., 215/945-7000) AMES: Has Until February 28 to File a Chapter 11 Plan ----------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York, extended the period within which Ames Department Stores, Inc., and its debtor-affiliates has the exclusive right to file a plan through February 28, 2005. The Court also extended the period within which the Debtors have the exclusive right to solicit acceptances to that plan through April 29, 2005. As reported in the Troubled Company Reporter on Aug. 23, 2004, the Debtors have been diligently laboring to maximize values for creditors and, as of August 17, 2004, have: (a) sold all their inventory; (b) fully satisfied their obligations under their postpetition financing facilities; (c) rejected or assumed and assigned the majority of their unexpired nonresidential real property leases in accordance with Section 365 of the Bankruptcy Code; (d) been settling and reconciling creditors' claims; (e) commenced and are continuing to prosecute and collect substantial sums from avoidance actions; and (f) sold, or are in the process of selling, their remaining real estate holdings. However, Martin J. Bienenstock, Esq., at Weil, Gotshal & Manges, LLP, in New York, told Judge Gerber of the U.S. Bankruptcy Court for the Southern District of New York that the Debtors are not in a position to determine if a recovery will be available for prepetition creditors. The Debtors needed to complete the process of liquidating their real property interests, reconciling administrative expense claims and prosecuting avoidance actions. The Debtors will not be able to develop a confirmable Chapter 11 plan until they determine the full extent of their administrative obligations and the resources available to satisfy those obligations. The extension of the deadline will avoid motion practice and unnecessary intrusion on management's time. Mr. Bienenstock reports that: (a) While the Debtors have successfully disposed the majority of their real property interests, other major real estate assets, including the Debtors' home office building, have yet to be liquidated; (b) The Debtors anticipate that they will have approximately $94,000,000 in administrative expense claims, many of which still need to be reconciled; (c) The Debtors have commenced and continue to prosecute approximately 2,000 Preference Actions. The Debtors anticipate the Preference Actions will continue well into 2005; and (d) The Debtors are also in the process of negotiating a sale of their distribution center in Leesport, Pennsylvania. The Debtors anticipate that the sale of their Leesport Distribution Center will generate significant liquidity to facilitate an interim distribution to creditors holding administrative expense claims. Headquartered in Rocky Hill, Connecticut, Ames Department Stores, Inc., is a regional discount retailer that, through its subsidiaries, currently operates 452 stores in nineteen states and the District of Columbia. Ames Department Stores filed for chapter 11 protection on August 20, 2001 (Bankr. S.D.N.Y. Case No. 01-42217). Albert Togut, Esq., and Frank A. Oswald, Esq., at Togut, Segal & Segal LLP, and Martin J. Bienenstock, Esq., and Warren T. Buhle, Esq., at Weil, Gotshal & Manges LLP, represent the liquidating retailer. When Ames filed for protection from its creditors, it listed $1,901,573,000 in assets and $1,558,410,000 in liabilities. (AMES Bankruptcy News, Issue No. 59; Bankruptcy Creditors' Service, Inc., 215/945-7000) ATA AIRLINES: Flight Attendants Ratify Concession Package --------------------------------------------------------- ATA Airlines (Nasdaq: ATAH) received notice from the Association of Flight Attendants Union President Jacki Pritchett that they overwhelming voted to ratify a concession package. ATA Airlines Vice President of Labor Relations Richard Meyer, Jr. said, "We are most appreciative of the decision by a majority of flight attendants to support this concession package. It represents much needed savings to the Company of nearly $24 million over the next two years and is the culmination of significant effort by both the Company and union leadership to develop a meaningful package for both parties." As reported in the Troubled Company Reporter on Aug. 3, 2004, the Association of Flight Attendants informed ATA that its membership narrowly defeated Letters of Agreement to amend the existing collective bargaining agreement (with only 69 percent of those eligible voted and, within that group, 51 percent voted against the proposal), which would have resulted in savings of several million dollars to the Company over the next two years. The Company was seeking the assistance package in an effort to cut costs during recent economic difficulties in the airline industry. ATA Holdings Corporation, parent company of ATA, announced on July 14 that it does not expect to earn a profit in 2004. This updated guidance was a result of rising jet fuel costs and weak revenues caused by aggressive pricing in the industry. ATA Holdings Corporation has been implementing cost-cutting measures to reduce the expected 2004 loss. Now celebrating its 31st year of operation, ATA Holdings Corp., parent company of ATA Airlines, is the nation's 10th largest passenger carrier (based on revenue passenger miles) and one of the largest low fare carriers in the nation. ATA has the youngest, most fuel-efficient fleet among the major scheduled carriers, featuring the new Boeing 737-800 and 757-300 aircraft. The airline operates significant scheduled service from Chicago-Midway, Hawaii, Indianapolis, New York and San Francisco to over 40 business and vacation destinations. Stock of the parent company is traded on the Nasdaq Stock Exchange under the symbol "ATAH." To learn more about the company, visit the web site at http://www.ata.com/ ATA HOLDINGS: Likely Bankruptcy Prompts S&P to Junk Credit Rating ----------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit ratings on ATA Holdings Corp. and subsidiary ATA Airlines Inc., to 'CCC-' from 'CCC', as well as lowering other ratings. Ratings on bond-insured 'AAA' rated enhanced equipment trust certificates are affirmed. The outlook is negative. "The ratings downgrade reflects the company's weakening liquidity, with an increasing likelihood that it will be forced to file for Chapter 11 bankruptcy protection in the near future," said Standard & Poor's credit analyst Betsy Snyder. The industry has continued to be negatively affected by a weak fare environment and high fuel costs, which has resulted in ongoing losses for most airlines (including ATA) in the normally seasonal profitable third quarter. As a result, ATA's cash position, which has been declining for the last several quarters, is expected to decline further from the $150 million available at June 30, 2004. The company had previously warned that it did not expect to have sufficient cash to meet its cash obligations in the first quarter of 2005. However, with the ongoing losses, that timing could be moved forward into the fourth quarter of 2004. There has recently been considerable speculation regarding a possible acquisition of the company due to the attractiveness of some of its assets, particularly its hub at Chicago's Midway Airport. However, such an acquisition, even if it were to occur, would not necessarily happen outside of a Chapter 11 bankruptcy filing. ATA Airlines is the 10th-largest scheduled air carrier in the U.S. ATA offers low fares to value-oriented passengers out of hubs located at Midway and Indianapolis. ATA is also the largest charter airline in North America, providing charter airline services primarily to U.S. and European tour operators, as well as to U.S. military and government agencies. ATA's revenues have suffered from continuing price competition, which is not expected to abate over the near term, while its costs have been affected by rising fuel prices. ATA also has a heavy operating lease burden due to acquisition of new aircraft over the past few years. A continued reduction in liquidity would likely result in a Chapter 11 bankruptcy filing and a ratings downgrade to 'D'. BEAR STEARNS: Fitch Puts Low Ratings on Six Mortgage Securities --------------------------------------------------------------- Bear Stearns Commercial Mortgage Securities Trust 2004-PWR5, commercial mortgage pass-through certificates are rated: -- $107,000,000 class A-1 'AAA'; -- $156,000,000 class A-2 'AAA'; -- $134,000,000 class A-3 'AAA'; -- $100,000,000 class A-4 'AAA'; -- $579,079,000 class A-5 'AAA'; -- $1,233,328,641 class X-1* 'AAA'; -- $1,194,309,000 class X-2* 'AAA'; -- $29,291,000 class B 'AA'; -- $9,250,000 class C 'AA-'; -- $20,042,000 class D 'A'; -- $13,875,000 class E 'A-'; -- $15,416,000 class F 'BBB+'; -- $9,250,000 class G 'BBB'; -- $18,500,000 class H 'BBB-'; -- $4,625,000 class J 'BB+'; -- $4,625,000 class K 'BB'; -- $6,167,000 class L 'BB-'; -- $4,625,000 class M 'B+'; -- $4,625,000 class N 'B'; -- $3,083,000 class P 'B-'; -- $13,875,641 class Q not rated (NR). * Notional amount and interest only. Classes: * A-1, A-2, A-3, A-4, A-5, X-2, B, C, and D are offered publicly, while * X-1, E, F, G, H, J, K, L, M, N, P, and Q are privately placed pursuant to rule 144A of the Securities Act of 1933. The certificates represent beneficial ownership interest in the trust, primary assets of which are 130 fixed-rate loans having an aggregate principal balance of approximately $1,233,328,641, as of the cutoff date. BEATON HOLDING: 8th Cir. BAP Doesn't Disqualify Debtors' Counsel ---------------------------------------------------------------- As reported in the Troubled Company Reporter on Feb. 25, 2004, Beaton Holding Company, LC, and its debtor-affiliates sought permission from the U.S. Bankruptcy Court for the Northern District of Iowa to hire the law firms of Heller, Draper, Hayden, Patrick & Horn, L.L.C., in New Orleans, Louisiana, and Belin Lamson McCormick Zumbach Flynn, P.C., in Des Moines, Iowa. FL Receivables Trust 2002-A objected to the engagement, arguing that the lawyers and their firm (i) represent interests adverse to the individual debtors estates because of inter-company claims, (ii) are not disinterested persons, and (iii) made inadequate disclosures pursuant to Rule 2014(a) of the Federal Rule of Bankruptcy Procedure. The Honorable Paul J. Kilburg approved the engagement over FL Trust's objection and adopted a "wait and see" approach to dealing with any potential conflict. The Debtors can always hire special counsel, Judge Kilburg observed. FT Trust appealed the Bankruptcy Court's ruling to the United States Bankruptcy Appellate Panel for the Eighth Circuit. The BAP says that because the employment order is interlocutory, rather than final, it's inappropriate to entertain the appeal at this juncture. Moreover, because no factual record was developed in the bankruptcy court, the BAP is left to speculate as to whether the alleged conflict of interest is real or imagined. That militates in favor of following Judge Kilburg's "wait and see" approach. A full-text copy of the 8th Cir. BAP's ruling is available at no charge at: http://www.ca8.uscourts.gov/opndir/04/10/046026P.pdf Headquartered in Cedar Rapids, Iowa, Beaton Holding Company, LC, and its affiliates operate some twenty-six Burger King restaurants in Missouri, Iowa, and Illinois. The Debtors filed for chapter 11 protection on February 10, 2004 (Bankr. N.D. Iowa Case No. 04- 00387). Douglas S. Draper, Esq., at Heller, Draper, Hayden, Patrick & Horn, L.L.C., and Thomas Flynn, Esq., at Belin Lamson McCormick Zumbach Flynn, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they estimated debts and assets of over $10 million. BISHOP GOLD: Sets Oct. 27 as Closing Date for Toodoggone Purchase ----------------------------------------------------------------- Bishop Gold Inc., listed on the TSX Venture Exchange Inc. under the trading symbol "BSG", reported that the closing date for its previously announced acquisition of the Toodoggone properties by Bishop (relating to the purchase of a 100% interest of Guardsmen Resources Inc. in two significant gold properties known as the Al/Bonanza and the Lawyers properties located in the Toodoggone district of North Central British Columbia) is set for Oct. 27, 2004. Bishop's previously announced financing for gross proceeds of a minimum of $750,000 and a maximum of $1,250,000, to be completed by way of Short-Form Offering Document in accordance with Exchange policies, will also close on Oct. 27, 2004. Bishop also announces that it has completed an amending agreement with Guardsmen to extend the closing date of the aforementioned Toodoggone property acquisition to Oct. 29, 2004 in order to facilitate the closing of the aforementioned transactions. About the Company Bishop Gold is a mineral exploration company with interests in the Al/Bonanza property and the Lawyers property, both are located in the Toodoggone District of North Central B.C.; and the Gordon Lake Property in the Giant Bay Region near Yellowknife, NWT. * * * Going Concern Doubt Stated in Bishop Gold's 3rd Quarter Report ending June 30, 2004: "The Company has realized recurring losses from operations, and has a working capital deficiency of $191,905. These factors, amongst others, cast substantial doubt with respect to the Company's ability to continue as a going concern." BMC INDSUTRIES: U.S. Trustee Picks 5-Member Creditors Committee --------------------------------------------------------------- The United States Trustee for Region 12 appointed five creditors to serve as an Official Committee of Unsecured Creditors in BMC Industries Inc., and its debtor-affiliates' chapter 11 cases: 1. Sage Industrial Sales, Inc. Attn: Pamela T. Diesing 4425 Margaret Circle Mound, Minnesota 55364 Phone: 952-474-8551 2. Teijin Kasei America, Inc. Attn: Naoaki Okuda 11371 South Bridge Parkway Alpharetta, Georgia 30022 Phone: 770-346-8949 3. Schott North America, Inc. Attn: Michael Wisniewski 400 York Avenue Duryea, Pennsylvania 18642 Phone: 570-457-7485 (ext. 267) 4. Corning S.A.S. Attn: Eric Wertz CP-AP-02-E6A Corning, New York 14831 Phone: 607-248-1236 5. Boston Laser Technology Attn: Lamar E. Bullock P.O. Box 801 Falmouth, Massachusetts 02541-0801 Phone: 508-746-0601 Official creditors' committees have the right to employ legal and accounting professionals and financial advisors, at the Debtors' expense. They may investigate the Debtors' business and financial affairs. Importantly, official committees serve as fiduciaries to the general population of creditors they represent. Those committees will also attempt to negotiate the terms of a consensual chapter 11 plan -- almost always subject to the terms of strict confidentiality agreements with the Debtors and other core parties-in-interest. If negotiations break down, the Committee may ask the Bankruptcy Court to replace management with an independent trustee. If the Committee concludes reorganization of the Debtors is impossible, the Committee will urge the Bankruptcy Court to convert the Chapter 11 cases to a liquidation proceeding. Headquartered in Ramsey, Minnesota, BMC Industries Inc. -- http://www.bmcind.com/-- is a multinational manufacturer and distributor of high-volume precision products in two business segments, Optical Products and Buckbee Mears. The Company, along with its affiliates, filed for chapter 11 protection (Bankr. D. Minn. Case No. 04-43515) on June 23, 2004. Jeff J. Friedman, Esq., at Katten Muchin, Zavis Rosenman and Clinton E. Cutler, Esq., at Fredrikson & Byron, P.A., represent the Debtors in their restructuring efforts. When the Debtor filed for protection from its creditors, it listed $105,253,000 in assets and $164,751,000 in liabilities. BOWATER INC: Market Issues Prompt Moody's to Slice Ratings to Ba2 ----------------------------------------------------------------- Moody's Investors Service downgraded Bowater Incorporated's senior implied, senior unsecured and issuer ratings to Ba3 from Ba2 due to systemic newsprint market issues and their potential impact. The same factors cause the outlook to remain negative. Concurrently, with no near term debt maturities to address and with near term performance favorably affected by pricing of certain products, the speculative grade liquidity rating was upgraded to SGL-2 (good) from SGL-3 (adequate). As noted, the action affecting long term ratings reflects concerns about systemic newsprint market issues: (i) Evolving advertising patterns have caused newsprint demand to be weak, and it appears further supply reductions are required before significant newsprint price momentum will be observed. In response, Moody's expects Bowater to continue to invest to modify assets to produce other grades where the supply/demand balance is more favorable. (ii) Some 30% of newsprint supply is fragmented among a number of smaller producers. In the absence of improved supply/demand balance, the behavior of this group may partially frustrate initiatives by market leaders to drive price increases through the market. (iii) Bowater's margins continue to be under pressure from the combination of increasing energy, wood and other input prices, including the US dollar exchange value of costs at Canadian operations. Moody's expects the combination of these factors will cause Bowater's credit protection metrics to remain relatively weak over the near-to-mid term. In the absence of proactive debt reduction, there is the potential they may not reflect through-the-cycle measures appropriate for the rating. As a consequence, the rating outlook remains negative. Ratings downgraded: -- Bowater Incorporated * Senior Implied: to Ba3 from Ba2 * Industrial and PC revenue bonds: to Ba3 from Ba2 * Issuer: to Ba3 from Ba2 * Senior Unsecured: to Ba3 from Ba2 -- Bowater Canada Finance Corp. * Senior unsecured guaranteed notes: to Ba3 from Ba2 Rating upgraded: -- Bowater Incorporated * Speculative Grade Liquidity Rating: to SGL-2 from SGL-3 Ratings Affirmed: -- Outlook: Negative The Ba3 ratings reflect Bowater's position as a leading North American producer of newsprint and groundwood paper (both coated and uncoated). Within the segment, Bowater has a relatively low cost position, supported in part by significant backward integration into timberlands and very strong energy self- sufficiency. Bowater also has the flexibility to divest of approximately 1.4 million acres of land should it chose to do so. This would allow the sales proceeds to be applied against debt, resulting in a significant decrease. Bowater also has significant exposure to market pulp and a smaller exposure to softwood lumber. These businesses provide some limited diversity of cash flow. With commodity prices gradually increasing after a prolonged trough, 2004 and 2005 should show sequential improvement in LTM credit protection measures. Off-setting factors include a very significant debt burden resulting from a sequence of acquisitions that were substantially debt-financed. At June 30, 2004, consolidated debt was US$2.55 billion, a level that is close to LTM net sales of US$2.66 billion, implying that meaningful debt reduction from internally generated cash flow will likely occur only over a prolonged period. Aside from relatively depressed newsprint and groundwood paper pricing, Bowater has had to cope with an appreciation of the Canadian dollar (approximate 25% over the past year-and-a-half) that has adversely affected margins of its Canadian operations (acquired in the Avenor and Alliance transactions), and cash outflows to pay anti-dumping and countervailing duties on softwood lumber exports to the United States. In addition, the company has a significant pension funding deficit that requires cash contributions. Bowater has good liquidity. While there are concerns about Bowater's financial performance through the business cycle, Moody's expects near term performance to benefit from exposure to pulp and coated paper, where pricing should be relatively favorable. Since Bowater does not have significant debt maturities to address over the next year, the combination of its FCF and revolving credit facilities provides good liquidity relative to its needs. The company maintains a $435 million revolver that is largely un-drawn and a $200 million accounts receivable securitization vehicle that is partially utilized. The bank facility matures in April 2007. As well as providing for operating needs, Moody's believes the revolver is good back-up for the approximately US$200 million in outstanding receivables' financing. Bowater is in compliance with its key financial covenants (Maximum Debt-to-Capitalization of 62.5% (58.8% at June 30, 2004), and Minimum Net Worth of $1.5 billion ($1.7 billion at June 30, 2004)). Beginning with the quarter-ending March 2005, Bowater will also have to comply with a rolling four quarters' Minimum EBITDA covenant. The initial threshold is $250 million, but steps-up to $400 million after 2005. While this is not expected to be an issue for the near term, given Bowater's recent performance, in order to remain compliant through future troughs, either the company's performance will have to be markedly superior to what was observed in the recent past, or the then prevailing cycle will have to be less severe. The negative outlook reflects Moody's expectation that Bowater's operating performance and credit statistics will remain relatively weak in 2004 and 2005 despite the benefits of higher pulp and coated paper prices. For a Ba3 rating, Moody's expects average through-the-cycle RCF to be in excess of 10%, with the related FCF measure being in excess of 5%. Given the excess capacity in the newsprint and groundwood paper markets, the very weak capacity utilization rates of Bowater's customer base (the printing and related services sector; low-to-mid 70% range), and increased energy and recycled fiber prices, there is considerable uncertainty as to the magnitude, sustainability, and impact of the commodity price recovery. It appears at this juncture that there is little hope of a demand-driven price recovery. Consequently, it appears that more aggressive supply management is required. While the top five producers make up 70% of the market, with the other 30% being very fragmented, the market leaders have been disproportionately responsible for supply-side initiatives. This fragmentation may also be partially frustrating initiatives to drive price increases through the market, with behavior of the smaller producers undermining the market. When combined with the recent appreciation of the Canadian dollar that adversely affects a portion of its operations, Bowater's financial profile is vulnerable to the impact of having to invest in further supply- side initiatives at a time when its margins continue to be squeezed. Even at the Ba3 rating level, there is the potential that Bowater's credit protection statistics will not reflect through-the-cycle measures appropriate for the rating unless proactive steps to reduce its debt load are taken. In summation, Moody's is concerned that there may be a tangible probability of the company's performance not meeting the above performance benchmarks. Either or both of the outlook and ratings could be upgraded if Bowater takes specific proactive steps to permanently reduce indebtedness or increase profitability so as to ensure the above credit metrics are met or exceeded. Conversely, a downgrade could result if it becomes clear that through-the-cycle performance will not, in Moody's opinion, meet the above benchmarks, if the company pursues material debt-financed acquisitions, or if liquidity arrangements deteriorate significantly. Bowater Incorporated, headquartered in Greenville, South Carolina is a global leader in newsprint, with additional operations in coated and uncoated groundwood papers, bleached kraft pulp, and lumber products. CBD MEDIA: Moody's Junks Planned $100 Million Senior Debt Ratings ----------------------------------------------------------------- Moody's Investors Service lowered the existing ratings for CBD Media Holdings LLC and CBD Media LLC, in response to the company's proposed debt issuance and consequent $127 million dividend to the equity sponsor, principally Spectrum Equity: * the company's senior implied to B2 from B1, * senior secured facilities to B1 from Ba3, and * senior subordinated notes to Caa1 from B3. In addition, Moody's assigned a new Caa2 rating for the $100 million senior note issuance by CBD Media Holdings. Pro forma for the transaction, the company's leverage, at 8.1 times debt-to-cash flow, exceeds the initial March 2002 purchase price of 7.7 times. In Moody's view, the increased level of financial risk is only somewhat mitigated by the modest level of business risk encountered by CBD, as the incumbent directory operator in the Cincinnati environs. This concludes Moody's review for possible downgrade of the company's ratings, which commenced October 13, 2004. Moody's reported these rating actions: -- assigned a Caa2 rating to Holdings' $100 million senior notes due 2012; -- lowered the senior implied rating to B2 from B1; -- lowered the rating on the $158 million of secured bank credit facilities to B1 from Ba3; -- lowered the rating on the $150 million of senior subordinated notes due 2011 to Caa1 from B3; -- lowered the senior unsecured issuer rating to Caa2 from B3. The rating outlook is stable. The ratings reflect the company's high leverage and consequent thin margin for error following the equity sponsor's history of dividends, including $133 million in 2003 and $127 million, currently. CBD faces significant challenges, including concentration risk as a single market operator and the potential for competition to intensify, particularly from better capitalized operators, albeit not incumbents (Verizon entered the market in the first quarter of 2004). Furthermore, critical to CBD's position as the incumbent is its relationship with Cincinnati Bell, the telephone service provider, which is also relatively weakly capitalized and vulnerable to competition (Cincinnati Bell has a B1 senior implied rating and a positive outlook). CBD is also susceptible to competition from other media and Moody's expects, increasingly, from the Internet. Finally, the directory business is mature with limited growth opportunities and the alternative, opportunities on the expense side, are constrained by CBD's already very thin staff due to an unusually high level of outsourcing (sales, printing, distribution, and billing). As a result, the company is likely to have fewer options for improving cash flow or preventing it potential deterioration. However, the ratings also consider the company's incumbent status and the stability that it has provided to date. CBD has an 85% market share and reports 85% customer retention. The operating margin as measured by EBITDA is among the strongest in the sector at greater than 50% and capital investment requirements are quite low. Moreover, greater than 50% of EBITDA is converted into free cash flow, allowing for fairly rapid debt repayment going forward. Further, while CBD's leverage is extremely high at about 8 times, Moody's recognizes that current public market multiples for directory businesses are greater than 10 times, although its peers have much greater geographic diversity. The stable outlook reflects the expectation of a stable operating environment and the use of free cash flow to de-lever. Meaningfully lower leverage would be necessary before the outlook could change to positive. Conversely, the ratings could experience further negative momentum should either the business environment become more competitive or financial pressure increase due to weak economic factors. Moody's remains concerned about the potential for a negative event to impact the company's valuation and the vulnerability of the balance sheet established by the substantial reduction in equity over such a short period of time. Pro-forma for the proposed transaction, debt-to-EBITDA is high at 8.1 times (Moody's calculates EBITDA after Spectrum's annual management fee of $2 million). Coverage of interest expense is a more reasonable 2.2 times, particularly given the low CapEx requirements. Free cash flow-to-total debt is expected to remain good, relative to CBD's rating category, at approximately 6%. Given the relatively good level of free cash flow, we expect CBD to be able to de-lever and the company is likely to be closer to 7.5 times debt-to-EBITDA by year-end 2005. The B1 rating on the senior secured credit facility reflects its priority position in the capital structure and reasonable collateral coverage. Outstandings are secured by a first lien on all tangible and intangible assets of CBD and all of its capital stock. The borrower is CBD, and guarantees from Holdings and from CBD's subsidiaries support the facility. The Caa1 rating on the senior subordinated notes reflects their effective and contractual subordination to senior debt of approximately $153 million at closing. The senior subordinated notes do, however, benefit from subsidiary guarantees. The Caa2 rating on the proposed senior notes at Holdings reflects its structural subordination to a sizable layer of debt at CBD and the absence of guarantees. Headquartered in Cincinnati, Ohio, CBD Media LLC is the exclusive telephone directory publisher for Cincinnati Bell-branded yellow pages in the Cincinnati-Hamilton metropolitan area, which is the 23rd largest metropolitan area in the country. CCC INFO: Delays Earnings Release to Review Warrant Transactions ---------------------------------------------------------------- CCC Information Services Group Inc. (Nasdaq:CCCG) has delayed its earnings release, which had been scheduled for 11:00 a.m. EDT on Oct. 20, 2004. The sole purpose of the delay is to permit the company to review and finalize the accounting treatment of options and warrants exercised in connection with its recent tender offer. This review does not relate to the operations of the business. Management expects to release earnings in approximately one week and is confident that the 10-Q will be filed in a timely fashion. About CCC CCC Information Services Group Inc. (Nasdaq:CCCG), headquartered in Chicago, is a leading supplier of advanced software, communications systems, Internet and wireless-enabled technology solutions to the automotive claims and collision repair industries. Its technology-based products and services optimize efficiency throughout the entire claims management supply chain and facilitate communication among approximately 21,000 collision repair facilities, 350 insurance companies and a range of industry participants. For more information about CCC Information Services, visit CCC's Web site at http://www.cccis.com/ * * * As reported in the Troubled Company Reporter on August 5, 2004, Standard & Poor's Ratings Services assigned its 'B+' corporate credit rating to Chicago, Illinois-based CCC Information Services Inc. At the same time, Standard & Poor's assigned its 'B+' senior secured debt rating, with a recovery rating of '4', to the company's proposed $208 million senior secured bank facility, which will consist of a $30 million revolving credit facility (due 2009) and a $178 million term loan (due 2010). The 'B+' rating on the senior secured debt is the same as the corporate credit rating and the '4' recovery rating indicates that the first priority senior secured debt holders can expect marginal (25%-50%) recovery of principal in the event of a default. The proceeds from this facility, along with about $38 million of cash on hand, will be used to repurchase $210 million in CCC's common stock. The outlook is positive. Pro forma for the proposed bank facility, CCC had approximately $205 million in operating lease-adjusted debt as of June 2004. "The ratings reflect CCC's narrow product focus within a mature niche marketplace and leveraged balance sheet," said Standard & Poor's credit facility Ben Bubeck. "These are only partially offset by a largely recurring revenue base supported by intermediate-term customer contracts, high barriers to entry, and solid operating margins, allowing for modest free operating cash flow generation." CENTURY/ML CABLE: Has Until Dec. 30 to File Plan of Reorganization ------------------------------------------------------------------ Judge Gerber of the U.S. Bankruptcy Court for the Southern District of New York extends the exclusive periods for Debtor Century/ML Cable Venture, ML Media Partners, LP, and Century Communications Corp. to: (a) file a plan of reorganization, through and including December 30, 2004; and (b) solicit acceptances of that plan, through and including February 25, 2005. Century Communications Corporation filed for Chapter 11 protection on June 10, 2002. Century's case has been jointly administered to proceedings of Adelphia Communications Corporation. Century operates cable television services in Colorado, California and Puerto Rico. CENTURY is an indirect wholly owned subsidiary of ACOM and an affiliate of Adelphia Business Solutions, Inc. Lawyers at Willkie, Farr & Gallagher represent CENTURY. Headquartered in Coudersport, Pennsylvania, Adelphia Communications Corporation (OTC: ADELQ) is the fifth-largest cable television company in the country. Adelphia serves customers in 30 states and Puerto Rico, and offers analog and digital video services, high-speed Internet access and other advanced services over its broadband networks. The Company and its more than 200 affiliates filed for Chapter 11 protection in the Southern District of New York on June 25, 2002. Those cases are jointly administered under case number 02-41729. Willkie Farr & Gallagher represents the ACOM Debtors. (Adelphia Bankruptcy News, Issue No. 70; Bankruptcy Creditors' Service, Inc., 215/945-7000) CHASE COMMERCIAL: S&P Assigns Low-B Ratings on Three Cert. Classes ------------------------------------------------------------------ Standard & Poor's Ratings Services raised its rating on four classes in Chase Commercial Mortgage Securities Corp.'s commercial mortgage pass-through certificates from series 1997-1. Concurrently, the ratings on four other classes from the same series have been affirmed. The raised and affirmed rating reflect the stable operating performance of much of the underlying trust collateral and credit enhancement levels that adequately support the ratings. As of Sept. 20, 2004 the trust collateral consisted of 81 loans with an aggregate outstanding principal balance of $350.6 million, down from 107 loans amounting to $533.8 million at issuance. The master servicer, GMAC Commercial Mortgage Corp. provided 2003 net cash flow debt service coverage -- DSC -- figures for 93.5% of the pool. Based on this information, Standard & Poor's calculated a weighted average DSC of 1.58x, up from 1.41x at issuance. The pool has experienced three losses to date amounting to $8.1 million (1.5%). The top 10 loans have: * an aggregate outstanding balance of $130.6 million (37.2%), and * reported a 2003 weighted average DSC of 1.60x, up from 1.47x at issuance. As part of its surveillance review, Standard & Poor's reviewed recent property inspections provided by GMAC Commercial for assets underlying the top 10 loans and all these assets were characterized as "good." There are no top 10 loans in special servicing and the sixth-largest loan is on GMAC Commercial's watchlist. There were three assets with an aggregate balance $16.6 million (4.7%) that were with the special servicer, also GMAC Commercial, as of the latest remittance period. Subsequently, the retail property in Oxford, Missouri, with a $6.0 million balance and $0.3 million in servicer advances, has liquidated for $4.9 million. The two other loans are both secured by lodging properties located in the proximity of Boston, Massachusetts with balances of $7.0 million and $3.5 million, respectively. Standard & Poor's anticipates substantial losses upon the ultimate resolution of both loans. The master servicer's watchlist consists of 15 loans with an aggregate balance of $58.4 million (16.7%) and includes the sixth- largest loan, which has a balance of $11.1 million (3.2%). The loan is secured by a 387,000-sq.-ft. office building in Nashville, Tennessee that reported a 2003 DSC of 0.93x, down from 1.13x in 2002. In the past year, occupancy at the property has increased to 86.0%, up from 79.0%. Additionally, ongoing capital improvements at the property have allowed the borrower to increase asking rents from 2002 levels. The remaining 14 loans on the watchlist appear primarily due to DSC or occupancy issues, and all of these loans have balances of less than $7.3 million. This underlying loan collateral is located in 22 states, with more than 40.0% of the concentration in: * New York (21.0%), * California (13.3%), and * Massachusetts (10.6%). Property concentrations are found in: * multifamily (36.5%), * retail (31.3%), and * office (17.1%) assets. Standard & Poor's stressed the specially serviced loans, loans on the watchlist, and other loans with credit issues in its analysis. The resultant credit enhancement levels adequately support the raised and affirmed ratings. Ratings Raised Chase Commercial Mortgage Securities Corp. Commercial mortgage pass-thru certs series 1997-1 Rating Class To From Credit Enhancement ----- -- ---- ------------------ C AAA AA+ 25.1% D AA A 16.7% E A BBB+ 13.7% F BB+ BB 5.3% Ratings Affirmed Chase Commercial Mortgage Securities Corp. Commercial mortgage pass-thru certs series 1997-1 Class Rating Credit Enhancement ----- ------ ------------------ A-2 AAA 40.3% B AAA 32.7% G BB- 3.8% H B- 1.5% CHOICE ONE: Hires Bankruptcy Services as Noticing Agent ------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York gave Choice One Communications Inc., and its debtor-affiliates, permission to employ Bankruptcy Services LLC as their official noticing agent on an interim basis. The Court scheduled a hearing to consider the Debtors' application to employ Bankruptcy Services on a permanent basis at 10:00 a.m., on Oct. 25, 2004. Bankruptcy Services will: a) notify all potential creditors of the filing of the bankruptcy petitions under the applicable provisions of the Bankruptcy Code and the Federal Rules of Bankruptcy Procedure; b) file with the Clerk of the Bankruptcy Court: (i) a copy of any notice served by Bankruptcy Services, (ii) a list of persons in alphabetical order to whom the notice was mailed, and (iii) the date the notice was mailed within ten days of service. c) record all transfers of claims and provide any notices of these transfers as required by Bankruptcy Rule 3001; d) maintain the official mailing list of the Debtors' claimants; and e) assist the Debtors' voting agent, Financial Balloting Group LLC, in providing notice to creditors and interest holders of the hearing to confirm the Debtors' plan of reorganization. Ron Jacobs, President of Bankruptcy Services, discloses that the Debtors will pay the Firm a $5,000 retainer to be applied to the final invoice Bankruptcy Services will submit to the Debtors. Mr. Jacobs adds that Kathy Gerber, Senior Vice-President at Bankruptcy Services, will be the lead professional performing services to the Debtors. Ms. Berger will bill the Debtors $210 per hour for her services. Mr. Jacobs reports Bankruptcy Services' professionals bill: Designation Hourly Rate ----------- ----------- Senior Consultants $185 Programmer 160 - 130 Associate 135 Data Entry/Clerical 40 - 60 To the best of the Debtors' knowledge, Bankruptcy Services is "disinterested" as the term is defined in Section 101(14) of the Bankruptcy Code. Headquartered in Rochester, New York, Choice One Communications, Inc. -- http://www.choiceonecom.com/-- is an Integrated Communications Provider offering voice and data services including Internet solutions, to businesses in 29 metropolitan areas (markets) across 12 Northeast and Midwest states. Choice One reported $323 million of revenue in 2003, and provides services to more than 100,000 clients. The Company and its 18 debtor- affiliates filed for chapter 11 protection on October 5, 2004 (Bankr. S.D.N.Y. Case No. 04-16433). Jeffrey L. Tanenbaum, Esq., and Paul M. Basta, Esq., at Weil Gotshal & Manges LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for bankruptcy, they reported $354,811,000 in total assets and $1,078,478,000 in total debts on a consolidated basis. CONSTELLATION BRANDS: Confirms Offer to Purchase Mondavi Corp. -------------------------------------------------------------- Constellation Brands, Inc. (NYSE: STZ, ASX: CBR), confirmed that it has offered to acquire The Robert Mondavi Corporation (Nasdaq: MOND) in a transaction in which Mondavi's Class A shareholders would receive $53.00 per share in cash and Mondavi's Class B shareholders would receive $61.75 per share in cash. The difference in prices reflects the premium allocation between Mondavi's Class A and Class B shares in connection with the recapitalization Mondavi has proposed. Constellation's offer represents a premium of 37% over the closing market price of Mondavi's publicly-traded Class A shares on Monday, Oct. 11, 2004, the day before the proposal was made. The total value of this transaction is approximately $1.3 billion, including approximately $970 million of equity on a fully-diluted basis plus the assumption of approximately $333 million of Mondavi net debt. "We would like to commence discussions with Mondavi immediately with a goal of entering into a merger agreement with Mondavi as soon as possible," stated Constellation Brands Chairman and Chief Executive Officer Richard Sands. "The Mondavi Board of Directors has expressed its commitment to maximize shareholder value and has indicated that Mondavi would meet with us to discuss our offer. We are prepared to begin immediately. Our offer is not conditioned on the completion of Mondavi's recapitalization and we see no reason to delay. In addition, just as we have honored the economic effect of the recapitalization in our offer, we would be willing to consider allowing a shareholder approval that would give effect to the one share/one vote aspect of the proposed recapitalization. This matter has the highest priority for us, and we are committed to working with Mondavi to bring this vision to fruition." Mr. Sands explained, "The combination of Constellation and Mondavi is a compelling strategic fit that strengthens Constellation and provides immediate value to Mondavi's shareholders. Mondavi, with its great portfolio of wines, unmatched brand equity and storied tradition, adds breadth to Constellation's world-leading wine portfolio, and provides Constellation with additional growth opportunities. "Our all-cash offer is not subject to financing and would provide Mondavi's shareholders with immediate value greater than the value of Mondavi's announced restructuring exercise as projected by Mondavi as recently as one month ago. Moreover, our premium transaction would insulate Mondavi shareholders from the risks inherent in the Mondavi restructuring plan, many of which Mondavi describes in a preliminary proxy statement that it filed on Oct. 8, 2004," Mr. Sands concluded. Constellation has received commitments for the financing necessary to complete the transaction. The transaction will be accretive to Constellation's earnings and cash flow per share in the first year. About Constellation Constellation Brands, Inc., is a leading international producer and marketer of beverage alcohol brands with a broad portfolio across the wine, spirits and imported beer categories. Well-known brands in Constellation's portfolio include: Corona Extra, Pacifico, St. Pauli Girl, Black Velvet, Fleischmann's, Mr. Boston, Paul Masson Grande Amber Brandy, Franciscan Oakville Estate, Estancia, Simi, Ravenswood, Blackstone, Banrock Station, Hardys, Nobilo, Alice White, Vendange, Almaden, Arbor Mist, Stowells and Blackthorn. Standard & Poor's Ratings Services rates Constellation Brands' senior secured and senior unsecured debt at BB, its subordinated debt at B+, and gives a B rating to the company's preferred stock issue. Constellation Brands' Aug. 31, 2004, balance sheet shows about $2 billion of outstanding debt. CONSTELLATION BRANDS: Mondavi Bid Spurs S&P to Watch Low-B Ratings ------------------------------------------------------------------ Standard & Poor's Ratings Services placed its 'BB' corporate credit rating and other ratings on alcoholic beverage producer and distributor Constellation Brands Inc. on CreditWatch with negative implications. Constellation Brands announced its all-cash offer to acquire The Robert Mondavi Corp. for approximately $1.3 billion, including approximately $333 million of Mondavi net debt. Fairport, New York-based Constellation Brands had about $2 billion of debt outstanding at Aug. 31, 2004. "The CreditWatch placement reflects Standard & Poor's concern that Constellation Brands' announcement could start a competitive bidding process for Mondavi, which in turn could lead to a significant escalation of the current offering price," said Standard & Poor's credit analyst Jean C. Stout. Standard & Poor's will continue to monitor developments, including assessing the ultimate impact upon the company's business and financial profile. However, if the proposed transaction were to occur on current terms, Standard & Poor's would affirm its 'BB' corporate credit, senior secured debt, and senior unsecured debt ratings on Constellation Brands, as well as the 'B+' subordinated debt rating and 'B' preferred stock rating on the company. The outlook would be negative. Standard & Poor's believes, based on publicly available information, that a combination with Mondavi would strengthen Constellation Brands' business profile, enhancing its position as one of the largest global wine producers by adding breadth to its worldwide wine portfolio, and providing Constellation Brands with additional growth opportunities. Still, the company's acquisition strategy has always been a rating concern and a key issue in assessing Constellation Brands' business profile. Nevertheless, the company's credit measures have improved in recent periods, providing some flexibility for debt-financed acquisitions. Constellation Brands already secured bank commitments for the financing necessary to complete this proposed transaction. While an acquisition of this size will weaken credit measures in the near term and create integration risk for the company, Standard & Poor's expects that the company's annual debt amortization schedule will not only be manageable but that the company will apply its strong free cash flows to reduce debt over the intermediate term. Constellation Brands has the largest wine business in the world. It is the second-largest U.S. supplier of wines, the third-largest U.S. importer of beer, and the third-largest U.S. supplier of distilled spirits. The company is also the No. 1 supplier of wine and the No. 2 producer of cider in the U.K., a leading alcoholic beverage wholesaler in the U.K., and the largest wine producer in Australia. CRESCENT REAL: Sells Non-Income Producing Land to Houston City -------------------------------------------------------------- Crescent Real Estate Equities Company (NYSE:CEI) has contracted to sell 5.3 acres of non-income producing land to the City of Houston. The land is adjacent to the 5.5 acres located in front of downtown's George R. Brown Convention Center that Crescent sold to the City at the end of 2002. This transaction allows the City to consolidate its land in order to develop an urban park of more than 13 acres. Jane Page, Executive Vice President of Asset Management and Leasing, commented, "As the largest landlord in Houston, Crescent shares the City's vision of developing a major new centerpiece park for all to enjoy. We believe that this type of gathering spot not only elevates the quality of life for those who live, work and play downtown, it also provides Houston with another way to compete with major metropolitan areas." The sale is expected to be completed in the fourth quarter, generating net proceeds to Crescent of approximately $23 million, which equates to a price of $100 per square foot. About the Company Crescent Real Estate Equities Company (NYSE:CEI) is one of the largest publicly held real estate investment trusts in the nation. Through its subsidiaries and joint ventures, Crescent owns and manages a portfolio of more than 70 premier office buildings totaling more than 29 million square feet primarily located in the Southwestern United States, with major concentrations in Dallas, Houston, Austin, Denver, Miami and Las Vegas. In addition, Crescent has investments in world-class resorts and spas and upscale residential developments. For more information, visit the company's website at http://www.crescent.com * * * As reported in the Troubled Company Reporter's July 2, 2004, edition, Standard & Poor's Ratings Services lowered its corporate credit ratings on Crescent Real Estate Equities Co. and its operating partnership, Crescent Real Estate Equities L.P., to 'BB-' from 'BB'. In addition, the rating on the company's senior unsecured notes is lowered to 'B' from 'B+', and the rating on the company's preferred stock is lowered to 'B-' from 'B'. The outlook is revised to stable from negative. "The lowered ratings reflect office market conditions that remain persistently weak, pressuring Crescent's highly concentrated portfolio," said Standard & Poor's credit analyst Elizabeth Campbell. "They also reflect tenant concentration concerns, an aggressive financial profile with weak coverage measures, limited financial flexibility, and a high dividend payout ratio." DETIENNE ASSOCIATES: Voluntary Chapter 11 Case Summary ------------------------------------------------------ Debtor: Detienne Associates Limited Partnership 22 North Last Chance Gulch Helena, Montana 59601 Bankruptcy Case No.: 04-63115 Chapter 11 Petition Date: October 13, 2004 Court: District of Montana (Butte) Judge: Ralph B. Kirscher Debtor's Counsel: James A. Patten, Esq. The Fratt Building, Suite 300 2817 2nd Avenue North Billings, MT 59101 Tel: 406-252-8500 Fax: 406-294-9500 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million The Debtor did not file a list of its 20-Largest Creditors. DIAMOND APPAREL LP: Voluntary Chapter 11 Case Summary ----------------------------------------------------- Debtor: Diamond Apparel, L.P. dba Diamond Cut Jeans fka Djeans.com LTD 901 East Highway 82 Nocona, Texas 76255 Bankruptcy Case No.: 04-70904 Type of Business: The Company manufactures and designs jeans for men, women and children for comfort, style and durability. The Company also specializes in gusseted jeans available in blue, black, and khaki denim. See http://www.diamondcutjeans.com/ Chapter 11 Petition Date: October 19, 2004 Court: Northern District of Texas (Wichita Falls) Judge: Harlin DeWayne Hale Debtor's Counsel: Ronald L. Yandell, Esq. Law Offices of Ron L. Yandell 705 Eighth Street, Suite 720 Wichita Falls, Texas 76301 Tel: (940)761-3131 Fax: (940)761-3133 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million The Debtor did not file a list of its 20 largest unsecured creditors. DVI, INC.: Judge Walrath Approves Debtors' Disclosure Statement --------------------------------------------------------------- The Honorable Mary F. Walrath of the U.S. Bankruptcy Court for the District of Delaware put her stamp of approval on a Disclosure Statement explaining the company's chapter 11 plan. Judge Walrath found that the disclosure document provides the right amount of the right kind of information that will allow creditors to make informed decisions when they vote to accept or reject the plan. DVI has sold most of its assets. The plan proposes to monetize all of DVI's remaining property and distribute the estate's cash assets to creditors in order of their statutory priority. The plan proposes to pay general unsecured creditors just under 3 cents-on-the-dollar and delivers just over 32 cents-on-the-dollar to the healthcare finance company's noteholders. Judge Walrath will convene a hearing to consider the merits of the Plan and whether the Plan should be confirmed on Nov. 17, 2004. DVI, Inc., the parent company of DVI Financial Services, Inc., DVI Business Credit Corp., and DVI Financial Services, Inc., provided lease or loan financing to healthcare providers for the acquisition or lease of sophisticated medical equipment. The Company, along with its affiliates, filed for chapter 11 protection (Bankr. Del. Case No. 03-12656) on August 25, 2003. Bradford J. Sandler, Esq., of Adelman Lavine Gold and Levin, PC, represents the debtors in their restructuring efforts. ENDURANCE SPECIALTY: Names Michael Fujii to Lead US-Based Business ------------------------------------------------------------------ Endurance Specialty Holdings Ltd. (NYSE:ENH) has named Michael Fujii to lead and manage the development of Endurance's insurance business in the United States. With a focus on developing key areas of specialization within the Property and Casualty insurance arena, Endurance will underwrite on both an admitted and non- admitted basis. Mr. Fujii joins Endurance from Great American Custom Insurance Services, where he most recently served as President and CEO. Prior to that, Mr. Fujii was President of CIGNA E&S from 1987 to 1992. A graduate of Loyola University-Los Angeles, Mr. Fujii is a member of the AICPA and the California Institute of Certified Public Accountants. Mr. Fujii also sits on the board of the Insurance Institute's Charitable Foundation. "We are delighted that someone of Mike's caliber has decided to lead the creation of our specialty insurance business," commented Endurance CEO, Kenneth J. LeStrange. "This is an exciting initiative for the company, and we look forward to applying our principles of specialization, disciplined underwriting, and superior client service in this business as well." The expansion into the U.S. insurance market comes on the heels of the company announcing its entrance into Surety business and Agribusiness. "Endurance's business model is based on flexibility and specialization," said Mr. LeStrange. "Thanks in large part to our strong capitalization and nimbleness, Endurance is able to take advantage of opportunities in the market. We feel that in establishing a U.S. insurance business, we can continue to offer products and services that meet the changing needs of clients." About Endurance Specialty Holdings Endurance Specialty Holdings Ltd. is a global provider of property and casualty insurance and reinsurance. Through its operating subsidiaries, Endurance currently writes property per risk treaty reinsurance, property catastrophe reinsurance, casualty treaty reinsurance, property individual risks, casualty individual risks, and other specialty lines. Endurance's operating subsidiaries have been assigned a group rating of A (Excellent) from A.M. Best, A2 by Moody's and A- from Standard & Poor's. Endurance's headquarters are located at Wellesley House, 90 Pitts Bay Road, Pembroke HM 08, Bermuda and its mailing address is Endurance Specialty Holdings Ltd., Suite No. 784, No. 48 Par-la-Ville Road, Hamilton HM 11, Bermuda. For more information about Endurance, please visit http://www.endurance.bm/ * * * As reported in the Troubled Company Reporter's June 18, 2004, edition, Standard & Poor's Ratings Services assigned its 'BBB' counterparty credit rating to Endurance Specialty Holdings Ltd. and its preliminary 'BBB' senior debt, 'BBB-' subordinated debt, and 'BB+' preferred stock ratings to the company's $1.8 billion universal shelf registration. "The ratings on Endurance are based on its strong competitive position, which is supported by a diversified business platform," noted Standard & Poor's credit analyst Damien Magarelli. "In addition, Endurance maintains strong capital adequacy and strong operating performance." Offsetting these positive factors are concerns about Endurance's exposure to catastrophes and minimal reinsurance protections. Endurance also is a relatively new operation, and management has not been tested through difficult market cycles. ENRON CORP: Court Approves ECS Bidding Procedures ------------------------------------------------- As reported in the Troubled Company Reporter on Oct. 1, 2004, Enron North America Corp., an Enron Corporation debtor-affiliate sought the permission of the U.S. Bankruptcy Court for the Southern District of New York to consent to the sale of certain assets belonging to wholly owned non-debtor subsidiary, Enron Compression Services Company, free of liens, claims and encumbrances to Paragon ECS Holdings, LLC, subject to higher and better offers. Specifically, the Assets to be sold are Compression Services Agreements entered into by ECS with Transwestern Pipeline Company and Florida Gas Transmission Company. The Assets will also include the associated agreements necessary in the performance of the obligations under the Transwestern and Florida Gas Compression Services Agreements. The United States Bankruptcy Court for the Southern District of New York approved a competitive bidding process to maximize the value of the Transwestern and Florida Gas Assets. The Proposed Bidding Procedures A. Assets ECS will entertain bids for the Assets, whether through a bid for all of the Assets or through bids for each of the Transwestern Assets and the Florida Gas Assets, through the Auction. B. Auction Date and Time The Auction will be held on October 18, 2004, commencing at 10:00 a.m. Eastern Time at the offices of LeBoeuf, Lamb, Greene & MacRae, LLP, Reliant Energy Plaza, 1000 Main Street, Suite 2550, Houston, Texas 77002, for consideration of qualifying offers that may be presented to ECS, or at the time or date as ECS may determine upon prior consultation with the Official Committee of Unsecured Creditors. C. Adjournment of Auction The Auction may be adjourned as ECS, upon consultation with the Creditors' Committee, deems appropriate. Reasonable notice of the adjournment and the time and place for the resumption of the Auction will be given to Paragon ECS Holdings, LLC, all entities submitting Competing Bids, and the Creditors' Committee. D. Qualification as Bidder Any entity that wishes to make a bid for the Assets, the Transwestern Assets, or the Florida Gas Assets must provide sufficient and adequate information to demonstrate to ECS' sole and absolute satisfaction, upon consultation with the Creditors' Committee, that the bidder has the financial means and ability to consummate the transactions contemplated in the purchase agreement submitted with the Competing Bid. Paragon is a Qualified Bidder. E. Bid Requirements ECS will entertain bids for the Assets, the Transwestern Assets, or the Florida Gas Assets that are on substantially the same terms and conditions as those terms set forth in the Purchase Agreement with Paragon. A cash deposit of at least equal to 25% of its bid must accompany each Competing Bid. Competing Bids must be: * in writing; * signed by an individual authorized to bind the prospective purchaser; and * received no later than 5:00 p.m. Eastern Time on October 13, 2004, by: ECS c/o Enron North America Corp. 1221 Lamar, Suite 1600 Houston, TX 77010 Attention: Gregory L. Sharp e-mail: greg.sharp@enron.com Facsimile: (713) 646- 3702) LeBoeuf, Lamb, Greene & MacRae, LLP 125 West 55th Street New York, NY 10019, Attention: Herbert K. Ryder e-mail: hryder@llgm.com Facsimile: (212) 424-8500 The Blackstone Group LP 345 Park Avenue New York, NY 10154 Attention: Pierre Chung e-mail: chung@blackstone.com Facsimile: (212) 583-5707 and Milbank, Tweed, Hadley & McCloy LLP One Chase Manhattan Plaza New York, NY 10005-1413 Attention: Luc A. Despins e-mail: ldespins@milbank.com Facsimile: 212-530-5219 Any Competing Bid must be presented under a contract substantially similar to the Purchase Agreement, marked to show any modifications made to the Purchase Agreement. The Competing Bid must not be subject to due diligence review, board approval, or the receipt of any consents not otherwise required by the Purchase Agreement. The initial overbid for the Assets must be at least 4% greater than the Base Purchase Price under the Purchase Agreement. In the instance of Competing Bids for each of the Transwestern Assets and the Florida Gas Assets, the Competing Bids must aggregate to an amount that is at least 4% greater than the Base Purchase Price. F. Due Diligence, Consent and Questions Prior to Submitting Bids In order to conduct due diligence on the Assets, the Transwestern Assets, or the Florida Gas Assets, parties may contact: Gregory L. Sharp. Before a party will be allowed to conduct due diligence, if not previously executed, it must execute a Confidentiality Agreement. G. Auction After the Bid Deadline and prior to the Auction, ECS will, upon consultation with the Creditors' Committee: * evaluate all Competing Bids received; * invite all Qualified Bidders to participate in the Auction; * determine which Competing Bid reflects the highest or best offer for the Assets; and * if applicable, determine which Competing Bids for each of the Transwestern Assets and Florida Gas Assets, in the aggregate, reflect the highest or best offer. ECS, in its business judgment and sole absolute discretion, in consultation with the Creditors' Committee, may reject any Competing Bid that is not in conformity with the requirements of the Bankruptcy Code, the Bankruptcy Rules, the Local Rules of the Court, or that is contrary to the best interests of ECS, ENA, its estate or its creditors. Subsequent bids for the Assets at the Auction, including those of Paragon, must be in increments of at least 1% more than the highest prior bid. In the instance of bids for each of the Transwestern Assets and the Florida Gas Assets, subsequent bids must aggregate to be in increments of at least 1% more than the highest prior bid for the Assets. ECS may modify the Bidding Procedures upon consultation with the Creditors' Committee, as may be determined to be in the best interests of ECS, ENA, its estates or its creditors. H. Irrevocability of Certain Bids The bid of the Winning Bidder will remain open and irrevocable in accordance with the terms of the purchase agreement executed by the Winning Bidder. The bid of the bidder or combination of bidders that submits the next highest or best bid -- the Back-up Bidder -- will remain open and irrevocable until the earlier to occur of (i) the consummation of a sale of the Assets and (ii) 90 days after the last date of the Auction; provided, that if Paragon is either the Winning Bidder or the Back-up Bidder, then the highest or best bid of Paragon will remain irrevocable in accordance with the terms of the Purchase Agreement. If Paragon is neither the Winning Bidder nor the Back-up Bidder, then the highest or best bid submitted by Paragon will, in addition to the bids of the Winning Bidder and the Back-up Bidder, remain irrevocable in accordance with the terms of the Purchase Agreement. I. Retention of Deposits ECS will retain the Deposit of the Winning Bidder in accordance with the terms of the purchase agreement executed by the Winning Bidder. The Deposit for each Back-up Bidder will be held until the earlier to occur of: * consummation of a sale of the Assets; and * 90 days after the last date of the Auction. If Paragon is either the Winning Bidder or the Back-up Bidder, ECS will retain Paragon's Deposit in accordance with the terms of the Purchase Agreement. If Paragon is neither the Winning Bidder nor the Back-up Bidder, then, in addition to the retention of the Deposits of the Winning Bidder and the Back-up Bidder, ECS will also retain Paragon's Deposit. J. Failure to Close In the event a bidder or combination of bidders is the Winning Bidder, and the Winning Bidder fails to consummate the proposed transaction by the closing date contemplated in the purchase agreement agreed to by the parties for any reason, ECS will: * retain the Winning Bidder's Deposit, to the extent provided in the applicable purchase agreement; * maintain the right to pursue all available remedies available to it subject to the terms of the purchase agreement executed by the Winning Bidder; and * upon consultation with the Creditors' Committee, be free to consummate the proposed transaction with the next highest or best bidder at the highest price bid by that bidder at the Auction without the need for an additional hearing or order from the Court. K. Non-Conforming Bids ECS, in consultation with the Creditors' Committee, will have the right to entertain bids that do not conform to one or more of the requirements provided in the proposed Bidding Procedures. L. Expenses Any bidders presenting bids will bear their own expenses in connection with the sale of the Assets, whether or not the sale is ultimately approved. Headquartered in Houston, Texas, Enron Corporation is in the midst of restructuring various businesses for distribution as ongoing companies to its creditors and liquidating its remaining operations. Before the company agreed to be acquired, controversy over accounting procedures had caused Enron's stock price and credit rating to drop sharply. The Company filed for chapter 11 protection on December 2, 2001 (Bankr. S.D.N.Y. Case No. 01- 16033). Judge Gonzalez confirmed the Company's Modified Fifth Amended Plan on July 15, 2004, and numerous appeals followed. Martin J. Bienenstock, Esq., and Brian S. Rosen, Esq., at Weil, Gotshal & Manges, LLP, represent the Debtors in their restructuring efforts. (Enron Bankruptcy News, Issue No. 127; Bankruptcy Creditors' Service, Inc., 15/945-7000) FEDERAL-MOGUL: Asks Court to Okay $500M Replacement DIP Facility ---------------------------------------------------------------- Federal-Mogul Corporation and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of Delaware for permission to enter into a replacement financing with Citicorp USA, Inc. Michael P. Migliore, Esq., at Pachulski Stang Ziehl Young Jones & Weintraub, PC, in Wilmington, Delaware, tells Judge Lyons that, with a few exceptions, the terms and conditions of the proposed replacement DIP financing to be syndicated by Citicorp USA, Inc., are substantially identical to the carefully crafted and heavily negotiated terms of the Debtors' existing $600 million Amended and Restated Revolving Credit, Term Loan and Guaranty Agreement, dated as of August 7, 2003, with JPMorgan Chase Bank, as administrative agent for the lenders. However, the improved interest rate for the Replacement Financing will result in immediate and material savings to the Debtors' estates. Its extended maturity removes any concerns that the Debtors might be unable to repay or refinance the Existing DIP Facility prior to its scheduled maturity in just five months. Mr. Migliore elaborates that the interest for the Replacement Financing at both base pricing and at a LIBOR-based pricing option is 0.75% (75 basis points) less than the Existing DIP Facility, resulting in monthly interest savings to the estate of roughly $238,000. The Replacement Financing also extends the maturity of the Debtors' postpetition financing until 12 months following the closing of the Replacement Financing transaction. The Debtors will use the proceeds of the Replacement Financing to repay the Existing DIP Facility and for working capital and other general corporate purposes. As of October 1, 2004, the balance outstanding on the Existing DIP Facility is $382 million, including certain letter of credit obligations. The salient terms of the proposed Replacement Financing are: Amount & Type of Facility: $500 million superpriority senior secured revolving credit facility Maturity: 12 months from the closing date of the Replacement Financing Availability of DIP Facility: Subject to a borrowing base consisting of: -- 85% of eligible accounts receivable; and -- eligible inventory subject to various advance rates as have been previously provided by Citicorp to the Company. Priority and Liens: Identical to the Existing DIP Facility Adequate Protection: Identical to that provided with respect to the Existing DIP Facility Interest Rates: LIBOR plus 2.25%, or Base Rate plus 1.25% Commitment Fees: (1) letter of credit participation fee at a rate equal to the interest rate margin applicable to LIBOR Loans; (2) commitment fee of 0.50% per annum on unused amounts; (3) letter of credit fronting fee of 0.125% per annum on the face amount of each letter of credit; and (4) letter of credit processing fees to be agreed upon. Financial Covenants: (A) The Debtors covenant with the Lenders to restrict capital expenditures to: $92,000,000 for the quarter ending Dec. 31, 2004; and $82,000,000 for each of the fiscal quarters ending March 31, June 30, and September 30, 2005. The unused portion of the amount of capital expenditures permitted to be made in each fiscal quarter may be carried forward to and made during the immediately following two fiscal quarters. To the extent the amount of capital expenditures actually made during the fiscal quarter ending September 30, 2004, does not exceed $92,000,000, the difference between the amount and $92,000,000 may be carried forward to and made during the fiscal quarters ending December 31, 2004, and March 31, 2005. (B) The Debtors covenant with the Lenders that Consolidated EBITDA will not fall below $590,000,000 and Domestic EBITDA will not fall below $200,000,000, for each period of four consecutive fiscal quarters ending December 31, 2004, March 31, 2005, June 30, 2005, and September 30, 2005. Non-refundable Fees: The Debtors will pay: * Upfront Fees: For the account of Citicorp Global, an upfront fee equal to the greater of (i) $_____[redacted] and (ii) the total amount of the DIP Facility multiplied by a fraction, the numerator of which is $_____[redacted] and the denominator of which is $_____[redacted], payable in full on the DIP Closing Date. The upfront fee will be credited dollar-for-dollar against the payment of the upfront fee with respect to the Exit Revolver Facility. * Administrative & Collateral Monitoring Fees: For the account of Citicorp, and an administrative fee of $_____[redacted] per annum, and a collateral monitoring fee of $_____[redacted] per annum, payable quarterly in advance, computed from the DIP Closing Date to the date of termination of the commitments under the DIP Facility and the repayment in full of all amounts outstanding. Representations and Warranties, Covenants and Events of Default: Substantially as stated in the Existing DIP Facility, with: (a) an additional basket of $30 million for asset sales; (b) a further basket of $30 million for investments; and (c) certain additional modifications from the Existing DIP Facility. Citigroup Global Markets, Inc., will serve as Sole Arranger and Bookrunner with respect to the Replacement Facility. Davis Polk & Wardwell rendered legal advice to Citicorp with respect to the transaction. The Debtors also seek the Court's permission to continue using their cash collateral and provide adequate protection to the prepetition lenders on terms substantially similar to those previously approved by the Court. The Debtors further seek permission to enter into hedge agreements to manage their interest rate exposures and other risks. Obligations under the Hedging Agreement are secured obligations under the Replacement Credit Documents. The Debtors propose to grant the Hedging Parties superiority liens and claims that are pari passu with those granted to the Bank Lenders providing Replacement Financing. The Debtors will also grant liens to Bank One, N.A., a lender under the Existing Facility, for certain incidental overadvances. Citicorp will have no liability to Bank One. Headquartered in Southfield, Michigan, Federal-Mogul Corporation -- http://www.federal-mogul.com/-- is one of the world's largest automotive parts companies with worldwide revenue of some $6 billion. The Company filed for chapter 11 protection on Oct. 1, 2001 (Bankr. Del. Case No. 01-10582). Lawrence J. Nyhan, Esq., James F. Conlan, Esq., and Kevin T. Lantry, Esq., at Sidley Austin Brown & Wood and Laura Davis Jones, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from its creditors, they listed $10.15 billion in assets and $8.86 billion in liabilities. (Federal-Mogul Bankruptcy News, Issue No. 65; Bankruptcy Creditors' Service, Inc., 215/945-7000) FHC HEALTH: Moody's Junks $100M Sr. Secured Third Lien Term Loan ---------------------------------------------------------------- Moody's Investors Service assigned ratings of Caa1 for FHC Health Systems, Inc.'s proposed Third Lien Term Loan. Moody's also affirmed a senior implied rating of B2 and a rating of B2 on the company's existing Second Lien Loan. In addition, Moody's downgraded the senior unsecured issuer rating to Caa1, at the same level as the Third Lien Term Loan. Although the issuer rating is effectively subordinated to the Third Lien Term Loan, Moody's believes there is limited value to the security package supporting the Third Lien Loan. The senior unsecured rating is a hypothetical rating that would be applied to any future issuance of senior unsecured debt based on the company's existing capital structure; currently, there is no outstanding unsecured debt. The outlook is stable. The rating assignment reflects: (i) the company's high concentration of revenues among a few customer accounts, contract renewal risk, (ii) a material near term decline in profitability for its federal contracts, and (iii) the moderately high financial leverage. Factors somewhat mitigating these concerns include the company's favorable historical performance and its demonstrated success in retaining customers. Additional factors supporting the ratings include: (i) the company's leading market position as a national provider, (ii) favorable industry growth trends, (iii) an experienced management team, (iv) proven ability to manage leverage, (v) growth in free cash flow, (vi) lower cost of capital with the transaction, and (vii) improved operations. New Rating Assigned: * $100 Million Senior Secured Third Lien Term Loan due 2010, rated Caa1 Ratings Affirmed: * Senior Implied Rating, rated B2 * Senior Secured Second Lien Term Loan due 2009, rated B2 Ratings Downgraded: * Senior Unsecured Issuer Rating, rated Caa1 The outlook is stable. In spite of the listed credit strengths, Moody's is concerned that the potential loss of one or more major contracts may lead to deterioration in the company's performance and credit metrics. Given the short-term nature of many of the contracts, this will remain an ongoing issue. The stable outlook anticipates that the company will experience mixed-to-slightly positive operating trends going forward, with improving performance under its public health contracts, continued high customer renewal rates (over 90%), new customer accounts and cost savings resulting from its systems migration and process improvements supporting profitability. The outlook also considers the company's successful renewal of its Arizona contract, and our expectation for the profitability of the contract to return to historical levels through higher rates and operating improvements. If the company does perform in line with our expectations, upward momentum for the rating outlook and the ratings themselves may still be limited for the foreseeable future, so long as the concentration of revenues and profits remains a concern. FHC is incurring a new Third Lien term loan to redeem its payment- in-kind preferred equity and to exercise the company's right to call the attached warrants. The company has recently obtained a guaranty of the company's Value Options, Inc. subsidiary for its existing Senior Secured Facilities; its major contract, which accounts for over 30% of revenues, however, will continue to be excluded from this guaranty. The existing and new bank debt will benefit from limited guarantees from certain subsidiaries and will be secured by certain assets of the company. The Third Term loan, however, is rated two levels below the company's senior term loans. The lower rating reflects its junior position on the debt capital structure, and Moody's expectations for materially higher expected loss, under a distressed scenario, relative to the existing term loan. The ratings for the Second Lien term loans, which are rated at the senior implied rating, reflect the limitations of the collateral package and guarantee. Following the issuance of the third lien loan and the retirement of the preferred stock, the level of debt and leverage will increase slightly. However, leverage metrics will be good for the rating category. Over the next few years, the Free Cash Flow to Debt coverage ratio is projected to rise and approach 10% as a result of an anticipated increase in free cash flow and debt retirement. The projected expansion in free cash flow will occur through leveraging its fixed expenses and improving its operating margins, reducing its working capital requirements, and stabilizing its capital expenditures needs. Currently, FHC has a reasonable amount of EBITDA cushion (which is projected to expand over time) in meeting its financial covenants of minimum interest coverage ratio (EBITDA/interest expense) and the maximum Leverage ratio (Debt/EBITDA) FHC Health Systems, Inc., headquartered in Norfolk, Virginia, is one of the leading behavioral managed care providers in the U.S., with approximately 23 million covered lives. The company's managed care business provides services to the public sector, employer groups, health plans and federal agencies. Through its subsidiary, Alternative Behavioral Services, FHC also provides behavioral treatment programs. For the fiscal year ended 2003, the company had revenues of $1.32 billion. FLINTKOTE CO.: Wants Until Dec. 23 to Make Lease-Related Decision ----------------------------------------------------------------- The Flintkote Company and its debtor-affiliate ask the U.S. Bankruptcy Court for the District of Delaware to extend, until Dec. 23, 2004, their time to decide whether to assume, assume and assign, or reject the unexpired lease of its headquarters' office space located in San Francisco, California. The Debtors tell the Court that the premises in San Francisco is their only office where they conduct their insurance recovery, financial and corporate activities. The headquarters lease will expire in August 2007. At this point, the Debtors are not prepared to assume the lease and obligate their estates for the remaining four years of the lease term. At the same time, rejecting the lease will force the Debtors to relocate. This will entail additional expenses and disrupt the Debtors' business operations. The Debtors assure the Court that they are current on all obligations under the lease and they intend to fulfill all future lease obligations on a timely basis throughout the duration of their chapter 11 cases. Headquartered in San Francisco, California, The Flintkote Company is engaged in the business of manufacturing, processing and distributing building materials. The Company filed for chapter 11 protection on April 30, 2004 (Bankr. Del. Case No. 04-11300). James E. O'Neill, Esq., Laura Davis Jones, Esq., and Sandra G. McLamb, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub P.C., represent the Debtor in their restructuring efforts. When the Company filed for protection from its creditors, it estimated debts and assets of more than $100 million. FORT HILL: IP Company Wants Exclusive Period Terminated ------------------------------------------------------- IP Company, LLC, the largest secured creditor of Fort Hill Square Associates and its debtor-affiliate, asks the U.S. Bankruptcy Court for the District of Massachusetts, Eastern Division, to terminate the Debtors' exclusive period to file and seek confirmation of a chapter 11 plan. IP Company believes that the only way for these cases to reach an expeditious and successful resolution is for the Court to permit other parties to submit an alternative plan of reorganization. In September, Chiofaro -- a minority partner of the Debtors -- filed a plan of reorganization. IP Company doesn't think Chiofaro's Plan is viable or confirmable because it exposes the Debtors to $2 million in breakup fees and would reduce the ownership interests of the Debtors' majority partner -- Hillman -- from 60 percent to 10 percent. The Debtors' majority partner, controlled by the Hillman entities, supports IP's motion to terminate exclusivity. Hillman agrees with IP that Chiofaro's Plan won't ever make it to confirmation. IP Company reminds the Court that since Chiofaro is a minority partner in these proceedings, it can't outweigh the interests of the majority equity holder, the unsecured creditors and the secured creditor. IP Company stresses that legitimate interests will only be served by terminating exclusivity. Headquartered in Boston, Massachusetts, Fort Hill Square Associates, manages and develops One International Place that consists of two separate but interconnected office towers consisting of over 1.8 million square feet. The Company filed for chapter 11 protection on May 7, 2004 (Bankr. Mass. Case No. 04-13855). Alex M. Rodolakis, Esq., at Hanify & King represents the Debtors in their restructuring efforts. When the Company filed for protection from their creditors, they listed both estimated assets and debts of over $100 million. FORT HILL: Wants Two Creditors Banned from Voting ------------------------------------------------- Fort Hill Square Associates and its debtor-affiliate want the U.S. Bankruptcy Court for the District of Massachusetts, Eastern Division, to disqualify IP Company, LLC, and Boston Funding, LLC -- both affiliates of Tishman Speyer -- from exercising their rights to vote for or against the Debtors' Plan of Reorganization. The Debtors assert that these two creditors acquired claims in bad faith. The Debtors allege that these creditors have been acting in concert for the purpose of seizing control of the Debtors' assets and it's that kind of improper behavior that should cause their claims to be designated under 11 U.S.C. Sec. 1126(e). According to Fort Hill, IP Company and Boston Funding have engaged in a course of conduct directed at undermining the Debtors' reorganization efforts. These moves include: * puchasing claims solely for the purpose of defeating the Plan; * direct contact with unsecured creditors violating a Court Order issued in July; * offering inducements to other creditors to obtain their support; and * engaging in a campaign of misinformation. The Debtors charge that these two creditors want to obtain a dominant position in the financial district of the City of Boston by controlling two of the premier locations in Fort Hill Square which are already managed by Tishman Speyer. The Debtors want the Court to halt their hostile attempt to seize ownership and control of the estates' assets. Headquartered in Boston, Massachusetts, Fort Hill Square Associates, manages and develops One International Place that consists of two separate but interconnected office towers consisting of over 1.8 million square feet. The Company filed for chapter 11 protection on May 7, 2004 (Bankr. Mass. Case No. 04-13855). Alex M. Rodolakis, Esq., at Hanify & King, represents the Debtors in their restructuring efforts. When the Company filed for protection from their creditors, they listed both estimated assets and debts of over $100 million. FRIEDMAN'S INC: Elects Peter Thorner to Board of Directors ---------------------------------------------------------- Friedman's Inc. (OTC non-BB: FRDM.PK), the value leader in fine jewelry retailing, said Peter Thorner has been elected as a new independent director of the Company. Mr. Thorner will fill an existing vacancy on the Board and will be designated as a Class B director. Mr. Thorner is the former Chairman and CEO of Bradlees Stores, a discount retailer. Allan Edwards, Chairman of the Board of Friedman's, said, "We are delighted that Peter is joining the Board and expect that his background in the retail sector and his experience in financial matters will be a tremendous resource to the Board as Friedman's continues to move forward with its restructuring efforts." 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, go to: http://www.friedmans.com/ Last month, Friedman's completed the restructuring of its senior secured credit facility. The new facility consists of a senior revolving loan of up to $67.5 million (maturing in 2006) and a $67.5 million junior term loan (maturing in 2007). Friedman's issued some warrants to Farallon Capital Management, L.L.C., in connection with that transaction. Friedman's also entered into a secured trade credit program providing security to vendors. Part of the deal allows Friedman's to stretch payment of invoices past due in July 2004 through 2005. 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. FRONTIER OIL: Negotiating to Begin Caribbean Sector Exploration --------------------------------------------------------------- Frontier Oil and Gas (Other OTC:FOGL.PK) began negotiations for exploration of oil and gas located in the Caribbean. Frontier is currently negotiating with a Caribbean joint venture partner in order to provide its services as an Oil and Gas Member Group of Exus Global Inc. (OTC BB:EXGO.OB). Frontier believes that through its agreements with Geoscanex -- Nevada Holding Group (Other OTC:NVHG.PK - News), and Exus Global Inc., Frontier Oil and Gas may be able to win significant opportunities and confirm the commercial viability of oil located in the Caribbean. "We are very excited that Frontier Oil and Gas may be able to demonstrate GeoScanex's technology and processes," stated Mr. Mancini of Frontier Oil and Gas. About Exus Global, Inc. Exus Global is a publicly traded Business Development Company (BDC) located in New York City. The company has initiated a strategy to create value for shareholders by investing in emerging companies that are positioned for strong industry growth or that have business models with strong cash flow potential. In addition to initial financing, Exus provides its portfolio companies with a variety of services including managerial and administrative assistance, back office support, pre-IPO and public listing planning, public relations and investor relations, marketing and feasibility studies and identification of strategic or financial partners. For more information see http://www.exusglobal.com/ About Nevada Holdings, Inc. The Institute of Geoinformational Analysis of the Earth. For more information on the institute see their web site http://www.geoscanex.com/ About the Company Frontier operates a 110,000 barrel-per-day refinery located in El Dorado, Kansas, and a 46,000 barrel-per-day refinery located in Cheyenne, Wyoming, and markets its refined products principally along the eastern slope of the Rocky Mountains and in other neighboring plains states. Information about the Company may be found on its web site http://www.frontieroil.com/ * * * As reported in the Troubled Company Reporter on Sept. 23, 2004, Moody's upgraded Frontier Oil Corporation's Senior Implied Rating from B1 to Ba3 and assigned a B1 rating to its new $150 million of 6.625% senior unsecured guaranteed notes due 2011, with a stable rating outlook. Moody's also upgraded Frontier Oil's senior unsecured issuer rating (a notional non-guaranteed parent issuer rating) from B2 to B1 and Frontier Oil's remaining $170 million of non-guaranteed 11.75% senior unsecured notes from B2 to B1. Note proceeds will fund the majority of Frontier Oil's pending call and retirement of the 11.75% notes (expected to cost roughly $180 million), with $35 million of Frontier Oil's $88 million in June 30, 2004 cash balances funding the rest of the tender cost. The one-notch upgrade in the senior implied rating reflects: * the impact of a continued disciplined approach to evaluating acquisition candidates; * a supportive margin environment driven by supportive regional crack spreads and by amply wide crude oil quality price differentials; * cash balances to provide back-up internal funding for heavy 2005 and 2006 capital spending; and * moderate leverage to bridge margin down-cycles and support revolver borrowings in such an environment in needed to support an escalated capital program and high inventory investment driven by high oil costs. HANOVER COMPRESSOR: S&P Affirms 'BB-' Corporate Credit Rating ------------------------------------------------------------- Standard & Poor's Rating Services affirmed its 'BB-' corporate credit rating on natural gas compression equipment provider Hanover Compressor Co. and revised its outlook on the company to stable from negative. Houston, Texas-based Hanover has about $1.8 billion of debt as of June 30, 2004. The outlook revision to stable reflects Standard & Poor's expectation that improving industry fundamentals and management's firm commitment to reduce its debt leverage will result in improved credit quality. The outlook revision is predicated on these factors: -- Falling leverage. While Standard & Poor's remains concerned about Hanover's debt burden, the company has specified a plan to reduce debt through the application of free operating cash flow, which includes tailoring its capital-spending program to allow for roughly $180 million ($60 million per year with this year's target already achieved) of debt reduction through 2006. Moreover, the magnitude and pace of debt reduction likely will increase as Hanover intends to use a portion of noncore asset sale proceeds to further reduce debt. -- No more distractions. During the past two years, Hanover has been taking important steps to improve its credibility, including replacing senior managers with new employees that are focused on reducing costs, lowering debt, and disposing of noncore business segments. With the resolution of the SEC investigation and shareholder lawsuit, the company is now better able to focus on its core operations. -- Improving fundamentals. Demand for compression equipment and services is slowly turning favorable (business reached a trough in 2002), as evidenced by increasing utilization rates and modest price increases. As of June 30, 2004, Hanover's utilization rate was 83%, versus 78% as of Dec. 31, 2002. "The stable outlook reflects Standard & Poor's expectation that Hanover will manage its growth initiatives in a manner that enables the company to adhere to its debt reduction strategy and that Hanover will maintain its improved liquidity position," said Standard & Poor's credit analyst Steven K. Nocar. "At this time, the company's pace of debt reduction will not be sufficiently rapid for Standard & Poor's to consider ratings upgrades for at least two years," he continued. However, no catalyst for a ratings downgrade is visible. Hanover's outlook or ratings could be negatively revised if Hanover resumes pursuing growth at the expense of its debt reduction goal ($60 million per year), although in Standard & Poor's view, this is unlikely. HEDSTROM CORP: Case Summary & 31 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Hedstrom Corporation 3436 North Kennicott Arlington Heights, Illinois 60004 Bankruptcy Case No.: 04-38543 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- ERO, Inc. 04-38546 ERO Industries, Inc. 04-38550 ERO Canada, Inc. 04-38553 Priss Prints, Inc. 04-38555 Type of Business: The Hedstrom Companies manufacture and market well-established children's leisure, outdoor recreation and home decor products, including outdoor gym sets, spring horses, trampolines, skating equipment (through Backyard Products Unlimited, currently in a Canadian receivership proceeding); play balls (through non-debtor BBS Industries, Inc., and accounting for 25% of Hedstrom's total sales); and arts and crafts kits, game tables, indoor sleeping bags, play tents and wall decorations (through ERO Industries, and accounting for 16% of Hedstrom's total sales). See http://www.hedstrom.com/ Chapter 11 Petition Date: October 18, 2004 Court: Northern District of Illinois (Chicago) Judge: Jack B. Schmetterer Debtor's Counsel: Allen J. Guon, Esq. Steven B. Towbin, Esq. Shaw Gussis Fishman Glantz Wolfson & Tow 321 North Clark Street, Suite 800 Chicago, Illinois 60610 Tel: (312) 541-0151 Fax: (312) 980-3888 Total Assets Total Debts ------------ ----------- Hedstrom Corporation $10M to $50M More than $100M ERO, Inc. $10M to $50M More than $100M ERO Industries, Inc. $10M to $50M More than $100M ERO Canada, Inc. $500,000 to $1M $100,000 to $500,000 Priss Prints, Inc. $1M to $10M $1M to $10M Consolidated list of Debtor's 31 largest unsecured creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Credit Suisse First Boston Loan $113,000,000 Accounting Department Attn: S. Viskovic 11 Madison Avenue, 9th Floor New York, New York 10010 Jia Chao International Trade $952,507 Company Limited Attn: Tom Hugar No. 75 Changh-Hsing Street Changhua, Taiwan 500 R.O.C. Disney Enterprise, Inc. Licensing Royalties $752,079 500 South Buena Vista Street Los Angeles, California 91521 Macsteel Service Centers USA Trade $647,695 Attn: Phyllis Ward 555 State Road Bensalem, Pennsylvania 19020 P3 International Limited Trade $592,719 Attn: Bill Gordon 33 Canton Road, Suite 1809B Tower 1, Tsimshatsui Kowloon, Hong Kong, China Sivaco Inc. Trade $426,349 Attn: Betty 800 Rue Ouellette, Marieville Quebec J3M 1P5, Canada Tri-State Far East Corp Trade $391,441 16th Floor, TAL Building 49 Austin Road, Kowloon Hong Kong, China Ten Cate Nicolon Trade $362,326 365 South Holland Drive Pendergrass, Georgia 30567 Silverplay (H.K.) Ltd. Trade $331,941 6th Floor, No. 45, Lane 76 Ruei Guang Road, 114 Neihu Taipe, Taiwan R.O.C. Highmark Blue Shield Insurance $308,654 Attn: Jenny Walter 120 Fifth Avenue, Suite 1033 Pittsburgh, Pennsylvania 15222 Michael J. Johnston Separation Agreement $266,218 516 South Beverly Lane Arlington Heights, IL 60005 GRI Trade $263,412 4th Floor Grandmark Centre 10 Granville Road Tsimshatsui, Kowloon Hong Kong, China Spider-Man Merchandising LP Licensing Royalties $249,096 Packaging Specialists Inc. Trade $239,112 Olympic Steel Inc. Trade $238,364 Industrial Steel & Fastener Trade $233,907 Glen Raven Knit Fabrics Trade $226,114 Frederick Contino Separation Agreement $206,090 Graphcom Inc. Trade $192,487 Titan Steel Corporation Trade $190,139 R.B. Industries, Inc. Trade $187,711 MPI Label Systems Trade $181,168 Fedex Ground, Inc. Trade $178,969 Cesari & McKenna Legal Services $176,367 Industrial Thermo Polymers Trade $175,991 Limited Innovative Toys (Suzhou) Trade $160,956 Company Limited Kenneth J. Giacomino Trade $148,846 Equistar Chemicals, LP Trade $147,334 Silverplay (H.K.) Ltd. Trade $140,834 Kogee Industry Company, Ltd. Trade $128,820 Brady Communications Trade $125,366 HIGH VOLTAGE: Reorganized Co. Amends Credit Agreement with Lenders ------------------------------------------------------------------ High Voltage Engineering Corporation, a leading provider of industrial power control and power quality solutions to industrial markets, said its lending group, and the lender's administrative agent Royal Bank of Canada, agreed to amend the terms of HVE's credit agreement to extend the dates by which HVE must deliver certain financial information and documentation needed to enable the lenders to perfect their security interest in specified assets of HVE. In connection with the execution of the amendment, HVE has agreed to pay the lenders a one-time fee equal to $112,500. Joseph W. McHugh, Jr., HVE's Chief Financial Officer said: "The amendment to the credit agreement is a significant show of support by our lenders, and demonstrates their commitment to HVE. By obtaining additional time to deliver the information required by the credit agreement, HVE can more easily balance its focus between operating the company and satisfying its obligations to its lenders." Mr. McHugh continued, "With this Quarterly Report, HVE has demonstrated that its reorganization efforts have begun to stabilize the company's operations and improve its efficiencies and overall performance. The company has delivered a solid quarterly performance, growing the business, in terms of both revenues and customers." Headquartered in Wakefield, Massachusetts, High Voltage Engineering Corp., designs and manufactures technology-based products in three segments: power conversion technology and automation, advanced surface analysis instruments and services, and monitoring instrumentation and control systems for heavy machinery and vehicles. The Company filed for chapter 11protection on March 1, 2004 (Bankr. Mass. Case No. 04-11586). The Company was represented by Fried, Frank, Harris, Shriver, & Jacobson LLP, Goulston & Storrs, P.C., and Evercore Restructuring L.P. When the Company filed for protection from its creditors, it listed estimated debts and assets of more than $100 million. The Company's Third Amended Joint Chapter 11 Plan of Reorganization was confirmed by the U.S. Bankruptcy Court for the District of Massachusetts on July 21, 2004, allowing the Company to emerge only 163 days after it commenced its chapter 11 case. HUFFY CORP: Files for Chapter 11 Protection in S.D. Ohio -------------------------------------------------------- HUFFY CORPORATION (OTC: HUFC) and all of its United States and Canadian subsidiaries have filed voluntary petitions for protection under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Southern District of Ohio. Concurrent with the filing, the Company said that, subject to Court approval, it has received a commitment for $50 million in debtor-in-possession financing from Congress Financial Corporation to fund post-petition operating expenses, supplier and employee obligations. "We regret the negative impact yesterday's actions will have on some of our constituencies, but after considering a broad range of alternatives, it was clear to the Board of Directors that this course of action is in the best interests of the Company and its many stakeholders. Our suppliers have agreed to support Huffy in this process by continuing to ship product for the holiday season and to provide trade terms post filing. Given such support we are confident that Huffy can meet its commitments to customers for the coming holiday season and through 2005. We are focused on restructuring our operations around our bicycle and golf product lines, and I am confident that Huffy will emerge as a stronger and more competitive organization, well-positioned to succeed," stated John A. "Jay" Muskovich, Chief Executive Officer and President. The Company indicated that it expects day-to-day operations to continue as usual during the reorganization and that management has sought authority from the Bankruptcy Court to pay vendors, suppliers and other business partners under normal terms for goods and services they provide during the reorganization process and to pay its employees in the usual manner. The Company expects that employee medical, dental, life insurance, and other employee benefits will continue without disruption. Huffy cited liquidity issues, significant operating losses associated with portions of its former Canadian operations, increasing public company costs, and mounting legacy costs associated with discontinued operations dating back to the 1950's, as major factors in its decision to seek protection of the Bankruptcy Court. Headquartered in Miamisburg, Ohio, designs and supplies wheeled and related products, including bicycles, scooters and tricycles. The Company and its debtor-affiliates filed for chapter 11 protection on Oct. 20, 2004 (Bankr. S.D. Ohio Case No. 04-39148). Donald W. Mallory, Esq., at Dinsmore & Shohl LLP, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $138,700,000 in total assets and $161,200,000 in total debts. HUFFY CORPORATION: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------------- Lead Debtor: Huffy Corporation aka Huffy Bicycle Company aka Huffy Sports Company 225 Byers Road Miamisburg, Ohio 45342 Bankruptcy Case No.: 04-39148 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Huffy Risk Management 04-39149 Hufco-Ohio, Inc. 04-39150 HCAC, Inc. 04-39151 Hufco-Delaware Company 04-39152 Huffy Sports, Inc. 04-39153 American Sports Design Company 04-39154 Huffy Sports Washington, Inc. 04-39155 Hufco-Georgia I, Inc. 04-39156 Lamar Snowboards Inc. 04-39157 Hufco-New Brunswick, Inc. 04-39158 Hufco-Georgia II, Inc. 04-39159 Huffy Sports Outlet, Inc. 04-39160 Huffy Sports Delaware, Inc. 04-39161 Huffy Sports Canada, Inc. 04-39162 Lehigh Avenue Property Holdings, Inc. 04-39163 First Team Sports, Inc. 04-39164 Tommy Armour Golf Company 04-39165 HUF Canada , Inc. 04-39166 Hespeler Hockey Holding, Inc. 04-39167 Type of Business: The Debtor designs and supplies wheeled and related products, including bicycles, scooters and tricycles. See http://www.huffy.com/ Chapter 11 Petition Date: October 20, 2004 Court: Southern District of Ohio (Dayton) Judge: Lawrence S. Walter Debtors' Counsel: Donald W. Mallory, Esq. Dinsmore & Shohl LLP 1900 Chemed Center 255 East Fifth Street Cincinnati, OH 45202 Tel: 513-977-8161 Fax: 513-977-8141 Total Assets: $138,700,000 Total Debts: $161,200,000 Debtors' 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Shenzhen Bo An Bike Co. Trade Payable $16,652,807 Ltd. (H146) Kenny Chou Bo Gang Country Sha Jing Town Shenzhen, 518104 China Bailey Cycle Service Ltd. Trade Payable $6,159,616 17f Sankei Tower 56-57 Yee Wo Street Causeway Bay, Hong Kong Hong Kong, Taiwan Ramiko Company, Ltd. (H120) Trade Payable $5,443,973 Room C, 4th Floor No. 148 Sung Chiang Rd Taipei, Roc Taiwan Oyama Bicycles (Taichang) Trade Payable $3,846,188 Co., Ltd. c/o Lanpac, Inc. 668 Inspration Lane Escondido, Ca 92025 Zhejiang Crown King Trade Payable $3,537,988 Bicycle Co. No. 67 Jianshe Second Road Xioshang Economic & Technical Development Zone Xiaoshan, China Luxl International Inc. Trade Payable $3,400,515 20, Luxi Road, Lujia Town, Jiangsu Province, P.R. China Kunshan City, 215331 China Shanghai Phoenix Ltd. (H106) Trade Payable $2,793,464 168 Gao Yang Road Shanghai, 200080 China Kenton Bicycle Holding Trade Payable $2,738,572 Factory (H129) 1 Fl. No. 3 Alley 2, Lane 345 Sec. 2 Chung Shan Road Tai Ping Hsiang Taichung Hsien, Roc Taiwan Top Image (Boan) (Taiwan) Trade Payable $2,155,347 7f-1, No. 626, Chung Mei St. Taichung, Taiwan (Harley) Kenton Bicycle Trade Payable $1,517,146 1 Fl. No. 3 Alley 2, Lane 345 Sec. 2 Chung Shan Road Tai Ping Hsiang Taichung Hsien, Roc Taiwan Dragon Bicycles Vietnam Trade Payable $1,337,366 Co., Ltd. Vietnam Far Great Plastics Trade Payable $1,318,221 Shanghai Atem Rubber & Plast. Ind. 277 Hu Xing Rd. Qi Bao Town Min Hang District Shanghai, China Clubik (J Ann J) Trade Payable $1,132,608 Jermany Company, Ltd. 2f 422 Ta-Tun Nantwen District Taichung, Taiwan Shaw, Phoebe Deferred Compensation $966,496 878 Freeling Drive Sarasota, FL 34242 Molen, Richard L. Deferred Compensation $885,574 1440 Country Wood Drive Dayton, OH 45440 Wieland, Sara Deferred Compensation $521,556 773 Stanbridge Dr. Dayton, OH 45429 Vanderkam John Deferred Compensation $369,303 2849 Bandera Hwy Kerrville, TX 78028 Jefferson Wells Int'l. Trade Payable $265,011 Box 68-4031 Milwaukee, WI 53268-4031 Clubik 2 Jermany Company, Trade Payable $202,938 Ltd. Perkins Coie Trade Payable $144,602 IGAMES ENTERTAINMENT: Completes Merger & Changes Trading Symbol --------------------------------------------------------------- iGames Entertainment, Inc. (OTC Bulletin Board: IGME) and Money Centers of America (OTC Bulletin Board: MCAM) completed the previously announced recapitalization merger of iGames with Money Centers of America, Inc., previously its wholly owned subsidiary. Money Centers' common stock will trade under the symbol "MCAM." On Oct. 15, 2004, iGames merged with and into Money Centers pursuant to an Aug. 10, 2004, Agreement and Plan of Merger. The principal effects of the merger were to eliminate the redemption right of iGames' Series A Preferred Stock, convert each share of iGames Series A Preferred Stock into 11.5 shares of Money Centers common stock and convert each share of iGames common stock into one share of Money Centers common stock. Options and warrants to purchase iGames' common stock, other than warrants issued in iGames' acquisition of Money Centers, will be deemed options and warrants to purchase the same number of shares of Money Centers common stock. Warrants issued in the acquisition of Money Centers will be exchanged for 1.15 shares of Money Centers' common stock for each share of common stock purchasable thereunder. In addition, the fiscal year of the combined companies will shift from March 31 to December 31. Completion of the recapitalization is the first step in Money Centers' plan to restructure its balance sheet. As previously announced, Money Centers has retained Prospect Financial Advisors to assist in this process, which is expected to include refinancing of some or all of Money Centers' outstanding debt as well as evaluating other opportunities. Money Centers has succeeded to iGames' registration under the Securities Exchange Act of 1934, and will file periodic reports under that Act. Such reports and other information may be viewed at the Commission's public information room located at 450 Fifth Street, N.W., Washington D.C. 20549. The Commission also maintains a website at http://www.sec.gov/which provides online access to reports, proxy and information statements and other information regarding registrants that file with the Commission. "The completion of our reorganization will now allow management to focus completely on the business of Money Centers of America -- being an industry leader in providing cash access services and transaction management systems to the gaming industry," said Christopher Wolfington, Chairman and CEO of Money Centers. Mr. Wolfington also stated: "The dynamics of our industry are changing rapidly, presenting an opportunity that we are well positioned to capitalize on and grow shareholder value. With the reorganization behind us, we look forward now to reworking our financing to strengthen our balance sheet and reduce interest expense, affording us a strong base to pursue the growth opportunities in front of us." About Money Centers Money Centers of America, Inc. provides cash access and transaction management systems for the gaming industry, focusing on specialty transactions in the cash access segment of the funds transfer industry. For a complete corporate profile on Money Centers, please visit Money Centers' corporate website at http://www.moneycenters.com. Safe Harbor Notice: Certain matters discussed in this news release are forward-looking statements, as defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to a number of known and unknown risks and uncertainties including, but not limited to, statements concerning Money Centers' ability to maintain its contractual relationships with casinos and other risks detailed from time to time in Money Centers' filings with the Securities and Exchange Commission. Actual results may differ materially from those expressed in any forward-looking statements made by or on behalf of Money Centers of America, Inc. About iGames iGames Entertainment, Inc. develops, manufactures and markets technology-based products for the gaming industry. The Company's growth strategy is to become the innovator in cash access and financial management systems for the gaming industry. The business model is specifically focused on specialty transactions in the cash access segment of the funds transfer industry. For a complete corporate profile on iGames Entertainment Inc., please visit the Company's corporate Web site at http://www.igamesentertainment.com/ * * * As reported in the Troubled Company Reporter on Sept. 1, 2004, Sherb & Co., LLP, the independent auditors for iGames Entertainment, Inc., note in its Audit Report dated June 23, 2004, that iGames has an accumulated deficit of $10,224,394 as of March 31, 2004, net losses topping $6.6 million and negative cash flow from operations in the year ended March 31, 2004. "This raises substantial doubt about [iGames'] ability to continue as a going concern," Sherb & Co. says. Management has noted that the Company's available cash equivalent balance at March 31, 2004 was approximately $232,000 and was approximately $2,148,000 at May 31, 2004. From inception through March 31, 2003, iGames raised an aggregate of approximately $2,500,000 in capital through the sale of its equity securities. In addition, the Company issued two 10% convertible promissory notes in the aggregate principal amount of $250,000 to one investor. In October 2002, this investor converted a $150,000 note into 300,000 shares of Company common stock, and from July 2003 through December 2003, iGames repaid an additional $81,500 of this debt. The Company intends to repay the remaining principal balance of this note of $18,500 in fiscal 2005. A significant portion of the Company's existing indebtedness is associated with its line of credit of $3,000,000 with Mercantile Capital, L.P., which iGames uses to provide vault cash for its operations. Vault cash is not working capital but rather the money necessary to fund the float, or money in transit, that exists when customers utilize the Company's services but the Company has yet to be reimbursed from the Debit, Credit Card Cash Advance, or ATM networks for executing the transactions. Although these funds are generally reimbursed within 24-48 hours, due to the magnitude of iGames' transaction volume, a significant amount of cash is required to fund its operations. The Company's vault cash loan accrues interest at the base commercial lending rate of Wilmington Trust Company of Pennsylvania plus 10.75% per annum on the outstanding principal balance, with a minimum rate of 15% per annum, and has a maturity date of May 31, 2005. iGames' obligation to repay this loan is secured by a first priority lien on all of its assets. iGames also has $6,000,000 of debt associated with its acquisition of Available Money. $2,000,000 of this indebtedness is payable in 1,470,589 shares of its common stock or cash to the previous shareholders of Available Money at iGames' discretion. The terms of the Stock Purchase Agreement allow for certain purchase price adjustments associated with this indebtedness that may lower the actual amount the Company is required to pay. The actual amount paid will not be determined until certain events outlined in the Stock Purchase Agreement have materialized. An additional $2,000,000 of this indebtedness is a loan provided by Chex Services, Inc. iGames filed suit against Chex Services regarding certain breaches to the term note evidencing iGames' obligation to repay this loan and breaches to a Stock Purchase Agreement entered into by the parties in November 2003. It is iGames' position that the damages the Company suffered as a result of the breaches by Chex Services, Inc., exceed the principal amount of this loan. The Company will continue to record this note as a liability until a judgment is rendered in the lawsuit. The final $2,000,000 of this indebtedness is a bridge loan provided by Mercantile Capital, L.P. This bridge loan accrues interest at an annual rate of 17% and has a maturity date of May 1, 2005. The Company's obligation to repay this loan is secured by a first priority lien on all of its assets. The Company intends to refinance this obligation in fiscal 2005. It paid a facility fee of $41,000 in connection with this loan. INTERMET CORP: Court OKs $20MM Interim Funding Under DIP Facility ----------------------------------------------------------------- The U.S. Bankruptcy Court of the Eastern District of Michigan entered an order giving INTERMET Corporation (Pink Sheets: INMTQ) approval to borrow up to $20 million under the $60 million debtor- in-possession (DIP) credit facility that Deutsche Bank Trust Company Americas and The Bank of Nova Scotia have committed to provide to the company. The court's order approved the material terms and conditions of the financing that have been negotiated by INTERMET and the lenders. The order also approved the placement of a lien on substantially all of INTERMET's assets having priority over the liens of the company's pre-petition lenders. INTERMET's borrowing of the $20 million is subject to a budget that will be agreed to by the company and the DIP lenders as part of a DIP credit agreement to be executed. The $20 million interim funding will be available to INTERMET following the execution of the DIP facility documents, including a credit agreement, which the company expects will occur this week. The remaining $40 million of availability under the DIP facility is subject to additional conditions and limitations, including approval by the DIP lenders of an updated budget and financial projections prepared by INTERMET, final approval by the court and other customary conditions. Headquartered in Troy, Michigan, Intermet Corporation -- http://www.intermet.com/-- provides machining and tooling services for the automotive and industrial markets specializing in the design and manufacture of highly engineered, cast automotive components for the global light truck, passenger car, light vehicle and heavy-duty vehicle markets. Intermet, along with its debtor-affiliates, filed for chapter 11 protection on Sept. 29, 2004 (Bankr. E.D. Mich. Case Nos. 04-67597 through 04-67614). Salvatore A. Barbatano, Esq., at Foley & Lardner LLP, represents the Debtors. When the Debtors filed for protection from their creditors, they listed $735,821,000 in total assets and $592,816,000 in total debts. INTERSTATE BAKERIES: Trustee Adds 3 Creditors' Committee Members ---------------------------------------------------------------- Charles E. Rendlen, III, the United States Trustee for Region 13, adds three more members to the Official Committee of Unsecured Creditors in Interstate Bakeries Corporation's Chapter 11 cases. The three new members are C P Management LLC, Bakery, the Confectionery, Tobacco Workers & Grain Miller's International Union, and Bartlett Milling Company. Cereal Food Processors, Inc., has resigned from the Committee. The Committee now consists of: (1) U.S. Bank National Association, Indenture Trustee One Federal Street Boston, MA 02110-2027 Telephone: 617-603-6429 Telecopier: 617-603-6640 e-mail: laura.moran@usbank.com Contact: Laura L. Moran, Co-Chairperson (2) Cargill, Inc./Horizon Milling 15407 McGinty Road West Wayzata, MN 55391 Telephone: 952-742-6567 Telecopier: 952-742-5062 e-mail: don-wright@cargill.com Contact: Don Wright, Co-Chairperson (3) Campbell Mithun 222 S. 9th Street Minneapolis, MN 55402 Telephone: 612-347-1558 Telecopier: 612-347-1910 e-mail: Steve_Arndt@Campbell-mithun.com Contact: Steven J. Arndt (4) International Brotherhood Of Teamsters 6 Tuxedo Avenue Hyde Park, NY 11040 Telephone: 516-747-0696 Telecopier: 516-747-0676 e-mail: teamplayer2@verizon.net Contact: Richard Volpe (5) ConAgra Foods, Inc. 7350 World Communications Drive Mail Stop 7350-317 Omaha, NE 68122 Telephone: 402-998-3202 Telecopier: 402-930-3309 e-mail: Jim.Salvadori@ConAgraFoods.com Contact: James P. Salvadori (6) Archer Daniels Midland Company P.O. Box 1470 Decatur, IL 62525 Telephone: 217-424-5222 Telecopier: 217-424-4773 e-mail: spycher@admworld.com Contact: Richard P. Spycher (7) C P Management, LLC 1829 Reisterstown Road, Suite 420 Baltimore, MD 21208 Telephone: 410-602-0195 Telecopier: 410-602-0391 e-mail: research@chespartners.com Contact: Bryan Long (8) Bakery, Confectionery, Tobacco Workers & Grain Miller's International Union 10401 Connecticut Avenue Kensington, MD 20895-3961 Telephone: 301-933-8600 Telecopier: 301-933-7618 e-mail: mfreer@bctgm.org Contact: Frank Hurt (9) Bartlett Milling Company 4800 Main Street Kansas City, MO 64112 Telephone: 816-753-6300 Telecopier: 816-931-3404 e-mail: rgeiger@bartlettmilling.com Contact: Roderick J. Geiger Headquartered in Kansas City, Missouri, Interstate Bakeries Corporation is a wholesale baker and distributor of fresh baked bread and sweet goods, under various national brand names, including Wonder(R), Hostess(R), Dolly Madison(R), Baker's Inn(R), Merita(R) and Drake's(R). The Company employs approximately 32,000 in 54 bakeries, more than 1,000 distribution centers and 1,200 thrift stores throughout the U.S. The Company and seven of its debtor-affiliates filed for chapter 11 protection on September 22, 2004 (Bankr. W.D. Mo. Case No. 04-45814). J. Eric Ivester, Esq., and Samuel S. Ory, 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 $1,626,425,000 in total assets and $1,321,713,000 (excluding the $100,000,000 issue of 6.0% senior subordinated convertible notes due August 15, 2014 on August 12, 2004) in total debts. (Interstate Bakeries Bankruptcy News, Issue No. 4; Bankruptcy Creditors' Service, Inc., 215/945-7000) JAZZ GOLF: Expects to Receive $1 Million from Private Placement --------------------------------------------------------------- The Directors of Jazz Golf Equipment Inc. announce a new common share issue through a private placement at a price of $0.08 per share. The main shareholder, ENSIS Growth Fund Inc. and the Directors and Officers of the Corporation have committed to participate in the private placement which is expected to result in gross proceeds of approximately $1,000,000. The funds will be used to finance the Company's growth plan for the year ending Aug. 31, 2005. As part of the private placement the Corporation received $500,000 from ENSIS pursuant to a two-year loan, convertible to common shares at a price of $0.08 per share. The loan bears interest at the same rate as ENSIS' current loan to Jazz. ENSIS has agreed to convert the loan into common shares on a matching basis. An additional investment of approximately $250,000 has been committed to the private placement by the Directors and Officers of the Corporation. The remaining balance of $250,000 is expected to be raised from existing shareholders and other qualifying investors. Additional details regarding the private placement will be announced as they are finalized. The transaction with ENSIS is a related party transaction that is exempt from the requirements of TSX Venture Policy 5.9 pursuant to sections 5.6(8) and 5.8(5) of OSC Rule 61-501. Jazz Golf Equipment Inc. manufactures and distributes, primarily in Canada, high quality golf clubs and accessories. As of May 31, 2004, the stockholder deficit widened to $6,649,696, from a deficit of $5,775,998 at May 31, 2003. JOHN Q. HAMMONS: Moody's Reviewing Low-B Ratings & May Downgrade ---------------------------------------------------------------- Moody's Investors Service placed the rating of John Q. Hammons Hotels, L.P., on review for possible downgrade: * Senior implied rated B2 * Senior unsecured issuer rating rated B3 * US$510 million 8.875% first mortgage notes, due May 15, 2012, rated B2 The rating action was prompted by the recent announcement that Barcelo Crestline Corporation (Barcelo) has made an offer to acquire all of the Class A common stock of John Q. Hammons Hotels, Inc., for $13 per share or approximately $63.5 million. Barcelo also announced that it reached an agreement with Mr. John Q. Hammons, the majority shareholder of John Q. Hammons Hotels, Inc. and John Q. Hammons Hotels, L.P., in which Mr. Hammons will exchange all of his ownership interests in John Q. Hammons Hotels, Inc. and John Q. Hammons Hotels, L.P., for a preferred ownership interest in Barcelo. It is Moody's understanding that the Board of Directors of John Q. Hammons Hotels, Inc. is currently evaluating the proposed acquisition offer. Mr. Hammons and his affiliates directly, or indirectly, own 269,100 Class A common shares of John Q. Hammons Hotels, Inc. and 294,000 Class B shares of John Q. Hammons Hotels, L.P., which in aggregate result in an effective ownership of 76% of the combined equity interests in John Q Hammons Hotels, Inc. and John Q Hammons Hotels, L.P., and 77% of the voting power of John Q. Hammons Hotels, Inc. Moody's review will focus on the ultimate decision of the Board of Directors of John Q. Hammons Hotels, Inc. in regards to the proposed acquisition, in addition to the progress and consummation of the proposed acquisition, as well as the ultimate capital structure, and the rating on the 8.875% first mortgage notes. The 8.875% first mortgage notes are secured by a first mortgage lien on 30 hotels. Additionally, under the partnership agreement governing John Q. Hammons, Hotels, L.P., Mr. Hammons, the limited partner, has agreed to contribute up to $195 million to the partnership in the event that proceeds from the sale of collateral are not enough to satisfy the new first mortgage note obligations. The notes also have a change of control provision as outlined in the note indenture at 101% of principle, plus accrued and unpaid interest and liquidated damages. John Q. Hammons Hotels, L.P., based in Springfield, Missouri, owns, develops and manages hotels under the Embassy Suites, Marriott and Holiday Inn brand names. KRATON POLYMERS: Weak Performance Cues S&P to Pare Rating to 'B+' ----------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on Kraton Polymers LLC because of continued weak profitability, which resulted from elevated raw-material costs and forestalled Kraton's efforts to restore its financial profile. The corporate credit was lowered to 'B+' from 'BB-'. At the same time, Standard & Poor's assigned its 'B+' corporate credit rating to Polymer Holdings LLC, the parent of Kraton Polymers. Standard & Poor's also assigned a 'B-' rating to Polymer Holdings' proposed $90 million senior discount notes due 2014, subject to preliminary terms and conditions. Net proceeds will be used to repay senior debt and place cash on the balance sheet at the operating company. The rating on the proposed senior discount notes is two notches below the corporate credit rating to reflect the noteholders' structural subordination to Kraton Polymers' existing creditors in the event of a default. The outlook is negative. Houston, Texas-based Kraton Polymers is a leading producer of styrenic block polymers -- SBCs -- with $690 million in annual sales and over $550 million in debt outstanding. "The downgrade reflects the deterioration in operating results due to the sharp increase in the cost of styrene and butadiene and the inability to pass on price increases in a timely manner," said Standard & Poor's credit analyst George Williams. The raw material price pressure weakened Kraton's cash flow generation and stretched the financial profile beyond acceptable levels at the prior ratings. The ratings incorporate Kraton Polymers' below-average business profile and its leadership position in the narrow SBC market, tempered by a difficult raw material and pricing environment and a very aggressive financial profile that is characterized by a high debt burden. LB-UBS: Fitch Assigns Low-B Ratings to Six Mortgage Certificates ---------------------------------------------------------------- Fitch Ratings-New York-October 19, 2004/marj Fitch Ratings affirms LB-UBS commercial mortgage pass-through certificates, series 2003-C1: -- $92.5 million class A-1 at 'AAA'; -- $180 million class A-2 at 'AAA'; -- $105 million class A-3 at 'AAA'; -- $537.5 million class A-4 at 'AAA'; -- $204 million class A-1b at 'AAA'; -- Interest Only (I/O) classes X-CL and X-CP at 'AAA'; -- $25.7 million class B at 'AA+'; -- $25.7 million class C at 'AA'; -- $20.6 million class D at 'AA-'; -- $18.9 million class E at 'A+'; -- $17.1 million class F at 'A'; -- $18.9 million class G at 'A-'; -- $18.9 million class H at 'BBB+'; -- $12 million class J at 'BBB'; -- $10.3 million class K at 'BBB-'; -- $18.9 million class L at 'BB+'; -- $6.9 million class M at 'BB'; -- $6.9 million class N at 'BB-'; -- $10.3 million class P at 'B+'; -- $5.1 million class Q at 'B'; -- $5.1 million class S at 'B-'; Fitch does not rate class T. The affirmations are due to the pool's stable performance. As of the September 2004 distribution date, the pool's aggregate principal balance has decreased 1.3% to $1.35 billion from $1.37 billion at issuance. There have been no loans delinquent or in special servicing since issuance. Wachovia Bank, the master servicer, collected year-end 2003 operating statements for 95.6% of the transaction. The YE 2003 weighted averaged debt service coverage ratio -- DSCR -- based on net operating income is stable from issuance at 1.59 times. The five credit assessed loans remain investment grade. Fitch reviewed operating statement analysis reports and other performance information provided by Wachovia. The DSCR for the loans are calculated based on a Fitch adjusted net cash flow --NCF -- and a stressed debt service based on the current loan balance and a hypothetical mortgage constant. Stonebriar Centre (13.4%), the largest loan in the pool, is secured by a regional mall in Frisco, Texas. The mall's performance is stable. As of June 2004, in-line occupancy was 96.5% and overall occupancy was 98.9%. The YE 2003 in-line average sales per square foot was flat to issuance and is trending positively for the trailing 12 months ended June 2004. The Fitch DSCR for the loan was 1.39x for YE 2003 compared to 1.43x at issuance. Westmoreland Mall (6.1%) is a 1.3 million sf enclosed regional mall with a grocery anchored shopping center and outparcels in Greensburg, Pennsylvania. The YE 2003 Fitch adjusted NCF for Westmoreland Mall declined 7.6%, primarily due to an increase in expenses. The corresponding Fitch DSCR was 1.36x compared to 1.45x at issuance. The in-line occupancy as of July 2004 increased to 87.1% from 82.8% at issuance. In addition, the borrower recently leased 51,000 sf of the vacant Ames space to Dick's Sporting Goods with rental payments anticipated to commence in early 2005. Pennmark (8.2%) is secured by a 333-unit apartment building with retail located in Manhattan, New York. Although the YE 2003 Fitch adjusted NCF declined 10%, the borrower recently signed a new retail lease for 33,500 sf bringing the retail occupancy to approximately 93.7% from 78% at issuance. The corresponding Fitch DSCR was 1.24x compared to 1.38x at issuance. Candler Tower (6.2%) is secured by a 227,685 sf office building in Manhattan, New York. The property is 100% leased to SFX Entertainment Inc. and is performing as expected. Brandywine Towne Center (2.2%), a retail power center located in Wilmington, Delaware remains 100% occupied as of July 2004. The YE 2003 Fitch NCF is stable with Fitch DSCR of 1.46x compared to 1.41x at issuance. LEVI STRAUSS: Fitch's Ratings Unaffected by Dockers Retention ------------------------------------------------------------- Fitch Ratings does not anticipate any rating implications from Levi Strauss & Co.'s announcement that it will retain the Dockers business. Fitch rates Levi's: * $1.7 billion senior unsecured debt 'CCC+', * $650 million asset-based loan, ABL, 'B+', and * $500 million term loan 'B'. The Rating Outlook is Negative. Levi's announcement that it will retain its Dockers business follows a five-month review of a possible sale of the business. The possible sale of Dockers was viewed as a means to reduce debt and focus on its core Levi businesses. Without the completion of the Dockers sale, Levi's will remain highly leveraged, with $2.0 billion of debt, and with operations that have yet to turn around. Of importance will be the growth of the Levi Strauss Signature brand -- LSS, which currently accounts for approximately 9.0% of revenues. The expansion of LSS to more discount retailers may provide the needed stimulus, but the improvement of the existing Levi branded products will be critical. The company's restructuring efforts, including plant closures, headcount reductions, and a shift to sourcing product, have enabled the company to increase EBITDA margins to 14.4% in the nine months ending August 29, 2004, compared with 12.5% in the comparable period of 2003. Liquidity is adequate to meet near term needs with $288 million of cash on the balance sheet and $245 million available on its revolver at the end of the last quarter. There are no significant debt maturities until 2006. Levi's August 29, 2004, Balance Sheet shows liabilities exceeding assets more than $1.3 billion. MERIT STUDIOS: Summary & Overview of Amended Chapter 11 Plan ------------------------------------------------------------ As reported in yesterday's edition of the Troubled Company Reporter, Merit Studios, Inc. (OTC: MRIT) filed an amended disclosure statement and plan in its Chapter 11 bankruptcy proceedings and is in the process of filing a second amendment to those documents. Merit filed for protection under Chapter 11 in an effort to eliminate approximately $1 million in debt and resume operations in the entertainment industry. Amended Chapter 11 Plan The Debtor's proposed plan wipes all existing debt and claims from the company's balance sheet, reshuffles the Debtors equity, and paves the way for the company to begin operations. The Plan is implemented in three steps: (1) Extinguish all existing debt through payments to creditors equaling 5% of the debt owed to the creditor. Funds for payment to creditors will be provided by an investment from the Debtor's President, who will be issued shares of common stock (post-split) at the price of $.05 per share. (2) Cancel 96,749 post-split shares of common stock currently outstanding, which shares were either not paid for or are currently owned or controlled by the Debtor's former president; (3) Issue approximately 500,000 shares of restricted common stock to Edward J. Haddad for funding the settlement of all debts and claims. The shares will be "restricted" securities as the term is defined under the Securities Act of 1933, as amended. The shares will be issued in reliance on standard exemptions from registration available in private transactions. Merit will then acquire business opportunities for its subsidiary Peak Entertainment, Inc. and acquire all of the equity of equity of BHK Entertainment Management, Inc. for 200,000 shares or restricted common stock. The Plan will commence seven days after entry of the order confirming the Plan. The Plan will be completed and this case will be closed when these six events have occurred: 1. Cash payment to creditors; 2. Cancellation of all debt; 3. a 500-to-1 reverse split of the Debtors common stock; 4. Cancellation of shares owned or controlled by ACE or former president Michael John; 5. Acquisition of business provided by Mr. Haddad; and 6. Commencement of business operations. History Merit Studios was incorporated in the State of Delaware October 6, 2003. Merit is a development stage publicly held corporation currently located in Las Vegas, Nevada. Merit's sole principle officer is Edward J. Haddad. According to previous management and existing creditors, from approximately 1999 to September 2002, the Debtor's business was the research and development of video compression technology called "wormhole." In September 2002, Merit acquired Peak Entertainment, Inc., a Nevada corporation owned by Mr. Haddad. At that time Peak held the management rights to productions in a showroom at the Aladdin Hotel in Las Vegas, Nevada. In connection with the acquisition of Peak, Mr. Haddad invested $150,000 in Merit. It is, believed that the prior president utilized the invested funds for his personal use and not for Merit's further development of the wormhole technology. Subsequent to acquisition of Peak, Mr. Haddad became president of Merit. Upon inquiring about the funds Mr. Haddad invested, Michael John resigned as an officer and director of the Debtor. Mr. John subsequently moved outside the United States. Due to the misrepresentations of the previous president, Mr. Haddad terminated developing business opportunities for the Debtor through its new subsidiary Peak. Since November 2002, Merit has been attempting to resolve debts and claims that the prior president represented were already agreed to be settled, primarily with George Cox & Sons and Health Concierge (formerly Videolocity). Due to the lack of any cooperation from some of the Merit's creditors, Merit found it necessary to commence a Chapter 11 filing prior to commencing any new operations. Merit Studios, Inc. (OTC: MRIT) licenses its compression and encryption software to Internet content providers and for data archiving. The Company is also seeking to offer services for data compression and data archiving to customers worldwide. Headquartered in Las Vegas Nevada, Merit Studios, Inc. filed for chapter 11 protection (Bank. D. Nev. Case No. 04-12501) on March 12, 2004. Matthew Q. Callister, Esq., and Nathaniel J. Reed, Esq., represent the Debtor in their restructuring effort. The Debtor has approximately $1,000,000 in unsecured debt. MERRILL LYNCH: S&P Affirms Class E's BB Rating ---------------------------------------------- Standard & Poor's Ratings Services affirmed its rating on class E from Merrill Lynch Mortgage Investors Inc.'s series 1996-C1 and removed it from CreditWatch with negative implications, where it was placed March 23, 2004. Concurrently, the ratings on two other ratings from the same transaction are raised and two are affirmed. The affirmation on class E reflects the repayment of prior interest shortfalls following the liquidation of an outlet center in Eddyville, Kentucky. The shortfalls resulted when final liquidation proceeds were not sufficient to repay outstanding advances. The raised and affirmed ratings reflect credit enhancement levels that adequately support the ratings through various stress scenarios. As of the Sept. 25, 2004 remittance report, the pool consisted of 26 loans with an aggregate principal balance of $225.9 million, down from 159 loans totaling $647.2 million at issuance. The master servicer, GMAC Commercial Mortgage Corp., provided 2003 net cash flow -- NCF -- debt service coverage -- DSC -- figures for 63% of the pool. Based on this information, Standard & Poor's calculated a weighted average DSC of 1.39x, whereas the DSC for the outstanding loans at issuance was 1.36x. Nineteen loans, comprising 20% of the pool, are not required to report financials. To date, there have been realized losses on five loans totaling $20.7 million. As of September 2004, there are three specially serviced mortgage loans totaling $8.6 million (3.8%). In addition to the specially serviced loans, there is another loan that is 30 days delinquent ($6.3 million) that is with the master servicer. Two of the specially serviced assets are 90-plus days delinquent. One of the 90-plus day delinquent loans has a balance of $3.9 million (with total exposure of $4.2 million), and is secured by a 61,304 square foot outlet center in Post Falls, Idaho. Occupancy levels at the center have fallen to 51%, resulting in a DSC of 0.26x. The declines in occupancy and DSC are due to increased competition from Wal-Mart as well as surrounding competition. The only two national tenants are Dress Barn and Casual Corner, the second of which is on a year-to-year lease. Based on a February 2004 appraisal, a severe loss is expected. The other 90-plus day delinquent loan has a balance of $1.6 million and is secured by a 118-room hotel in Little Rock, Arkansas. A recent appraisal suggests losses upon disposition. The remaining specially serviced loan has a balance of $3.3 million. The loan matured in April 2003 and is in the process of finalizing a second extension through April 2005. The loan is secured by a 242,500-sq.-ft. office/industrial warehouse property in Hutchins, Texas (southeast of downtown Dallas) that was built in 1986. The 30-day delinquent mortgage totals $6.4 million, and is secured by a 440-unit apartment complex in Dallas, Texas, built in 1982. The borrower has expressed interest in paying off the mortgage. GMAC Commercial received a commitment letter, and estimates the payment date to occur before year-end. As of March 2004, the property reported a 1.06x (year-to-date) DSC, down from 1.29x at issuance. Occupancy levels for the same periods were 71% and 91%, respectively. GMAC Commercial reported 25 loans totaling $79.4 million (31.7% of the pool) on its watchlist. The watchlist includes three of the top 10 mortgages in the pool, which appear because of DSC issues, as well as one 30-day delinquent mortgage, which is described above. The fourth-largest loan has a balance of $9.6 million. The mortgage is secured by a 376-unit multifamily property in Las Vegas. GMAC Commercial reported occupancy of 87% and DSC of 1.15x, down from 92% and 1.28x, respectively, at issuance. The owner has made the expenditures to improve the occupancy levels. The fifth-largest mortgage totals $7.7 million, and is secured by a 360-unit apartment complex in Denton, Texas (60 miles northwest of Dallas), built in 1985. As of May 2004, occupancy was reported at 83%, resulting in a DSC of 1.04x, down from 96% and 1.30x, respectively, at issuance. Management has increased occupancy levels to 94% (as of September 2004) by offering concessions. The sixth-largest loan has a balance of $7.2 million, and is secured by a 253-unit multifamily property in Fort Collins, Colorado. As of December 2003, occupancy was reported at 75%, resulting in DSC of 0.65x, down from 98% and 1.36x, respectively, at issuance. The decline in performance is largely the result of the low interest rate environment, resulting in decreased demand for rental housing. The pool is geographically diverse, with properties located in 24 states. Concentrations in excess of 10% exist in Nevada (18%) and Texas (16%). The property type concentration of the pool includes: * multifamily (56%), * retail (27%), and * an assortment of other property types. Standard & Poor's stressed the specially serviced, watchlist, and other loans in the pool that appeared to be underperforming. The resultant credit enhancement levels support the raised and affirmed ratings. Ratings Raised Merrill Lynch Mortgage Investors Inc. Commercial mortgage pass-through certs series 1996-C1 Rating Class To From Credit Support ----- -- ---- -------------- C AAA AA 50.53% D A BBB 36.21% Rating Affirmed And Removed From Creditwatch Negative Merrill Lynch Mortgage Investors Inc. Commercial mortgage pass-through certs series 1996-C1 Rating Class To From Credit Support ----- -- ---- -------------- E BB BB/Watch Neg 14.73% Ratings Affirmed Merrill Lynch Mortgage Investors Inc. Commercial mortgage pass-through certs series 1996-C1 Class Rating Credit Support ----- ------ -------------- A-3 AAA 84.90% B AAA 67.71% MIRANT: Stay Modified to Allow NYISO to Pursue Remand Proceeding ---------------------------------------------------------------- The New York Independent System Operator, Inc., is a non-profit organization, which, among other things, administers a wholesale market for electricity in the state of New York and operates the State of New York's bulk electric transmission system. Mirant Americas Energy Marketing, LP, purchases and sells energy and ancillary services, including operating reserves, in the Market pursuant to agreements that MAEM entered into with the NYISO. Before the Petition Date, MAEM or various of its affiliates entered into an agreement for the sale of energy and ancillary services pursuant to the NYISO Market Administration and Control Area Service Tariff, as in effect from time to time and as filed with the Federal Energy Regulatory Commission. In March 2000, the NYISO filed a proceeding before the FERC seeking refunds with respect to certain operating reserves provided between January 29 and March 27, 2000. The FERC declined to order refunds in the Proceeding, and the NYISO and others parties appealed the ruling to the United States Court of Appeals for the District of Columbia. On November 7, 2003, the D.C. Circuit remanded several issues raised in the FERC Proceeding to the FERC for further consideration. The issues remain pending before the FERC. On June 26, 2004, the NYISO asked the FERC to reopen the Remand Proceeding to receive evidence to assist the FERC in redetermining the rates in effect during the Relevant Period and to authorize the NYISO, thereafter, to recalculate operating reserves payments based on the redetermined rates and to seek refunds from Market Participants based on the redetermined rates. MAEM and certain affiliates responded to the NYISO's Motion to Reopen on August 2, 2004, alleging among other things, that the NYISO's filing was a violation of the automatic stay. Michael P. Massad, Jr., at Hunton & Williams, LLP, in Dallas, Texas, asserts that the NYISO's Motion to Reopen did not violate the automatic stay. The stay imposed by Section 362 of the Bankruptcy Code is inapplicable to the Remand Proceeding. Accordingly, the NYISO asks Judge Lynn to either: -- declare that the Motion to Reopen was not in violation of the automatic stay; or -- modify the automatic stay to allow the NYISO to prosecute the Motion to Reopen in the Remand Proceeding. Parties Stipulate To avoid further litigation and to resolve the dispute, the Debtors and the NYISO stipulate that: (a) To the extent applicable, the automatic stay is modified for the limited purpose of permitting the NYISO to pursue the Motion to Reopen and to permit the FERC to take action in the Remand Proceeding as appropriate. However, nothing will be construed to provide the NYISO with permission to collect or take any action to collect as to the Debtors any refunds ordered or judgments issued by the FERC in the Remand Proceeding; (b) The Debtors agree to file a motion to withdraw from the Remand Proceeding parts III(B) and (C) of the Answer they filed before the FERC. The withdrawal will be without prejudice to any of the Debtors' bankruptcy rights, including, without limitation, the Debtors' rights under Sections 362, 501, and 502 of the Bankruptcy Code and Rule 3003(c)(2) of the Federal Rules of Bankruptcy Procedure; and (c) The Stipulation is not intended to be or will be construed as an admission by either the Debtors or the NYISO concerning the applicability or non-applicability of the automatic stay to the NYISO's Motion to Reopen and the Remand Proceeding. The parties expressly acknowledge that both have reserved all of their rights with respect to these provisions. Judge Lynn approves the stipulation in its entirety. 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. Mirant Corporation 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. 46; Bankruptcy Creditors' Service, Inc., 215/945-7000) MKP CBO: S&P Places B+ Ratings on Classes C-1 & C-2 on CreditWatch ------------------------------------------------------------------ Standard & Poor's Ratings Services placed its ratings on the class B, C-1, and C-2 notes issued by MKP CBO II Ltd., a cash flow arbitrage CDO of ABS/RMBS, on CreditWatch with negative implications. At the same time, the ratings on the class A-1 and A-2 notes from the same transaction are affirmed, based on the credit enhancement available to support the notes. The rating on the class B notes was previously lowered Aug. 6, 2004. The ratings on the class C notes were previously lowered Feb. 17, 2004 and Aug. 6, 2004. The CreditWatch placements reflect factors that have negatively affected the credit enhancement available to support the notes since the last rating action. These factors include continued defaults and negative migration in the collateral pool that have occurred during the past several weeks, primarily within the manufactured housing sector. Standard & Poor's will be reviewing the results of the current cash flow runs generated for MKP CBO II Ltd. to determine the level of future defaults the rated classes can withstand under various stressed default timing and interest rate scenarios, while still paying all of the interest and principal due on the notes. The results of these cash flow runs will be compared with the projected default performance of the performing assets in the collateral pool to determine whether the ratings currently assigned to the notes remain consistent with the credit enhancement available. Ratings Placed On Creditwatch Negative MKP CBO II Ltd. Rating Class To From ----- -- ---- B A-/Watch Neg A- C-1 B+/Watch Neg B+ C-2 B+/Watch Neg B+ Ratings Affirmed MKP CBO II Ltd. Class Rating ----- ------ A-1 AAA A-2 AAA Transaction Information: Issuer: MKP CBO II Ltd. Current manager: MKP Capital Management Underwriter: Banc of America Securities Trustee: LaSalle Bank N.A. Transaction type: CDO of ABS/RMBS Tranche Initial Last Current Information Report Action Action ----------- ------- ------ ------- Date (MM/YYYY) 3/02 8/04 10/04 Class A-1 notes rtg. AAA AAA AAA Class A-2 notes rtg. AAA AAA AAA Class A O/C ratio 124.67% 119.96% 120.10% Class A O/C ratio min. 119.5% 119.50% 119.50% Class B note rtg. AA A- A-/Watch Neg Class B O/C ratio 116.14% 111.75% 111.66% Class B O/C ratio min. 112.00% 112.00% 112.00% Class C-1 note rtg. BBB B+ B+/Watch Neg Class C-2 note rtg. BBB B+ B+/Watch Neg Class C O/C ratio 106.06% 102.05% 101.70% Class C O/C ratio min. 102.80% 102.80% 102.80% Class A-1 note bal. $183.75mm $183.75 $177.54mm Class A-2 note bal. $61.25mm $61.25mm $60.56mm Class B note bal. $18.00mm $18.00mm $18.00mm Class C-1 note bal. $12.50mm $12.50mm $12.52mm Class C-2 note bal. $12.50mm $12.50mm $12.55mm Portfolio Benchmarks Current -------------------- ------- S&P wtd. avg. rtg. (excl. defaulted) BBB- S&P default measure (excl. defaulted) 0.95% S&P variability measure (excl. defaulted) 1.66% S&P correlation measure (excl. defaulted) 1.50% Wtd. avg. coupon (excl. defaulted) 7.26% Wtd. avg. spread (excl. defaulted) 2.28% Oblig. rtd. 'BBB-' and above 67.71% Oblig. rtd. 'BB+' and above 76.24% Oblig. rtd. 'B+' and below 84.39% Oblig. rtd. in 'CCC' range 7.35% Oblig. rtd. 'CC', 'SD', or 'D' 4.41% Rated Current O/C (ROC) Rating Action -------- ------------- Cl. A-1 101.57% (AAA) Cl. A-2 101.57% (AAA) Cl. B 102.23% (A-/Watch Neg) Cl. C-1 97.94% (B+/Watch Neg) Cl. C-2 97.94% (B+/Watch Neg) For information on Standard & Poor's CDO Portfolio Benchmarks and Rated Overcollateralization Statistic, see "ROC Report October 2004," published on RatingsDirect, Standard & Poor's Web-based credit analysis system, and on the Standard & Poor's Web site at http://www.standardandpoors.com/ Go to "Credit Ratings," under "Browse by Business Line" choose "Structured Finance," and under Commentary & News click on "More" and scroll down to the desired article. MOHEGAN TRIBAL: Acquisition Cues Moody's to Affirm Low-B Ratings ---------------------------------------------------------------- Moody's Investors Service affirmed Mohegan Tribal Gaming Authority's: * Ba1 senior implied rating, * Ba1 secured bank loan rating, * Ba3 senior subordinated debt ratings, * Ba2 long-term issuer rating, and * stable outlook following its announcement that it had entered into an agreement to purchase The Downs Racing, Inc. and its subsidiaries (Pocono Downs) from Penn National Gaming, Inc. (Ba3/Stable) for $280 million. Mohegan Tribal plans to fund the Pocono Downs acquisition through a draw under its bank credit facility, which has been amended to increase the current availability from $382.7 million to $600.0 million. The affirmation anticipates the acquisition of Pocono Downs will ultimately have a positive impact on the Mohegan Tribal credit, help to reduce Mohegan Tribal's single-site dependence, and provide some hedge against potential competition in the Northeast. While Debt/Adjusted EBITDA (net of relinquishment payments) is expected to rise to close to 5.0x by the end of fiscal 2005 as a result of the debt-financed acquisition, pro forma Debt/Adjusted EBITDA is about 4.5x. This assumes a 15% return on the $505 million of total planned invested capital related to Pocono Downs. Mohegan Tribal's overall return-on-assets for the 12-month period ended June 30, 2004 was about 16.7%. The stable ratings outlook anticipates that Mohegan Tribal will maintain Debt/Adjusted EBITDA at or below 4.5x over the long-term. Although this leverage is considered high for the Ba1 senior implied rating category, and for a single asset issuer, Moody's considers Mohegan Tribal's competitive profile to be strong enough to materially offset the high leverage relative to the rating. However, any ratings improvement would require a meaningful and sustainable reduction in leverage, and would also depend on the success of Mohegan Tribal's current and future diversification efforts. Although this specific transaction was not anticipated, Moody's did expect that Mohegan Tribal would pursue some type of diversification opportunity on a restricted or unrestricted basis. In July 2004, Mohegan Tribal successfully eliminated certain covenants that prohibited the Mohegan Tribe from engaging in gaming activities on an unrestricted basis and without involving Mohegan Tribal. Under terms of the agreement, Mohegan Tribal will acquire Pocono Downs, a standard bred harness racing facility located in Wilkes- Barre, Pennsylvania and five Pennsylvania off-track wagering -- OTW -- operations. Following the closing of the transaction, Mohegan Tribal will obtain the right to apply for a Category One license to initially install and operate up to 3,000 slot machines at Pocono Downs, one of the fourteen sites eligible to apply for a gaming license under the recently passed Pennsylvania Race Horse Development and Gaming Act. Upon the issuance of the gaming license, Mohegan Tribal plans to open the new slot machine facility in early 2006. Mohegan Tribal anticipates that it will spend up to $175 million on the construction, furnishing and equipping of the new facility, in addition to paying a one-time $50 million license fee payable to the Commonwealth of Pennsylvania upon receipt of a gaming license. The acquisition is expected to close by December 31, 2004 and is subject to customary closing conditions and regulatory approvals including the approval of the Pennsylvania Harness Racing Commission. The agreement also provides the Authority with both pre- and post-closing termination rights in the event of certain materially adverse legislative or regulatory events. The Mohegan Tribal Gaming Authority is an instrumentality established by the Mohegan Tribe of Indians of Connecticut, with the exclusive power to operate the Mohegan Sun casino in Uncasville, Connecticut. MORGAN STANLEY: Fitch Puts Low-B Ratings on Six Cert. Classes ------------------------------------------------------------- Morgan Stanley Capital I Trust's commercial mortgage pass-through certificates, series 2004-HQ4, are rated by Fitch Ratings: -- $17,970,000 class A-1 'AAA'; -- $50,000,000 class A-2 'AAA'; -- $50,000,000 class A-3 'AAA'; -- $72,000,000 class A-4 'AAA'; -- $123,000,000 class A-5 'AAA'; -- $120,000,000 class A-6 'AAA'; -- $776,217,000 class A-7 'AAA'; -- $1,370,184,328 class X-1* 'AAA'; -- $1,310,179,000 class X-2* 'AAA'; -- $15,415,000 class B 'AA+'; -- $18,840,000 class C 'AA'; -- $13,702,000 class D 'AA-'; -- $23,978,000 class E 'A'; -- $10,276,000 class F 'A-'; -- $11,989,000 class G 'BBB+'; -- $11,989,000 class H 'BBB'; -- $15,415,000 class J 'BBB-'; -- $5,138,000 class K 'BB+'; -- $5,138,000 class L 'BB'; -- $5,139,000 class M 'BB-'; -- $1,712,000 class N 'B+'; -- $3,426,000 class 0 'B'; -- $3,425,000 class P 'B-'; -- $15,415,328 class Q 'NR'; * Notional amount and interest only. Class Q is not rated by Fitch. Classes: * A-1, A-2, A-3, A-4, A-5, A-6, A-7, B, C, D, and E are offered publicly, while * X-1, X-2, F, G, H, J, K, L, M, N, O, P, and Q are privately placed pursuant to rule 144A of the Securities Act of 1933. The certificates represent beneficial ownership interest in the trust, primary assets of which are 92 fixed-rate loans having an aggregate principal balance of approximately $1,370,184,328 as of the cutoff date. NASH FINCH: S&P Assigns 'B+' Rating to $300M Sr. Secured Facility ----------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B+' bank loan rating to Nash Finch Co.'s proposed $300 million senior secured credit facility. A recovery rating of '3' also was assigned to the facility, indicating the expectation for a meaningful (50%- 80%) recovery of principal in the event of a default. Concurrently, Standard & Poor's revised the ratings outlook on Nash Finch to positive from negative. Existing ratings on the company, including the 'B+' corporate credit rating, were affirmed. Nash Finch anticipates using proceeds from the proposed credit facility to refinance its current term loan, redeem $165 million of 8.5% senior subordinated notes due 2008, and cover call premiums and other fees and expenses. Pro forma for the refinancing and assuming all subordinated notes are redeemed, the company will have total debt outstanding of $263 million ($372 million including lease-equivalent debt). Lease-adjusted debt to EBITDA will be just under 3x, and trailing-12-months EBITDA interest coverage will be in the mid 3x area. The outlook revision reflects the company's improved credit measures and its change in corporate strategy to focusing on food distribution while retrenching its underperforming retail operations. "The ratings on Minneapolis, Minnesota-based Nash Finch reflect the company's relatively small scale in the highly competitive food wholesaling and supermarket industries, as well as its weak retail operating performance over the past several years," said Standard & Poor's credit analyst Stella Kapur. "Given the difficulty of competing on price with larger companies, Nash Finch must continue to improve operating efficiencies and service levels. These risks are somewhat mitigated by the company's good market positions in many upper-Midwest markets, its strong position in military food distribution in the Mid-Atlantic region, and credit measures that are above average for current rating levels." Nash Finch has annual sales of almost $4 billion. NORSKE SKOG: Moody's Affirms Ba3 Ratings with Negative Outlook -------------------------------------------------------------- Toronto, October 19, 2004 Moody's Investors Service affirmed Norske Skog Canada Ltd.'s senior implied, issuer and senior unsecured ratings at Ba3. Concurrently, the rating on the company's senior secured credit facility was affirmed at Ba2. The outlook remains unchanged and is negative. While Moody's has concerns about the long term North American supply and demand balance for newsprint and related groundwood paper grades having an adverse affect on the financial performance of paper makers, NorskeCanada's capital and debt structure should allow it to generate average through-the-cycle credit protection measures commensurate with its rating. However, with the systemic supply/demand issues, and with the recent appreciation of the Canadian dollar and the cost of other inputs such as fiber and energy, NorskeCanada is vulnerable to continued margin pressure. Since there is reasonable potential that NorskeCanada's credit protection statistics will not reflect through-the-cycle measures appropriate for the rating, the rating outlook remains negative. Ratings Affirmed: -- Norske Skog Canada Ltd. * Outlook: Negative * Senior Implied: Ba3 * Issuer Rating: Ba3 * Senior Unsecured: Ba3 -- Norske Skog Canada Finance Limited * Outlook: Negative Backed Senior Secured Bank Credit Facility (Dom Curr): Ba2 The Ba3 rating reflects: (i) NorskeCanada's high cash flow leverage and weak coverage metrics, (ii) relatively poor market dynamics for newsprint and related paper grades, (iii) the company's relatively limited geographic and product line diversification, and (iv) its relative lack of flexibility to modify its asset portfolio with the proceeds being used to facilitate debt reduction. The ratings are supported by: (i) NorskeCanada's improving relative cost competitiveness, (ii) its relatively strong backwards integration into virgin and recycled fiber supply, (iii) its leading directory paper position, and (iv) its solid liquidity arrangements. NorskeCanada has very good liquidity. The company maintains a C$350 million revolver that is largely un-drawn. The bank facility matures in July 2007. NorskeCanada is in compliance with the lone applicable financial covenant. Moody's does not expect the covenant to act as a constraint for the foreseeable future. For a Ba3 rating, Moody's expects average through-the-cycle RCF to be in excess of 10%, with the related FCF measure being in excess of 5%. There is considerable uncertainty as to the magnitude, sustainability, and impact, of the commodity price recovery, given: (i) the excess capacity in the newsprint and groundwood paper markets, (ii) continued weak newsprint demand, (iii) very weak capacity utilization in the printing and related services sector (low-to-mid 70% range), and (iv) increased energy and recycled fiber prices, It appears that more aggressive supply management is required before the market will enjoy sustained momentum. While the top five producers make up 70% of the market, the remaining 30% is very fragmented. This fragmentation may be partially frustrating initiatives to drive price increases through the market, with the behavior of certain members of this group undermining the market. Given these systemic issues, Moody's is concerned there may be a greater probability of the company's performance not meeting the above performance benchmarks. Either or both of the outlook and ratings could be upgraded: (i) if the market dynamic demonstrates sufficient strength and sustainability to allow the above-noted credit metrics to be met or exceeded, or alternatively, (ii) if NorskeCanada takes specific proactive steps to permanently reduce indebtedness or increase profitability to achieve a similar result. Conversely, a downgrade could result if it becomes clear that through-the-cycle performance will not, in Moody's opinion, meet the above benchmarks, if the company pursues material debt- financed acquisitions, or if liquidity arrangements deteriorate significantly. NorskeCanada, headquartered in Vancouver, British Columbia, Canada, is the third largest newsprint and specialty groundwood paper producer in North America. The Company also produces market pulp. Primary paper markets are North America, Latin America and the Pacific Rim. Primary pulp markets are Europe and the Pacific Rim. NorskeCanada is a broadly held Canadian public company with shares traded on the TSX under the symbol NS. NORTHWESTERN CORP: Court Formally Confirms Plan of Reorganization ----------------------------------------------------------------- The Honorable Charles G. Case II of the U.S. Bankruptcy Court for the District of Delaware has entered a written order confirming NorthWestern Corporation's Second Amended and Restated Plan of Reorganization. NorthWestern said it anticipates the Plan's effective date will be Nov. 1, 2004, at which time the company will formally exit Chapter 11 reorganization. As previously announced, the court issued an oral ruling confirming the Plan on Oct. 8, 2004. A copy of the signed court order is available on NorthWestern's Web site at http://www.northwestern.com/ Headquartered in Sioux Falls, South Dakota, NorthWestern Corporation (Pink Sheets: NTHWQ) -- http://www.northwestern.com/ -- provides electricity and natural gas in the Upper Midwest and Northwest, serving approximately 608,000 customers in Montana, South Dakota and Nebraska. The Debtors filed for chapter 11 protection on September 14, 2003 (Bankr. Del. Case No. 03-12872). Scott D. Cousins, Esq., Victoria Watson Counihan, Esq., and William E. Chipman, Jr., Esq., at Greenberg Traurig, LLP, and Jesse H. Austin, III, Esq., and Karol K. Denniston, Esq., at Paul, Hastings, Janofsky & Walker, LLP, represent the Debtors in their restructuring efforts. On the Petition Date, the Debtors reported $2,624,886,000 in assets and liabilities totaling $2,758,578,000. NORTHWESTERN CORP: Fitch Puts Low Ratings on Proposed Sr. Notes --------------------------------------------------------------- Fitch Ratings expects to assign to 'BB+' to NorthWestern Corp's: * proposed issuance of $200 million Rule 144A senior secured notes due 2014; and * $125 million secured term loan B due 2011. The proceeds from these offerings, along with cash on hand, are expected to be used to prepay NorthWestern's outstanding $383.2 million secured credit facility. In addition, Fitch expects to upgrade certain NorthWestern securities that are scheduled to be reinstated upon the company's reorganization and emergence from bankruptcy, expected to occur by November 1, 2004. Specifically, Fitch expects to upgrade the company's outstanding $476.8 million first mortgage bonds, secured medium-term notes, and secured pollution control bonds to 'BB+' from 'CCC'. Fitch currently rates NorthWestern's: * outstanding $865 million senior unsecured debt 'DD'; and * $365.6 million trust preferred securities 'D'. The Rating Outlook is Positive. NorthWestern's expected senior secured debt rating and Positive Rating Outlook reflects the company's reasonable capital structure at the time of reorganization and anticipated near-term improvement in its financial profile. Under the terms of the Second Amended and Restated Plan of Reorganization, NorthWestern will emerge from Chapter 11 with an enterprise value of about $1.5 billion, consisting of approximately $850 million of secured debt and common equity of $710 million. NorthWestern's financial restructuring will be accomplished through a debt-for-equity swap, under which the company's senior unsecured debtholders and certain trade creditors will receive a 92% equity stake in the restructured company. Holders of NorthWestern's trust preferred securities are eligible to receive 8% of the common stock and warrants exercisable for an additional 13% of the common stock in the reorganized company. NorthWestern's outstanding secured debt obligations are not impaired under the plan and will be reinstated upon the company's exit from Chapter 11. A key component of the company's plan of reorganization involved reaching a settlement with the Montana Public Service Commission and Montana Consumer Counsel, thus resolving Montana Public's ongoing financial investigation of NOR. Importantly, both Montana Public and Montana Consumer agreed not to oppose NorthWestern's plan of reorganization and not to block the company's efforts to refinance portions of its existing secured debt. Key provisions of the Montan Public stipulation agreement include restrictions on non-utility investments and the requirement that NorthWestern files rate information for review by Montana Public no later than September 30, 2006. NorthWestern's goal to emerge from bankruptcy as a pure regulated electric and gas utility is predicated on the liquidation of remaining non-utility investments. Pending items include: * the wind-down and liquidation of Netexit (telecommunications), * the sale of a remaining Blue Dot HVAC location, and the subsequent release of proceeds generated from the earlier sale of 63 locations, * the divestiture of the uncompleted Montana First Megawatts power project, and * monetization of a secured claim against Cornerstone Propane. If successful, these transactions could provide up to $100 million of residual cash proceeds, which would be utilized to further reduce debt leverage at NorthWestern. From an operational standpoint, NorthWestern's core regulated electric and gas utility operations, which serve approximately 608,000 customers located primarily in Montana and South Dakota, have performed well throughout the company's financial restructuring. Prospectively, the utility should generate operating EBITDA in excess of $200 million, absent the significant legal and administrative costs associated with NorthWestern's bankruptcy, although this amount could fluctuate moderately depending on weather conditions. In addition, the challenging regulatory environment in Montana and pending 2006 rate review could affect future utility financial performance. If NOR succeeds in divesting its remaining non-utility interests as described above, NOR will have the opportunity to improve its credit profile to levels consistent with investment-grade parameters by as soon as mid-to-late 2005. Specifically, FFO/interest could exceed 3.5 times by year-end 2005 with total debt/EBITDA in the low 3.0x range. Subsequent to the initial rating upon reorganization, a further upgrade of NorthWestern's ratings will depend upon the amount and use of proceeds from asset divestitures and demonstration of the ability to reduce administrative expenses after reorganization. Fitch notes that management has made good progress toward settling various prepetition litigation and shareholder class action suits, but certain items remain ongoing, including a formal SEC investigation into NorthWestern's year-end 2002 financial restatement and litigation related to the alleged fraudulent conveyance of NorthWestern's Montana Power assets. None of these is expected to materially affect senior secured creditors after reorganization. NUCENTRIX: Lawyers Get Success Fee, But Financial Advisor Doesn't ----------------------------------------------------------------- The Honorable Harlin D. Hale of the U.S. Bankruptcy Court for the Northern District of Texas praised the professionals retained by Nucentrix Broadband Networks, Inc., a/k/a Heartland Wireless Communications, Inc., for a fantastic outcome in the Debtors' cases, awarded a fee enhancement to the Debtors' lawyers, but declined to approve any bonus for the Debtors' financial advisor. Background Nucentrix Broadband Networks, Inc., and certain subsidiaries filed chapter 11 petitions on Sept. 5, 2003 (Bankr. N.D. Tex. Case No. 03-39123). Before the cases were filed, Nucentrix held the rights to certain frequencies of radio spectrum licenses by the Federal Communications Commission covering over 8 million households in over 90 primarily medium and small markets across Texas, Oklahoma, and the Midwest, and other licenses for spectrum covering over 2 million households, primarily in Texas. The Debtors attempted to use their spectrum to provide wireless subscription television services, often referred to as "wireless cable," but were unsuccessful. The Debtors subsequently attempted to shift the use of their spectrum from wireless cable to broadband internet and other advanced wireless services, but were also unsuccessful due to the combination of years of regulatory proceedings, delayed technology product cycles and a restricted capital market. These missteps led Nucentrix first to seek new investment or a buyer, and later, the protection of Chapter 11. The Debtors' stated goal from the outset was to maximize the value of the Debtors' assets for the benefit of their creditors and equity through the sale process provided by Bankruptcy Code Section 363, and then through the plan process. The Professionals The Debtors retained Vinson & Elkins, L.L.P., their prepetition attorneys, to serve as general bankruptcy counsel, pursuant to a run-of-the-mill application under Section 327 of the Bankruptcy Code. The Debtors hired Houlihan Lokey Howard & Zukin Capital, Inc., to serve as financial advisors and investment bankers. Importantly, in this case, the order approving Houlihan's engagement provides that the Firm's final fee application would be subject to the standards set forth in Section 328(a) of the Bankruptcy Code, which allow for approval of a compensation arrangement in advance. Pursuant to that provision of the Code, Judge Hale approved a fee for Houlihan in the aggregate amount of $800,000 at the outset of the chapter 11 case. Selling the Debtors' Assets At the time of the filing, the Debtors had one potential bidder, SBC Communications, Inc. and cash to fund operations for about 60 days. On the petition date, the Debtors entered into an asset purchase agreement with SBC Operations, Inc., as a stalking horse bidder, for a total cash purchase price of $15 million. Under the proposed transaction with SBC, creditors were expected to receive approximately twelve cents on the dollar. Judge Hale approved a sale process which provided procedures designed by Houlihan and V & E for competing offers for the purchase of the Debtor's assets. The process included a competitive auction in early November 2003. Under the Court-approved sale process, the Debtors received several qualified bids to purchase the assets, which then required the Debtors to hold a competitive auction presided over by V & E and Houlihan. The auction started on Nov. 4, 2003, and concluded late in the day on Nov. 5, 2003, and was very successful. Nextel Spectrum Acquisition Corp. won the auction with a bid of $51 million in cash, plus assumption of certain liabilities estimated at approximately $5 million. Nextel also agreed to provide DIP financing in an amount sufficient to last through the approval process with the FCC. The Court approved the transactions with Nextel in late November 2003. Houlihan and V & E continued their labors for the Debtors after the approval of the Nextel sale, handling at least four sales of residual assets. The Debtors proposed and confirmed a plan in the Spring of 2004, which incorporated the Nextel sale transaction. The FCC approved the sale to Nextel, the Debtors closed the transaction, and the effective date under the plan has occurred. As a result of the sale process and the efforts of V & E and Houlihan, all of the Debtors' creditors are projected to be paid in full and a substantial return is projected to be made to equity security holders. "By any measuring stick, this bankruptcy case was an extraordinary success," Judge Hale says. Vinson & Elkins Gets Non-Discounted Hourly Rates Plus 10% Enhancement V & E served as general bankruptcy counsel to the Debtors. During the pendency of the case, V & E provided services to the Debtors in bankruptcy, corporate, securities, tax and litigation matters. Under an agreement with the Debtors, V & E agreed to reduce its rates to 93% of its standard rates. In addition, because of the dire circumstances the Debtors were experiencing at the time the case was filed, V & E received only a $47,000 retainer. "During the course of this complicated bankruptcy case, V & E has provided exceptional legal representation and advice to the Debtors," Judge Hale says. V & E prepared and effectuated the sale process, which led to the Debtors' receiving a bid over three times the original stalking horse bid. The case presented a host of regulatory, securities, and other issues, which were managed and handled by V & E. Much of the work by the law firm was out of court, as the fee application demonstrates. However, the sale hearings, lease disputes, disclosure statement, plan, and post plan disputes have been before the Court and V & E has done exemplary work in all respects. In its fee application, V & E sought an upward adjustment from its discounted rates to its standard hourly rates charged in other bankruptcy cases, as well as an enhancement for the results obtained. To determine reasonable compensation, the court must determine the "nature and extent of the services supplied by" the attorneys. 11 U.S.C. Sec. 330(a)(3); In re First Colonial Corp., 544 F.2d 1291, 1299 (5th Cir. 1977). The court must also assess the value of those services in relation to the customary fee and the quality of the work. These two factors comprise the components for the lodestar calculation. See Cobb v. Miller, 818 F.2d 1227, 1231 (5th Cir.1987). Generally, the lodestar is calculated by multiplying the number of hours reasonably expended by reasonable hourly rates. Hensley v. Eckerhart, 461 U.S. 424, 434, 103 S.Ct. 1933, 76 L.Ed.2d 40 (1983). The court may then adjust the compensation based on the factors of Sec. 330(a)(3) and (4) and Johnson v. Georgia Highway Express, Inc., 488 F.2d 714 (5th Cir.1974). The Johnson factors may be relevant for adjusting the lodestar calculation but no one factor can substitute for the lodestar. Id. Rather, the lodestar shall be presumed to establish a reasonable fee with adjustments made when required by specific evidence. Pennsylvania v. Delaware Valley Citizens' Council for Clean Air, 478 U.S. 546, 564, 106 S.Ct. 3088, 3097-98, 92 L.Ed.2d 439 (1986); Graves v. Barnes, 700 F.2d 220, 222 (5th Cir. 1983) (adopting "lodestar" method of calculation, citing Copper Liquor, Inc. v. Adolph Coors Co., 684 F.2d 1087, 1092-93 (5th Cir. 1982)). According to commentators, a professional may petition a bankruptcy court for a fee enhancement or bonus if a professional's work has been of superior quality. In order to receive a fee enhancement, the professional typically must establish that "the quality of service rendered was superior to that which one should reasonably expect in light of the hourly rates charged and that success was 'exceptional.' " See William L. Norton, Jr., NORTON BANKRUPTCY LAW AND PRAC.2d Sec. 26.7 (2004). Bankruptcy courts in the Fifth Circuit have recognized the need for an adjustment to a fee for extraordinary circumstances when the lodestar analysis simply will not fairly compensate the professional, given all the surrounding circumstances. See, In re El Paso Refinery, L.P., 257 B.R. 809, 826 (Bankr. W.D. Tex. 2000). The Fifth Circuit has found that upward adjustments of the lodestar are permissible, but are reserved for those few cases which are "rare and exceptional." Transamerican Natural Gas Corp. v. Zapata P'ship, Ltd., 12 F.3d 480, 488 (5th Cir. 1994); Lawler v. Teofan (In re Lawler), 807 F.2d 1207, 1213-14 (5th Cir. 1987). Bankruptcy courts in the Fifth Circuit have occasionally determined a Chapter 11 case to meet the criteria for the award of a fee enhancement to estate-paid professionals. For example, in In re Farah, 141 B.R. 920 (Bankr. W.D. Tex. 1992), the court provided a substantial enhancement for Debtor's counsel in a case which was turned from a case of an expected 5% return to unsecured creditors to a case in which creditors received payment in full with interest and the Debtors were able, to retain assets worth in excess of $3.5 million, largely because of the efforts of Debtor's counsel. According to the Farah court, the result was "rare and exceptional" because the results exceeded the reasonable expectations of the parties under the Bankruptcy Code. Id. at 925. In In re Intelogic Trace, Inc., 188 B.R. 557 (Bankr. W.D. Tex. 1995), the Court awarded a 1% enhancement as a success fee to a consultant for the consultant's efforts in selling properties and obtaining a return far beyond the original expectations. Finally, in an unpublished ruling this court previously awarded an enhancement of approximately 10% above the hourly calculations to Debtor's counsel in a Chapter 11 case where creditors were paid in full and shareholders retained significant value. In re I.C.H. Corp., Case No. 395-36351 RCM-11 (Bankr. N.D. Tex., June 20, 1997). Determining what constitutes reasonable compensation is soundly within the discretion of the bankruptcy court, because the bankruptcy judge is in the best position to determine the reasonableness of a proposed fee. Hensley v. Eckerhart, 461 U.S. 424, 433-34, 103 S.Ct. 1933, 1939-40, 76 L.Ed.2d 40 (1983), see also In re Anderson, 936 F.2d 199, 204 (5th Cir. 1991). In determining whether the circumstances of a case are so "exceptional and rare" as to warrant a fee enhancement, the "results obtained" factor in the lodestar analysis is one of the more significant factors. See, In re Farah, 141 B.R. 920, 925 (Bankr. W.D. Tex. 1992). See also, Rose Pass Mines Inc. v. Howard, 615 F.2d 1088, 1090 (5th Cir. 1980). In fact, at least two bankruptcy courts have required that all creditors of the estate be paid in full before allowing a fee enhancement. See, In re Morris Plan Co. of Iowa, 100 B.R. 451, 454 (Bankr. N.D. Iowa 1989); In re D.W.G.K. Restaurants, 106 B.R. 194, 197 (Bankr. S.D. Cal. 1989). Applying this case law and commentary to the instant case easily leads to the conclusion that this case is rare and exceptional. At the time of the case filing, the Debtors' financial condition, to be charitable, was fragile. The Debtors' out of court solutions had failed. The Debtors were virtually out of cash. The Debtors appeared to have only one option, a quick sale to SBC. The Debtors entered bankruptcy with their viability wholly dependent upon post-petition financing during the process. Debtors' counsel, with the help of Houlihan, was able to navigate these Debtors through a sale and plan process which resulted in the proceedings going from a small dividend to unsecured creditors to a 100% payout, plus a substantial return to shareholders. Counsel successfully represented Debtors' interests at each step of the way, even including an attempt by one creditor to set aside the confirmed plan, which would have jeopardized the recovery for the unsecured creditors. Because of the expeditious sale process, devised and handled largely by V & E, the creditors are now being paid in full and shareholders will receive a substantial return. But for the extraordinary efforts of Debtors' counsel and Houlihan, these results would not have occurred. Under the circumstances, the Court believes that, under the lodestar approach, a fee based upon the normal hourly rates charged by the law firm (instead of the discounted 93% rates), multiplied by the number of hours billed, is reasonable. The Court further finds that an enhancement of 10% of that amount appropriately recognizes the contribution of counsel to the success of this case due to the rare and exceptional nature of this case, but remains true to the public's interest in discouraging professionals from excessive charges. The Court allows all expenses requested as reasonable. Sec. 328 Blocks Any Bonus For Houlihan The Debtors engaged Houlihan to serve as financial advisors and investment bankers. Houlihan's engagement was under both Bankruptcy Code Sections 327 and 328. In its final fee application, Houlihan sought its $800,000 fee plus a bonus of $1,295,000. Section 328 allows a professional seeking to represent a bankruptcy estate to obtain prior court approval of his compensation plan. See, 11 U.S.C. Sec. 328(a). Under that provision, the professional may avoid uncertainty by obtaining court approval of compensation agreed to with the estate. See, In re Nat'l Gypsum Co. 123 F.3d 861, 862-63 (5th Cir. 1997). Under Section 328, once a compensation plan has received bankruptcy court approval, "the court may allow compensation different from the compensation provided under such terms and conditions after the conclusion of such employment, if such terms and conditions prove to have been improvident in light of developments not capable of being anticipated at the time of the fixing of such terms and conditions." 11 U.S.C. Sec. 328(a) It is not enough that developments in a bankruptcy case be unforeseen. Daniels v. Barron (In re Barron), 225 F.3d 583, 585 (5th Cir. 2000). Rather, the bankruptcy court is charged to follow the plain meaning of the statute, which requires the developments to be incapable of being anticipated to depart from the previously approved compensation scheme. Id. Thus, on more than one occasion the Fifth Circuit has found reversible error when a bankruptcy court has deviated from a previously approved Section 328 payment arrangement based on developments which did not meet the express requirements of that statute. In In re Barron, the Fifth Circuit twice reversed a very respected bankruptcy judge for altering a Section 328-approved payment scheme based upon only "developments unforseen when originally approved." And, the appeals court has found that respected judges in this District have incorrectly applied Section 328. See, National Gypsum, 123 F.3d 861; In re Texas Sec., Inc., 218 F.3d 443 (5th Cir. 2000). In the present case, Houlihan had its fees of $800,000 approved by this Court at the time of its engagement. It now seeks to have this approved arrangement altered and a bonus awarded because of the extraordinary result. Houlihan did play a significant role in the success of this bankruptcy case. Its members worked long and hard through the sale process, which was extraordinarily successful. Houlihan continued to labor for the Debtors after the sale and the assignment of certain agreements and the assumption of certain liabilities. Houlihan's position in its application, in the hearing on the application, and in post-hearing authorities, is that the extraordinary results from the auction and the full payment of creditors and return to shareholders were not reasonably expected and justify an upward departure from the previously approved Section 328 arrangement. With all due respect, the Court disagrees. Early in this case, Debtors sought to sell their assets under a sale process developed by V & E and Houlihan. That process contemplated a stalking horse bidder at a competitive auction. The sale auction sought higher and better offers. While no party, even including this Court, expected that the auction process would be so successful, the success of the auction was capable of being anticipated. In fact, a successful auction was exactly what the parties anticipated. The magnitude of success in the auction process likely was unforeseen when Houlihan sought the protection of its requested fee under Section 328. However, the possibility of an increased bid was certainly capable of being anticipated. Thus, the requirements to alter the Section 328-approved fee of Houlihan have not been met. Does Section 330 Help? As an alternative, Houlihan seeks the bonus under Section 330 of the Code for the sale of certain residual assets, which occurred after the auction. Houlihan argues that the bonus it seeks should be awarded because Houlihan provided additional services, selling residual assets in four additional transactions. "The Court wishes it were so," Judge Hale says. However, the Engagement Letter (Dkt. Entry 20, Appl. to Employ, Ex. B) approved by this Court provides for the employment of Houlihan for the sale of all or substantially all of the assets of the Debtors in one or more transactions. Thus, the Engagement Letter approved by the Court is the compensation arrangement approved under, and governed by Bankruptcy Code Sec. 328. "This ruling is reluctantly made as to Houlihan," Judge Hale says, "because its professionals ably served the Debtors and the interests of creditors and shareholders. However, if a firm obtains the protection of Section 328, the firm and the Court must live with the conditions of that section. While the Court is not particularly happy with this result, it cannot wink at the language of Section 328, nor the mandate of the Fifth Circuit and the United States Supreme Court to follow the language of the statute. If results would dictate changing the terms, a Court would be empowered to reduce the fees of a professional in an unsuccessful sale or case, and Section 328 is expressly written to preclude such action. "Although the Court is convinced of the worth of Houlihan to this case," Judge Hale continues, "such arguments do not allow for a departure from the previously approved compensation scheme. As taught by the Fifth Circuit, the bankruptcy court must honor the plain meaning of Section 328. The successful auction process was not only capable of being anticipated, it was the hope and desire of the professionals for the Debtor." OGLEBAY NORTON: Wants Court to Reconsider Confirmation Ruling ------------------------------------------------------------- As previously reported in the Troubled Company Reporter, the Honorable Joel B. Rosenthal of the U.S. Bankruptcy Court for the District of Delaware refused to confirm the chapter 11 plan of reorganization proposed by Oglebay Norton Co. and its debtor- affiliates. The judge rejected the Debtors' proposal for generic "pass-through" treatment for the asbestos and silica tort claims, rather than a concrete, supportable proposal to resolve and pay those claims. Rather than scrap the plan and start the plan and disclosure statement process again from scratch, the Debtors now ask Judge Rosenthal to reconsider his earlier ruling. The Company says it can show that the plan does not impair asbestos and silica claimants and is prepared to parade that evidence before the Court. The Debtors will bring their Motion for Reconsideration before Judge Rosenthal on Oct. 28, 2004. Judge Rosenthal will also review a request by a group representing 13,000 people alleging injury from exposure to asbestos-containing products and 480 individuals alleging injury from exposure to silica products that the Bankruptcy Court direct the U.S. Trustee to appoint an official tort claimants' committee Oglebay's cases. The group says the Official Committee of Unsecured Creditors does not adequately represent the interests of the 96,000 claimants the Debtors know about to date. Judge Rosenthal denied an earlier bid by these tort claimants for an official committee on Aug. 24, 2004. The group hopes that Judge Rosenthal's decision to deny confirmation of the company's chapter 11 plan will inspire a different ruling this time around. The group says that insurance information and the company's ability to pay tort claims in the future is critical to understanding whether any future plan is or isn't a good deal. Headquartered in Cleveland, Ohio, Oglebay Norton Company, mines, processes, transports and markets industrial minerals for a broad range of applications in the building materials, environmental, energy and industrial market. The Company and its debtor- affiliates filed for chapter 11 protection on February 23, 2004 (Bankr. D. Del. Case Nos. 04-10559 through 04-10560). Daniel J. DeFranceschi, Esq., at Richards, Layton & Finger represents the Debtors in their restructuring efforts. When the Debtor filed for protection from its creditors, it listed $650,307,959 in total assets and $561,274,523 in total debts. OMEGA HEALTHCARE: Paying $0.19 Common Stock Dividend in 3rd Qtr. ---------------------------------------------------------------- Omega Healthcare Investors, Inc. (NYSE:OHI) said its Board of Directors declared a common stock dividend of $0.19 per share, a $0.01 increase over the prior quarter, and announced the release date of the Company's third quarter results and earnings call. Common Dividends The Company's Board of Directors announced a common stock dividend of $0.19 per share, to be paid Nov. 15, 2004 to common stockholders of record on Oct. 29, 2004. At the date of this release the Company had approximately 46.6 million common shares outstanding. Preferred Dividends The Company's Board of Directors also declared its regular quarterly dividends for all classes of preferred stock to preferred stockholders of record on Oct. 29, 2004. Series B and Series D preferred stockholders of record on Oct. 29, 2004 will be paid dividends in the amount of $0.53906 and $0.52344, per preferred share, respectively, on Nov. 15, 2004. The liquidation preference for each of the Company's Series B and D preferred stock is $25.00. Regular quarterly preferred dividends for both series B and D represent dividends for the period Aug. 1, 2004, through October 31, 2004. Third Quarter Earnings Call The Company scheduled to release its earnings results for the quarter ended Sept. 30, 2004, on Tuesday, Oct. 26, 2004. In conjunction with its release, the Company will be conducting a conference call on Oct. 26, 2004, at 10 a.m. EDT to review its third quarter 2004 results and current developments. To listen to the conference call via webcast, log on to http://www.omegahealthcare.com/and click the "earnings call" icon on the Company's homepage. Webcast replays of the call will be available on the Company's website for at least two weeks following the call. Additionally, a copy of the earnings release will be available on the "news releases" section of the Company's website. About the Company Omega Healthcare Investors, Inc., is a Real Estate Investment Trust investing in and providing financing to the long-term care industry. At Sept. 30, 2004, the Company owned or held mortgages on 205 skilled nursing and assisted living facilities with approximately 21,900 beds located in 29 states and operated by 39 third-party healthcare operating companies. * * * As reported in the Troubled Company Reporter on Sept. 14, 2004, Fitch Ratings upgraded its ratings on approximately $300 million of senior unsecured notes issued by Omega Healthcare Investors, Inc.'s to 'BB-' from 'B'. Additionally, Fitch upgraded its preferred stock rating to 'B' from 'CCC+' on Omega's two series of outstanding preferred securities. This includes the $118.5 million of 8.375% series D cumulative redeemable preferred securities issued in the first quarter of 2004. In all, approximately $168 million of preferred securities are affected by this upgrade. Fitch has revised the Rating Outlook on Omega to Stable from Rating Watch Positive. OSBORN FARMS: Case Summary & Largest Unsecured Creditor ------------------------------------------------------- Debtor: Osborn Farms, LLC P.O. Box 6193 Saint Joseph, Louisiana 71366 Bankruptcy Case No.: 04-32580 Type of Business: Promoting a "building friendships through hunting" motto, the Debtor operates a deer and duck hunting ground. See http://www.osbornfarms.com/ Chapter 11 Petition Date: October 13, 2004 Court: Western District of Louisiana (Monroe) Judge: Henley A. Hunter Debtor's Counsel: Wade N. Kelly, Esq. Robichaux, Mize & Wadsack, LLC 1333 Common Street Lake Charles, LA 70601 Tel: 337-433-0234 Fax: 337-433-127 Total Assets: $1,819,050 Total Debts: $1,443,000 Debtor's Largest Unsecured Creditor: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Tensas State Bank Operating loan $45,000 OWENS CORNING: Dr. Peterson Pegs Asbestos Liability at $18.6 Bil. ----------------------------------------------------------------- As previously reported in the Troubled Company Reporter and Owens Corning Bankruptcy News, the Honorable John P. Fullam, Sr., the U.S. District Court judge overseeing parts of Owens Corning's chapter 11 proceeding, will hold an initial hearing on Jan. 13, 2005, to determine whether the $16 billion value ascribed to the company's liability for asbestos-related personal injury claims is too high, on the mark or too low. Dr. Mark A. Peterson, the Official Committee of Asbestos Claimants' asbestos claims valuation expert opines that, as of October 5, 2000 (the date Owens Corning filed for chapter 11 protection: * the present value of Owens Corning's liability for present and future asbestos-related bodily injury claims is $11.1 billion; and * the present value of Fibreboard's liability for present and future asbestos-related bodily injury claims is $7.7 billion. Owens Corning, with the support of its asbestos claimant constituencies and some creditors, has proposed a chapter 11 plan premised on a $16 billion valuation for asbestos-related claims. It appears that the Official Committee of Asbestos Claimants will now argue that the $16 billion number is a painful compromise of the real $18.6 billion liability. The holders of Owens Corning's bank debt vehemently oppose these numbers equal to multiples of Owens Corning's asset base. Dr. Peterson brings 20 years of mass tort litigation experience, having served as an expert or consultant to tort claimants' committees for The Babcock & Wilcox Company, Pittsburgh Corning Corporation, Armstrong World Industries Inc., Burns & Roe Enterprises Inc., G-I Holdings Inc., W.R. Grace & Company, United States Gypsum Corporation, Dow Corning, Raytech Corporation, Fuller Austin Insulation Company Inc., H.K. Porter Company Inc., and six other Chapter 11 restructurings. In addition, he has also rendered consultancy services to the Manville Personal Injury, Eagle Picher, Celotex and H.K. Porter Asbestos Trusts and other claims resolution settlement trusts. Through his firm, Legal Analysis Systems, Dr. Peterson commands $600 an hour for his services. Laura S. Welch, M.D,, FACP, FACOEM, Loreto T. Tersigni, CPA, CFE, and Samuel P. Hammar, M.D., round out the Asbestos Claimants' team of experts. CSFB Says The Total's Much Lower Credit Suisse First Boston, as Agent for Owens Corning's prepetition lending consortium, intends to argue that the value of Owens Corning's asbestos-related liability is a fraction of what Dr. Peterson thinks. CSFB has retained Dr. Frederick C. Dunbar as its asbestos claims valuation expert. Dr. Dunbar is Senior Vice President at National Economic Research Associates, Inc., and has been involved in estimating mass tort liability in Combustion Engineering, Inc., The Babcock & Wilcox Company, et al., National Gypsum Company, Robert A. Falise, et al., v. The American Tobacco Company, et al., Pacific Gas & Electric Company, Johns-Manville Corporation and Dow Corning Corporation. Dr. Dunbar is prepared to testify that Owens Corning's present and future asbestos-related liability is in the range of $1.8 to $2.2 billion. CSFB has also retained Prof. Lester Brickman, Dr. Lee Sider, Hans Weill, M.D., Andrew Churg, M.D., Ph.D., James Hass and Dr. Francine Rabinovitz, and Dr. Joseph N. Gitlin as experts. The initial asbestos claims estimation hearing in Owens Corning's cases before Judge Fullam will be held on Jan. 13, at 10:00 a.m., in Courtroom 15A at 601 Market Street in Philadelphia. Judge Fullam has indicated that, at this juncture, the historical data available from Owens Corning's and Fibreboard's asbestos claims databases and the parties' experience in other asbestos- related litigation and restructurings, viewed in light of the expert testimony to be presented by the parties at the Jan. 13 hearing "should probably suffice for Claims Estimation purposes." If by the end of the Jan. 13 hearing Judge Fullam thinks he needs more information, he'll ask for it at that time. 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: Wants Until June 2005 to Decide on Leases -------------------------------------------------------- Pursuant to Section 365(d)(4) of the Bankruptcy Code, Owens Corning and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of Delaware to extend the time within which to assume, assume and assign, or reject their Unexpired Leases, through and including June 4, 2005. Lessors may ask the Court to shorten the Extension Period and specify a period of time in which the Debtors must determine whether to assume, assume and assign, or reject an Unexpired Lease. Jeremy Ryan, Esq., at Saul Ewing, LLP, in Wilmington, Delaware, relates that the Debtors have made substantial and consistent progress in evaluating 347 unexpired non-residential real property leases. As of October 11, 2004, the Debtors rejected 75 leases and assumed, or assumed and assigned, 22 others. Taking into account the 81 leases that have expired postpetition, the Debtors are party to 169 prepetition nonresidential real property leases. According to Mr. Ryan, most of the Unexpired Leases are for spaces used by the Debtors for conducting the production, warehousing, distribution, sales, sourcing, accounting and general administrative functions that comprise the Debtors' businesses, and are important assets of the Debtors' estates. The Unexpired Leases, thus, are critical to the Debtors' continued operations as they seek to reorganize. Mr. Ryan advises the Court that given the size and complexity of the Debtors' portfolio of unexpired leases, the Debtors should not at this time be compelled to assume substantial, long-term liabilities under the Unexpired Leases, or forfeit benefits associated with some leases. The Unexpired Leases create potential administrative expense claims. Assumption of the leases at this point is detrimental to the Debtors' ability to preserve the going concern value of their business for the benefit of their creditors and other parties-in-interest. Assumption or rejection decisions are an integral part of the reorganization process and should be dealt with globally through the plan confirmation process. Although it is unclear when the Debtors will obtain the critical final approvals of their disclosure statement and voting procedures necessary to solicit acceptances of their plan, the Debtors nevertheless have made good faith progress towards emergence from bankruptcy. Recently, District Court Judge Fullam approved the substantive consolidation of the Debtors' estates, which is an integral element of the Debtors' proposed plan. Moreover, a hearing on asbestos estimation is scheduled for January 13, 2005, before Judge Fullam. To address assumption or rejection decisions at this point prior to plan confirmation would compel the Debtors to make premature decisions as to their leases, and would cause the Debtors to run the risks, regarding the assumption of substantial long-term liabilities or the forfeiture of favorable leases. It may also foreclose the Debtors or other parties from pursuing plan modifications or alternative plan structures that rely on different dispositions of some or all of the Unexpired Leases than is presently contemplated. 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. 85; Bankruptcy Creditors' Service, Inc., 215/945-7000) PENN NATIONAL: Racing Commission Grants Unconditional License ------------------------------------------------------------- The Maine Harness Racing Commission has granted Penn National Gaming, Inc. (Nasdaq: PENN) an unconditional racing license for Bangor Historic Track for the 2004 racing season. The annual license represents the completion of the first regulatory approval necessary for Penn National to proceed with its proposed $74 million development project at the track including the construction of the State's first and only gaming facility where Penn National intends to place approximately 1,500 slot machines. The five-person Racing Commission voted 4-1 to grant the license late last week after reviewing the background investigation reports on the Pennsylvania-based public company and the company's application. Penn National is submitting its licensing application to the State's Gambling Control Board and anticipates that its application may be reviewed at the Board's October 28 meeting. Contingent on Gambling Control Board approval, renewal of the racing license, and the required licensing of machine manufacturers and distributors, Penn National expects to conduct a Spring 2005 ground breaking for the new and upgraded facilities and anticipates a mid-2006 opening. Responding to the action taken by the Maine Harness Racing Commission, Peter M. Carlino, chief executive officer of Penn National, said, "We are delighted to move forward with this important project. With our development plans, Bangor Historic Track will provide exciting entertainment to patrons and represents an enormous opportunity for the local economy. As our 30 years of industry experience has demonstrated, our pari-mutuel and gaming facilities create important sources of revenue, jobs and other economic benefits for the regions in which they are located." During the first quarter of 2004 Penn National was awarded a conditional harness racing license in Maine for Bangor Historic Track, Inc. which operates harness racing at the city-owned track at Bass Park in Bangor, Maine. Last fall, local voters approved a referendum allowing slot machines at the Bangor facility, and both houses of the legislature subsequently passed supplemental legislation that provides for additional regulation and taxation. Penn National Gaming, Inc. (Nasdaq: PENN) (S&P, BB- Corporate Credit Rating, Stable) owns and operates: Hollywood Casino properties located in Aurora, Illinois, and Tunica, Mississippi; Charles Town Races & Slots(TM) in Charles Town, West Virginia; two Mississippi casinos, the Casino Magic - Bay St. Louis hotel, casino, golf resort and marina in Bay St. Louis and the Boomtown Biloxi casino in Biloxi; the Casino Rouge, a riverboat gaming facility in Baton Rouge, Louisiana and the Bullwhackers casino properties in Black Hawk, Colorado. Penn National currently operates two racetracks and eleven off-track wagering facilities in Pennsylvania; the racetrack at Charles Town Races & Slots in West Virginia; the racetrack at Bangor Raceway in Bangor, Maine, and a 50% interest in the Pennwood Racing Inc. joint venture which owns and operates Freehold Raceway in New Jersey; and operates Casino Rama, a gaming facility located approximately 90 miles north of Toronto, Canada, pursuant to a management contract. POLYMER HOLDINGS: Moody's Junks $200M Senior Subordinated Notes --------------------------------------------------------------- Moody's Investors Service assigned a Caa2 rating to Polymer Holdings LLC's proposed senior discount notes due 2014 and affirmed the B1 rating on KRATON Polymer LLC's senior secured credit facility. Moody's lowered the rating on Kraton's 8.125% senior subordinated notes to Caa1 from B3. Moody's also lowered the senior implied rating to B2 from B1 and assigned this rating at the Polymer level. Polymer was also assigned a Caa2 senior unsecured issuer rating. The rating outlook remains stable. The downgrades consider the substantial increase in Polymer's raw material costs and their effect on cash flow support for the high level of debt that resulted from Texas Pacific Group's and J.P. Morgan Partners' (the sponsors) purchase of Kraton in December of 2003. While benefiting the banks in terms of debt reduction, the new discount notes at Polymer reflect the need on the part of the company for both covenant relief on the bank credit facilities at Kraton and a reduction in the intermediate term cash interest burden of some $3.7 million annually. Polymer's new discount notes will allow for a $76 million reduction in the bank group outstandings, from $342 million to $266 million. The ratings also recognize that pro forma credit metrics, which were weak for the ratings category, have gotten weaker than anticipated and have precipitated a need to amend bank covenants and restructure debt. In light of the anticipated success of the restructuring and the fact that Moody's derives comfort from the company's leading global market position in styrenic block copolymers -- SBCs, the rating outlook is stable. These summarizes the ratings activity: Ratings assigned: -- Polymer Holdings LLC. * Senior implied - B2 * Senior unsecured issuer rating -- Caa2 * Senior Discount Notes due 2014 -- Caa2 Ratings lowered: -- KRATON Polymers LLC * Guaranteed senior subordinated notes, $200 million due 2013 (co-borrower is KRATON Polymers Capital Corporation) -- to Caa1 from B3 Ratings affirmed: -- KRATON Polymers LLC * Guaranteed senior secured revolver, $60 million due 2008 -- B1 * Guaranteed senior secured term loan, $342 million due 2010 -- B1 The ratings continue to reflect Polymer's product concentration in SBCs, though this concern is offset by the multiple grades of SBCs offered. Still, the availability of substitutes, increased Asian competition for lower-quality SBCs, and especially the cyclical nature of its commodity raw material feedstocks remain key concerns. The ratings actions consider the deterioration in 2004 operating performance (that began in 2003) due to elevated feedstock prices. In 2003, the costs for butadiene and styrene increased by 46% and 21%, respectively, due to rising crude oil prices and tight supply and demand conditions in the market place. Prices for styrene, butadiene and isoprene increased by approximately 30%, 10% and 10%, respectively, during the first six months of 2004, and prices have continued to increase during the second half of 2004. These raw materials (styrene, butadiene and isoprene) together represented approximately 80% of Polymer's total raw material purchases volume and approximately 40% of the total cost of goods sold in 2003. The ratings also consider that Polymer's operating performance has been negatively impacted by increased feedstock costs. Moody's expects EBITDA (adjusted for inventory writeups) to decline to $79 million for the LTM ending September 30, 2004 versus $94 million in 2003, as higher raw material costs offset improved volumes. Moody's also notes that a U.S. supply contract with Shell for butadiene and styrene expires in 2005. Moody's expects Polymer to re-new these contracts. However, it is uncertain if the contract terms will be as favorable as those in the original contracts. The ratings incorporate Polymer's high pro forma leverage with Moody's estimate of free cash flow/ total debt to be 2.5% at the end of 2004. Moody's estimates that total debt to EBITDA could approach the high six times level over the next twelve to eighteen months. Moody's notes that the proposed senior discount note transaction will serve to improve the lot of the secured bank debt by reducing the term loan from $342 million to $266 million. Moody's projects unadjusted EBITDA to total interest expense to be slightly above two times over the intermediate term. The ratings are supported by the company's leading market share in the more complex and higher margin HSBC's (KRATON G) products, strong brand recognition, and its ability to expand sales volumes despite weak economic conditions. The ratings also reflect the economic benefits associated with the existing raw material purchase agreements with Shell, modest maintenance capital expenditure requirements, the diversity of the company's customer base and barriers to entry, which include long-standing customer relationships, some product customization, and manufacturing expertise in producing significant volumes of HSBC's. The limited availability of isoprene also serves as a barrier to entry. Polymer has a favorable pro forma debt maturity profile with term loan amortization of only $3 million per year for the next six years. After completion of the transaction, the company will have cash of $36 million and revolver availability of $60 million. The stable outlook reflects Moody's expectation that Polymer will maintain or increase the current volume of business, and that near-term credit metrics will remain relatively stable or improve somewhat. The ratings could be lowered if the company's operating performance deteriorates further as a result of further significant increases in raw material prices. If EBITDA margins were to fall to 5% or if free cash flow turns negative, or if flexibility under the covenants is less than anticipated the ratings could also be lowered. The ratings could be raised if the company improves its operating performance through product price increases that allow for the full pass through of higher raw material costs. Credit metrics supporting a stronger rating would include a total debt/ EBITDA ratio of 5 times or lower and free cash flow to total debt of greater than 5%, while maintaining a conservative stance towards acquisitions and dividends. The notching of the senior secured credit facility (rated B1) at one level above the senior implied reflects the decreasing portion of secured bank debt in the debt structure (53% assuming a full draw under the revolver) and Moody's belief that in a distressed situation, the collateral will cover amounts outstanding under the credit facilities. Moody's does note, however, that a material portion of the company's assets reside outside of North America. Kraton's obligations under the credit facilities are guaranteed by the parent Polymer and by domestic subsidiaries. The credit facility is secured by substantially all of the tangible and intangible assets of the borrower and its guarantors, as well as a 100% pledge of stock in domestic subsidiaries and a 65% pledge of stock in international subsidiaries. The lenders' position is further supported by an excess cash flow sweep provision and limitations on acquisitions and capital expenditures. The notching of the senior unsecured subordinated notes (rated Caa1), two levels below the senior implied, reflects their contractual subordination to a significant amount of secured debt. The notes will be guaranteed by the company's domestic subsidiaries. The notching of the holding company, Polymer, senior discount notes (rated Caa2) reflects their structurally subordinate position in the organizational structure. Polymer is the world's leading producer of SBCs with 30% of global capacity. SBCs impart favorable properties when integrated with other materials and typically represent a small portion of a customer's bill of materials. Within SBCs, the company has two primary product classes: USBCs (KRATON D) and HSBCs (KRATON G). KRATON D (65% of 2003 revenue) is more commodity-like and is primarily used in adhesive, road, and roofing applications. KRATON G (35% of 2003 revenue) is more difficult to manufacture and is primarily used in compounds and polymer systems (CAPS), and adhesives and sealants. The company operates six global manufacturing facilities (the Japanese facility is operated as a 50% joint venture). Polymer Holdings LLC, headquartered in Houston, Texas, is a leading global producer of styrenic block copolymers, or SBCs, which are synthetic elastomers used in industrial and consumer applications to impart favorable product characteristics such as flexibility, resilience, strength, durability and processability. The company generated revenues of $735 million for the LTM ended June 30, 2004. PORTOLA PACKAGING: S&P Slices Corporate Credit Rating to 'B' ------------------------------------------------------------ Standard & Poor's Ratings Services lowered its ratings on Portola Packaging Inc. The corporate credit rating was lowered to 'B' from 'B+'. At the same time, Standard & Poor's placed all ratings on CreditWatch with negative implications. San Jose, California-based Portola had approximately $193 million of total debt outstanding at May 31, 2004. "The downgrade and CreditWatch listing reflect concerns regarding the continuation of Portola's weaker-than-expected operating performance during fiscal 2004 because of intensified competition in certain segments of the domestic closures market, lower sales in the Tech Industries business, and increased raw-material costs, namely low-density polyethylene resin," said Standard & Poor's credit analyst Franco DiMartino. Portola's liquidity position is currently limited and could weaken further during upcoming quarters as a result of unabated competitive pressures and continued increases in plastic resin prices due to rising crude oil costs and still-elevated natural gas costs. Additionally, the company's subpar credit measures could experience further deterioration as operating cash generation during fiscal 2004 is below capital spending and cash interest requirements. The CreditWatch will be resolved following a review of operating results in the fiscal fourth quarter, which is traditionally the company's strongest quarter, and an assessment of Portola's ability to preserve liquidity and restore credit quality. Continued access to the company's $50 million revolving credit facility is a key rating consideration in light of Portola's low cash balance and significant near-term operating challenges. Accordingly, the ratings could be lowered again if liquidity deteriorates further or if the company is unable to solidify its financial profile through an operating turnaround. PENN TRAFFIC: Postpones Today's Disclosure Statement Hearing ------------------------------------------------------------ The Penn Traffic Company (OTC: PNFTQ.PK) is continuing to explore the multiple compelling proposals for a sale-leaseback transaction it has received involving most of its owned stores and distribution center properties. If consummated, the proposed sale- leaseback transaction could result in substantial additional funding to the Company. Accordingly, the Company is postponing the Oct. 21, 2004 hearing to approve the Disclosure Statement for its proposed Plan of Reorganization to a date to be announced. Penn Traffic would use the cash received from the proposed sale- leaseback transaction, in part, to repay all of its senior secured bank debt in full, to invest in continuing to modernize and enhance its store base, and for other working capital needs. The sale-leaseback proposals received by Penn Traffic are non-binding indications of interest and any definitive transaction remains subject to execution of binding agreements and other customary conditions, including approval of the U.S. Bankruptcy Court for the Southern District of New York. Penn Traffic filed its Plan of Reorganization with the U.S. Bankruptcy Court for the Southern District of New York on Aug. 20, 2004, and a hearing to approve the Disclosure Statement for that Plan was originally scheduled for Sept. 23, 2004, but was rescheduled by the Company to Oct. 21st after it had received multiple attractive sale-leaseback proposals. The previously filed Plan of Reorganization contemplated that reorganized Penn Traffic would emerge from chapter 11 with approximately $55 million of senior secured bank debt and approximately $50 million of undrawn availability under its proposed working capital revolving credit facility. In light of the progress made to date on the potential sale- leaseback transaction and the significant change it would have on Penn Traffic's capital structure upon emergence from chapter 11, the Company has decided to postpone the Oct. 21st Disclosure Statement hearing to give it more time to pursue entering into a binding sale-leaseback agreement within the next few weeks, subject to bankruptcy court approval. In that event, the Company will file an amended Plan of Reorganization that would include a detailed description of the sale-leaseback transaction and the resulting adjustments to Penn Traffic's capital structure. Penn Traffic's Creditors' Committee, as well as its senior secured bank lenders, have informed the Company that they support the postponement of the Disclosure Statement hearing and the continued pursuit of the sale-leaseback proposals. Robert Chapman, President and CEO of Penn Traffic, said: "The proposed sale-leaseback transaction offers many potential benefits to the Company that require continued review and due consideration. The proposals on the table would unlock the intrinsic value in the Company's real estate assets, eliminate the need for any long term debt upon the Company's emergence from bankruptcy and significantly enhance our liquidity, which will in turn enhance our ability to compete in our core markets. Because of these benefits, the Company, with the support of its banks and creditors committee, has decided to postpone this week's bankruptcy court hearing to continue to explore these very compelling proposals. We remain fully committed to the successful restructuring of Penn Traffic on a timely basis." Headquartered in Rye, New York, Penn Traffic Company distributes through retail and wholesale outlets. The Group through its supermarkets carries on the retail and wholesale distribution of food, franchise supermarkets and independent wholesale accounts. The Company filed for chapter 11 protection on May 30, 2003 (Bankr. S.D.N.Y. Case No. 03-22945). Kelley Ann Cornish, Esq., at Paul Weiss Rifkind Wharton & Garrison, represent the Debtors in their restructuring efforts. When the grocer filed for protection from their creditors, they listed $736,532,614 in total assets and $736,532,610 in total debts. QWEST COMMS: To Release 3rd Quarter Financial Results on Nov. 4 --------------------------------------------------------------- Qwest Communications International Inc. (NYSE: Q - News) will release third quarter 2004 earnings and operational highlights on Thursday, Nov. 4, 2004, at approximately 7:00 a.m. EST. Qwest will host a conference call Nov. 4, 2004, at 9:00 a.m. EST. This call will feature Richard C. Notebaert, chairman and CEO, and Oren G. Shaffer, vice chairman and CFO, who will jointly provide the company's perspective on third-quarter results. You can also access a live audio webcast or a replay of the webcast at http://www.qwest/com/about/investor/meetings(Windows Media Player or RealPlayer software is needed to listen to the webcast). About Qwest Qwest Communications International, Inc., (NYSE:Q) is a leading provider of voice, video and data services. With more than 40,000 employees, Qwest is committed to the "Spirit of Service" and providing world-class services that exceed customers' expectations for quality, value and reliability. For more information, visit the Qwest Web site at http://www.qwest.com/ Qwest's June 30, 2004, balance sheet shows a stockholders' deficit totaling $1,909,000,000 -- swelling 53% from the $1,251,000,000 shareholder deficit reported at March 31, 2004. RAMP CORP: Modifies 54.6 Million Warrants to Reduce $982K Debt -------------------------------------------------------------- Ramp Corporation (Amex: RCO) has entered into a number of financial transactions with its existing convertible note holders, the result of which was a reduction in debt of $982,000 and an additional capital infusion to Ramp of $250,000. To effect these transactions and to induce the note holders to exercise their warrants, an aggregate of 54.6 million warrants were modified from exercise prices ranging from $0.11 to $0.40, to an exercise price of $0.0325 per share. Ramp, through its wholly-owned HealthRamp subsidiary, markets CareGiver, a comprehensive solution for the long term care industry that allows facility staff to easily place orders for drugs, treatments and supplies from a wireless handheld PDA or desktop Internet web browser. "The exercise of these warrants helps to reduce our debt and aids us in our financial restructuring. We are working towards improving the financial position of Ramp, which we believe will significantly improve our overall business development efforts and business prospects," stated Ramp CEO and President, Andrew Brown. Ramp Corporation, through its wholly owned HealthRamp subsidiary, markets the CareGiver and CarePoint suite of technologies. CareGiver allows long term care facility staff to easily place orders for drugs, treatments and supplies from a wireless handheld PDA or desktop web browser. CarePoint enables electronic prescribing, lab orders and results, Internet-based communication, data integration, and transaction processing over a handheld device or browsmr, at the point-of-care. HealthRamp's products enable communication of value-added healthcare information among physician offices, pharmacies, hospitals, pharmacy benefit managers, health management organizations, pharmaceutical companies and health insurance companies. Additional information about Ramp can be found at http://www.Ramp.com/ * * * Going Concern Doubt As reported in the Troubled Company Reporter on Oct. 14, 2004, Ramp Corporation said it has experienced substantial recurring losses to date which raise substantial doubt about its ability to continue as a going concern. At June 30, 2004, the Company had a working capital deficit of $7,375,000. Management continues to pursue fund-raising activities, including private placements, to continue to fund the Company's operations until such time as revenues are sufficient to support operations. There can be no assurances that additional funds will be raised or that the Company will ever be profitable. Ramp has reported net losses of $31,321,000, $9,014,000 and $10,636,000 for the years ended Dec. 31, 2003, 2002 and 2001, respectively, and $15,955,000 for the six months ended June 30, 2004. At June 30, 2004, the Company had an accumulated deficit of $87,482,000. The Company relies on investments and financings to provide working capital. While management believes the Company can continue to sell its securities to raise the cash needed to continue operating until cash flow from operations can support its business, there can be no assurance that this will occur. There can be no assurance that additional investments in Ramp's securities or other debt or equity financings will be available to it on favorable terms, or at all, to adequately support the development and deployment of its technology. Failure to obtain such capital on a timely basis could result in lost business opportunities. Ramp's independent accountants have advised management and the Audit Committee that there were material weaknesses in Ramp's internal controls and procedures during fiscal year 2003, which management believes have continued through the fiscal period ended June 30, 2004. The Company has taken steps and has a plan to correct the material weaknesses. Progress was made in both the first and second quarters, however management believes that if these material weaknesses are not corrected, a potential misapplication of generally accepted accounting principles or potential accounting error in the Company's consolidated financial statements could occur. Enhancing its internal controls to correct the material weaknesses has, and will, result in increased costs to the Company. RCN CORP: Elects to Acquire Remaining 50% D.C. Stake from Pepco --------------------------------------------------------------- RCN Corporation's subsidiary, RCN Telecom Services of Washington D.C., Inc., has elected to acquire the remaining 50% stake in its Washington, D.C. market for $29 million from Pepco Communications. Upon completion of the purchase, RCN will obtain full ownership and control of the approximately 48,000 customers and 180,000 marketable homes in the greater Washington, D.C. area. The Company expects to complete the transaction before the end of the year. Under a right of first refusal provision in the operating agreement with Pepco Communications, a wholly owned affiliate of Potomac Electric Power Company, RCN elected to match a third party's offer to purchase the remaining 50% interest owned by Pepco Communications. RCN and Pepco Communications launched service in its Washington, D.C. market in the summer of 1999, and today its state-of-the-art fiber optic network serves residents in downtown Washington, the Maryland communities of Bethesda, Chevy Chase, Gaithersburg, Silver Spring, and Takoma Park, as well as Falls Church, Virginia. The service offers customers "triple play" bundled packages of digital cable television, local and long distance phone, and high speed Internet, all with the convenience and value of a single provider and a single monthly bill. Recent product launches include High Definition Television, Video on Demand, as well as Subscription Video on Demand service with several premium channels. RCN plans to roll out a higher speed cable modem and Digital Video Recorders in all its markets, including Washington, D.C., over the next several months. "This is an important strategic move for us. We will now have full control of our operations and state-of-the-art network in one of the country's most important markets as we continue to roll out more products and services to our customers," said Chairman and CEO David C. McCourt. "We remain committed to this market and look forward to continuing to develop our relationship with our customers and the local communities throughout the Washington metro area." 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: Wants to Assign Leases to Advance Magazine ---------------------------------------------------- RCN Corporation and its debtor-affiliates seek the Court's authority to enter into a Partial Assignment of Lease and Assignment of Subleases Agreement among RCN Corporation, RCN Telecom Services, Inc., and Advance Magazine Publishers, Inc. The Master Lease Agreement and Guaranty RCN Telecom's predecessor-in-interest and Advance Magazine entered into a master lease dated May 9, 2000, wherein Advance Magazine leased to RCN Telecom nine entire floors and other areas in the building located at 825 Third Avenue in New York City. The Master Lease expires on June 30, 2015. RCN executed a guaranty in favor of Advance Magazine of certain of RCN Telecom's obligations under the Master Lease. Shortly after executing the Master Lease, RCN and its affiliates realized that their operations did not require all nine floors of the Building and subleased a substantial portion of the Original Premises to third parties. Specifically, RCN Telecom subleased a portion of the Original Premises to: * CDC IXIS Financial Guaranty Services, Inc., pursuant to an Agreement of Sublease dated March 22, 2001, * Morgan Stanley D.W., Inc., pursuant to an Agreement of Sublease dated October 4, 2001, and * Joke Vision, LLC, pursuant to an Agreement of Sublease dated July 24, 2003. RCN Telecom continues to occupy a small portion of the Original Premises and anticipates continuing to do so for some period in the future. Partial Assignment of Lease and Assignment of Subleases Agreement RCN Corp. and RCN Telecom do not believe that they will have any use for most of the Original Premises as part of their future business plains. Although subtenants currently occupy most of the leased space, the subleases will expire prior to the expiration of the Master Lease. Accordingly, the Master Lease and Guaranty could give rise to significant contingent liabilities against RCN Telecom and RCN Corp.'s bankruptcy estate, as the long term real estate market and their resultant ability to continue to sublease most of the Original Premises through 2015, is highly unpredictable. D. Jansing Baker, Esq., at Skadden, Arps, Slate, Meagher & Flom, LLP, in New York, tells the Court that the Debtors would receive a significant benefit if they relieve themselves of the contingent obligations, exit the real property leasing business, and extract themselves from most of their obligations under the Master Lease and Guaranty. To that end, RCN and RCN Telecom commenced negotiations with Advance Magazine regarding an agreement that would allow them to achieve these goals. The Agreement After arm's-length, good faith negotiations, RCN Corp., RCN Telecom and Advance Magazine executed an agreement, which provides that: (a) RCN Telecom will assign, transfer and convey to Advance Magazine: * all of RCN Telecom's right, title, interest and obligations, as tenant under the Master Lease, with respect to each of the CDC, Morgan and Joke Vision Premises; and * all of RCN Telecom's right, title, interest and obligations, as sublessor in, to and under each of the CDC, Morgan and Joke Vision Subleases, together with the security deposits, if any, held pursuant to the CDC Sublease and the Joke Vision Sublease. (b) Advance Magazine will assume RCN Telecom's obligations under the Assigned Interests. (c) Advance Magazine will release RCN Corp. and RCN Telecom from certain liabilities and obligations arising from or relating to the Assigned Interests, including RCN Corp. and its estate's obligations with respect to the Guaranty, provided that RCN Telecom does not file a bankruptcy petition or similar proceeding within 90 days of the final Bankruptcy Court approval of the Agreement. (d) RCN Telecom will: * allow Advance Magazine to retain a letter of credit for $1.7 million previously delivered by RCN Telecom to Advance Magazine as security for performance of RCN Telecom's obligations under the Master Lease; and * pay $179,013 to Advance Magazine. Mr. Baker points out that the Agreement provides the Debtors with a substantial benefit, as it relieves RCN Corp. and RCN Telecom from significant contingent liabilities that could arise from their long term obligations under the Master Lease and Guaranty. The remaining term of the Master Lease calls for rent obligations of more than $60 million in excess of the anticipated revenue from the Subleases. This contingent liability, therefore, far exceeds the consideration provided to Advance Magazine under the Agreement. In RCN Corp.'s and RCN Telecom's reasonable business judgment, this consideration constitutes fair, adequate and reasonable equivalent value and should be approved. "Assigning the respective Assigned Subleases is an important step in the RCN Telecom's and the Debtors' restructuring process, as it relieves them of a significant contingent liability under the Master Lease and Guaranty, and provides an exit from the real estate leasing business," Mr. Baker says. Moreover, the modifications of the Master Lease and Guaranty provided in the Agreement are integral aspects of RCN Telecom's and RCN's overall restructuring efforts. Failure to approve the Agreement would likely impede the Debtors' efforts to focus on their core businesses and effect a successful restructuring. Additionally, the uncertainty and cost generated by a failure to approve the Agreement will have a negative impact on RCN Telecom's and the Debtors' continued operations. 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. 13; Bankruptcy Creditors' Service, Inc., 215/945-7000) READY MIXED: Moody's Junks Planned $150M Senior Subordinated Notes ------------------------------------------------------------------ Moody's Investors Service assigned a Caa1 rating to Ready Mixed Concrete Company's proposed $150 million senior subordinated notes, due 2012. The ratings primarily reflect: (i) the company's high leverage, (ii) regional concentration within mid-Atlantic states, (iii) continuing acquisition risk, and (iv) its limited history operating as a company with over $100 million of revenues. The ratings also incorporate the cyclicality inherent in the concrete industry, although recognizing that the industry is currently in a cyclical upturn. The ratings outlook is stable. This is the first time Moody's has rated Ready Mixed. Ratings assigned: * $150 million guaranteed senior subordinated notes, due 2012, rated Caa1, * Senior implied rating of B2 * Senior unsecured issuer rating of B3 * Speculative Grade Liquidity rating of SGL-3. Moody's is not assigning a rating to Ready Mixed's proposed senior secured credit facility, which consists of a $25 million revolving credit facility and a $30 million delayed draw term loan, both due 2010. Audax Private Equity Fund, L.P. plans to acquire Ready Mixed from its current owners in a transaction valued at $222 million. More specifically, RMCC Acquisition Company, an entity formed by Audax, will merge into the company. After consummation of the merger, Audax will own substantially all the equity interests of Ready Mixed. Proceeds from the senior subordinated notes and a $60 million cash equity contribution by Audax will be used to purchase the equity interests of the existing owners and to refinance debt. The ratings reflect: (i) Ready Mixed's high leverage with pro forma debt to EBITDA of 5.2 times for the LTM ended September 30, 2004 (EBITDA includes the full year benefit of the APAC acquisition and excludes certain costs the company identifies as non- recurring); (ii) negative tangible net worth; acquisition risk; and (iii) regional concentration that exacerbates exposure to local economic conditions and weather. As a concrete supplier to the residential, commercial and, to a lesser extent, the public construction markets, the company's performance is highly sensitive to construction activity and public spending levels on a regional basis. The ratings also consider that the company is not vertically integrated and relies on local suppliers, some of whom have their own concrete operations, to supply cement and aggregates, two key raw materials. As such, the company's ability to maintain margins depends on its ability to pass on increases in input costs. The ratings are supported by the company's favorable cost structure that has resulted in a cost per cubic yard of concrete below the southeastern U.S. regional average. The ratings also recognize that the company is a leading supplier in its markets (market defined as a 10 to 15 mile radius around a Ready Mixed plant location), and that the cement industry is in a cyclical upturn with the supply/demand balance very tight in the states in which the company operates. The ratings further consider: (i) barriers to entry including lengthy zoning and approval process, (ii) high capital expenditure requirements, and (iii) the current cement shortage. The fact that the company has no material contingent liabilities related to pensions or environmental reserves is also supportive of the ratings. The stable outlook reflects Moody's expectation that Ready Mixed will pursue debt-financed acquisitions, which will not materially deteriorate pro forma credit metrics, and that volumes will continue to improve as the company benefits from a cyclical upturn in its commercial end-market, while the residential market should remain stable. The stable outlook also assumes that the company will generate free cash flow (cash from operations less capital expenditures) to debt of around 5%. The ratings could be lowered or outlook revised if the company pursues an acquisition that increases debt to EBITDA above 6.0 times, if the company encounters integration problems, or if annual free cash flow is not positive. Conversely, the ratings could be upgraded if the company regionally expands its operations while improving debt to EBITDA to 4.0 times, and produces free cash flow to debt closer to 10%. The Caa1 rating for the senior subordinated notes reflects their contractual subordination to the senior secured credit facility. The notes will be guaranteed by domestic subsidiaries. The indenture will include baskets for additional indebtedness based on a 2.0x consolidated coverage ratio. Additionally, restricted payments will be limited to 50% of consolidated net income. The credit facility is secured by a first priority security interest in substantially all tangible and intangible assets of the borrower and each of its subsidiaries as well as the capital stock of the borrower and its subsidiaries. The delayed draw term loan may be drawn if pro forma leverage is less than 5.25 times. Otherwise, these facilities will be substantially undrawn at the closing of the transaction. The lenders' position is further supported by an excess cash flow sweep and by limitations on indebtedness, asset sales, dividends, and sale/leaseback transactions. Moody's notes that Ready Mixed Concrete Company is an operating entity that holds all the assets of the company. Moody's has also assigned Ready Mixed an SGL-3 speculative grade liquidity rating. The rating reflects the company's modest pro forma cash balance and limited free cash flow. However, the rating is supported by Moody's expectation that revolving credit facility availability will exceed $20 million and that the company will have a favorable debt maturity profile. Ready Mixed produces ready-mixed concrete for North Carolina, South Carolina, and southern Virginia (54%, 39%, and 7% of revenues, respectively). The company delivered 2.2 million cubic yards of concrete in 2003. Approximately 53% of its revenues were derived from commercial construction companies, 37% from residential builders, and 7% from departments of transportation (DOT). Margins in the residential market are typically higher than commercial due to smaller purchase quantities and lower cement content. The company's asset base consists of 71 manufacturing plants, three rail distribution terminals, 544 mixer trucks, and 70 hauling vehicles. Plants are situated to serve customers in a 10-mile radius. The company has acquired 19 ready- mix companies since 1976, with the largest being the Unicon Concrete acquisition that doubled the size of the company (completed in December 2002). The company's acquisition strategy is to consolidate its existing markets to leverage the advantage of its transportation infrastructure. The U.S. ready-mix industry is highly fragmented. The top ten producers account for just 18% of the market, with many smaller producers and larger cement producers with downstream concrete operations competing primarily on the basis of price. The ratings reflect Ready Mixed's high leverage with pro forma debt increasing to $162 million from $75 million as of September 30, 2004. Moreover, pro forma debt is slightly less than LTM revenues of $163 million. Based on actual LTM EBITDA of $28 million, pro forma debt to EBITDA was 5.7 times (5.2 times on a adjusted EBITDA basis). As of September 30, 2004, pro forma debt to capitalization was 73% and increases to 118% when adjusted for tangible net worth. Moody's is also concerned that estimated goodwill of $85 million will challenge the company's ability to earn an adequate return on assets. The ratings also recognize that Ready Mixed has generated good average free cash flow of $12 million over the last four fiscal years. However, pro forma interest expense would have reduced LTM free cash flow to approximately $4 million from $12 million, which implies a FCF to pro forma debt of less than 5%. The ratings derive support from Ready Mixed's favorable cost structure, which has resulted in the company's cost of concrete being less than the southeastern U.S. regional average. The company believes this favorable cost structure is a function of centralized purchasing, efficient use of transportation with access to rail, and flexibility in the use of raw material substitutes. The company has also realized efficiencies through the regional density of its plants, whereby mixer trucks can deliver concrete from several plants to avoid stressing the capacity of any one particular plant. The ratings also garner support from the company's trade program with Mack, whereby approximately one-fourth of their fleet is traded every year, resulting in a 2.4-year average life (3.8 years adjusted for Unicon) versus the industry average of 7 years. Additionally, none of the company's 875 employees are represented under collective bargaining agreements. However, the rail and truck companies that deliver cement are frequently unionized. Founded in 1935 and headquartered in Raleigh, North Carolina, Ready Mixed Concrete Company is a leading producer of ready-mixed concrete for North Carolina, South Carolina, and southern Virginia. The company recorded revenues of $163 million for the LTM ended September 30, 2004. RELIANCE GROUP: Court Approves $166.5 Million PBGC Settlement ------------------------------------------------------------- As reported in the Troubled Company Reporter on Oct. 4, 2004, the Official Unsecured Creditors' Committee and the Official Unsecured Bank Committee asked Judge Gonzalez to approve a stipulation to settle the Pension Benefit Guaranty Corporation's Claims. The PBGC filed 12 claims against the Reliance Group Holdings, Inc., Pension Plan and the Reliance Insurance Company Retirement Plan. The aggregate value of the PBGC Claims was $200,000,000 in both the Debtors' cases. The PBGC alleged that its Claims were entitled to administrative or some other priority under the Bankruptcy Code. If allowed, the PBGC Claims would have exceeded the Debtors' cash, potentially presenting an insurmountable hurdle to any reorganization plan for either Debtor. The Committees disagreed with the PBGC's stance, and objected to the amounts and priority of the Claims. In response, PBGC announced that it would take over and terminate the RGH Pension Plan and asked RGH to enter into an "Agreement for Appointment of Trustee and Termination of Pension Plan." In support of the request, the PBGC commenced an action before the United States District Court for the Southern District of New York. The Action is still pending. The continued litigation with the PBGC will delay the Debtors' reorganization process and cause further erosion of the estate's assets. Rather than litigate disputes with the PBGC, the Committees decided to amicably resolve the controversy. The Stipulation provides that: (1) The PBGC will receive an allowed general unsecured claim against Reliance Financial Services Corporation's estate for $82,500,000; (2) The PBGC will receive an allowed general unsecured claim against the RGH estate for $81,000,000; (3) The PBGC will receive an administrative claim against the RFSC estate for $3,000,000. This claim will be payable solely from 50% of the first $6,000,000 of future proceeds otherwise available for distribution to Reorganized RFSC common stockholders under the RGH/RFSC Settlement. (4) The PBGC will dismiss the District Court Action and withdraw the Plan Objection; (5) Certain liabilities imposed by the Employee Retirement Income Security Act will be exempted from the releases contained in the Chapter 11 Plan the Bank Committee proposed for RFSC; (6) The PBGC will not assert claims against insurance policies that are referenced in the PA Settlement Agreement; (7) RGH will execute the Agreement for Appointment of Trustee and Termination of Pension Plan. The PBGC will terminate the RGH Pension Plan; and (8) Although the Debtors are not signatories to the Stipulation, it will be binding on the Debtors and their estates. Additionally, the Committees and the estates will not challenge the validity of the lien filed by the PBGC against the assets of Reliance Development Group, Inc., a non-debtor affiliate. The Committees and their professionals have concluded that the PBGC Stipulation will result in a favorable outcome for the Debtors' estates and their creditors. While much progress in these proceedings has been made so far, the PBGC's claims presented a significant hurdle. The PBGC Stipulation will reduce the PBGC Claims against each Debtor, as well as lower their priority to general unsecured status. The PBGC litigation will immediately cease, which will conserve time and resources that are dear to the estates. The withdrawal of PBGC's objection to the Chapter 11 Plan for RFSC also eliminates a major hurdle to plan confirmation. High River Objects Representing High River Limited Partnership, Edward S. Weisfelner, Esq., at Brown, Rudnick, Berlack & Israels, in New York City, relates that the Official Unsecured Bank Committee was contractually obligated to obtain High River's consent before making any modifications to the RFSC Plan of Reorganization. Pursuant to a July 2, 2004, Letter Agreement with the Bank Committee, High River withdrew its appeal of the Court's Order approving the RGH and RFSC Settlement, and waived its objections to the RFSC Plan. In exchange, the Bank Committee promised that there would be no changes to the RFSC Plan without High River's written consent, other than "immaterial cleanup type changes." Therefore, the Bank Committee's actions constitute a patent violation of the express terms of the High River Agreement. Since High River has not consented, the Bank Committee cannot make changes to the RFSC Plan to implement the PBGC Stipulation, so as to: a) make the terms of the PBGC Stipulation controlling over the terms of the RFSC Plan in the event of a conflict; b) carve out of the litigation claims that are to be assigned to RFSC's Parent, Reliance Group Holdings, for prosecution of ERISA-based breach of fiduciary duty claims for the benefit of certain RFSC creditors; or c) modify the release provisions to exclude any liability under Title IV of ERISA. These alterations are precisely what High River sought protection from when it withdrew its appeal and did not object to the RFSC Plan. Mr. Weisfelner says that in the absence of the right to modify the RFSC Plan to effectuate the PBGC Stipulation, the PBGC Stipulation will merely languish as an unenforceable document, and there is no purpose to approve the PBGC Stipulation. In addition, Mr. Weisfelner says, the Committees' request should be denied because the Settlement improperly affords the PBGC administrative priority status for a material portion of its claim. The settlement requires that $3,000,000 of the PBGC's claims be treated as an administrative claim with a payment priority. However, as the Committees noted in their Joint Objection to the PBGC Proofs of Claim, case law makes it clear that none of the PBGC's claims are entitled to administrative expense status. Despite legal precedent and its own resolute statements refuting the PBGC's assertion of priority status, the Bank Committees now ask the Court to approve an agreement purporting to give the PBGC a $3,000,000 administrative expense claim. Granting the PBGC an administrative expense claim to which it is not entitled is tantamount to preferring the PBGC at the expense of other creditors. Because the PBGC Stipulation mandates that a $3 million portion of the PBGC claims be afforded administrative priority status -- in the face of ample case law denying the PBGC such priority status -- the Committees have not met their burden of establishing that the PBGC Stipulation is reasonable and in the best interests of the estates. * * * Judge Gonzalez finds no merit in High River's administrative claim objection and thus, overrules it with prejudice. High River's consent objection is also overruled, but without prejudice to High River's ability to re-assert that objection in connection with confirmation of the RFSC Plan. The Court approves the PBGC Stipulation in all respects. ROYAL & SUNALLIANCE: Fitch Affirms BB- Financial Strength Rating ---------------------------------------------------------------- Fitch Ratings has affirmed the 'BB-' insurer financial strength ratings of the Royal & SunAlliance USA insurance subsidiaries and removed those ratings from Rating Watch Negative. Following the affirmations, Fitch has withdrawn the ratings. The companies represent the U.S. insurance operations of Royal & Sun Alliance Insurance Group PLC. The ratings are being withdrawn due to minimal market interest. The insurer financial strength ratings are affirmed at 'BB-' and the insurer financial strength rating of 'BB-' is withdrawn on the following: * American and Foreign Insurance Co. * Atlantic Indemnity Company * Atlantic Security Insurance Co. * Carolina American Insurance Co. * The Connecticut Indemnity Company * Financial Structures Insurance Co. * Financial Structures Ltd. * The Fire & Casualty Insurance Co. of CT * Globe Indemnity Company * Grocers Insurance Co. * Guaranty National Insurance Co. * Guaranty National Insurance Co. of CT * Landmark American Ins. Co. * Marine Indemnity Insurance Co. of America * Orion Insurance Co. * Peak Property & Casualty Insurance Co. * Royal Indemnity Company * Royal Insurance Co of America * Royal Surplus Lines Insurance Co. * Safeguard Insurance Co. * Security Insurance Co. of Hartford * Unisun Insurance Co. * Viking County Mutual Insurance Co. * Viking Ins. Co. of Wisconsin SALEM COMMS: Hosting 3rd Qtr. Earnings Teleconference on Nov. 3 --------------------------------------------------------------- Salem Communications Corporation (Nasdaq:SALM - News), the leading radio broadcaster focused on religious and family themes programming, will release third quarter 2004 financial results following market hours on Wednesday, Nov. 3, 2004. The Company will also host a teleconference to discuss its results on Nov. 3, 2004 at 5:00 p.m. Eastern Time. To access the teleconference, please dial 973-582-2734 ten minutes prior to the start time. The teleconference will also be available live and via archived webcast on the investor relations portion of the Company's website, located at http://www.salem.cc/If you are unable to listen to the live teleconference at its scheduled time, there will be a replay available through November 10, 2004 and can be accessed by dialing 973-341-3080 or 877-519-4471, passcode 5299252 or on the Company's website. Salem Communications Corporation, headquartered in Camarillo, California, is the leading U.S. radio broadcaster focused on religious and family themes programming. Upon the close of all announced acquisitions, the company will own 101 radio stations, including 66 stations in 24 of the top 25 markets, mainly comprising three primary formats: Christian Talk & Teaching; News/Talk; and Contemporary Christian Music. In addition to its radio properties, Salem owns Salem Radio Network, which syndicates talk, news and music programming to over 1,600 affiliated radio stations; Salem Radio Representatives, a national sales force; Salem Web Network, the leading Internet provider of Christian content and online streaming; and Salem Publishing, a leading publisher of Christian themed magazines. For more information, visit Salem Communications' web site at http://www.salem.cc/ * * * As reported in the Troubled Company Reporter on Sept. 16, 2004, Standard & Poor's Ratings Services revised its outlook on Salem Communications Corp. to stable from negative, based on the company's improving financial profile. The 'B+' long-term corporate rating on the company was affirmed. The Camarillo, California-based radio broadcasting company had total debt outstanding of approximately $284.4 million at June 30, 2004. SMURFIT-STONE: Moody's Puts Ba3 Rating on $2.2 Billion Facilities ----------------------------------------------------------------- Moody's Investors Service assigned a (P)Ba3 rating to Smurfit- Stone Container Enterprises, Inc.'s new $1.3 billion senior secured institutional term loans and 5-year $900 million revolving bank credit facility. SSCE will be the new name for Stone Container Corporation, the key operating company for Smurfit-Stone Container Corporation -- SSCC, the publicly traded packaging company. This occurs as a consequence of a corporate reorganization that starts with JSCE, Inc., a company related to Stone, merging with its wholly owned subsidiary, Jefferson Smurfit Corporation (U.S.). The surviving entity will then merge into Stone, with Stone, i.e. SSCE, being the surviving entity. The refinance occurs concurrently with the reorganization. Net proceeds from the institutional term loans will repay existing institutional term loans of approximately the same aggregate size. With no material increase in total debt, the amalgamation and refinance is neutral to SSCE's debt profile, and accordingly, pending completion of the refinance and corporate reorganization, the applicable ratings of Stone and JSC together with those of Stone's wholly owned Canadian subsidiary, are affirmed. With SSCE assuming the debt of JSC at closing, Jefferson Smurfit's ratings will be withdrawn (post-closing). Given the size and features of the new bank facility combined with improved containerboard market conditions, Moody's anticipates assigning an SGL-2 Speculative Grade Liquidity Rating to SSCE. In the interim, Stone's SGL-3 rating and Jefferson Smurfit's SGL-4 will continue to apply. With a security pool comprised of most of the company's assets, the institutional term loans and bank credit facility ratings are notched one level above the senior implied rating to Ba3. Ratings issued: -- Stone Container Corporation (to be re-named Smurfit-Stone Container Enterprises, Inc.): * Senior Secured Term Loan B: (P)Ba3 * Senior Secured Bank Credit Facility: (P)Ba3 -- Smurfit-Stone Container Canada, Inc.: * Backed Senior Secured Term Loan C: (P)Ba3 Ratings Affirmed: -- Stone Container Corporation (to be re-named Smurfit-Stone Container Enterprises, Inc.): * Outlook: Stable * Senior Implied: B1 * Issuer: B2 * Senior Unsecured: B2 * Speculative Grade Liquidity: SGL-3 -- Jefferson Smurfit Corporation (U.S.): * Outlook: Stable * Senior Implied: B1 * Issuer: B2 * Backed Senior Unsecured: B2 * Speculative Grade Liquidity Rating: SGL-4 -- Stone Container Finance Company of Canada II: * Backed Senior Unsecured: B2 SSCE's new $900 million senior secured bank credit facility will be committed for a 5-year term. $200 million of the facility is available at both the Canadian subsidiary and at SSCE (with the balance for the exclusive use of SSCE). Canadian outstandings will be guaranteed by SSCE. At closing, it is estimated there will be significant aggregate unused capacity of approximately $500 million. Near term compliance with financial covenants is not expected to be an issue. SSCE will also have access to a new $500 million accounts receivable securitization facility that will be committed for the same 5-year period. Moody's anticipates usage of approximately 90%. These new arrangements are quite robust in comparison to what they replace. Together with the institutional term loan refinance that eliminates near term refinance risk ($1.0 billion at SSCC and $300 million at the Canadian subsidiary (guaranteed by SSCE)), and favorable near term containerboard fundamentals, SSCE will have solid liquidity arrangements. Moody's anticipates that an SGL-2 rating will be assigned. In the interim, the existing SGL ratings of SGL-3 for Stone and SGL-4 for JSC will continue to apply. SSCE is the main operating subsidiary of Smurfit-Stone Container Corporation's. The group is highly concentrated in containerboard, a commodity with relatively volatile pricing. Accordingly, small changes in pricing result in rather dramatic changes in earnings and cash generation. In conjunction with high debt levels, this has resulted in the recent experience of weak debt protection measurements. As well, management appears to be comfortable with a leveraged capital structure, and SSCC has been an active consolidator within the sector. Accordingly, Moody's expects SSCC to periodically increase debt to finance future acquisitions. As noted, expectations are for relatively strong cash generation over the next several quarters; however, the over- hang of excess capacity may limit the upside to commodity price appreciation and margin expansion. This concern is exacerbated by the ongoing displacement of North American manufacturing activity by Asian and other foreign competitors that potentially reduces the size of SSCC's effective market. However, in the context of expectations of improving cash flow, it is anticipated that SSCC will look to reduce its indebtedness over the near term. Consequently, the ratings' outlook is stable. The rating could be upgraded if Moody's expectations of through- the-cycle RCF-to-Debt exceed 10% while FCF-to-Debt exceeds 5% while at the same time, SSCC implements more conservative acquisition and financial policies. Given the above-noted concerns about the underlying fundamentals, and as well, given SSCC's product concentration and the financial performance experienced during the recent past, it is likely this will require a substantial "seasoning" period, with the company's performance being comfortably above these thresholds for a considerable period before such an action would be considered. The rating could be downgraded if the deviation from these benchmarks continues or increases, the company engages in material debt financed acquisition activity, or if financial liquidity deteriorates. Smurfit-Stone Container Corporation, headquartered in Chicago, Illinois, is an integrated producer of paper, paperboard, and packaging, and is a large collector, marketer, and exporter of recycled fiber. Jefferson Smurfit Corporation (U.S.) is an integrated producer of containerboard, corrugated containers, and packaging products. TANGO INC: Revenue Projections Show Significant Percentage Gain --------------------------------------------------------------- Tango Incorporated (OTCBB:TNGO) reported that Gross Revenue for the fiscal first Quarter ending Oct. 31, 2004, is expected to be in excess of $1,100,000, representing a significant percentage increase in Gross Revenue over the same Quarter last year. In addition, preliminary projections for the Quarter ending January 31, 2005 indicate that Tango could see a revenue increase of 50% in comparison to the same period last year. According to Sameer Hirji, CEO of Tango Incorporated, "The numbers for this Quarter seem to indicate that Tango Pacific is meeting all the expectations that have been placed upon it by its shareholders and investors. We are seeing positive growth in the numbers almost every quarter. Also, the investment we have made in our Art Department, our Sales and Marketing Team and the Management Team is allowing us to reap the benefits in terms of increased sales." He added, "What is immensely gratifying is the fact that based on the projections for the upcoming Quarter, Tango is on track to generate Revenue in the amount of $6.5 million for the upcoming year, and to move into cash neutral and then positive cash flows in the months ahead." About Tango Tango Incorporated is a leading garment manufacturing and distribution company, with a goal of becoming a dominant leader in the industry. Tango pursues opportunities, both domestically and internationally. Tango provides major branded apparel the ability to produce the highest quality merchandise, while protecting the integrity of their brand. Tango serves as a trusted ally, providing them with quality production and on-time delivery, with maximum efficiency and reliability. Tango becomes a business partner by providing economic solutions for development of their brand. Tango provides a work environment that is rewarding to its employees and at the same time has an aggressive plan for growth. Tango is currently producing for many major brands, including Nike, Nike Jordan and RocaWear. * * * Going Concern Doubt In its Form 10-QSB for the quarterly period ended April 30, 2004, filed with the Securities and Exchange Commission, Tango Inc. reported that, as of April 31, 2003 and 2004, its auditors expressed substantial doubt about the company's ability to continue as a going concern in light of continued net losses and working capital deficits. SHERIDAN HOLDNGS: Moody's Puts B1 Rating on $145MM Sr. Bank Loans ----------------------------------------------------------------- Moody's Investors Service assigned a rating of B1 to Sheridan Holdings, Inc. and Sheridan Healthcare, Inc. as Co-Borrowers $145 million senior secured first lien bank credit facilities comprised of a $40 million senior secured revolving credit facility and a $105 million senior secured term loan. Moody's also assigned a B2 rating to Sheridan's $65 million senior secured second lien term loan. In addition, Moody's assigned a senior implied rating of B1 and a senior unsecured issuer rating of B2. The outlook for the ratings is stable. The rating action follows the announcement by the company that the new credit facilities along with $149.1 million of common equity contributed by J.W. Childs Associates and $13.1 million of roll over equity contributed by management shareholders of Sheridan will be used to fund the purchase of Sheridan from its current primary equity holder, Vestar Capital Partners. Ratings assigned: * $40 million senior secured first lien revolving credit facility due 2009, rated B1 * $105 million senior secured first lien term loan due 2010, rated B1 * $65 million senior secured second lien term loan due 2011, rated B2 * B1 senior implied rating * B2 senior unsecured issuer rating The outlook for the ratings is stable. The ratings reflect: (i) Sheridan's concentration of company revenues in facilities owned by HCA, Inc (23% of revenue) and the South Broward County Hospital District (17% of revenue) and in the state of Florida overall; (ii) the significant amount of leverage being considered in the transaction resulting in weaker free cash flows; (iii) the ability of the company to continue to recruit new physicians in light of the decreasing supply of new anesthesiologists; (iv) pressures on the company's operating model as a result of the ongoing nurse labor shortage; (v) Sheridan's ability to maintain margins in the face of rising labor cost trends; and (vi) increasing medical malpractice expense accruals resulting in margin pressures and weaker free cash flows. The ratings also reflect: (i) the company's leading market position in anesthesiology and neonatology; (ii) improving demographic trends resulting in a higher percentage of surgical procedures and, as a result, anesthesiology services; (iii) Sheridan's historical track record of consistent revenue and cash flow generation; (iv) the company's proven ability to operate in leveraged environment and use free cash flow to reduce leverage; (v) Sheridan's track record of organic growth resulting in less reliance on acquisition oriented growth; (vi) improving contract growth with a consistent trend in 2004; (vii) Sheridan's diversification strategy resulting in operations in 12 states; and (viii) a strong management team with extensive company experience and equity commitment to the company. In Moody's view, the ratings would come under pressure if Sheridan were to change its operating strategy and begin a rapid consolidation of the industry resulting in the company's inability to reduce debt. This could potentially be a result of the new equity owner's desire for more rapid earnings growth. However, if the company continues to operate according to its historically disciplined growth model and continues to maintain its operating cash flow to adjusted debt in the 10% to 15% range, the ratings would likely remain stable. If Sheridan were to deleverage its balance sheet through debt reduction, a likely scenario given the amortizing nature of the $105 million term loan, and if the company improves its operating cash flow to adjusted debt to the 15% to 20% range, Moody's would likely upgrade the ratings. Moody's is concerned with the rising level of medical malpractice expenses in the healthcare industry. The company is effectively self-insured for medical malpractice through an arrangement with a third party insurer and its captive insurance subsidiary, Marblehead Surety & Reinsurance Co. LTD. Moody's projects the captive to be conservatively funded and the company provides for adequate accruals in its financial statements. If the frequency and severity of claims against Sheridan were to increase resulting in higher claims-made losses and higher medical malpractice expenses resulting in weaker cash flows, Moody's would likely downgrade the ratings. Pro forma for the proposed transaction and giving effect to the new credit facilities, Sheridan will have cash flow coverage of debt that is moderate for the B1 category. For the twelve months ended June 30, 2004, Sheridan's pro-forma operating cash flow to debt was approximately 13%. Capital expenditures for the business are approximately $3 million to $3.5 million, which would result in pro-forma free cash flow to debt of approximately 12% for the twelve months ended June 30, 2004. Moody's projects that cash flow coverage of debt is expected to be approximately 11% to 13% for the company's fiscal years ending December 31, 2004 and December 31, 2005, while free cash flow coverage of debt for the same periods is expected to be approximately 10% to 11%. Coverage metrics for Sheridan, pro-forma for the transaction, for the twelve months ended June 30, 2004 will be weak for the B1 category. EBIT coverage of interest would have been approximately 1.5 times pro-forma for the twelve months ended June 30, 2004 while EBITDA less capital expenditures to interest would have been approximately 2.4 times for the twelve months ended June 30, 2004. Pro forma EBITDA to interest would have been approximately 2.6 times for the twelve months ended June 30, 2004. Total debt to total invested capital pro forma for the transaction would have been approximately 52% at June 30, 2004. Following the issuance of the senior secured credit facilities and pro forma for the transaction for the twelve months ended June 30, 2004, Sheridan's leverage is expected to be high for the B1 rating category. Pro forma debt to EBITDA would have been approximately 4.7 times for the twelve months ended June 30, 2004. Pro forma adjusted debt to EBITDAR would have been approximately 5.1 times for the twelve months ended June 30, 2004. Moody's notes that the use of EBITDA and related EBITDA ratios as a single measure of cash flow without consideration of other factors can be misleading. Moody's expects Sheridan to have good liquidity after the transaction. Sheridan will only have approximately $.5 million of cash, but the company will have access to a $40 million revolving credit facility that will be unfunded at closing of the transaction. Additionally, given adequate cash flow generation, liquidity will improve for the company over time. The senior secured first lien rating is placed at the senior implied rating as a result of the moderate collateral coverage of assets and distressed firm value coverage. The senior secured second lien rating is placed at the senior unsecured issuer rating and notched one level below the senior implied rating to reflect the debts effective unsecured nature relative to the senior secured first lien debt. The ratings are subject to Moody's review of final documentation for the transaction. Headquartered in Sunrise, Florida, Sheridan Healthcare is a leading provider of physician services to hospitals and ambulatory surgical facilities that desire to outsource the physician staffing for the anesthesia, neonatology and emergency departments. Sheridan also provides a full compliment of professional and administrative support services including physician billing. For the twelve months ended June 30, 2004 Sheridan generated revenues of approximately $257 million. THAXTON RBE: Judge Hodges Approves Transfer of Cases to Delaware ---------------------------------------------------------------- The Honorable Judge George R. Hodges of the U.S. Bankruptcy Court for the Western District of North Carolina, Charlotte Division, approved, on Sept. 30, 2004, the transfer of the cases of Thaxton RBE, Inc., and its debtor-affiliates to the U.S. Bankruptcy Court for the District of Delaware. The Honorable Judge Peter J. Walsh of the District of Delaware is now handling Thaxton RBE's chapter 11 cases. As reported in the Troubled Company Reporter on Nov. 18, 2003, Thaxton RBE, Inc., and nine debtor-affiliates filed for chapter 11 protection in the U.S. Bankruptcy Court for the Western District of North Carolina on Nov. 11, 2003, almost a month after its parent company, The Thaxton Group, Inc., and its 31 other affiliates filed for chapter 11 protection in Delaware. Richard M. Mitchell, the Chapter 11 Trustee appointed in the North Carolina chapter 11 cases involving Thaxton RBE, and the Official Committee of Unsecured Creditors appointed in North Carolina wanted the cases moved to Delaware as a first step toward the substantive consolidation of Thaxton RBE's cases with Thaxton Group. The Chapter 11 Trustee and the Committee point to six things that militate in favor of substantive consolidation of all the Thaxton debtors: * unity of management; * unity of location; * unity of ownership; * unity of operations; * unity of formation; and * difficulty ascertaining individual assets and debts. The Delaware Bankruptcy Court now has jurisdiction over all Thaxton cases and Judge Walsh will hear the substantive consolidation arguments. If the Delaware Bankruptcy Court finds that the estates should be rolled into one, all intercompany claims would be extinguished. The North Carolina Bankruptcy Court rejected arguments that the Thaxton RBE Debtors' cases should stay in North Carolina. Judge Hodges found that transfer of the cases to the District of Delaware is in the interest of justice and is appropriate under: * Section 1412 of the Judiciary Procedures Code, * Section 105(a) of the Bankruptcy Code, and * Rule 1014(a) of the Federal Rules of Bankruptcy Procedures. The chapter 11 cases transferred to Delaware are: New Old Entity Case No. Case No. ------ -------- -------- Thaxton RBE, Inc. 04-13006 03-34243 Thaxton Life Partners, Inc. 04-13005 03-34244 Thaxton Reinsurance Ltd. 04-13007 03-34245 Thaxton Insurance Group of Arizona, Inc. 04-13008 03-34246 Claims Management Services, Inc. 04-13009 03-34247 U.S. Financial Group Agency, Inc. 04-13010 03-34248 Thaxton Insurance Group of Nevada, Inc. 04-13011 03-34249 Thaxton Insurance Group of New Mexico, Inc. 04-13012 03-34250 Oasis Insurance Agency, Inc. 04-13013 03-34251 Summerlin Insurance Agency, Inc. 04-13014 03-34253 Headquartered in Lancaster, South Carolina, The Thaxton Group, Inc., is a diversified consumer financial services company. The Company filed for Chapter 11 protection on Oct. 17, 2003 (Bankr. Del. Case No. 03-13183). The Debtors are represented by Michael G. Busenkell, Esq., and Robert J. Dehney, Esq., at Morris, Nichols, Arsht & Tunnell. THAXTON RBE INC: Case Summary & 50 Largest Unsecured Creditors -------------------------------------------------------------- Lead Debtor: Thaxton RBE, Inc. PO Box 1069 Lancaster, South Carolina 29721 dba Thaxton Insurance Group, Inc. dba Auto Cycle Insurance Agency, Inc. dba Auto Security Agency dba The Insurance Shoppe dba Auto Security Agency/Safeguard dba American United Insurance Agency dba Lakeside Insurance Agency dba National Insurance Centers Bankruptcy Case No.: 04-13006 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Thaxton Life Partners, Inc. 04-13005 Thaxton Reinsurance Ltd. 04-13007 Thaxton Insurance Group of Arizona, Inc. 04-13008 Claims Management Services, Inc. 04-13009 U.S. Financial Group Agency, Inc. 04-13010 Thaxton Insurance Group of Nevada, Inc. 04-13011 Thaxton Insurance Group of New Mexico, Inc. 04-13012 Oasis Insurance Agency, Inc. 04-13013 Summerlin Insurance Agency, Inc. 04-13014 Type of Business: The Debtors are affiliates of The Thaxton Group, Inc., a diversified consumer financial services company. Chapter 11 Petition Date: October 19, 2004 Court: District of Delaware (Delaware) Judge: Peter J. Walsh Debtor's Counsel: S. Andrew Jurs, Esq. Poyner & Spruill, LLP 301 South College Street, Suite 2300 Charlotte, North Carolina 28202 Tel: 704-342-5301 Fax: 704-342-5264 Estimated Assets: $1 Million to $10 Million Estimated Debts: $10 Million to $50 Million Debtor's 50 largest unsecured creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Assurant Reinsurance of Reinsurance Contract $33,289,092 the Turks and Caicos, Ltd. Balance 11222 Quail Roost Drive Miami, Florida 33157-6596 Frank G. Burt Jorden Burt LLP 1025 Thomas Jefferson St. N.W. Suite 400 East Washington, DC 20007-5208 James N. Whyte Contract Balance $1,242,285 8400 E. Prentice Avenue #1125 Greenwood Village, CO 80111 CCC, Inc. Promissory Note $1,000,000 1663 Katy Lane Fort Mill, SC 29708-0000 Marion F. Sistare Promissory Note $729,528 And/or Rhonda F. Sistare 2561 Old Camdem Monroe Highway Lancaster, SC 29720-0000 Perry L. Mungo Promissory Note $718,148 216 Anderson Street Pageland, SC 29728-0000 P.F. Mungo and Perry L. Promissory Note $594,223 Mungo, Inc. 216 Anderson Street Pageland, SC 29728-0000 Janet Mangum Promissory Note $450,804 105 Pepperridge Lane Monroe, NC 28110-0000 Joann M. Jordan Promissory Note $448,671 Route 4, Box 288 Pageland, SC 29728-0000 David A. Osteen, Sr. Promissory Note $432,103 1572 Ross Road Elgin, SC 29045-0000 Charles Picklesimer Promissory Note $420,418 484 Timberview Drive Marysville, OH 43040-0000 Jimmy M. Jordan Promissory Note $408,816 719 E. McGregor Street Pageland, SC 29728-0000 R. William Burch Promissory Note $394,887 PO Box 1441 Silver Springs, FL 00003-4489 David L. Baskin, Sr. Promissory Note $389,154 4635 Musket Road Heath Springs, SC 00002-9058 Jesus M. Alvarez Promissory Note $388,163 1136 Deardon Drive Venice, FL 00003-4292 Charles Y. Workman Promissory Note $375,598 PO Box 37118 2060 Old Eury Road Rock Hill, SC 29732-0000 Kevin Kirsh Promissory Note $356,407 PO Box 443 Clover, SC 29710-0000 H & K Interiors, Inc. Promissory Note $335,956 PO Box 158 Pageland, SC 29728-0000 Claude R. Demby Promissory Note $332,898 PO Box 603 Pageland, SC 29728-00000 Prime Rate Premium Trade Debt $323,703 Finance Michael E. Parrish Promissory Note $315,391 1574 Firetower Road Rock Hill, SC 29730-0000 S. David Barefoot Promissory Note $315,330 1123 Windy Grove Road Charlotte, NC 28279-9232 Norman L. Moinska Rev Promissory Note $315,313 Liv Tst 6480 Shier-Rings Road PO Box 483 Dublin, OH 43017-0000 Farrell G. Broach Promissory Note $300,000 1343 Cedar Pine Lake Rd. Lancaster, SC 00002-9720 Robert J. Lambert Promissory Note $300,000 PO Box 780 Waxhaw, NC 28173 Floyd W. Cauthen Promissory Note $299,281 PO Box 215 Heath Springs, SC 29058-0000 Betty P. Pruitt Promissory Note $292,797 1181 High Point Church Road Pageland, SC 298058-0000 Zeb W. Stevenson, Jr. Promissory Note $291,904 PO Box 302 Jefferson, SC 29718-0000 John W. Stevenson, Jr. Promissory Note $290,000 101 Sunset Drive Union, SC 29379-0000 Janice P. Demby Promissory Note $284,980 28984 Hwy 9 Pageland, SC 29728-0000 Everett H. Demby Promissory Note $259,894 306 E. Main Street Chesterfield, SC 29709 Charles H. Burris Promissory Note $250,000 PO Box 544 Clover, SC 29710-0000 Philip D. Grant Promissory Note $255,287 William C. Moore Promissory Note $205,000 Billy Hensley Promissory Note $203,189 Jack R. Tyner, Sr. Promissory Note $200,000 Bobby L. Knight, Sr. Promissory Note $194,584 Jonathan S. Coleman Promissory Note $182,808 William M. Payne Promissory Note $179,335 Lucy K. Simpson Promissory Note $173,184 Joe D. Falls Promissory Note $170,850 Charles L. Mathis Promissory Note $166,621 Insurance Billing Service Trade Debt $159,999 W I Simpson Promissory Note $158,355 L.C. McAteer Promissory Note $153,034 W.A. Westmoreland Promissory Note $150,687 Robert Miesse Promissory Note $150,000 Donna B. Harrington Promissory Note $150,000 Gregory L. Spray Promissory Note $145,961 Dean Curtis Promissory Note $143,528 Herbert Kirsh Promissory Note $139,356 TPS ENTERPRISES: Court Rejects IRS' Excusable Neglect Argument -------------------------------------------------------------- The Honorable Gerald D. Fines of the United States Bankruptcy Court for the Southern District of Illinois rejected a pitch by the Internal Revenue Service that its late-filed claim should be allowed based on an excusable neglect argument. Judge Fines outlines the material facts in this matter that are not in serious dispute: (1) TPS Enterprises, Inc., filed for relief under Chapter 11 of the Bankruptcy Code on Aug. 1, 2002 (Bankr. S.D. Ill. Case No. 02-60736). (2) The Debtor listed the Internal Revenue Service as the holder of an unliquidated claim. (3) On Aug. 19, 2002, the Court entered an Order establishing Jan. 27, 2003, as the deadline for filing claims in Debtor's Chapter 11 bankruptcy proceeding. (4) The Internal Revenue Service filed a proof of claim on March 4, 2003, some 36 days after the deadline for filing claims. (5) The Internal Revenue Service did not file a motion for the allowance of its late-filed claim, nor did the Internal Revenue Service request an extension of time within which to file its proof of claim. (6) On Apr. 25, 2003, the Debtor filed its Disclosure Statement and an Amended Plan of Reorganization. Pursuant to the Debtor's Amended Plan of Reorganization, the Internal Revenue Service was to be treated in accordance with Rule 3003 of the Federal Rules of Bankruptcy Procedure. (7) The Internal Revenue Service did not object to the Debtor's Disclosure Statement, and, on June 19, 2003, the Court approved the Disclosure Statement and entered an Order regarding the solicitation of ballots and established a deadline to object to the Amended Plan of Reorganization. The Internal Revenue Service did not submit a ballot as to Debtor's Amended Plan of Reorganization, nor did the Internal Revenue Service file an objection to confirmation of Debtor's Amended Plan of Reorganization. (8) On Aug. 22, 2003, the Court held a hearing on confirmation of the Debtor's Amended Plan of Reorganization at which time the Internal Revenue Service failed to appear, contrary to the assertion of representatives of the Office of the United States Attorney. (9) An Order was entered confirming the Debtor's Amended Plan of Reorganization on Sept. 9, 2003. Pursuant to Rule 3003(c)(2) of the Federal Rules of Bankruptcy Procedure, Judge Fines observes, any creditor or equity security holder whose claim or interest is not scheduled or scheduled as disputed, contingent, or unliquidated shall file a proof of claim or interest within the time prescribed by the Court. Rule 3003(c)(2) further states that any creditor who fails to file a claim as required shall not be treated as a creditor with respect to such claim for the purposes of voting and distribution under a Chapter 11 reorganization. In this case, Judge Fines says, it is clear that the claim of the Internal Revenue Service was unliquidated at the time of the filing of the Debtor's Chapter 11 bankruptcy petition. As such, pursuant to Rule 3003(c)(2), the Internal Revenue Service was required to file a claim in order to vote on the Debtor's Amended Plan of Reorganization and to receive any distribution under that Plan. It is the Debtor's position that the Internal Revenue Service failed to file a timely claim, and, as such, the Internal Revenue Service should receive no distribution on its claim, which was eventually filed on March 4, 2003. The Internal Revenue Service maintains that the late filing of its claim should be allowed based upon excusable neglect. In considering the defense of excusable neglect, the United States Supreme Court, in the case of Pioneer Investment Services v. Brunswick Associates, 507 U.S. 380, 113 S.Ct. 1489, 123 L.Ed.2d 74 (1993), stated that the Court must consider four factors to determine whether excusable neglect exists in the late filing of a claim: (1) The danger of prejudice to the debtor; (2) The length of the delay and its potential impact on the judicial proceedings; (3) The reason for the delay, including whether it was in the reasonable control of the party asserting excusable neglect; and, (4) Whether the party asserting excusable neglect acted in good faith. The Supreme Court further stated that the Court should balance the doctrine of excusable neglect against the underlying principle that the purpose of the bar date is to create finality and assist in the expeditious administration of the bankruptcy estate. If the Court is to allow excusable neglect as the norm, rather than the exception, then the bar date has no meaning in bankruptcy. Id. at 385. In examining the required factors in order to apply excusable neglect, Judge Fines finds that the Internal Revenue Service has failed to establish that its actions in filing its claim late resulted from excusable neglect. Judge Fines says that allowing the Internal Revenue Service claim at this point in time would clearly prejudice the Debtor, especially in light of the fact that the Internal Revenue Service had no participation in the Debtor's bankruptcy proceeding prior to the late filing of its claim. Additionally, the Court notes that the reason for the delay in filing of the Internal Revenue Service's claim was well within the control of the Internal Revenue Service, and the Court has heard no credible argument to excuse the Internal Revenue Service from the bar date clearly established by Order of this Court on August 19, 2002. The undisputed facts indicate that the Internal Revenue Service had ample notice of all deadlines in the Debtor's Chapter 11 bankruptcy proceeding yet chose not to participate in any way. Further, Judge Fines finds that the Internal Revenue Service has failed to establish that it acted in good faith in its failure to file a timely claim or to participate in the Debtor's Chapter 11 bankruptcy proceeding. In addition to its argument that its late-filed claim should be allowed based upon excusable neglect, the Internal Revenue Service argues that the Order of Confirmation entered on September 9, 2003, is contrary to the provisions of Debtor's Amended Plan of Reorganization, and that the Order of Confirmation provides for treatment of the Internal Revenue Service's claim in a manner that is significantly different than in the Amended Plan of Reorganization. This Court has reviewed the Debtor's Amended Plan of Reorganization and the Order of Confirmation and finds that it disagrees with the assertion of the Internal Revenue Service. Judge Fines says that the Debtor's Amended Plan of Reorganization shows clearly that the Internal Revenue Service claim would be treated pursuant to Rule 3003 of the Federal Rules of Bankruptcy Procedure, and the Order of Confirmation does not alter that treatment. The Internal Revenue Service chose not to object to the Debtor's Amended Plan of Reorganization, nor to appear at hearing on the confirmation on that plan; and, thus, cannot now complain of the treatment afforded to it. The facts in this matter clearly establish that the Internal Revenue Service failed to act within any deadline established in Debtor's Chapter 11 case, and, as such, the Court must conclude that the Debtor in Possession's Motion for Rehearing and to Reconsider Order Denying Objection to Claim should be allowed, the Debtor's Objection to Claim should also be allowed, and any distribution to the Internal Revenue Service under the Debtor's confirmed Amended Plan of Reorganization should be denied. Edward W. Brankey, Esq., in Charleston, Illinois, represents TPS Enterprises, Inc. TRM CORP: S&P Puts B+ Rating on Planned $15M Sr. Secured Facility ----------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B+' corporate credit rating to Portland, Oregon-based TRM Corporation. At the same time, Standard & Poor's also assigned its 'B+' senior secured debt rating to the company's proposed $150 million in senior secured credit facilities. The facilities consist of: * a $15 million, U.S.-based line of credit; * a $15 million, U.K. line of credit (available in euros and sterling); and * a $120 million, six-year term loan. "The facilities have a '4' recovery rating, indicating that debt holders can expect a marginal (25%-50%) recovery of principal in the event of a default. The outlook is negative," said Standard & Poor's Credit analyst Lucy Patricola. The proceeds from the term loan, along with about $50 million of newly raised equity, will be used to purchase the ATM Solutions business of eFunds, Inc. for $150 million. Pro forma for the proposed bank facility, TRM had approximately $140 million in operating lease-adjusted debt as of June 2004. The ratings reflect: -- TRM's narrow revenue base as an ATM and photocopier service provider; -- its aggressive acquisition strategies; and -- considerable debt amortization, partly offset by: -- recurring, contractual revenue streams. TRM currently provides services for about 6,400 ATMs and 25,000 self-service photocopiers across the U.S., Canada, and the United Kingdom. The $150 million eFunds acquisition will add 17,000 North American ATMs to its portfolio--more than tripling its base, to about 23,000. The machines are located in nonbanking sites (typically convenience locations such as grocery stores and retailers) under a five-year contract, providing a recurring revenue stream. TRM has some concentration in chains of convenience stores, although no one customer exceeds 10% of sales. US AIRWAYS: Court Fixes Feb. 3, 2005 as Claims Bar Date ------------------------------------------------------- At the request of US Airways, Inc., and its debtor-affiliates, Judge Mitchell of the U.S. Bankruptcy Court for the Eastern District of Virginia establishes: -- February 3, 2005, as the deadline for creditors to file proofs of claim in the Debtors' cases; and -- March 11, 2005, as the deadline for governmental units to file proofs of claim. Judge Mitchell also approves the form and notice of commencement of the Debtors' Chapter 11 cases and the notice of the Bar Dates. Brian P. Leitch, Esq., at Arnold & Porter, in Denver, Colorado, relates that the United States Trustee will conduct a meeting of creditors pursuant to Section 341 of the Bankruptcy Code on November 5, 2004. Pursuant to Rule 3003-1 of the Local Rules of the U.S. Bankruptcy Court for the Eastern District of Virginia, the Bar Date shall be 90 days after the Section 341 meeting of creditors. The Governmental Unit Bar Date shall be 180 days after the Petition Date. The Bar Dates apply to all Persons or Entities holding or wishing to assert Claims against the Debtors that arose before the Petition Date, including: (1) Any Creditor whose Claim is listed as "disputed," "contingent" or "unliquidated" that desires to participate in these Chapter 11 cases or share in any distribution; (2) Any Creditor whose Claim is improperly classified in the Schedules or is listed in an incorrect amount and that wants its Claim allowed in a classification or amount different from the Schedules; and (3) Any Creditor whose Claim is not listed in the Schedules. The Debtors retain the right to dispute, or assert offsets or defenses against all Claims as to nature, amount, liability, classification or otherwise. The Debtors may also designate any Claim as disputed, contingent or unliquidated. The Debtors proposed that the Claims and Noticing Agent serve by first class U.S. mail, postage prepaid, on all known holders of prepetition Claims: (i) a commencement notice of the Chapter 11 cases and Section 341 meeting of creditors; (ii) notice of the Bar Dates; and (iii) a proof of claim form. The Proof of Claim Form will state whether the Entity's Claim is listed in the Schedules, the dollar amount of the Claim, the Debtor against which the Entity's Claim is scheduled and whether the Claim is listed as disputed, contingent or unliquidated. The Claims and Noticing Agent will serve the Initial Notice by October 15, 2004. The Claims and Noticing Agent will serve the Bar Date Notice and Proof of Claim Form by November 5, 2004. This will allow claimants sufficient time to file their Claims after receiving the Bar Date Notice and Proof of Claim Form. All Creditors asserting Claims against more than one Debtor are required to file a separate Proof of Claim Form for each Debtor. Mr. Leitch explains that if Creditors are permitted to assert Claims against more than one Debtor in a single proof of claim, the Claims and Noticing Agent may have difficulty maintaining separate Claim registers for each Debtor. Also, all Debtors will have to object to a proof of claim that may be applicable to only one of the Debtors. Creditors must identify on each Proof of Claim Form the particular Debtor against which their Claim is asserted. This will expedite the Debtors' review of the Claim, minimize the Debtors' need to object to the Claim that were filed against the incorrect Debtor, and reduce the cost and administrative burden of the claims resolution process. This requirement will not be unduly burdensome since the Creditors should know the identity of the Debtor against which they are asserting a Claim. Due to the size of the Debtors, there may be Claims against the Debtors that they do not know about. Unknown potential Claims may include: -- Claims of trade vendors who failed to submit an invoice to the Debtors; -- Claims of former employees; -- Claims of potential litigants who have not filed suit against the Debtors; and -- Claims that are not recorded on the Debtors' books and records. The Debtors will provide notice of the Bar Dates to unknown Entities by publishing the Bar Date Notice in The New York Times (national edition), The Wall Street Journal (national and European editions), and USA Today (worldwide), by November 5, 2004. The Debtors may translate the notices into foreign languages to better inform foreign creditors of the Bar Dates. This will give Creditors sufficient notice, time and opportunity to file their Claims. 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 a $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 their 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. 65; Bankruptcy Creditors' Service, Inc., 215/945-7000) US AIRWAYS: Lays Off 308 Workers in Pittsburgh Int'l Airport ------------------------------------------------------------ US Airways will eliminate 308 full- and part-time jobs at Pittsburgh International Airport, Dan Fitzpatrick of the Pittsburgh Post-Gazette reports. The job cuts are a result of the airline's reduced presence at PIA. According to Mr. Fitzpatrick, the layoff will affect baggage handlers, gate and ticket agents, mechanics, aircraft cleaners, and airport cart drivers. The terminated employees can apply for jobs with the Debtors in other cities. The job cuts will lower the carrier's employee count in Pittsburgh to below 7,000, Mr. Fitzpatrick says. 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 a $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 their 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. 65; Bankruptcy Creditors' Service, Inc., 215/945-7000) US AIRWAYS: Committee Hires Vorys Sater as Local Counsel -------------------------------------------------------- The Official Committee of Unsecured Creditors appointed in the chapter 11 cases of US Airways, Inc., and its debtor-affiliates seeks permission of the U.S. Bankruptcy Court for the Eastern District of Virginia to retain Vorys, Sater, Seymour and Pease LLP, as its local counsel, effective as of September 20, 2004. The Committee has selected the Vorys Firm because of its experience and knowledge of business reorganizations under Chapter 11 of the Bankruptcy Code. The Vorys Firm operates in a cost effective, efficient and timely manner. The Vorys Firm has no conflict of interest, according to R. Douglas Greco, Vice President, Sales Finance at Airbus North America Holdings, Inc., and Chairperson of the Committee. The Vorys Firm will: -- attend hearings; -- review applications and motions; -- communicate with Otterbourg, Steindler, Houston & Rosen, the Committee's lead counsel; -- communicate with and advise the Committee; -- attend meetings of the Committee; -- communicate with the Debtors' counsel; -- provide expertise on these proceedings and procedural rules and regulations; and -- perform all other services for the Committee that are necessary. The Vorys Firm will be paid on an hourly basis and reimbursed of actual and necessary expenses. The hourly rates for the Vorys Firm's professionals and paraprofessionals that will be working on US Airways' cases are: Partners $230 - 425 Counsel 230 - 350 Associates 110 - 225 Paralegal/Legal Assistants 65 - 150 The Vorys Firm has not received a retainer from the Committee. The hourly rates for the principal attorneys and paraprofessionals that will represent the Committee are: Robert J. Sidman $425 Malcolm M. Mitchell, Jr. 325 Reginald W. Jackson 365 Randall D. LaTour 350 Melissa M. Nichols 210 Byron L. Pickard 190 Stacey L. Papp 175 Cindy D. Fricke 135 Emma Tamonte 125 Mr. Greco reminds the Court that the Vorys Firm represented the Official Committee of Unsecured Creditors and the Post- Confirmation Committee in the Debtors' prior bankruptcy proceedings. In connection with the Post-Confirmation Committee, in the 90 days preceding the Petition Date, the Vorys Firm was paid $8,871 and is currently owed $2,437. The Vorys Firm has closed the firm identification number on that matter, written off the receivable and will not seek payment from the estate. 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 a $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 their 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. 65; Bankruptcy Creditors' Service, Inc., 215/945-7000) VENTAS INC: Files Amended Shelf Registration Statement ------------------------------------------------------ Ventas, Inc. (NYSE: VTR) filed an amendment to its shelf registration statement relating to the guarantee by certain of its recently formed or acquired subsidiaries of debt securities that the Company previously registered for future shelf offerings. The shelf registration statement relating to the previously registered debt securities is a universal shelf registration statement that was declared effective by the Securities and Exchange Commission on July 8, 2002, and originally provided for the issuance of up to $750.0 million of debt securities, common stock, preferred stock, depositary shares and warrants, of which $599.1 million of securities remains available for future offerings. Except for the registration of these guarantees, Tuesday's registration statement contains no significant changes from the universal shelf and does not increase the total amount of securities that may be publicly offered by the Company. The Company has no present intention to issue any securities under its shelf registration statements. Tuesday's registration statement has not been declared "effective" by the Securities and Exchange Commission. The subsidiary guarantees registered under such registration statement may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of such securities in any state in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such state. Ventas, Inc. is a leading healthcare real estate investment trust that owns healthcare and senior housing assets in 39 states. Its properties include hospitals, nursing facilities and assisted and independent living facilities. More information about Ventas can be found on its website at http://www.ventasreit.com/ * * * As reported in the Troubled Company Reporter on June 30, 2004, Standard & Poor's Ratings Services raised its corporate credit ratings on Ventas Inc., its operating partnership Ventas Realty L.P., and Ventas Capital Corp. to 'BB' from 'BB-'. In addition, ratings are raised on the company's senior unsecured debt, which totals $366 million. Concurrently, the outlook is revised to stable from positive. "The upgrades acknowledge the company's steady improvement in both its business and financial profiles," said Standard & Poor's credit analyst George Skoufis. "Recent acquisitions have targeted improving Ventas' diversification, foremost its concentration with its primary tenant Kindred Healthcare Inc. Growing cash flow and profits, and lower leverage have contributed to stronger debt protection measures. Credit weaknesses remain, however, including Ventas' continued reliance on un-rated Kindred, the risk of future changes to government reimbursement, and constrained, but improved, financial flexibility." VERESTAR INC.: Exclusive Plan-Filing Period Stretched to Jan. 17 ---------------------------------------------------------------- Verestar, Inc., out of an abundance of caution, asked the U.S. Bankruptcy Court for the Southern District of New York, pursuant to 11 U.S.C. Sec. 1121, for an extension of its exclusive periods to propose a chapter 11 plan and solicit acceptances of that plan from creditors. Specifically, the Debtor asked that its exclusive period to file a plan be extended through Jan. 17, 2005, and that its exclusive solicitation period be extended through Mar. 18, 2005. The Honorable Allan L. Gropper found cause for the extensions and agreed to block any other party-in-interest from attempting to wrest control of the plan process at this juncture. Verestar agreed to sell its assets to SES AMERICOM earlier this year for $18.5 million in cash and the Court blessed that transaction. The Debtor filed a chapter 11 plan and disclosure statement on Sept. 29, 2004, outlining its proposal to distribute those sale proceeds to creditors in order of their statutory priority. Judge Gropper will convene a hearing on Nov. 9, 2004, to consider the adequacy of the company's Disclosure Statement. Objections to the Disclosure Statement, if any, must be filed and served by Nov. 2. If Judge Gropper finds that the disclosure document provides adequate information allowing creditors to make informed decisions about whether to vote to accept or reject the plan, he'll approve the document for distribution to creditors. The Court will hold a hearing to consider the merits of the plan, and whether it should be confirmed, at a later date. Headquartered in Fairfax, Virginia, Verestar, Inc., -- http://www.verestar.com/-- is a provider of satellite and terrestrial-based network communication services. The Company and two if its affiliates filed for chapter 11 protection on December 22, 2003 (Bankr. S.D.N.Y. Case No. 03-18077). Matthew Allen Feldman, Esq., at Willkie Farr & Gallagher LLP represents the Debtors. When the Company filed for protection from its creditors, it listed assets and debts of more than $100 million each. WASTECORP. INT'L: Disclosure Statement Hearing Moved to Nov. 9 -------------------------------------------------------------- Wastecorp. International Investments Inc. (TSX Venture: Stock Symbol "WII"), advises that the US Bankruptcy Court for the District of New Jersey has adjourned the hearing of Wastecorp.'s preliminary disclosure statement, for the third time, to Nov. 9, 2004. The US Bankruptcy Court has extended the exclusivity period in which to solicit acceptances to a plan of reorganization to Jan. 26, 2005. As previously reported, Wastecorp. filed a preliminary disclosure statement on May 12, 2004, to explain its chapter 11 plan. ITT Industries, Inc., the Company's largest creditor, raised various objections. Headquartered in Glen Rock, New Jersey, Wastecorp. Inc. -- http://www.wastecorp.com/-- is a waste management company specializing in wastewater sewage treatment with its Wastecorp. Marlow Plunger Pump line, medical waste disposal, with its reusable sharps container program and plastic and scrap tire recycling division. On April 7, 2003, Wastecorp. International Investments Inc., together with its subsidiary, Wastecorp. Inc., filed voluntary Chapter 11 petitions in the United States, Bankruptcy Court for the District of New Jersey. Wastecorp. Is represented in Canada by the law firm of Borden, Ladner, Gervais, and in the United States by lawyers at Cole, Schotz, Meisel, Forman & Leonard. WEIRTON STEEL: Court Approves WVWCC Settlement Agreement -------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of West Virginia approved a settlement agreement between Weirton Steel Corporation and its debtor-affiliates, and the West Virginia Workers' Compensation Commission. As reported in the Troubled Company Reporter on Aug. 25, 2004, Weirton Steel elected to self-insure against workers' compensation claims with consent of the Commission. Even though the Debtor, as a self-insured employer, was not required to subscribe to the Fund, it was required by applicable non-bankruptcy law to make certain payments, referred to as a "self-insured premium tax," to the Fund. Before the Petition Date, Frontier Insurance Company issued a surety bond for $10,277,958 on Weirton's behalf, for the benefit of the Fund. Frontier is presently subject to a state law insolvency and rehabilitation proceeding in New York. Mr. Freedlander maintains that prior to the Closing of the Asset Sale to ISG Weirton, Inc., the Debtor was current on all its statutory obligations due and owing to the Fund. However, the Commission disputes this characterization as it relates to the Debtor's alleged obligation to provide sufficient surety to the Fund. Concurrent with the Closing, the Debtor terminated all of its employees. Weirton no longer had the ability to pay, and ceased paying, all amounts otherwise due to the Fund prior to the Closing. After the Closing, the Debtor was no longer an active employer for purposes of West Virginia workers' compensation law. The Debtor has not participated in the West Virginia workers' compensation program since the Closing. On November 3, 2003, the Commission asserted a contingent unsecured priority claim in the undiscounted amount of $111,031,825 and the discounted amount of $59,901,268, based on an estimation of self-insured prepetition liabilities. The Commission subsequently filed an administrative expense priority claim for $6,178,687, based on an estimation of self-insured postpetition liabilities. The Debtor disputes the amount, validity and priority of the Commission Claims. On April 23, 2004, the Commission filed a Notice of Appeal of the ISG Sale Order with the United States District Court for the Northern District of West Virginia. The Debtor and the Commission now want to resolve their dispute to avoid the costs, risks, delay and uncertainty associated with litigating the Appeal and the Commission Claims. The significant terms of the Settlement Agreement are: A. Payment In full and final payment and satisfaction of the Commission's Administrative Claim, the Debtor will pay the Commission $4,000,000 in cash. No portion of the Settlement Amount will be subject to recovery or disgorgement once paid. B. Assignment of Annuity Contracts With respect to the Commission's Priority Claim, Weirton will, to the extent assignable, assign to the Commission the Debtor's right, title and interest in 12 annuity contracts: Settled Cases Settlement Cost ------------- --------------- Ash, Robert $111,679 Barnhouse, Thomas 85,442 Chapman, Herbert 73,390 Graham, Arles 24,059 Griffith, Charles 101,875 Mowder, Clarence 117,965 Nagy, Alec 76,578 Taylor, Anthony 43,885 Thomas, Vashti 63,118 Weber, Norman 42,943 Wright, Jeffrey 72,098 Yeater, Dallas 113,899 --------------- TOTAL PREMIUM $926,931 =============== The Debtor will take all reasonable actions necessary to effectuate the assignments, including, but not limited to, executing a transfer of ownership. To the extent the Annuities are not assignable, the Debtor will liquidate the Annuities and pay the proceeds to the Commission as soon as practicable. C. Assignment of Subordinated Note With respect to the Commission's Priority Claim, the Debtor will assign to the Commission that certain Subordinated Purchase Money Note dated as of June 19, 1997, from the West Virginia Economic Development Authority in the original principal amount of $1,057,200. No representations or warranties are made by the Debtor as to the collectability or enforceability of the Subordinated Note. D. Disallowance of Claims Upon payment of the Settlement Amount, any and all claims filed or could in the future be filed by the Commission against the Debtor, including but not limited to claims for self-insured premium taxes, but excluding, however, the Allowed Priority Claim will be disallowed and expunged. E. Dismissal of Appeal Upon receipt of the Settlement Amount, the Commission will take all necessary action to dismiss the Appeal, with each party to bear its own costs. F. Waiver of Claims The Commission expressly agrees that upon payment of the Settlement Amount and assignment of the Annuities and of the Subordinated Note, it will seek no other or further payment from the Debtor for any claim, except for that claim for $10,277,958, representing the discounted present value of an undiscounted greater sum of the Commission's Priority Claim which will have the status of a claim under Section 507(a)(8)(E) of the Bankruptcy Code. 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. 36; Bankruptcy Creditors' Service, Inc., 215/945-7000) YURWAY TRANSPORTATION: Case Summary & Largest Unsecured Creditors ----------------------------------------------------------------- Lead Debtor: Yurway Transportation, Inc. 177 Neville Street Circleville, Ohio 43113 Bankruptcy Case No.: 04-18654 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Torymac Investments, Inc. 04-18655 CZ Ryan, Inc. 04-18656 Chapter 11 Petition Date: October 7, 2004 Court: Southern District of Indiana (Indianapolis) Judge: James Coachys Debtor's Counsel: KC Cohen, Esq. KC Cohen, Lawyer, PC 151 North Delaware Street, Suite 1104 Indianapolis, IN 46204-2573 Tel: 317-715-1845 Fax: 317-916-0406 Estimated Assets Estimated Debts ---------------- --------------- Yurway Transportation, Inc. $0 to $50,000 $1 M to $10 M Torymac Investments, Inc. $0 to $50,000 $100,000-$500,000 CZ Ryan, Inc. $0 to $50,000 $50,000-$100,000 A. Yurway Transportation, Inc.'s 4 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Bank One Judgment $1,248,000 c/o Barren & Merry Co., LPA 200 E. Campus View Blvd. Ste. 200 Columbus, OH 43235 GE Cap Lease default $84,600 Internal Revenue Service Highway use tax $55,538 Eakins Trust Trade debt $50,000 B. Torymac Investments, Inc.'s 6 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ GE Cap Lease default $140,400 Bank One Judgment $127,349 Dayton Leasing Operating equipment $100,000 US Bancorp Equipment Finance $60,000 Internal Revenue Service Highway use tax $48,536 Capital City Trailers, Inc. Operating equipment $10,300 C. CZ Ryan, Inc.'s 6 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Dayton Leasing Operating equipment $82,575 * Piper Rudnick Merging with Gray Cary Effective Jan. 1, 2005 ------------------------------------------------------------- Piper Rudnick LLP, one of the nation's leading law firms, and Gray Cary Ware and Freidenrich LLP, a premier technology law firm, reported a merger that will create one of the largest, most diversified law firms in the United States. The new firm will be named "Piper Rudnick Gray Cary LLP." With more than 1,300 lawyers, the combined firm will become one of the 10 largest law firms in the U.S. The firm will have 20 offices located in leading business and technology markets throughout the country and projected revenues for 2004 that will approach $800 million, which would have placed the merged firm sixth in last year's AmLaw 100, which ranks U.S. law firms based on revenues. The merger, which takes effect on January 1, 2005, was announced jointly by Piper Rudnick's co-chairs, Francis B. Burch Jr., and Lee I. Miller, and Gray Cary's chairman and CEO, J. Terence O'Malley. The merger combines the 380 lawyers from Gray Cary, a firm well known for representing clients in corporate and securities, intellectual property and complex litigation matters, with the 1,000 lawyers from Piper Rudnick, a firm widely known for its real estate, litigation, business and technology, and government affairs practices. The combination results in a litigation department that will be one of the nation's largest and most experienced at trying complex litigation, including commercial and patent law disputes. It also accelerates the growth of Piper Rudnick's business and technology practice, which will have notably stronger capacity to represent clients of all sizes, from emerging companies to Fortune 100 corporations, particularly in the technology industry. "This merger represents an important milestone in our strategic plan," said Burch and Miller, co-chairs of Piper Rudnick, in a joint statement. "Gray Cary's core areas of practice, talented attorneys, and presence in key locations fit perfectly into our client-driven plans for growth. Their corporate and litigation strengths complement our own, so collectively, we are well positioned to meet the increasingly complex and global legal needs of our clients." "Like Piper Rudnick, we represent sophisticated clients that provide sophisticated products and services throughout the U.S. and across international markets," explained O'Malley. "This merger enables us to offer them comprehensive legal services in areas that are of critical importance to their business. O'Malley added that having a presence in New York, Los Angeles, Boston and Chicago, where Piper Rudnick now has offices, will give Gray Cary's clients and the firm's attorneys immediate proximity to important financial centers, capital markets, and additional venues where complex cases are litigated. He also cited an expanded presence in Washington D.C., where Piper Rudnick has a substantial part of its well established legislative and regulatory practice, as advantageous to the firm's clients who find themselves at the intersection of technology and regulatory issues in the post 9-11 business environment. Response from clients to the merged firm's capabilities is expected to be very positive. "Gray Cary and Piper Rudnick have combined their substantial individual competencies and wide ranging expertise into a powerful global platform capable of serving global organizations like ours and the companies we work with in a multitude of ways. We look forward to strengthening our long-standing partnerships with these great firms now that they have joined forces to create this enhanced set of capabilities," said Bob Grady, Managing Director and global head of venture capital at the Carlyle Group, one of the world's largest private equity firms. The combined firm will comprise a set of top caliber, national legal practices in the areas of: -- Corporate and Securities/M&A -- The merger will instantly create a leading corporate finance practice with more than 250 attorneys. Based on completed deals, the merged firm would have ranked second in the country for "Completed U.S. M&A transactions" in the Thomson Financial tables. -- Litigation -- The combined firm creates a litigation department with more than 550 attorneys in offices throughout the country working on patent, securities, trade regulation, commercial, product liability, class action, white collar, financial services/insurance and other litigation work. The firm would rank seventh in the U.S. for the number of patent litigation cases filed in 2003, according to data compiled by American Lawyer Media. -- Real Estate -- With Piper Rudnick already widely recognized as the nation's preeminent real estate law firm, the combined firm would have more than 200 attorneys focused on real estate matters through the addition of 30 Gray Cary attorneys focusing in this area. -- Intellectual Property -- The merged firm will have nearly 200 attorneys heavily focused on IP matters, including patents, copyrights and trademarks, media and advertising. The merged firm will have more than 60 attorneys focusing on patent and trademark prosecution, 60 attorneys with copyright law experience and nearly 80 patent litigators. -- Government Affairs -- Building upon Piper Rudnick's existing position as one of the top government affairs law firms in the U.S., the merged firm will have more than 180 attorneys operating out of the Washington D.C. office, including Senator George Mitchell, Congressman Dick Armey and Governor James Blanchard among a host of other political leaders. The office will become the second largest within the firm's network while hosting sophisticated practices that include antitrust, communications, environmental, international trade, government controversies, legislative affairs, government contracts, and electronic commerce and privacy. "As two firms that are each the product of successful mergers in the past, both Piper Rudnick and Gray Cary approached this deal with a sharp focus on making sure there was a cultural fit," Burch added. "Both Piper Rudnick and Gray Cary have collegial, open and consensus-based cultures. Both share a deep commitment to pro bono and public service. Both invest heavily in training and developing their lawyers. We will continue to emphasize those values, enabling us to provide a stimulating and rewarding working environment for our lawyers and staff." Building on National Growth and Momentum According to Burch and Miller, Piper Rudnick's continued expansion in California has been a central part of the firm's strategic growth plan to build core practices areas in key regions of strategic importance to clients. The merger allows both firms to expand existing client relationships and provides a strong platform for developing new regional and national client relationships. The merger continues a period of dramatic growth for Piper Rudnick during the past 15 months, reflected in several strategic mergers, alliances and recruitment of many high-profile partners and strategic advisors across the country. About Gray Cary Gray Cary is a national law firm that represents private and public businesses, from emerging growth companies to Fortune 500 corporations. The firm has approximately 380 attorneys practicing in Austin, East Palo Alto, Sacramento, San Diego, San Francisco, Seattle and Washington, D.C. About Piper Rudnick LLP Piper Rudnick is a business law firm of 1,000 lawyers with U.S. offices in Baltimore, Boston, Chicago, Dallas, Edison, Las Vegas, Los Angeles, New York, Philadelphia, Reston, San Francisco, Tampa, and Washington, and a European office in Paris. In 2004, Chambers USA named 40 of the firm's lawyers (up from 28 in 2003) among America's Leading Lawyers for Business, including two who received the rare "Exceptional" rating and one "Senior Statesman," particularly in the areas of real estate, corporate, litigation, and labor and employment. The firm's practice is focused on: -- Litigation, including national business and securities, product liability and toxic torts, intellectual property, antitrust, labor and class action litigation, and a white- collar group featuring a former Watergate prosecutor. This group includes eight members of the American College of Trial Lawyers (one of whom also served as president), two former United States Attorneys and a former federal judge. -- Real Estate, comprising one of the largest and most diverse practices in the United States, with a focus on transactional, finance and securities capabilities for owners and investors in all property sectors. In 2004, Chambers and Partners, the Practical Law Company and Who's Who Legal in separate independent surveys of clients and competitors all ranked the Real Estate group as the undisputed leading real estate practice in the nation. The group includes the President-elect and a former President of the American College of Real Estate Lawyers, as well as 16 other members of the College. -- Business and Technology, including corporate and securities, corporate governance, franchise and distribution, intellectual property, media, information technology, taxation, bankruptcy, biosciences, IPOs, private equity, mergers and acquisitions, project finance, and other major transactions for companies of all sizes. -- Government Affairs, including the nationally known federal affairs and legislation group formerly with Verner Liipfert Bernhard McPherson and Hand; a government controversies practice headed by the former general counsel of a leading telecommunications company; and prominent regulatory practices in government contracts, environmental, e-commerce and privacy, tax legislation, antitrust and communications. This group includes former Senate Majority Leader George Mitchell and former House Majority Leader Dick Armey. -- International, with significant capabilities in trade regulation, dispute resolution, and cross-border transactions, complemented by our strategic alliance with The Cohen Group, an international strategic business advisory firm headed by former U.S. Secretary of Defense William S. Cohen, former NATO Supreme Allied Commander General Joseph Ralston, and former U.K. Defense Minister and NATO Secretary General Lord George Robertson. * Scott Hileman Leads A&M's New York Real Estate Group Expansion ---------------------------------------------------------------- Alvarez & Marsal, a leading global professional services firm, announced that Scott Hileman has joined the firm's Real Estate Advisory Services group as a Managing Director. He will build and lead the New York group, which provides independent and objective financial consultation and analysis to real estate owners, investors, lenders and corporate users. Mr. Hileman has more than 22 years of domestic and international real estate consulting experience. He specializes in due diligence, loan underwriting and restructuring, investment analysis, capital market strategies, lease analysis and occupancy cost reduction and has extensive experience re-engineering front and back office operations of real estate developers, operators, lenders and private equity funds as well as corporate real estate departments. Prior to joining A&M, Mr. Hileman was a Principal with Ernst & Young's Real Estate Advisory Services and National Practice Leader for its Real Estate Business Transformation Group. "Since launching our Real Estate Advisory Services group, we have continued to attract senior professionals who have broad and deep real estate industry experience - nationally and internationally," said William "Biff" McGuire, head of A&M's Real Estate Advisory Services in Texas. "Scott's impressive background and extensive consulting experience in numerous critical areas make him an invaluable team leader in New York and further increase our ability to serve current and future clients in the U.S. and globally." Over the course of his career, Mr. Hileman has overseen the selection and implementation of real estate technology for such companies as Prime Hospitality Group, Northshore LIJ Hospital, Roseland Properties, Kroeger, McDonalds and Giant Eagle. In addition, he has consulted on the successful financing of over $1.5 billion of commercial real estate for clients including GMAC Commercial Mortgage, G.E. Capital Real Estate, J.P. Morgan Chase and Lehman Brothers. Mr. Hileman earned his bachelor's degree in Journalism and Business from Pennsylvania State University and is a member of the Urban Land Institute, CoreNet Global, National Council of Real Estate Investment Fiduciaries, Mortgage Bankers Association and Commercial Mortgage Securities Association. Alvarez & Marsal's Real Estate Advisory Services group provides services including: transaction advisory services for real estate buyers, sellers, investors and lenders; restructuring and real estate litigation services, including consulting and expert witness services related to real estate matters; strategy and operations services, including executive management consulting to institutional owners, investors, lenders and users of real estate; and owner advisory services, including financial strategies and execution for private companies and institutional owners of real estate. About Alvarez & Marsal 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 address complex business issues, implement change and favorably influence results. Alvarez & Marsal's 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, visit http://www.alvarezandmarsal.com/ ********* 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 ***