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/raid1/www/Hosts/bankrupt/TCR_Public/041118.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, November 18, 2004, Vol. 8, No. 253 Headlines 2015 FIFTH AVENUE: Case Summary & 2 Largest Unsecured Creditors AFFINITY TECH: Sept. 30 Balance Sheet Upside-Down by $1.4 Million AMERCO: Declares $.53125 Quarterly Preferred Stock Dividend AMERICAN RESIDENTIAL: Fitch Junks Class B Issue AMERICAN WOOD: Section 341(a) Meeting Slated for Dec. 17 ASSOCIATED WOOD: Case Summary & 20 Largest Unsecured Creditors ATA AIRLINES: Closes $15 Million DIP Financing with ITFA ATA AIRLINES: Picks 2 Members as Co-Chairmen for Creditors' Panel ATA AIRLINES: Sec. 341 Meeting of Creditors Scheduled for Dec. 15 AVAYA INC: Prices $284 Million of 11-1/8% Sr. Notes Due 2009 AVAYA INC: S&P Upgrades Rating on Senior Unsecured Debt to 'B+' BEAR STEARNS: Poor Performance Cues Fitch to Junk Class BF Issue BEAR STEARNS: Payoff Prompts S&P to Withdraw Class G's BB+ Rating BMC INDUSTRIES: B.D. Carlson Takes the Helm as 3 Executives Resign BNS CO: Posts $629,000 Third Quarter Net Loss Following Asset Sale BRUENERS HOME: Hires IP Recovery as I.P. Disposition Agent BREUNERS HOME: Can Continue Hiring Ordinary Course Professionals BUFFALO MOLDED: Hires Campbell Levine as Local Bankruptcy Counsel BUFFALO MOLDED: Look for Bankruptcy Schedules on Nov. 30 BURLINGTON: Trust Signs Settlement Pact with UAE Mecklenburg CANBRAS COMMS: Horizon Asserts $24.7 Mil. Indemnification Claim CAPITAL GUARDIAN: Fitch Junks $15 Million Preference Shares CARE CONCEPTS: New CUSIP Number Issued to Reflect Name Change CARROLS CORP: S&P Puts B+ Rating on Planned $250M Sr. Sec. Loan CATHOLIC CHURCH: Tucson Tort Committee Retains Stinson as Counsel CBD MEDIA: Third Quarter Net Revenue Up 1% to $21,700,000 CHARTER COMMS: Moody's Junks $750M Senior Unsec. Convertible Notes CHARTER COMMS: Fitch Junks $750 Million Convertible Senior Notes CONTECH PACKAGING: Case Summary & 20 Largest Unsecured Creditors COVANTA ENERGY: Settles Dispute on Nixon Peabody's $272K Claim COVANTA ENERGY: Lake II's Schedule of Assumed Contracts & Leases COVENTRY HEALTH: Names Dale B. Wolf as Chief Executive Officer CROWN PACIFIC: Unable to File Third Quarter Financials DANA CORP: S&P Upgrades Corporate Credit Rating to BBB- from BB DAVCRANE INC: Case Summary & 20 Largest Unsecured Creditors DELTA AIR LINES: Reports September 2004 Quarter Results ELECTRIC MACHINERY: Bankruptcy Court Confirms Reorganization Plan EMPIRE FINANCIAL: Sept. 30 Balance Sheet Upside-Down by $1.8 Mil. ENRON CORP: Plan of Reorganization Declared Effective ENRON: CCE Holdings Joint Venture Completes CrossCountry Purchase ENRON CORP: Court Approves Settlement Agreement with ETOL EXIDE TECHNOLOGIES: Castlerigg Discloses 7.5% Equity Stake EXIDE TECHNOLOGIES: S&P Revises Outlook on BB- Rating to Negative FABRICATION & DESIGN: Voluntary Chapter 11 Case Summary FINOVA GROUP: Reports Status of Senior Notes Prepayment FLAVIUS CDO: Fitch Affirms Junk Ratings on Four Note Classes FULTON VILLAGE: Case Summary & 20 Largest Unsecured Creditors GLOBAL CROSSING: Court Permits AGX Trustee to Examine 16 Parties GLOBALNET INT'L: Parent Inks Lease Settlement Pact with Cisco GRAFTECH FINANCE: Moody's Rates Proposed Senior Sec. Facility Ba3 GRAFTECH FINANCE: S&P Rates Proposed $225M Credit Facility 'BB-' HAYES LEMMERZ: Will Host 3rd Quarter Conference Call on Dec. 10 HEALTH & NUTRITION: Sept. 30 Balance Sheet Upside-Down by $828K INTERSTATE BAKERIES: Section 341 Meeting Reset to Dec. 15 K. HOVNANIAN: Moody's Places Ba3 Rating on $100M Senior Sub. Notes KMART HOLDING: Merges with Sears to Create 3rd Largest Retailer LEVEL 3: Moody's Assigns B3 Rating to Proposed $450 Mil. Facility LEVEL 3: Fitch Junks Planned $200 Million Senior Convertible Notes MICROCELL TELECOMMS: Moody's Withdraws Ratings After Debt Payment NAPIER ENVIRONMENTAL: Reports Third Quarter 2004 Financial Results NATIONAL MUSIC: Case Summary & 20 Largest Unsecured Creditors NEVADA POWER: S&P Assigns 'BB' Rating to $250 Million Bonds NEXTEL PARTNERS: Subscriber Growth Cues Moody's to Upgrade Ratings OGLEBAY NORTON: Judge Rosenthal Confirms Plan of Reorganization PAXSON COMMS: Third Quarter EBITDA Up $2.2 Million From 2003 PINNACLE FOODS: Moody's Changes Ratings Outlook to Negative PINNACLE FOODS: Weak Half-Year Performance Cues S&P to Cut Ratings POWDER SPRINGS: Wants to Hire Paul Reece as Bankruptcy Counsel POWDER SPRINGS: Section 341(a) Meeting Slated for Dec. 16 PREMCOR REFINING: S&P Affirms 'BB-' Corporate Credit Rating PRESTIGE BRANDS: S&P Low-B & Junk Ratings on CreditWatch Positive REGENCY GAS: Moody's Assigns Low-B Ratings to Debts RELIANCE GROUP: Inks $30 Million Settlement with John Hancock RIG VENTURES INC: Case Summary & 18 Largest Unsecured Creditors SAFETY-KLEEN: Wants Claims Objection Deadline Extended to June 16 SBA COMMS: Launches Cash Tender Offer for 10-1/4% Sr. Notes SIGHT RESOURCE: 2002 & 2003 Financials Still Unaudited SNACKIE JACK: Ontario Securities Commission Puts Default Status SPIEGEL INC: Court Allows Deutsche Bank Claim for $24,575,433 SPIEGEL INC: Court Approves IBM Settlement Agreements SPIEGEL INC: Eddie Bauer Wants to Reject Menlo Park Store Lease STELCO INC: Inks 20-Month Supply Agreement with General Motors STORAGE COMPUTER: Recurring Losses Spur AMEX's Delisting Notice TENNECO AUTOMOTIVE: Moody's Rates Planned $500M Sr. Sub. Notes B3 THOMPSON DINING LP: Case Summary & 20 Largest Unsecured Creditors UAL CORP: Wants Court Nod to Pay Amendment Fees to DIP Lenders UAL CORP: Judge Wedoff Approves EPA Settlement Agreement UAL CORP: Engineers Want Stay Lifted to Pursue California Suit US AIRWAYS: Progresses in Talks with Flight Attendants US AIRWAYS: Wants Hilton Hotels to Honor Agreements VINFRED INTERIOR: Case Summary & 19 Largest Unsecured Creditors WEIRTON STEEL: Debra Davidson Wants to Pursue Claim WORLDCOM INC: Disputes HickoryTech's $1.2 Million Claim WYNN LAS VEGAS: Launches Sr. Debt Offering & Consent Solicitation * Boston Consulting Welcomes John Rose to New York Office * Stroock & Stroock Names Four New Partners ********* 2015 FIFTH AVENUE: Case Summary & 2 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: 2015 Fifth Avenue Associates, LLC 542 East Shore Road Great Neck, New York 11024 Bankruptcy Case No.: 04-17357 Chapter 11 Petition Date: November 16, 2004 Court: Southern District of New York (Manhattan) Debtor's Counsel: Jeffrey A. Wurst Ruskin Moscou Faltischek, P.C. 190 EAB Plaza, East Tower Uniondale, New York 11556 Tel: (516) 663-6535 Fax: (516) 663-6678 Total Assets: $2,501,870 Total Debts: $709,800 Debtor's 2 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ New York State Department of Finance $6,000 Bank & Assignment Unit 345 Adam Street, 10th Floor Brooklyn, New York 11201 New York State Department of Taxation $800 Bankruptcy Section PO Box 5300 Albany, New York 12205-0300 AFFINITY TECH: Sept. 30 Balance Sheet Upside-Down by $1.4 Million ----------------------------------------------------------------- Affinity Technology Group, Inc. (OTCBB: AFFI) reported financial results for the third quarter and nine months ended Sept. 30, 2004. Revenues for the quarter were $23,000, with a net gain of $242,000. For the comparable period in 2003, revenues were $4,000 and the Company reported a net loss of $157,000. The weighted average number of shares outstanding during the three months ended September 30, 2004, was 41.9 million, compared to 41.5 million for the same period in 2003. Revenues for the nine months ended September 30, 2004, were $282,000 and the Company's net loss was $66,000. In the comparable nine month period in 2003 revenues were $13,000 and the net loss was $590,000. The weighted average number of shares outstanding during the nine months ended September 30, 2004, was 41.5 million, compared to 41.4 million for the same period in 2003. Joe Boyle, Affinity's President and Chief Executive Officer, stated, "The Company reported third quarter net income of $242,000 due to the reversal of $386,000 in litigation expenses we had previously accrued in conjunction with the jury verdict in the Temple Ligon trial. In July the verdict was overturned by the trial judge and the accrual was reversed. Over the next several months we will continue to evaluate our thin capital position in conjunction with progress by the U.S. Patent and Trademark Office's reexamination of two of our patents -- U.S. Patent Nos. 5,940,811 and 6,105,007." About Affinity Technology Group, Inc. Through its subsidiary, decisioning.com, Inc., Affinity Technology Group, Inc., owns a portfolio of patents that covers the automated processing and establishment of loans, financial accounts and credit accounts through an applicant-directed remote interface, like a personal computer or terminal touch screen. Affinity's patent portfolio includes U.S. Patent No. 5,870,721C1, No. 5,940,811, and No. 6,105,007. At Sept. 30, 2004, Affinity Technology's balance sheet showed a $1,392,293 stockholders' deficit, compared to a $1,441,012 deficit at Sept. 30, 2003. AMERCO: Declares $.53125 Quarterly Preferred Stock Dividend ----------------------------------------------------------- AMERCO (Nasdaq: UHAL), the parent of U-Haul International, Inc., Oxford Life Insurance Company, Republic Western Insurance Company and Amerco Real Estate Company, declared a regular quarterly cash dividend of $.53125 on its Series A, 8-1/2 percent Preferred Stock (NYSE: AO+A). The company also reported the payment of four quarterly cash dividends that were in arrears on its Series A, 8-1/2 percent Preferred Stock (NYSE: AO+A). All five quarterly dividends, totaling $2.65625 per share, will be payable Dec. 1, 2004, to holders of record on Nov. 22, 2004. "We are pleased to continue our regular quarterly dividends, and bring current the dividends that were in arrears on the Company's Series A, 8-1/2 percent Preferred Stock. These dividend payments complete the last step of the Company's financial restructuring and allows us to concentrate all of our efforts on serving customers," stated Joe Shoen, chairman of AMERCO. "As we celebrate 60 years of helping families move, we are proud of the employees whose hard work and dedication help over 11 million customers each year with their do-it-yourself moving and storage needs." Headquartered in Reno, Nevada, AMERCO's principal operation is U- Haul International, renting its fleet of 94,000 trucks, 75,000 trailers, and 35,000 tow devices. U-Haul has also been a leader in the storage industry since 1974, with over 340,000 rooms and more than 28.8 million square feet of storage space and over 1,000 facilities throughout North America. The Company filed for chapter 11 protection on June 20, 2003 (Bankr. Nev. Case No. 03-52103). AMERCO's confirmed chapter 11 Plan took effect on March 15, 2004. Craig D. Hansen, Esq., Jordan A. Kroop, Esq., Thomas J. Salerno, Esq., and Carey L. Herbert, Esq., at Squire, Sanders & Dempsey LLP, represented the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $1,042,777,000 in total assets and $884,062,000 in liabilities. * * * As reported in the Troubled Company Reporter on June 11, 2004, Standard & Poor's Ratings Services assigned its 'B+' corporate credit rating to Reno, Nevada-based AMERCO. The outlook is stable. At the same time, Standard & Poor's assigned its 'BB' senior secured bank loan rating to the company's $550 million secured bank facility, due 2009, its 'B+' rating to the company's $80 million senior secured notes, due 2009, and its 'CCC+' rating to the company's preferred stock. The bank facility is rated two notches above the corporate credit rating, with a recovery rating of '1', indicating a high expectation of full recovery of principal in the event of default. Proceeds from the bank facility and senior secured notes were used to repay a portion of the company's debtor-in-possession financing obligations and payments to various creditors that allowed the company to emerge from Chapter 11 on March 15, 2004. "AMERCO's revenues and earnings are expected to improve modestly over the intermediate term," said Standard & Poor's credit analyst Kenneth Farer. "However, upside rating potential will be constrained by a heavy debt burden, constrained financial flexibility, and various ongoing investigations." AMERICAN RESIDENTIAL: Fitch Junks Class B Issue ----------------------------------------------- Fitch Ratings has taken rating actions on these American Residential HELT 1998-1: * Series 1998-1 -- Class M-1 affirmed at 'AA'; -- Class M-2 downgraded to 'A-' from 'A' and removed from Rating Watch Negative; -- Class B remains at 'CCC'. The affirmation reflects credit enhancement consistent with future loss expectations and affects $2,737,396 of outstanding certificates. The negative rating action on class M-2 relates to concerns regarding the adequacy of credit enhancement in the light of declining collateral performance. The downgrade affects $198,938 of outstanding certificates. Since the class M-2 was placed on Rating Watch Negative in May of 2004, the credit enhancement -- in the form of subordination and overcollateralization -- has increased from 13.31% to 15.85%. However, the percentage of delinquent loans has increased from 28.53% to 36% and there have been two months in which losses have exceeded excess spread. Furthermore, OC remains below target. Currently OC stands at $100,263 compared with a target of $490,904. The pool factor (outstanding loan principal as a percentage of the initial loan pool) is currently 23%. AMERICAN WOOD: Section 341(a) Meeting Slated for Dec. 17 -------------------------------------------------------- The United States Trustee for Region 4 will convene a meeting of American Wood Preservers Institute, Inc.'s creditors at 11:00 a.m., on December 17, 2004, at the Office of the U.S. Trustee located in 115 South Union Street, Suite 208 in Alexandria, Virginia. This is the first meeting of creditors required under 11 U.S.C. Sec. 341(a) in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Headquartered in Reston, Virginia, American Wood Preservers Institute, Inc., filed for chapter 11 protection on Nov. 10, 2004 (Bankr. E.D. Va. Case No. 04-14669). James Thomas Bacon, Esq., at Allred, Bacon, Halfhill & Young, represents the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed more than $50,000 in estimated assets and more than $100 million in estimated debts. ASSOCIATED WOOD: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Associated Wood Products, Inc. 15051 Biscayne Avenue West Rosemount, Minnesota 55068 Bankruptcy Case No.: 04-36650 Type of Business: The Company manufactures specialty wood products. See http://www.associatedwood.com/ Chapter 11 Petition Date: November 14, 2004 Court: District of Minnesota (St. Paul) Judge: Dennis D. O'Brien Debtor's Counsel: Kurt M. Anderson, Esq. PO Box 2434 Minneapolis, Minnesota 55402-0434 Tel: (612) 333-3185 Fax: (612) 333-4001 Financial Condition as of November 6, 2004: Total Assets: $1,145,000 Total Debts: $985,000 Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Metro Hardwoods Trade $54,000 9540 83rd Avenue North Maple Grove, Minnesota 55369 Northern Forest Products ::C Trade $53,000 2050 Main Street Centerville, Minnesota 55038 Forest Specialties Trade $34,347 Atlas Staffing Trade $28,000 US Bank Visa Trade $12,274 Froehling Anderson Trade $11,395 Baer Supply Trade $7,020 Saint Croix Hardwoods Inc. Trade $5,699 Youngblood Lumber Company Trade $4,240 Navy Island Plywood Inc. Trade $3,217 Astleford International & Isuzu Trade $3,000 Hardware Distributors Trade $2,920 Industrial Lumber & Plywood Inc Trade $2,412 Diamond Meadow Trade $2,137 Minneapolis Glass Trade $2,081 Hancock Tool Company Trade $1,456 Thomas Miller P.A. Trade $1,395 Michael Weinig Inc. Trade $1,344 Stiles Machinery Inc. Trade $1,302 Scherer Brothers Lumber Company Trade $1,206 ATA AIRLINES: Closes $15 Million DIP Financing with ITFA -------------------------------------------------------- ATA Airlines, Inc., the principal subsidiary of ATA Holdings Corp. (OTC: ATAH.PK), closed a transaction with the Indiana Transportation Finance Authority that will provide ATA with over $15 million of debtor-in-possession financing as it continues to negotiate a restructuring of its operations with lessors, creditors and other affected parties. The Company and ATA are currently operating as debtors-in-possession in a jointly administered Chapter 11 case pending in Indianapolis. The agreement is subject to approval by the Bankruptcy Court. "The combination of this DIP financing with the agreement with AirTran Airways provides a platform from which we can continue developing our plan for a reorganized ATA. We are very grateful for the support demonstrated by the State of Indiana, the City of Indianapolis and the Indianapolis Airport Authority," said Gilbert Viets, Executive Vice President and Chief Restructuring Officer. "I'd like to express particular gratitude on behalf of ATA to Governor Joe Kernan and Mayor Bart Peterson for their leadership in issuing this short-term financing that will ensure ATA's operations while we complete other elements of our restructuring," said George Mikelsons, Chairman, President and CEO. Under the transaction, ATA sold property consisting primarily of aircraft parts, free and clear of any liens to the ITFA. The ITFA in turn leased that property to the IAA and the IAA subleased the property to ATA. ATA is obligated to repurchase the property upon the earlier to occur of the closing of a transaction to transfer its Chicago-Midway Airport operations, expected to take place in December of 2004, or Feb. 15, 2005. As part of the repurchase of the property, ATA will reimburse the ITFA for interest on the funds it provided which carry interest at a variable rate, currently equal to approximately 3% per annum. As part of the financing, ATA has committed to continue to: -- operate from its headquarters in Indianapolis; -- maintain substantial hub operations at Indianapolis International Airport; -- provide passenger service to destinations in Indiana; and -- continue to employ a substantial number of Indianapolis- based employees. A breach of these covenants would likely require ATA to pay a fee of $1.5 million to the State and the City. The Bankruptcy Court supervising the Chapter 11 case gave its interim approval on Nov. 16, 2004. Headquartered in Indianapolis, Indiana, ATA Airlines, owned by ATA Holdings Corp. -- http://www.ata.com/-- is the nation's 10th largest passenger carrier (based on revenue passenger miles) and one of the nation's largest low-fare carriers. ATA has one of the youngest, most fuel-efficient fleets among the major 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 parent company, ATA Holdings Corp., is traded on the Nasdaq Stock Exchange. The Company and its debtor-affiliates filed for chapter 11 protection on October 26, 2004 (Bankr. S.D. Ind. Case No. 04-19866, 04-19868 through 04-19874). Terry E. Hall, Esq., at Baker & Daniels, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $745,159,000 in total assets and $940,521,000 in total debts. ATA AIRLINES: Picks 2 Members as Co-Chairmen for Creditors' Panel ----------------------------------------------------------------- Nancy J. Gargula, the United States Trustee for Region 10, informs the United States Bankruptcy Court for the Southern District of Indiana that the Official Committee of Unsecured Creditors in ATA Airlines and its debtor-affiliates' Chapter 11 cases selected two of its members to sit as Co-Chairmen: (1) John Hancock Funds Arthur Calavritinos 101 Huntington Avenue Boston, MA 02199-7603 Tel: (617) 375-1929 Fax: (617) 375-1837 acalavritinos@jhancock.com Lee Crockett (617) 375-6869 hlcrockett@jhancock.com (2) Flying Food Group, LLC David Cotton 212 North Sangamon Street Suite 1-A Chicago, IL 60601 Tel: (312) 243-2122 ext. 31 Fax: (312) 264-2490 dcotton@flyingfood.com Headquartered in Indianapolis, Indiana, ATA Airlines, owned by ATA Holdings Corp. -- http://www.ata.com/-- is the nation's 10th largest passenger carrier (based on revenue passenger miles) and one of the nation's largest low-fare carriers. ATA has one of the youngest, most fuel-efficient fleets among the major 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 parent company, ATA Holdings Corp., is traded on the Nasdaq Stock Exchange. The Company and its debtor-affiliates filed for chapter 11 protection on Oct. 26, 2004 (Bankr. S.D. Ind. Case No. 04-19866, 04-19868 through 04-19874). Terry E. Hall, Esq., at Baker & Daniels, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $745,159,000 in total assets and $940,521,000 in total debts. (ATA Airlines Bankruptcy News, Issue No. 4; Bankruptcy Creditors' Service, Inc., 215/945-7000) ATA AIRLINES: Sec. 341 Meeting of Creditors Scheduled for Dec. 15 ----------------------------------------------------------------- The United States Trustee for Region 10, Nancy J. Gargula, will convene a meeting of ATA Airlines and its debtor-affiliates' creditors on December 15, 2004, at 1:30 p.m., in Room 416A U.S. Courthouse, in Indianapolis. This is the first meeting of creditors required under 11 U.S.C. Section 341(a) in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible officer of the Debtors under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Headquartered in Indianapolis, Indiana, ATA Airlines, owned by ATA Holdings Corp. -- http://www.ata.com/-- is the nation's 10th largest passenger carrier (based on revenue passenger miles) and one of the nation's largest low-fare carriers. ATA has one of the youngest, most fuel-efficient fleets among the major 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 parent company, ATA Holdings Corp., is traded on the Nasdaq Stock Exchange. The Company and its debtor-affiliates filed for chapter 11 protection on Oct. 26, 2004 (Bankr. S.D. Ind. Case No. 04-19866, 04-19868 through 04-19874). Terry E. Hall, Esq., at Baker & Daniels, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $745,159,000 in total assets and $940,521,000 in total debts. (ATA Airlines Bankruptcy News, Issue No. 4; Bankruptcy Creditors' Service, Inc., 215/945-7000) AVAYA INC: Prices $284 Million of 11-1/8% Sr. Notes Due 2009 ------------------------------------------------------------ Avaya Inc. (NYSE: AV), a leading global provider of business communications software, systems and services, disclosed the consideration to be paid in its cash tender offer and consent solicitation with respect to its $284,395,000 aggregate principal amount of 11-1/8% Senior Secured Notes due 2009. The Company received the requisite consents with respect to its consent solicitation for the adoption of certain proposed amendments to the indenture pursuant to which the Notes were issued. The consideration was determined as of 2:00 P.M., New York City time, on Monday, Nov. 15, 2004, by reference to a fixed spread of 50 basis points above the yield to maturity of the 1.50% U.S. Treasury Note due March 31, 2006, with respect to the Notes. The consideration for each $1,000 principal amount of Notes validly tendered and not validly withdrawn and accepted for payment is $1,158.95, which includes a consent payment of $30.00 per $1,000 principal amount of Notes tendered on or prior to 5:00 p.m. New York City time, on Nov. 15, 2004, subject to the terms and conditions set forth in the Offer to Purchase and the accompanying Letter of Transmittal, and such amount will be paid promptly following the Price Determination Date. Noteholders that validly tender their Notes after 5:00 p.m., New York City time, on Nov. 15, 2004, and before 5:00 p.m., New York City time, on Wednesday, Dec. 1, 2004, will receive the Total Consideration minus the Consent Payment, which will be payable promptly following the Expiration Date. In each case, Noteholders who validly tender their Notes shall receive accrued and unpaid interest from the last interest payment date to, but not including, the applicable Settlement Date, payable on the applicable Settlement Date. As of 5:00 p.m., New York City time on Monday, Nov. 15, 2004, holders of the Notes had tendered $271,090,000 aggregate principal amount of such Notes (approximately 95.3% of the total outstanding principal amount), a percentage sufficient to amend the Indenture, as described in the Offer to Purchase and the accompanying Letter of Transmittal. The supplemental indenture incorporating the Proposed Amendments will become effective upon execution by Avaya and The Bank of New York, as trustee, but will provide that the Proposed Amendments will not become operative until the time that Avaya notifies the Trustee and the depositary for the Notes, The Bank of New York, that the Notes tendered and not validly withdrawn pursuant to the Offer are accepted for purchase at the earlier of the Initial Settlement Date or the Final Settlement Date. If the Offer is terminated or withdrawn, in whole or in part, or the Notes are not accepted for purchase for any reason, the Indenture will remain in effect in its present form and the supplemental indenture will not become operative. The Proposed Amendments will eliminate substantially all restrictive covenants, the reporting requirements and certain events of default from the Indenture, as well as eliminate the requirement under the Indenture to provide security for the Notes and related provisions regarding the collateral. The Offer with respect to the Notes is subject to several conditions, including the execution of the supplemental indenture amending the Indenture and other customary conditions. The terms of the Offer are described in Avaya's Offer to Purchase and the accompanying Letter of Transmittal, copies of which may be obtained from Georgeson Shareholder Communications, the Information Agent, at (800) 457-5303. Persons with questions regarding the Offer should contact: Citigroup Dealer Manager and Solicitation Agent (800) 558-3745 (212) 723-6106 -- or -- Georgeson Shareholder Communications Information Agent (800) 457-5303 Commerzbank Securities and Mitsubishi Securities are acting as Co- Dealer Managers for the Offer. This announcement is not an offer to purchase, a solicitation of an offer to purchase or a solicitation of consent with respect to the Notes. The Offer is being made solely by the Offer to Purchase and accompanying Letter of Transmittal. None of Avaya, the Dealer Manager, the Co-Dealer Managers, the Trustee, the Depositary or the Information Agent makes any recommendations as to whether or not holders should tender their Notes pursuant to the Offer or consent to the Proposed Amendments to the Notes and the Indenture, and no one has been authorized by any of them to make such recommendations. Holders must make their own decisions as to whether to consent to the Proposed Amendments to the Notes and the Indenture and to tender Notes, and, if so, the principal amount of Notes to tender. About the Company Avaya, Inc., designs, builds and manages communications networks for more than one million businesses worldwide, including more than 90 percent of the FORTUNE 500(R). Focused on businesses large to small, Avaya is a world leader in secure and reliable Internet Protocol telephony systems and communications software applications and services. Driving the convergence of voice and data communications with business applications -- and distinguished by comprehensive worldwide services Avaya helps customers leverage existing and new networks to achieve superior business results. For more information visit the Avaya Web site: http://www.avaya.com/ * * * Standard & Poor's Ratings Services raised its rating on Basking Ridge, New Jersey-based Avaya Inc.'s senior unsecured debt to 'B+' from 'B' to reflect lower amounts of priority secured debt in Avaya's capital structure. The corporate credit rating is affirmed, with a positive outlook. AVAYA INC: S&P Upgrades Rating on Senior Unsecured Debt to 'B+' --------------------------------------------------------------- Standard & Poor's Ratings Services raised its rating on Basking Ridge, New Jersey-based Avaya Inc.'s senior unsecured debt to 'B+' from 'B' to reflect lower amounts of priority secured debt in Avaya's capital structure. On November 16, 2004, Avaya announced it had successfully tendered for $271 million of its outstanding $284 million of senior secured notes. Avaya maintains access to an undrawn $250 million senior secured credit facility, although the senior unsecured debt holders would not be materially disadvantaged. The corporate credit rating is affirmed, with a positive outlook. "The ratings reflect Avaya's position in the recovering enterprise telephony market, along with recent improvements in operating performance, liquidity, and leverage," said Standard & Poor's credit analyst Joshua Davis. Avaya's business profile is improving after a three-year downturn in enterprise investment in telephony products and systems, with better market conditions and reduced operating costs resulting in recovering profitability. At the same time, improved balance-sheet liquidity and deleveraging is contributing to an improved financing profile. Avaya reported revenues for the September 2004 quarter of $1.1 billion, up 11% year-over-year, a modest acceleration from the 9% and 6% year-over-year growth generated in the June and March 2004 quarters, respectively. EBITDA margins improved to an estimated 14.6% in the September 2004 quarter from 12.4% in the June quarter, and 10.0% in the March quarter, reflecting top-line improvements combined with restructuring actions taken in earlier periods that have reduced the company's operating cost base. Greater volumes of business should continue helping Avaya meet margin expansion goals. Recent acquisition activity has the potential to strengthen Avaya's business profile, particularly the announced acquisition of Germany-based Tenovis, which will increase Avaya's position in Europe. BEAR STEARNS: Poor Performance Cues Fitch to Junk Class BF Issue ---------------------------------------------------------------- Fitch has taken rating actions on these Bear Stearns ABS issues: * Series 1999-2 group 1 -- Class A affirmed at 'AAA'; -- Class MF1 affirmed at 'AA'; -- Class MF2 affirmed a 'BBB'; -- Class BF downgraded to 'CCC' from 'B'. * Series 1999-2 group 2 -- Class A affirmed at 'AAA'; -- Class MV1 affirmed at 'AAA'; -- Class MV2 affirmed at 'A'; -- Class BV downgraded to 'B' from 'BB'; The affirmations reflect credit enhancement consistent with future loss expectations and affect $31,241,714 of outstanding certificates. The negative rating actions on classes BF from group 1 and BV from group 2 are the result of poor collateral performance, losses incurred to date, and future loss expectations in relation to credit support levels. The downgrades affect $6,547,533 of outstanding certificates. Series 1999-2 is backed by two collateral loan groups: group 1 (fixed-rate) and group 2 (adjustable-rate) originated by Conseco Finance Corporation (69.17%) and Amresco Residential Mortgage Corporation (20.92%) and five other originators (9.91%). EMC Mortgage Corporation, rated 'RPS1' by Fitch, is the master servicer. The group 1 and group 2 mortgage pools are not cross-collateralized. However, there is limited cross-collateralization in the form of excess spread. In group 1, the three-month average monthly loss, after application of excess spread, is approximately $145,108. High losses have resulted in the decline of overcollateralization to approximately $654,326. When this transaction was last reviewed in August 2004, there was $860,110.24 of OC outstanding, so OC depleted by approximately $205,784 in two months. In addition, as of the October 2004 distribution, the 90 plus delinquency (including bankruptcies, foreclosures, and real estate owned) stands at 24.71%. The pool factor (outstanding loan principal as a percentage of the initial loan pool) is currently 23%. In group 2, the three-month average monthly loss, after application of excess spread, is approximately $62,402. As with group 1, the level of OC has been decreasing and currently stands at $575,832. In addition, the 90 plus delinquency is currently 31.22%. The pool factor is currently 11%. BEAR STEARNS: Payoff Prompts S&P to Withdraw Class G's BB+ Rating ----------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its ratings on seven classes of Bear Stearns Commercial Mortgage Securities, Inc.'s commercial mortgage pass-through certificates from series 2003-WEST. At the same time, two other ratings from the same transaction are withdrawn following payoff. On October 26, 2004, a payment was made to de-leverage the transaction in conjunction with the initial public offering of Sunstone Hotel Investors, Inc., the sponsor of the properties. This payment was applied to pay off $54.5 million of mezzanine loans and the entire F and G certificates. In addition, the class E certificates were reduced by $4,154,353. The outstanding mortgage pool balance is now $176,509,965. While the de-leveraging payment reduced the in-trust balance of the mortgage pool by $38.2 million, the payment was applied from the bottom of the capital structure up. As a result, the remaining senior classes were relatively unaffected. A number of the certificates were downgraded in September 2004. The operating performance has changed little since the last downgrade, and it remains on track to meet management's budget for 2004. The net cash flow for the first nine months of 2004 is 16% above the NCF for the same period of last year, but still significantly below the levels underwritten at issuance. This transaction consists of one loan secured by 11 cross- collateralized and cross-defaulted full-service hotels: * the Hilton Huntington, * Marriott Troy, * Marriott Tyson's Corner, * Marriott Philadelphia West, * Hyatt Newporter, * Hilton Delmar, * Marriott Houston Greenspoint, * Valley River Inn, * Radisson Fort Magruder, * Doubletree Minneapolis, and * Radisson Englewood. The loan matures January 2006, and there are two, one-year extensions available. Prior to the closing of the loan, the debt service coverage ratio -- DSCR -- fell below 1.10x (the default determination ratio), triggering a DSCR excess cash sweep event. Pursuant to the loan agreement, all excess cash is held until the default determination ratio is achieved for two consecutive quarters. If the funds have not been released to the borrower prior to the loan maturity date, the funds may be applied to the loan payoff. In addition, the borrower is permitted to use funds from the cash trap to fund PIP requirements. As a result, the cash trap balance, which was $1.7 million in March 2004, has been reduced to $0.7 million as of November 2004. Ratings Affirmed Bear Stearns Commercial Mortgage Securities Inc. Commercial mortgage pass-thru certs series 2003-WEST Class Rating ----- ------ A AAA B AA C A- D BBB+ E BBB X-1 AAA X-2 AAA Ratings Withdrawn Bear Stearns Commercial Mortgage Securities Inc. Commercial mortgage pass-thru certs series 2003-WEST Rating Class To From ----- -- ---- F N.R. BBB- G N.R. BB+ BMC INDUSTRIES: B.D. Carlson Takes the Helm as 3 Executives Resign ------------------------------------------------------------------ On November 2, 2004, three officers resigned from their positions at BMC Industries, Inc.: Name Position ---- -------- Douglas C. Hepper Chairman of the Board Chief Executive Officer President Curtis E. Petersen Senior Vice President, Finance Chief Financial Officer Richard G. Faber Controller Effective as of November 3, 2004, Bradley D. Carlson, 39, has been appointed Chief Executive Officer and Chief Financial Officer of BMC Industries. Mr. Carlson will oversee the Company's efforts to confirm a Chapter 11 plan of reorganization in the Company's bankruptcy cases filed in the United States Bankruptcy Court for the District of Minnesota. Mr. Carlson joined BMC in September 1999 as Treasurer. From July 1992 to September 1999, Mr. Carlson held various positions with Northwest Airlines, Inc., a commercial air travel carrier, most recently as Director of Corporate Finance. Mr. Carlson served as an Associate with Kidder Peabody, Inc., an investment banking firm, in 1991 and as a Corporate Finance Analyst with Dain Rauscher Incorporated, an investment banking firm, from December 1987 to June 1990. 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. BNS CO: Posts $629,000 Third Quarter Net Loss Following Asset Sale ------------------------------------------------------------------ BNS Co. (OTCBB:BNSXA) reported a $629,000 net loss for the third quarter ended Sept. 30, 2004. The loss for the quarter included an adjustment to insurance expense of $301,000 resulting from a change in an insurance policy that was prepaid in 2003. This policy was purchased in anticipation of company's liquidation after the sale of its U.K. assets. As the company did not liquidate, the policy was revised and, after a credit from the insurer, the remaining prepaid premium was expensed. The balance of the quarter's loss arose from normal overhead costs and the costs of exploring strategic alternatives. The company had no revenue in the quarter. Following its June 11, 2004 Annual Meeting, the company initiated a search for a suitable acquisition candidate or merger partner. Management and the Board of Directors have reviewed a number of merger and acquisition proposals, and continue to search for a suitable partner. Michael Warren, President and CEO, indicated that with the sale of its U.K. assets, consummated in June, and the 2003 sale of the its Rhode Island property, the company now has in excess of $21 million in unrestricted cash and marketable securities, and has no debt. "The company has everything in place to close a deal," Mr. Warren said. "The acquisition of, or merger with, an operating business will allow the company to preserve the use of it's approximately $45 million in net operating loss carry-forwards to offset otherwise taxable earnings. The company is continuing to successfully resolve, through settlement or dismissal, its contingent product liability claims." Results of Operations Nine Months Ended Sept. 30, 2004, Compared to Sept. 30, 2003 The Loss from Continuing Operations amounted to $1,749,000 for the nine months ended September 30, 2004. This is compared with an operating loss of $2,579,000 for the nine months ended Sept. 30, 2003. The Company has continued to reduce corporate level administration expenses over last year. Both periods include legal and professional costs incurred in connection with the sale of assets and exploration of strategic alternatives. The operating loss in the nine months ended September 30, 2003, included $475,000 pertaining to the accrual for sales and use tax examination liabilities. This additional accrual was the result of additional sales and use tax liabilities, which became known during the quarter ended June 30, 2003. No interest expense was incurred for the nine months ended September 30, 2004, compared with interest expense of $55,000 for the nine months ended September 30, 2003. As a result of the rental operations of the Rhode Island Facility being reclassified to discontinued operations, the entire interest expense represents interest owed on an outstanding liability to a former CEO of the Company. The decrease in the amount of interest expense is attributable to the fact that this liability was paid in 2003. Other income, net amounted to $169,000 for the nine months ended September 30, 2004, compared with $46,000 for the nine months ended September 30, 2003. Other income, net in the nine months ended September 30, 2004, consists primarily of interest income. Other income, net in the nine months ended September 30, 2003, consisted of interest income and income related to the cancellation of insurance on executives no longer with the Company. Interest income increased primarily as a result of higher cash balances in the nine months ended September 30, 2004. No income taxes are provided for the U.S. operation as the Company has substantial net operating losses from prior years that are available to offset otherwise taxable current earnings. Discontinued operations amounted to income of $9,412,000 for the nine months ended September 30, 2004, compared with income of $16,102,000 for the nine months ended September 30, 2003. The income reported in discontinued operations in 2004 contains primarily the gain on sale of the Company's U.K. property of $9,309,000. The income reported in 2003 was related to the rental operations of the Rhode Island Property and the U.K. Property (before the later sale of each property). Liquidity and Capital Resources The Company had unrestricted cash of $16,400,000 at September 30, 2004. This is an increase from the cash balance at December 31, 2003, of $14,101,000. The increase is primarily attributable to the net proceeds from the sale of the Company's U.K. property amounting to $9,654,000. There is no assurance that the future months' expenses of the Company will not be greater than anticipated, or that its expected cash flow will not be less than anticipated, and that a liquidity problem may not arise as a result of poor economic conditions, environmental problems or expenses of maintaining the Company as a "public" reporting company. At present, the Company has no active trade or business operations. The Company's ability to continue as a going-concern relies on its ability to achieve positive cash flow from investment earnings on its undistributed cash, or from earnings that may be generated by a business that may be acquired. Cash Flow and Working Capital Net cash used in operations for the nine months ended Sept. 30, 2004, was $7,410,000. The Company had working capital related to continuing operations of $20,656,000 at September 30, 2004, and $13,879,000 at December 31, 2003. This increase in working capital is primarily the result of the disposal of assets during the nine months ended September 30, 2004. Going Concern Doubt The Company received a report from its independent auditors for the year ended Dec. 31, 2003, containing an explanatory paragraph stating that the Company's recurring operating losses from continuing operations and the Company's intention to sell its remaining assets and liquidate or seek other strategic alternatives raise substantial doubt about the Company's ability to continue as a going concern. About the Company BNS Co., formerly known as Brown & Sharpe Manufacturing Company, is a Rhode Island icon and one of the oldest corporations in America. Established in 1833, it played a significant role in the industrial revolution as an innovative manufacturer of machine tools and precision measurement instruments. It has been in continuous operation since then, but in recent years began gradually selling its operating units and other assets. * * * As reported in the Troubled Company Reporter on June 18, 2004, BNS Co. (OTCBB:BNSXA) completed the sale of the company's U.K. assets, consisting of approximately 86.5 acres of land currently operated as a landfill near Heathrow Airport, for an aggregate of 5.5 million British Pounds. A portion of the sales price has been placed in escrow pending resolution of certain U.K. Tax Issues, and there will be a post closing adjustment for the net working capital of the company's U.K. Subsidiary. The terms of the sale are fully described in the company's Proxy Statement filed with the SEC prior to its June 11 Annual Meeting, at which the shareholders approved the sale. BRUENERS HOME: Hires IP Recovery as I.P. Disposition Agent ---------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware gave Breuners Home Furnishings Corp. and its debtor-affiliates permission to employ IP Recovery, Inc., as their intellectual property disposition agent. IP Recovery will: a) conduct an investigative audit of the Debtors' Intellectual Property Assets; b) evaluate the Debtors' right to sell the Intellectual Property Assets; c) make contact with vendors, licensors, and granting authorities in seeking consent to assign or transfer the Debtors' Intellectual Property Assets licenses; d) work with the Debtors' counsel to develop template contracts and agreements for the purpose for facilitating the dissemination of database samples and any other sensitive information that is required to facilitate a sale transaction of the Intellectual Property Assets; e) identify potential acquirers of the Intellectual Property Assets and solicit their interests on behalf of the Debtors by demonstrating the Assets and related supporting documentation on the IP Recovery website and the Debtors' website; f) develop and disseminate marketing material to promote the sale of the Intellectual Property Assets; g) identify and engage facilitators, agents and consultants on behalf of the Debtors to dispose of the Intellectual Property Assets at the sole expense of IP Recovery to cover any third-party fees and commissions; h) recommend potential structures for sale and auction processes to be used to dispose of the Intellectual Property Assets in the immediate near term; i) negotiate structuring potential "stalking horse" contracts with appropriate acquirers of the Intellectual Property Assets, including providing aide to the Company in negotiating sale transaction with any previous interested parties; and j) collect and analyze appropriate data in connection with recommending sale transaction to dispose of the Intellectual Property Assets in the market in order to maximize the value of the Debtors' estates and their parties-in-interest. Jay D. Lussan, IP Recovery Chairman, discloses that professionals of the Firm performing services for Breuners Home will charge $550 per hour. Mr. Lussan reports IP Recovery's terms of compensation: a) the Firm will receive a $25,000 fee for the investigative audit of the Debtor's Intellectual Property Assets; b) the Firm will receive a success fee equal to 30% of the Gross Consideration received by the Debtors for a successful sale transaction of the Intellectual Property Assets; and c) the Firm will receive a $15,000 preliminary marketing budget for direct expenditures necessary for the disposition of the Debtors' Intellectual Property Assets. To the best of the Debtors' knowledge, IP Recovery is "disinterested" as the term is defined in Section 101(14) of the Bankruptcy Code. Headquartered in Lancaster, Pennsylvania, Breuners Home Furnishings Corp. -- http://www.bhfc.com/-- is one of the largest national furniture retailers focused on the middle to upper-end segment of the market. The Company, along with its debtor-affiliates, filed for chapter 11 protection on July 14, 2004 (Bankr. Del. Case No. 04-12030). Great American Group, Gordon Brothers, Hilco Merchant Resources, and Zimmer-Hester were brought on board within the first 30 days of the bankruptcy filing to conduct Going-Out-of- Business sales at the furniture retailer's 47 stores. Bruce Grohsgal, Esq., and Laura Davis Jones, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, represent the Debtors in their restructuring efforts. The Company reported more than $100 million in estimated assets and debts when it sought protection from its creditors. BREUNERS HOME: Can Continue Hiring Ordinary Course Professionals ---------------------------------------------------------------- The Honorable Peter J. Walsh of the U.S. Bankruptcy Court for the District of Delaware gave Breuners Home Furnishings Corp. and its debtor-affiliates permission to continue to retain, employ and pay professionals they turn to in the ordinary course of their businesses without bringing formal employment applications to the Court. In the day-to-day operation of their businesses, the Debtors regularly call upon certain professionals, including attorneys, accountants and consultants to provide them with services that are not directly related to their chapter 11 cases. Because of the nature of the Debtors' businesses, it would be unduly burdensome on the part of the Debtors, the Ordinary Course Professionals and the Court to require each of the Professional to apply separately for approval of its employment and compensation. The Debtors explain that the uninterrupted services of their Ordinary Course Professionals are necessary for their ongoing business operations and to preserve the value of their assets and estates. The Debtors assure that Court that: a) no Ordinary Course Professional will be paid more than $1,000 per month; b) in the event that an Ordinary Course Professional's fees and disbursements exceeds $1,000 in any given month, that Professional will apply for a formal approval to the Court; c) every January 31, April 30, July 31, and October 31 of every year that the Debtors' chapter 11 case is still pending, they will file a statement with the Court and serve a copy of that statement to the Office of the U.S. Trustee, the Debtors' counsel, and counsel to the Official Committee of Unsecured Creditors that contains: (i) the name of the Ordinary Course Professional, (ii) the aggregate amounts paid as compensation for services rendered and reimbursement of expenses incurred by the Ordinary Course Professional, and (iii) a general description of the services rendered by each of the Ordinary Course Professional; d) each of the Ordinary Course Professional to be retained will submit to the Court and to the Debtors' counsel an Affidavit of Disinterestedness stating that the Professional does not represent any interest adverse to the Debtors or their estates; and e) no Ordinary Course Professional will be involved in the administration of the Debtors' chapter 11 case. Headquartered in Lancaster, Pennsylvania, Breuners Home Furnishings Corp. -- http://www.bhfc.com/-- is one of the largest national furniture retailers focused on the middle to upper-end segment of the market. The Company, along with its debtor-affiliates, filed for chapter 11 protection on July 14, 2004 (Bankr. Del. Case No. 04-12030). Great American Group, Gordon Brothers, Hilco Merchant Resources, and Zimmer-Hester were brought on board within the first 30 days of the bankruptcy filing to conduct Going-Out-of- Business sales at the furniture retailer's 47 stores. Bruce Grohsgal, Esq., and Laura Davis Jones, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, represent the Debtors in their restructuring efforts. The Company reported more than $100 million in estimated assets and debts when it sought protection from its creditors. BUFFALO MOLDED: Hires Campbell Levine as Local Bankruptcy Counsel ----------------------------------------------------------------- The U.S. Bankruptcy Court for the Western District of Pennsylvania gave Buffalo Molded Plastics, Inc., permission to employ Campbell & Levine, LLC, as its local bankruptcy counsel. Campbell & Levine will: a) provide counsel with respect to the Debtor's power and duty as a debtor-in-possession in the continued operation of its business and management of its assets, and with respect to the administration of the Debtor's estates; b) take all necessary actions to protect and preserve the Debtor's estate including: (i) prosecuting actions on the Debtor's behalf, (ii) defending any actions commenced against the Debtor, (iii) negotiating litigation in which the Debtor is involved, and (iv) objecting to claims filed against the Debtor's estate; c) prepare on the Debtor's behalf all necessary motions, answers, orders, reports and other legal papers in connection with the administration of the Debtor's estate; and d) provide all other legal services to the Debtor in connection with the formulation and implementation of a plan of reorganization and all other legal services as the Debtor may request. David B. Salzman, Esq., a Senior Member at Campbell & Levine, is the lead attorney for the Debtor's restructuring. Mr. Salzman discloses that the Firm received a $50,000 retainer. For his professional services, Mr. Salzman will bill the Debtor $375 per hour. Mr. Salzman reports Campbell & Levine's professionals bill: Professional Designation Hourly Rate ------------ ------------ ----------- Stanley E. Levine Senior Member $375 Douglas A. Campbell Senior Member 375 Philip E. Milch Junior Member 315 Roger M. Bould Junior Member 290 Ronald B. Roteman Junior Member 275 Erik Sobkiewicz Associate 250 Paul J. Cordaro Associate 190 Salene R. Mazur Associate 190 Mark S. Frank Counsel 300 Jonathan G. Babyak Counsel 225 Rudy A. Fabian RAF Counsel 240 Suzanne D Schreiber Paralegal 100 Michele Kennedy Paralegal 100 Theresa M. Matiasic Professional Staff 50 Headquartered in Andover, Ohio, Buffalo Molded Plastics, Inc., dba Andover Industries, -- http://www.andoverplastics.com/-- is engaged in the molding industry. The Company filed for chapter 11 protection on Oct. 21, 2004 (Bankr. W.D. Pa. Case No. 04-12782). When the Debtor filed for chapter 11 protection, it estimated assets and debts in the $10 million to $50 million range. BUFFALO MOLDED: Look for Bankruptcy Schedules on Nov. 30 -------------------------------------------------------- The U.S. Bankruptcy Court for the Western District of Pennsylvania gave Buffalo Molded Plastics, Inc., more time to file its: (1) Schedules of Assets and Liabilities, (2) Statement of Financial Affairs, and (3) Schedule of Executory Contracts and Unexpired Leases. The Debtor tells the Court that it is still in the process of closing its books and records and has not had sufficient time to collect and assemble all the requisite financial data and other information required for the Schedules. The Debtor adds that collection of the necessary information for the Schedules requires an expenditure of additional time and effort on the part of its principals and employees. The Debtor assures the Court that the extension will give it more time to diligently compile all the information necessary to complete the Schedules on or before the November 30 deadline. Headquartered in Andover, Ohio, Buffalo Molded Plastics, Inc., dba Andover Industries, -- http://www.andoverplastics.com/-- is engaged in the molding industry. The Company filed for chapter 11 protection on Oct. 21, 2004 (Bankr. W.D. Pa. Case No. 04-12782). David Bruce Salzman, Esq., at Campbell & Levine, LLC, represents the Company. When the Debtor filed for chapter 11 protection, it estimated assets and debts in the $10 million to $50 million range. BURLINGTON: Trust Signs Settlement Pact with UAE Mecklenburg ------------------------------------------------------------ UAE Mecklenburg Cogeneration, LP, asserted a $9,588,894 general unsecured claim in Burlington Industries, Inc., and its debtor- affiliates' Chapter 11 cases, on account of damages arising from the rejection of an executory contract. Rebecca L. Booth, Esq., at Richards, Layton & Finger, P.A., in Wilmington, Delaware, relates that the BII Distribution Trust and Virginia Electric and Power Company, doing business as Dominion Virginia Power, as successor-in-interest to UAE, entered into a Release and Settlement Agreement to resolve the claim. Pursuant to the Settlement, the parties agree that: (1) Dominion Virginia will be granted an allowed claim for $3,600,000 to be treated as a Class 4 Claim under the Plan; (2) the Trust will pay $858,794 or 24% of the Allowed Claim to Dominion Virginia without delay, with the remaining distribution to be made in accordance with the provisions of the Plan governing distributions to holders of Class 4 Claims; (3) any proofs of claim filed by, or scheduled on behalf of, UAE Mecklenburg will be permanently reduced in the aggregate to the amount of the Allowed Claim; (4) all other claims filed and asserted by UAE Mecklenburg in the Debtors' bankruptcy cases will be deemed withdrawn with prejudice; and (5) Dominion Virginia will release the Debtors, the Estates and the Trust from any and all claims or rights originally asserted by UAE Mecklenburg. The Trust asks the U.S. Bankruptcy Court for the District of Delaware to approve the Settlement. Headquartered in Greensboro, North Carolina, Burlington Industries, Inc. -- http://www.burlington-ind.com/-- was one of the world's largest and most diversified manufacturers of soft goods for apparel and interior furnishings. The Company filed for chapter 11 protection in November 15, 2001 (Bankr. Del. Case No. 01-11282). Daniel J. DeFranceschi, Esq., at Richards, Layton & Finger, and David G. Heiman, Esq., at Jones Day, represent the Debtors. WL Ross & Co. LLC purchased Burlington Industries and then sold the Lees Carpets business to Mohawk Industries, Inc. Combining Burlington with Cone Mills, WL Ross created International Textile Group. Burlington's chapter 11 Plan confirmed on October 30, 2003, was declared effective on Nov. 10, 2003. (Burlington Bankruptcy News, Issue No. 56; Bankruptcy Creditors' Service, Inc., 215/945-7000) CANBRAS COMMS: Horizon Asserts $24.7 Mil. Indemnification Claim --------------------------------------------------------------- Canbras Communications Corp. (NEX.CBC.H) has received a written notice from Horizon Cablevision do Brasil, S.A., asserting claims for indemnification under the Share Purchase Agreement entered into in respect of the sale of substantially all of the Corporation's operations to Horizon in December 2003. The aggregate amount of claims asserted by Horizon is Reais $57.6 million, or approximately $24.7 million. Under the terms of the SPA, the Corporation's indemnification obligations are limited to the balance of the purchase price due under the SPA, which balance is represented by the one-year promissory note due on December 19, 2004, in the principal amount of $10.432 million, plus accrued interest thereon at 10% per annum. The Horizon notice asserts a number of claims falling into approximately 7 categories. Horizon's notice states that it is a preliminary list of claims, and that it is reserving its rights to supplement, review, adjust and otherwise modify its list of claims in accordance with the SPA. As of Nov. 17, 2004, Canbras has not received sufficient information to enable it to assess the validity of the claims nor the propriety of the demand for indemnification in respect of such claims. Although Canbras intends to examine all such claims and, where appropriate, to contest their validity or propriety or amount, at this time there can be no assurance that the Corporation will not ultimately be held to be contractually responsible for an amount of indemnification that equals the entire amount of the Note and all accrued interest due thereon. Canbras has previously estimated that the final distribution of net proceeds of the Sale Transaction to shareholders would aggregate approximately $0.30 per share (or $16.5 million) assuming no unforeseen claims were asserted against the Corporation. The Corporation has now received notice of asserted claims for indemnification under the SPA, and the Corporation cannot at this time predict the outcome of such asserted indemnity claims. Therefore, if the Corporation is ultimately contractually responsible for some or all of the indemnity claims asserted to date by Horizon (or for future indemnity claims which may be validly asserted by Horizon), then the amount of the final distribution of net proceeds to shareholders will be reduced, and it is possible that the amount of the final distribution to shareholders will not include any amounts previously expected to be received by the Corporation under the Note, representing approximately $0.21 per share of the originally estimated final distribution of $0.30 per share, and will be limited to cash on hand ($7.4 million at September 30, 2004) less expenses incurred to the time of the making of the final distribution, including overhead expenses, expenses related to contesting and/or defending the claims for indemnification asserted by Horizon and expenses associated with collecting amounts due, if any, under the Note. Canbras had also previously stated that the final distribution would be made in one or more installments after the receipt of the balance of the purchase price payable pursuant to the Note which is due on December 19, 2004, the satisfaction of all remaining liabilities of the Corporation and the receipt by the Corporation of up-dated tax clearance certificates. As a result of the receipt of the notice from Horizon, the Corporation cannot at this time predict the length of time that may be required to finally settle any issues surrounding the asserted indemnity claims nor to finally settle any of the lawsuits underlying any valid claims for indemnification. Therefore, at this time, the Corporation cannot predict when the final distribution will be made. CAPITAL GUARDIAN: Fitch Junks $15 Million Preference Shares ----------------------------------------------------------- Fitch Ratings downgrades two classes of notes and one class of preference shares and affirms three classes of notes issued by Capital Guardian ABS CDO I, Ltd. These rating actions are effective immediately: -- $53,356,846 class A-1A notes affirmed at AAA; -- $145,518,670 class A-1B notes affirmed at AAA; -- $47,827,136 class A-1C notes affirmed at AAA; -- $70,000,000 class B notes downgraded to BBB from AA-; -- $11,563,833 class C notes downgraded to B+ from BBB+; -- $15,000,000 preference shares downgraded to CCC from BB-. The rating action is based primarily upon collateral quality deterioration over the past year. Capital Guardian is a collateralized debt obligation managed by Capital Guardian Trust Company, which closed February 28, 2002. Capital Guardian is composed of residential mortgage-backed securities, commercial mortgage-backed securities, asset-backed securities, CDOs, and corporate debt. Included in this review, Fitch discussed the current state of the portfolio with the asset manager and its portfolio management strategy. Currently, the manager has accumulated approximately $22 million of cash in the principal collection account (as of the October 31, 2004 trustee report). The manager indicated that due to the fact that it cannot identify suitable reinvestments, this cash will be held in eligible investments until suitable collateral is identified or the end of the reinvestment period in April 2005 (unless it must be used for a mandatory redemption due to a coverage test failure). Since the last rating action on September 29, 2003, the collateral has experienced deterioration in credit quality due to downgrades of several assets, including assets with exposure to manufactured housing and aircraft leases. On the October 4, 2004 distribution date, approximately $7.6 million of cash was used to amortize the class A notes due to a failure of the class C overcollateralization test. However, the test was cured with available cash. The weighted average rating factor is currently failing and increased from 16 ('BB/BB-') as of July 31, 2003, to 23 ('B+/B') versus a test trigger of 18 ('BB/BB-') as of the most recent trustee report dated October 2004. The class A/B OC ratio decreased from 106.5% to 105.3% versus a test trigger of 104.%. The class C OC ratio decreased from 102.8% to 101.6% versus a test trigger of 101.5%. The class A/B interest coverage ratio decreased from 186.4% to 119.8% versus a test trigger of 115%. The class C interest coverage ratio decreased from 172.71% to 112.7% versus a test trigger of 110%. There were no assets classified as defaulted assets. However, assets rated 'CCC+' or lower represented approximately 7.26% of the $339,341,791 of total collateral and eligible investments. The ratings of the class A and class B notes address the likelihood that investors will receive full and timely payments of interest, as per the governing documents, as well as the aggregate outstanding amount of principal by the stated maturity. The rating of the class C notes addresses the likelihood that investors will receive ultimate interest payments, as per the governing documents, as well as the aggregate outstanding amount of principal by the stated maturity. The rating of the preference shares addresses the ultimate repayment of the initial preference share rated balance upon the stated maturity and the ultimate receipt of payments resulting in a yield of 2%. Fitch conducted cash flow modeling utilizing various default timing and interest rate scenarios to measure the breakeven default rates relative to the minimum cumulative default rates required for the rated liabilities. As a result of this analysis, Fitch has determined that the current ratings assigned to the class B and C notes and the preference shares no longer reflect the current risk to noteholders. Fitch will continue to monitor and review this transaction for future rating adjustments. For more information on the Fitch VECTOR Model, see 'Global Rating Criteria for Collateralised Debt Obligations,' dated September 13, 2004, available on the Fitch Ratings Web Site at http://www.fitchratings.com/ CARE CONCEPTS: New CUSIP Number Issued to Reflect Name Change ------------------------------------------------------------- Care Concepts I, Inc., (AMEX:IBD), said Standard and Poors CUSIP Bureau has issued CUSIP number 458404100 for the common stock of IBD in connection with the Company's planned name change to Interactive Brand Development. Subject to the Nov. 29, 2004 shareholders meeting, IBD is being renamed Interactive Brand Development, Inc., to better reflect its growing role as a media holding company, including its 40% equity ownership of Penthouse Media Group, publisher of PENTHOUSE(TM) Magazine and owner of the PENTHOUSE trademarks. "IBD has undergone substantial changes in the past several months," said IBD Chief Operating Officer Steve Markley. "The combination of the Penthouse acquisition, the substantial new capital from several institutions, new senior management and other business developments, makes it appropriate that IBD assume a new name." Prior to the PENTHOUSE(TM) acquisition, IBD's investments consisted of an online auction Web site and a sports radio station plus investments in animation art libraries. As a result of the PENTHOUSE(TM) investment, a substantial amount of the IBD assets and anticipated future growth is derived from PENTHOUSE(TM), a company founded in 1965 by Robert Guccione. As disclosed in the Company's definitive proxy statement filed on Form 14A with the U.S. Securities and Exchange Commission, the formal name change is subject to the shareholders meeting and the requisite 66.66% votes in favor. The Company has received sufficient proxies to carry the name change at the scheduled November 29, 2004 meeting. The current Cusip assigned to the Company's common stock shall remain unchanged until the new name is formally adopted. About the Company Care Concepts I, Inc. (AMEX:IBD) is a media and marketing holding company with significant consumer brand investments. The company owns interests in animation brands; adult entertainment brands; and in online auctions. The Company's brand investments include Penthouse Media Group (PMG), publisher of Penthouse Magazine, a brand-driven global entertainment business founded in 1965 by Robert C. Guccione. PMG's flagship PENTHOUSE(TM) brand is one of the most recognized consumer brands in the world and is widely identified with premium entertainment for adult audiences. PMG is operated by affiliates of Marc Bell Capital Partners, LLC, as a global multimedia company encompassing Internet distribution through multiple Web sites, video production, broadcast, clubs and product licensing. * * * Auditors Express Doubt On January 15, 2003, Care Concepts dismissed Angell & Deering as its principal accountants and auditors. A&D's report on the Company's financial statements expressed substantial doubt about the Company's ability to continue as a going concern. On January 15, 2003, William J. Hadaway was hired to review the Company's 2002 financial statements. On October 30, 2003, Care Concepts dismissed WJH. WJH shared A&D's doubts. Effective October 30, 2003, the Company engaged the accounting firm of Jewett, Schwartz & Associates as its new independent accountants to audit the financial statements for the fiscal year ending December 31, 2003. CARROLS CORP: S&P Puts B+ Rating on Planned $250M Sr. Sec. Loan --------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B+' rating to Syracuse, New York-based Carrols Corp.'s proposed $250 million senior secured bank loan package. A recovery rating of '2' was also assigned to the loan, indicating the expectation for a substantial recovery of principal (80%-100%) in the event of a default. In addition, Standard & Poor's assigned its 'B-' subordinated debt rating to Carrols' proposed $200 million senior subordinated notes due 2012. The ratings on the proposed bank loan and notes offering are based on preliminary information and are subject to review upon final documentation. Proceeds will be used to: (1) refinance existing debt; (2) pay a distribution to shareholders of approximately $141 million; and (3) pay transaction costs related to the distribution and the new credit facilities. Outstanding ratings on Carrols, including the 'B+' corporate credit rating, were affirmed. The ratings were removed from CreditWatch, where they were placed with negative implications on June 23, 2004, due to Carrols' withdrawal of its S-1 registration to issue $450 million of enhanced yield securities and the company's indication that it may undertake a debt offering. The outlook is negative. "The ratings reflect Carrols' leveraged capital structure and the risks of operating in the extremely competitive quick-service restaurant industry," said Standard & Poor's credit analyst Kristi Broderick. "These factors are tempered somewhat by the company's solid regional presence and generally good operating performance." Carrols is the largest franchisee in the domestic franchised Burger King system, with 351 restaurants in 13 states in the Northeast, Midwest, and Southeast. The company also operates and franchises 85 Pollo Tropical restaurants, primarily located in Florida, and 133 Taco Cabana restaurants, primarily located in Texas. CATHOLIC CHURCH: Tucson Tort Committee Retains Stinson as Counsel ----------------------------------------------------------------- The Official Committee of Tort Creditors of the Diocese of Tucson sought and obtained authority from the U.S. Bankruptcy Court for the District of Arizona to retain Stinson Morrison Hecker, LLP, as counsel, effective as of Oct. 18, 2004. Stinson Morrison will provide legal services to the Tucson Tort Committee, including: (a) Analysis of Tucson's financial situations, and rendering advice to the Tucson Tort Committee in determining course of action necessary to reorganize effectively; (b) Preparation of and filing of pleadings and documents which may be required; (c) Representation of the Tucson Tort Committee at the meetings and hearings; (d) Representation of the Tucson Tort Committee in any and all adversary or contested matters and other court proceedings; (e) Negotiations with Tucson and other parties-in-interest; (f) Investigation of the acts, conduct, assets, liabilities and financial condition of Tucson, the operation of Tucson's related entities and business interests, and any matter relevant to Tucson's case; (g) Participation in Tucson's Chapter 11 case to the extent it affects the rights and interests of the Diocese's tort creditors, including, without limitation, the formulation of a Chapter 11 plan of reorganization and confirmation of that plan; (h) Preparation of a request for appointment of a trustee or examiner; (i) Preparation, filing and contesting a motion to convert Tucson's case to Chapter 7 for a material default in the confirmed Chapter 11 plan; (j) Performance of any and all other services as are in the Tucson Tort Committee's interests relevant to Tucson's Chapter 11 case; and (k) Other representation as deemed appropriate and necessary for the Tucson Tort Committee's benefit. Thomas Groom, Tucson Tort Committee Chairman, relates that Stinson Morrison is experienced and is well qualified to represent the Committee. The firm's professionals will be compensated based on their customary hourly rates: Attorneys $175 to 415 Paralegals & Document Clerks 45 to 130 Alisa C. Lacey, a partner at Stinson Morrison, attests that the firm is "disinterested" and does not represent any interest adverse to Tucson. Additionally, Ms. Lacey discloses that: (a) Stinson Morrison formerly represented the Diocese of Phoenix in matters related to sexual abuse cases against the Diocese of Phoenix, but the representation was terminated substantially before Tucson's bankruptcy case. (b) She and other partners, C. Taylor Ashworth, and Warren J. Stapleton, during their employment with Osborn Maledon, PA, represented a group of sexual abuse plaintiffs. The plaintiffs negotiated a settlement with Tucson two years before the Petition Date. The settling plaintiffs currently hold a lien on the real property commonly referred to as "Regina Cleri." Stinson Morrison has not represented the settling plaintiffs recently in this case. (c) Stinson Morrison represented a group of 24 sexual abuse plaintiffs before the Tucson Tort Committee decided to retain Stinson Morrison as its counsel. A Notice of Appearance was filed by the firm detailing the names of the Plaintiff Group. Upon retention as counsel to the Tucson Tort Committee, Stinson Morrison ceased its representation of the Plaintiff Group. The Plaintiff Group is aware of, and approves of the employment of Stinson Morrison by the Tucson Tort Committee. (d) Stinson Morrison currently represents Bank One in numerous matters entirely unrelated to the Tucson case. Stinson Morrison is in the process of seeking appropriate waivers from Bank One. If any directly adverse issues arise with respect to Bank One, the Tucson Tort Committee may be required to retain special counsel for that purpose. (e) Mr. Ashworth and Ms. Lacey have practiced in Chapter 11 bankruptcy cases in Arizona for many years. In the course and scope of their practice they have referred cases to, and received referrals from, and represented, many of the attorneys representing various parties in the Tucson case, including Quarles & Brady, Lewis & Roca, and Mesch, Clark & Rothschild. However, none of the referrals or representations, past or present, has resulted in any kind of financial alliance or relationship with the entities other than ordinary course professional. The Roman Catholic Church of the Diocese of Tucson filed for chapter 11 protection (Bankr. D. Ariz. Case No. 04-04721) on September 20, 2004, and delivered a plan of reorganization to the Court on the same day. Susan G. Boswell, Esq., and Kasey C. Nye, Esq., at Quarles & Brady Streich Lang LLP, represent the Tucson Diocese. The Archdiocese of Portland in Oregon filed for chapter 11 protection (Bankr. Ore. Case No. 04-37154) on July 6, 2004. Thomas W. Stilley, Esq., and William N. Stiles, Esq., at Sussman Shank LLP, represent the Portland Archdiocese in its restructuring efforts. In its Schedules of Assets and Liabilities filed with the Court on July 30, 2004, the Portland Archdiocese reports $19,251,558 in assets and $373,015,566 in liabilities. (Catholic Church Bankruptcy News, Issue No. 9; Bankruptcy Creditors' Service, Inc., 215/945-7000) CBD MEDIA: Third Quarter Net Revenue Up 1% to $21,700,000 --------------------------------------------------------- CBD Media, LLC, reported results for its third quarter ended Sept. 30, 2004. Net revenue in the quarter was $21.7 million, up 1% from $21.6 million in third quarter 2003, and EBITDA was $11.4 million, the same as third quarter 2003. Third quarter was the first full quarter reporting the new revenue billing associated with the June 2004 directories and the 2004 White Pages. EBITDA represents earnings before interest, taxes, depreciation and amortization. EBITDA is included to provide additional information with respect to our ability to satisfy our debt service, capital expenditure and working capital requirements. Cash flow provided by operating activities was $15.1 million for the quarter ended September 30, 2004, versus cash flow provided by operating activities of $18.2 million for the quarter ended September 30, 2003. Cash decreased in the quarter by $2.0 million versus a $0.6 million decrease in the same quarter last year. At quarter's end, CBD's cash balance was $14.1 million with outstanding debt of $280.0 million. On October 26, 2004, CBD's parent, CBD Media Holdings LLC, completed an offering of $100.0 million of 9-1/4% Senior Notes due 2012, pursuant to a Purchase Agreement, dated October 21, 2004, between CBD Media Holdings, its parents, CBD Holdings Finance, Inc., Lehman Brothers, Inc., Banc of America Securities, LLC, and Goldman, Sachs & Co. In connection with the offering, CBD increased the term loan borrowings under its senior credit facility by $23.0 million. CBD distributed approximately $7.0 million of cash on hand and $23.0 million of net proceeds of the increased term loan borrowings to CBD Media Holdings, which, in turn, distributed such funds, along with the net proceeds of the Senior Notes offering of approximately $97.0 million, to its equityholders. Third Quarter - Operating Results Net revenue increased $0.1 million, or 1%, to $21.7 million. Results for the quarter included the first full quarterly revenue recognition of the June 2004 directories, including the Greater Cincinnati edition. General and Administrative costs increased $0.5 million for the quarter at $2.2 million, primarily relating to costs incurred examining alternative capital structure. In addition, there were decreases in cost of revenue of $0.4 million. Capital expenditures were $39,000 for the quarter. About the Company CBD Media, LLC, is the twelfth largest directory publisher in the United States based on 2003 revenues. The Company is the exclusive directory publisher for Cincinnati Bell branded yellow pages in the Cincinnati-Hamilton metropolitan area, which is the 23rd largest metropolitan area in the country. CBD Media was created on March 8, 2002, as the result of the purchase of fourteen yellow page directories for $343.4 million, by Spectrum Equity Investors, a private equity firm, from Broadwing, now renamed Cincinnati Bell. * * * As reported in the Troubled Company Reporter on Oct. 21, 2004, 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. CHARTER COMMS: Moody's Junks $750M Senior Unsec. Convertible Notes ------------------------------------------------------------------ Moody's Investors Service assigned a Ca rating for the proposed $750 million issuance of five-year senior unsecured convertible notes to be issued by Charter Communications, Inc., and affirmed all existing ratings for the company and its subsidiaries. The rating outlook remains stable. Proceeds from the proposed transaction will mainly be used to refinance existing convertible notes (about $600 million) that are coming due in October 2005, with the balance being placed in escrow for the exclusive purpose of servicing interest on this new obligation. Moody's does not believe that the current financing alters the company's capital structure in any material way; rather, the latest financing merely extends the company's debt maturity profile and somewhat enhances what would otherwise be a slowly eroding liquidity profile. Moody's contends that the company's liability structure remains wholly incongruous with both its industry and business model. This fundamental mismatch continues to drive the Caa1 senior implied rating. The Ca rating assigned to the proposed convertible note issuance specifically recognizes that this debt represents the junior-most capital in an over-leveraged company, and remains subject to a less-than 50% look at any residual value that may come from the company's asset base. Moody's continues to believe the debt of the consolidated company is in need of an ultimate restructuring on a much larger scale. Charter Communications, Inc. * Senior Implied Rating -- Caa1 (affirmed) * Senior Unsecured Issuer Rating -- Ca (affirmed) * Speculative Grade Liquidity Rating -- SGL-3 (affirmed) * Rating Outlook (for all ratings of Charter and its subsidiaries) -- Stable (unchanged) * $750 million (proposed gross proceeds) of Convertible Senior Notes due 2009 -- Ca (assigned) * $588 million (remaining amount) of 5.75% Convertible Senior Notes due 2005 -- Ca (affirmed, to be withdrawn following repayment commensurate with proposed transaction) * $156 million (remaining amount) of 4.75% Convertible Senior Notes due 2006 -- Ca (affirmed) Charter Communications Holdings, LLC (CCH) * Senior and Discount Notes maturing 2007-2012, coupons 8.25%- 13.5%, aggregate outstanding approximately $8.9 billion -- Ca (affirmed) CCH II, LLC (CCH II) * $1,601 million of 10.25% Senior Notes due 2010 -- Caa1 (affirmed) CCO Holdings, LLC (CCO Holdings) * $500 million of 8.75% Senior Notes due 2013 -- B3 (affirmed) Charter Communications Operating, LLC (CCO) * $6,500 million of Senior Secured Credit Facilities -- B2 (affirmed) * $1,500 million of Senior Secured (Second Lien) Notes due 2014 -- B2 (affirmed) CC V Holdings, LLC (CC V; formerly Avalon Cable, LLC) * $113 million of 11.875% Senior Discount Notes due 2008 -- Caa1 (affirmed) Renaissance Media, LLC * $114 million of 10% Senior Discount Notes due 2008 -- B3 (affirmed) The ratings continue to reflect: (1) very high consolidated financial leverage approximating 10.2x on an adjusted (to include preferred stock) debt-to- EBITDA basis; (2) operational performance that continues to lag both peers and previous management guidance, including more rapid erosion of basic subscribers and slower growth in telephony and high speed data subscribers; (3) the ongoing cash absorptive nature of the company, which is expected to continue over at least the next few years, particularly as remaining discount notes convert to cash pay and capital expenditure requirements remain high; and (4) heightened competition from direct broadcast satellite and regional Bell operating companies. However, the ratings also continue to incorporate: (1) Moody's belief in the high value of the company's assets, including a sizeable (albeit shrinking) subscriber base of approximately 6 million; and (2) the nominal liquidity improvement resulting from the proposed transaction, the absence of which would have likely prompted lower senior implied and liquidity ratings, while its assumed success confirms Charter's continued market access (albeit at a high cost). Additionally, the recent sale of systems to Atlantic Broadband for proceeds of approximately $725 million, implying a per subscriber value of approximately $3,000, supports Moody's belief in the relative resilience of private market values for cable assets, and Charter's rating derives strength from the perceived potential for incremental asset sales if needed to further bolster liquidity over the interim period prior to the assumed eventual restructuring of the company's balance sheet. The stable outlook reflects Moody's opinion that the current ratings adequately reflect the relative recovery prospects at each level of the capital structure, as well as the reduced likelihood of default (and corresponding necessity to lower ratings further) over the intermediate term following the proposed transaction. Moody's continues to believe a more comprehensive restructuring is necessary, and debt ratings on specific instruments factor in estimated recovery value in this scenario. As such, an increase in the probability of default might lead Moody's to lower the senior implied rating, but is less likely to impact ratings on individual debt instruments, as has been the case for some time now. Continued weakness in operating performance and evidence of Charter's inability to alter its fundamentally unsustainable capital structure could pressure the ratings down. Conversely, meaningful balance sheet restructuring achieved through a larger contribution of new equity (i.e., most likely through the exchange of a meaningful amount of current debt obligations for common equity) could provide upward ratings potential. The SGL-3 liquidity rating continues to reflect the adequacy of the company's proforma liquidity profile as projected for the next twelve months. Inability to generate enough cash to satisfy substantial and growing capital expenditure and debt service requirements, offset by a readily accessible revolver with sufficient capacity over the next 12 months, drives this rating. Moody's expects Charter will continue to burn cash over the next 12 months, due to both rising cash interest payments as discount notes convert to cash pay-status and rising capital expenditures, but the company benefits from borrowing availability of $957 million under its $1.5 billion revolving credit facility as of September 30, 2004. The proposed transaction does not impact the credit facilities and should not alter this liquidity. Charter is likely to remain in compliance with recently established covenants over the intermediate term, ensuring continued access, although potential repayment of approximately $118 million of stub notes at CCV (if CCH leverage falls below 8.75 times in the fourth quarter of 2004) could reduce capacity by that amount, since Charter has no other readily accessible source to fund the payment. In analyzing Charter from a quantitative perspective, Moody's notes that in addition to its very high financial leverage, EBITDA coverage of total interest expense is very thin at just 1.2 times. Moreover, while EBITDA coverage of cash interest is currently about 1.5x, it is likely to decline as discount notes convert to cash pay-status, falling to an estimated 1.4 times during 2005 and even lower thereafter. This coverage causes particular concern given the capital intensive nature of the cable business in general and Charter's rising capital expenditures in particular, as the company attempts to respond to competitive factors through continued spending on network upgrades and telephony initiatives. While most multiple system cable operators have been experiencing the adverse impact of DBS competition, Charter has been less successful than most of its peers in stemming basic subscriber erosion, in Moody's view. The approximately 450,000 net basic subscribers Charter has lost since the beginning of 2002 represent about 7% of its basic subscriber base going into 2002 (both losses and beginning base adjusted for the sale of certain systems to Atlantic Broadband in early 2004), and since that time, Charter has added basic subs in just one quarter -- the September 2003 quarter. Notwithstanding this erosion, however, Charter has a still sizeable subscriber base of about 6.1 million, providing a substantial diversified pool of potential customers as it rolls out new services, which increases its resilience to region-specific events. Charter's assumed ability to refinance the convertible notes also demonstrates continued access to the capital markets (albeit on slightly tighter terms given the prefunded interest and high cost for current equity holders via substantial dilution) and eliminates the dual risks of a looming maturity and potential default triggered by the possibility of receiving a qualified auditors' opinion. Charter Communications is one of the largest domestic cable operators serving approximately 6.1 million subscribers. The company maintains its headquarters in St. Louis, Missouri with corporate offices also in Greenwood Village, Colorado. CHARTER COMMS: Fitch Junks $750 Million Convertible Senior Notes ---------------------------------------------------------------- Fitch Ratings assigned a 'CCC+' rating to a proposed offering of $750 million of convertible senior notes due 2009 issued by Charter Communications, Inc. CHTR expects to use the proceeds from the offering to prefund a portion of interest payments on the new notes and to refinance CHTR's 5.75% convertible senior notes due October 2005, of which approximately $588 million remain outstanding. The Rating Outlook is Stable. The new issuance improves the company's near-term liquidity profile by addressing the company's scheduled maturity during 2005. Additionally the issuance provides for liquidity at CHTR to service interest payments on the new notes without significant reliance on cash being upstreamed from its subsidiaries. Fitch's ratings reflect CHTR's highly levered balance sheet and the negative impact on basic subscriber metrics, revenue, and EBITDA growth stemming from the high business risks associated with CHTR's competitive operating environment. Additionally, Fitch expects that the company will continue to generate negative free cash flow given the company's current operating profile and increasing cash interest requirements on debt that recently has or is scheduled to convert to cash interest payment in 2005. During the 12-month period ending September 30, 2004, CHTR has lost approximately 164,400 basic subscribers reflecting the negative impact of the competitive pressure from the direct broadcast satellite operators. During each of the first three quarters of 2004, the rate of year-over-year basic subscriber losses has accelerated. The DBS operators have reported record levels of subscriber additions capitalizing on the expanded availability of local channel services and aggressive customer premises equipment and service promotions. The basic subscriber erosion coupled with slower growth of digital subscribers (indicative of the company's high digital penetration of 44.3% as of the end of the third quarter) and the limited ability to increase prices due to the competitive environment has resulted in weak video revenue growth relative to its peer group. Additionally, competitive pressures and rising programming costs have constrained CHTR's EBITDA growth and margin. During the third quarter of 2004, CHTR generated approximately $471 million of EBITDA, relatively flat compared with the third quarter of 2003 on a pro forma basis. EBITDA margins declined 230 basis points as increasing programming and operating costs more than offset the company's revenue growth. For the year-to-date period ended September 30, 2004, CHTR reported a negative $256 million of free cash flow, primarily driven by increased cash interest expense. From Fitch's perspective, the company's ability to generate free cash flow over the near term is constrained by limited EBITDA growth prospects and the conversion of discount notes issued by Charter Communications Holdings, LLC to cash pay interest. Fitch expects the cash interest expense to grow during the fourth quarter as the first cash interest payment on the 9.92% senior discount notes due 2011 was paid, and the 11.75% senior discount notes due 2010 begin to accrue cash interest in January 2005. The company's liquidity position is supported by the $958 million available under the company's secured credit facility, all of which is available for borrowing under the covenant structure. CHTR's leverage metric was 9.9 times on an LTM basis. In light of Fitch's expectation of limited near term EBITDA growth, Fitch does not expect any meaningful improvement of credit protection metrics. CONTECH PACKAGING: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Contech Packaging, Inc. 99 Hartford Avenue Providence, Rhode Island 02909 Bankruptcy Case No.: 04-13605 Type of Business: The Debtor is a Rhode Island-based medical device contract manufacturer and packager. The Company also provides associated product design and improvement support, services and assistance to its customers. Chapter 11 Petition Date: November 16, 2004 Court: District of Rhode Island (Providence) Judge: Arthur N. Votolato Debtor's Counsel: Linda Rekas Sloan, Esq. Matthew J. McGowan, Esq. Salter McGowan Sylvia & Leonard 321 South Main Street, Suite 301 Providence, RI 02903 Tel: 401-274-0300 Fax: 401-453-0073 Estimated Assets: $0 to $50,000 Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Bunzl Extrusion Misc. Goods and $254,967 Massachusetts Services 5997 Collections Center Drive Chicago, IL 60693 Pierce Refrigeration, Inc. Misc. Goods and $217,021 439 East Center Street Services P.O. Box 40 West Bridgewater, MA 02379 Alhambra Building Co. 2002-2004 $214,924 2077 Elmwood Avenue Warwick, RI 02888 Contech Medical Int'l Ltd. Misc. Goods and $108,927 Services CSC Cal Supply Company, Inc. Misc. Goods and $44,613 Services Phillips Plastics Corp. Misc. Goods and $38,941 Services Prent Corporation Misc. Goods and $33,369 Services Salter McGowan Sylvia Misc. Goods and $27,678 Leonard Services RDI, Inc. Misc. Goods and $22,730 Services Leroux & Garceau LLP Misc. Goods and $22,000 Services Sterling Mfg. Co., Inc. Misc. Goods and $20,100 Services Bassi Associates, LLC Misc. Goods and $18,355 Services Manan Medical Products, Inc. Misc. Goods and $16,248 Services Genesys Consulting Assoc. Misc. Goods and $14,659 Services Tua Systems, Inc. Misc. Goods and $13,560 Services Town of North Smithfield Misc. Goods and $12,808 Tax Collector Services GJ Sales, Inc. Misc. Goods and $12,659 Services Consumers Interstate Corp. Misc. Goods and $11,474 Services Alliance Precision Plastics Misc. Goods and $11,276 Corporation Services UFP Technologies, Inc. Misc. Goods and $9,502 Services COVANTA ENERGY: Settles Dispute on Nixon Peabody's $272K Claim -------------------------------------------------------------- Nixon Peabody, LLP, provided legal services to Covanta Energy Corporation prior to April 1, 2002, for which Nixon Peabody asserts the Debtors owe it $272,456. Nixon Peabody filed two timely proofs of claim, Claim Nos. 1701 and 1706, on account of its claim. The Reorganized Debtors asked the United States Bankruptcy Court for the Southern District of New York to disallow and expunge Claim No. 1706, denying any liability to Nixon Peabody. The Reorganized Debtors also sought to transfer and reallocate from one Debtor's case to multiple other Debtors' cases and to reduce and allow Claim No. 1701, claiming that they did not owe all of the $272,456. After further review and negotiation, the Reorganized Debtors and Nixon Peabody discovered that a portion of the $272,456 has been paid. The parties agreed that the Reorganized Debtors owe Nixon Peabody $147,371. The parties also agreed as to which of the Reorganized Debtors owe the obligation to Nixon Peabody in respect of the Prepetition Claim. The parties want to provide for the transfer of Claim No. 1701 to the appropriate Debtors so that the true liabilities of the Debtors will be reflected for purposes of distribution and discharge, and to resolve the matter without further claim objections or dispute. In a Court-approved stipulation, the parties agree that: (a) Certain of the Reorganized Debtors owe Nixon Peabody $126,491 in the aggregate with respect to the Prepetition Claim; (b) The Prepetition Claim will be resolved as: Original New Allowed Claim Claim Correct Debtor Co. Amount -------- ------ ------------------ ------- 1701 170101 Three Mountain Power $2,406 1701 170102 Covanta Energy Americas 10,650 1701 170103 Covanta Mid-Conn 1,540 1701 170104 Covanta Huntington 7,602 1701 170105 Covanta Onondaga 35,972 1701 170106 Covanta Fairfax 134 1701 170107 Covanta Huntsville 885 1701 170108 Covanta Indianapolis 257 1701 170109 Covanta Montgomery 1,045 1701 170110 Covanta Power Development 15,357 1706 Covanta Energy Corporation 50,646 (c) The 11 claims will be deemed allowed claims for distribution purposes pursuant to the Plans; and (d) Any and all scheduled claims will be superceded by the Allowed Claims. Headquartered in Fairfield, New Jersey, Covanta Energy Corporation -- http://www.covantaenergy.com/-- is a publicly traded holding company whose subsidiaries develop, own or operate power generation facilities and water and wastewater facilities in the United States and abroad. The Company filed for Chapter 11 protection on April 1, 2002 (Bankr. S.D.N.Y. Case No. 02-40826). Deborah M. Buell, Esq., and James L. Bromley, Esq., at Cleary, Gottlieb, Steen & Hamilton, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from its creditors, they listed $3,280,378,000 in assets and $3,031,462,000 in liabilities. On March 10, 2004, Covanta Energy Corporation and its core subsidiaries emerged from chapter 11 as a wholly owned subsidiary of Danielson Holding Corporation. Some of Covanta's non-core subsidiaries have liquidated under separate chapter 11 plans. (Covanta Bankruptcy News, Issue No. 69; Bankruptcy Creditors' Service, Inc., 215/945-7000) COVANTA ENERGY: Lake II's Schedule of Assumed Contracts & Leases ---------------------------------------------------------------- Vincent E. Lazar, Esq., at Jenner & Block, LLP, in Chicago, Illinois, advises the U.S. Bankruptcy Court for the Southern District of New York that Covanta Lake II, Inc., will assume 13 executory contracts and unexpired leases pursuant to its plan of reorganization: Contract Counterparty -------- ------------ Uniform & Mat Contract Cintas Corporation effective 12/20/00 Gas line interconnect and City of Leesburg, Florida Procurement of Natural Gas Interconnection Agreement Florida Power Corporation dated as of 1/26/1988 Standard Offer Contract Florida Power Corporation for the Purchase of Firm Energy and Capacity from a Qualifying Facility dated 10/12/88 Master Services Agreement Florida Power Corporation dated 7/7/1997 Amendment to Standard Offer Florida Power Corporation Contract, dated 11/2/1989 Front End Loader Lease VFS Leasing Co. effective 9/27/2001 Amendment Agreement Lake County (Re Merc. Control Capital Addition), dated 1/17/1995 First Amendment to Addendum Lake County XII to NRG/Lake County Agreement, dated 4/10/1990 First Supplemental Loan Lake County Agreement, dated 10/1/1993 Loan Agreement Lake County dated 11/1/1988 Service Agreement - Addendum Lake County XII as amended and restated dated 11/8/1988 Site Agreement Lake County dated 11/10/1988 The contracts involving Lake County as counterparty, and any related claims, are separately treated in Covanta Lake II's Plan. Covanta Lake II reserves the right to add or remove executory contracts and unexpired leases to or from the schedule at any time before the Effective Date of its Plan. Headquartered in Fairfield, New Jersey, Covanta Energy Corporation -- http://www.covantaenergy.com/-- is a publicly traded holding company whose subsidiaries develop, own or operate power generation facilities and water and wastewater facilities in the United States and abroad. The Company filed for Chapter 11 protection on April 1, 2002 (Bankr. S.D.N.Y. Case No. 02-40826). Deborah M. Buell, Esq., and James L. Bromley, Esq., at Cleary, Gottlieb, Steen & Hamilton, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $3,280,378,000 in assets and $3,031,462,000 in liabilities. On March 10, 2004, Covanta Energy Corporation and its core subsidiaries emerged from chapter 11 as a wholly owned subsidiary of Danielson Holding Corporation. Some of Covanta's non-core subsidiaries have liquidated under separate chapter 11 plans. (Covanta Bankruptcy News, Issue No. 69; Bankruptcy Creditors' Service, Inc., 215/945-7000) COVENTRY HEALTH: Names Dale B. Wolf as Chief Executive Officer -------------------------------------------------------------- On November 4, 2004, Dale B. Wolf was elected to Coventry Health Care, Inc.'s Board of Directors effective January 1, 2005. This follows Mr. Wolf's appointment as Chief Executive Officer effective January 1, 2005. Effective November 4, 2004, Coventry's Board of Directors approved an amendment to the bylaws of the Company to provide that the positions of Chief Executive Officer and President may be held by more than one person, and to delete the position of Chief Operating Officer as a required officer. Coventry Health Care is a managed health care company based in Bethesda, Maryland. It operates health plans and insurance companies under the names Altius Health Plans, Coventry Health Care, Coventry Health and Life, Carelink Health Plans, Group Health Plan, HealthAmerica, HealthAssurance, HealthCare USA, PersonalCare, SouthCare, Southern Health and WellPath. The Company provides a full range of managed care products and services, including HMO, PPO, POS, Medicare+Choice, Medicaid, and Network Rental to 3.1 million members in a broad cross section of employer and government-funded groups in 14 markets throughout the Midwest, Mid-Atlantic and Southeast United States. More information is available on the Internet at http://www.cvty.com/ * * * As reported in the Troubled Company Reporter on Oct. 20, 2004, Moody's Investors Service placed Coventry Health Care, Inc.'s ratings (senior unsecured rating Ba1) under review for possible downgrade following the announcement of its agreement to acquire First Health Group Corp. for approximately $1.8 billion. Moody's stated that the nature and structure of the acquisition appears to be inconsistent with certain key assumptions underlying the current rating. As reported in the Troubled Company Reporter on Oct. 18, 2004, Fitch Ratings placed Coventry Health Care Inc.'s 'BB' long-term and senior unsecured debt rating on Rating Watch Negative. The rating action affects approximately $170.5 million of debt. S&P's rating action follows Coventry's announcement that it intends to purchase First Health Group Corp., a national health benefits company serving group health, worker's compensation, and state public programs. Coventry intends to finance the expected purchase price of $1.8 billion with a combination of approximately $900 million of new debt and existing cash and $900 million of company stock. CROWN PACIFIC: Unable to File Third Quarter Financials ------------------------------------------------------ Crown Pacific Partners, L.P., is unable to file its Quarterly Report on Form 10-Q for the quarter ended September 30, 2004, within the prescribed time period without unreasonable effort or expense, due to staff reductions coupled with the additional financial reporting and accounting requirements of its chapter 11 bankruptcy case. In addition, the disposition of a significant portion of its operations during the quarter ended Sept. 30, 2004, has further strained its internal accounting resources. The Company expects to report income from discontinued operations in the three and nine months ended September 30, 2004, compared to losses from discontinued operations in the comparable periods of 2003, due primarily to improved market conditions for the discontinued segments in the 2004 periods. The 2004 periods also include gains on the disposals of the discontinued operations. The Company also expects to report net income for the three and nine months ended September 30, 2004, compared to net losses in the comparable periods of 2003. In addition to the improved results from discontinued operations, the three and nine month periods ended September 30, 2004, exclude $12.9 million and $38.5 million of interest expense, respectively, that would have been recorded except for the Company's Chapter 11 bankruptcy filing, compared to the exclusion of $11.7 million of interest in both of the comparable 2003 periods. Headquartered in Portland, Oregon, Crown Pacific Partners, L.P., is an integrated forest products company. Crown Pacific owns and manages approximately 524,000 acres of timberland in Oregon and Washington, and uses modern forest practices to balance growth with environmental protection. Crown Pacific operates mills in Oregon and Washington, which produce dimension lumber, and also distributes lumber products through its Alliance Lumber operation. The Debtors filed for chapter 11 protection on June 29, 2003 (Bankr. D. Ariz. Case No. 03-11260). Alisa C. Lacey, Esq., and C. Taylor Ashworth, Esq., at Osborn Maledon, P.A., represent the Debtors in their restructuring efforts. DANA CORP: S&P Upgrades Corporate Credit Rating to BBB- from BB --------------------------------------------------------------- Standard & Poor's Ratings Services raised its corporate credit and senior unsecured debt ratings on Toledo, Ohio-based Dana Corp. to 'BBB-' from 'BB' and removed them from CreditWatch where they were placed with positive implications on December 3, 2003. The outlook is stable. Total outstanding debt at Sept. 30, 2004, was about $2.5 billion, accounting for Dana Credit Corp. (BB/Negative/BB), which is undergoing an orderly liquidation, by the equity method. "Dana is expected to balance its strategic objectives with maintenance of a solid financial profile, allowing for generation of appropriate credit measures to sustain credit quality," said Standard & Poor's credit analyst Daniel DiSenso. Dana Corp.'s financial profile has improved, following the $1 billion sale of its automotive aftermarket business (expected to close by the end of November) to affiliates of The Cypress Group LLC. Dana will receive $950 million of cash proceeds and a payment-in-kind subordinated seller note with a $50 million fair market value ($74.5 million face amount). Dana is expected to generate acceptable earnings and cash flow measures, notwithstanding deterioration of industry conditions in the second half of 2004, because of original equipment light-vehicle production cuts and higher steel costs. Although Dana will no longer benefit from the earnings and cash flow from divested operations, it will apply the bulk of proceeds to reduce debt and debt-like obligations. Dana is one of world's largest suppliers of modules, systems, and components to light, commercial, and off-highway vehicle OE manufacturers. Products include axles, driveshafts, fluid systems, structural components, bearings, and seals. Dana's growth plan is expected to be organically driven, supplemented on occasion by establishment of strategic alliances, joint ventures, and niche acquisitions. Major debt-financed acquisitions are not factored into the ratings. Dana is expected to maintain a solid capital structure, with moderate debt leverage and satisfactory cash flow protection. DAVCRANE INC: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: Davcrane, Inc. 5221 East Harrison Harlingen, Texas 78550 Bankruptcy Case No.: 04-11507 Type of Business: The Debtor produces and develops cranes. See http://www.davcrane.com/ Chapter 11 Petition Date: November 12, 2004 Court: Southern District of Texas (Brownsville) Judge: Richard S. Schmidt Debtor's Counsel: Michael J. Urbis, Esq. Jordan Hyden Womble & Culbreth 2390 Central Boulevard, Suite G Brownsville, TX 78520 Tel: 956-542-1161 Fax: 956-542-0051 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Oilfield Power & Supply $237,718 P.O. Box 79241 Houston, TX 77279 City Of Harlingen & Harlingen $37,115 609 N. 77 Sunshine Strip Harlingen, TX 78551 Victoria Machine & Fab $28,775 1309 East Commercial Victoria, TX 77902 Holt Cat $25,559 Sarytchoff, Tom W P.C. CPA $20,456 Burtons Bearing & Industrial $20,141 Womack Machine Supply-Houston $19,992 MPC Studios, Inc. $17,748 Finite Engineering $17,231 Garcia, Andres $15,417 Sun Valley Motor Hotel, Ltd. $12,856 Hytorc of Texas, Inc. $12,022 Hydraquip Corporation $11,604 Pederson Construction Co., Inc. $10,352 Hino Gas Sales, Inc. $9,401 Gallegos Electric Inc. $8,836 SBC Equipment $8,759 Thomas Petroleum Ltd. $8,428 Harlingen Steel, LLC $8,378 Harlingen Implement Co. $8,222 DELTA AIR LINES: Reports September 2004 Quarter Results ------------------------------------------------------- Delta Air Lines reported its operating results for the quarter ended September 30, 2004. The Company posted a $646 million net loss for the quarter ended September 30, 2004, as compared to a $164 million net loss for the same period in 2003. September 2004 quarter operating revenues increased 6%, while passenger unit revenues decreased 4%, compared to the September 2003 quarter. Continued weak domestic yields, down 6% as compared to the prior-year quarter, drove the decline in passenger unit revenues. Also, four major hurricanes impacted a significant portion of the airline's Southeastern operations during the quarter, resulting in an estimated revenue loss of approximately $50 million. The load factor for the September 2004 quarter was 77.7%, a 1.0 point increase as compared to the September 2003 quarter. Consolidated system capacity was up 9% and Mainline capacity rose 9% from the prior-year quarter. Operating expenses for the September 2004 quarter increased 15% from the September 2003 quarter and consolidated system unit costs increased 5%. Fuel expense was the primary driver of the increase, rising 63%, or $304 million, with more than 88% of the increase resulting from higher fuel prices. The airline reported a net loss of $3 billion for the nine months ended September 30, 2004, as compared to a net loss of $446 million for the nine months ended September 30, 2003. The loss for the nine months ended September 30, 2004, includes non- cash charges totaling $1.7 billion related to Delta's: (1) deferred income tax assets, (2) defined benefit pension plan for pilots, and (3) sale of eight owned MD-11 aircraft. Operating revenues for the nine months ended September 30, 2004, increased 8%, while passenger unit revenues decreased 2% to 9.21 cents, as compared to the prior year period. The increase in operating revenue reflects a 12% rise in traffic and a 4% decline in passenger mile yield. The decline in the passenger mile yield reflects the airline's lack of pricing power due to the continuing growth of low-cost carriers with which Delta competes in most of its domestic markets. Consolidated system capacity was up 10% from the prior year period driven by the restoration of flights that Delta reduced in 2003 due to the war in Iraq. Load factor increased 1.5 points to 75.0%. Operating expenses for the nine months ended September 30, 2004, increased 14% from the same period in the prior year primarily due to: (1) higher fuel prices in the nine months ended Sept. 30, 2004, than in the nine months ended September 30, 2003, and (2) $398 million in government reimbursements under the Appropriations Act that were recorded as an offset to operating expenses in the September 2003 quarter. Aircraft fuel expense increased 42%, or $601 million, with approximately $500 million of the increase resulting from higher fuel prices. Delta Air Lines -- http://delta.com/-- is the world's second largest airline in terms of passengers carried and the leading U.S. carrier across the Atlantic, offering daily flights to 493 destinations in 87 countries on Delta, Song, Delta Shuttle, the Delta Connection carriers and its worldwide partners. Delta's marketing alliances allow customers to earn and redeem frequent flier miles on more than 14,000 flights offered by SkyTeam, Northwest Airlines, Continental Airlines and other partners. Delta is a founding member of SkyTeam, a global airline alliance that provides customers with extensive worldwide destinations, flights and services. At September 30, 2004, Delta Air Lines reported a $3.58 billion shareholder deficit, compared to a $659 million shareholder deficit at December 31, 2003. ELECTRIC MACHINERY: Bankruptcy Court Confirms Reorganization Plan ----------------------------------------------------------------- The United States Bankruptcy Court for the Middle District of Florida confirmed the Plan of Reorganization of Electric Machinery Enterprises, Inc., the largest operating subsidiary of EarthFirst Technologies, Inc. (OTCBB:EFTI), on Nov. 16, 2004. The Plan provides that all Allowed Administrative Expense Claims and Priority Claims will be paid by the Reorganized Debtor 10 days after the effective date of the Plan. These Secured Creditors will be paid over time: (1) Sun Trust Bank on account of the $7,537,363 claims secured by blanket liens on the Debtor's accounts receivable, inventory, equipment, certain compute equipment, and software; (2) SunTrust on account of a $1,310,555 claim secured by a first mortgage on a real property located in Polk Country, Florida, and a blanket lien on all personal property of EME Modular Structures, Inc., the Debtor's wholly owned non-debtor subsidiary; (3) SunTrust on account of a $19,000 claim secured by liens on specific titled vehicles; (4) Huntington Leasing on account of a claim secured by a lien on a phone system; (5) Claimants owed money on a construction project that hold a valid and enforceable claim under Section 713 of the Florida Statutes -- Mechanic Lien Claimants; and (6) Claimants owed money on a construction project that hold a valid and enforceable claim against a bond posted on the construction project -- Bond Claimants. The Debtor's future earnings will be used to fund the Reorganized Debtor's obligations required to be paid after the Effective Date. In the event that a property is sold, creditors holding claims secured by an interest in the property will be paid from the sale proceeds. A portion of the net proceeds realized from the resolution of claims and causes are required to be paid to Sun Trust and deposited in the Unsecured Creditors Fund -- the segregated account into which the Debtor deposits money for distribution to unsecured creditors. On the Effective Date, the Reorganized Debtor will retain all causes of action. Ten percent of recoveries from litigation will be used to pay the Unsecured Creditors: (1) recovery against Hunt Clark or Orange County on the Orange County Convention Center; (2) recovery against Johnson Controls on the Orange County Convention Center; (3) recovery against Whiting-Turner on Seuss Landing project; and (4) recovery against Fluor Daniel or the owner on the Four Seasons Resort at Emerals Bay, Exuma. Unsecured creditors will likely receive a minimum of 10% distribution on their Allowed Claim, but may receive as much as 35% of their allowed claim depending on lawsuit recoveries. The disbursing agent appointed under the Plan, Larry S. Hyman at Michael S. Moecker and Associates, will make distributions on account of Allowed Unsecured Claims from the $500,000 paid by EarthFirst Technologies and from the liquidation of the 5,000,000 shares of EarthFirst Technologies stock issued by EarthFirst Technologies. The Unsecured Plan Stock will be converted to cash within 12 to 18 months after confirmation and yield an additional $1,000,0000 for distribution to the Allowed Unsecured Claims. Insider Unsecured Creditors will have no right to a cash distribution. They will receive a pro rata distribution of 5,000,000 shares of EFTI restricted stock. The stock will be distributed as early as December 16, 2004. Equity holders will recover nothing. A full-text copy of the Plan is available for a fee at: http://www.researcharchives.com/download?id=040812020022 EarthFirst Technologies, Incorporated and its subsidiaries -- http://www.earthfirsttech.com/-- are dedicated to producing environmentally superior products from carbon-rich solid and liquid materials currently considered wastes. The Company has conducted more than five years of extensive development on advanced technologies to achieve this goal. Through its subsidiary Electric Machinery Enterprises, Inc., the Company provides electrical contracting services both as a prime contractor and as a subcontractor, electrical support for industrial and commercial buildings, power generation stations, and water and sewage plants in the U.S. and abroad. Based in Tampa, Florida, Electric Machinery Enterprises, Inc., filed for chapter 11 protection on May 29, 2003 (Bankr. M.D. Fla. Case No. 03-11047). The Debtor filed a chapter 11 plan in September 2003 premised on its transaction with EarthFirst Technologies. Electric Machinery's Chapter 11 filing was precipitated by an adverse court decision on a disputed construction contract. The dispute has been resolved pursuant to Electric Machinery's Plan of Reorganization. EMPIRE FINANCIAL: Sept. 30 Balance Sheet Upside-Down by $1.8 Mil. ----------------------------------------------------------------- Empire Financial Holding Company (Amex: EFH), a financial brokerage services firm serving retail and institutional clients, reported financial results for the third quarter and nine months ended Sept. 30, 2004. Third quarter 2004 financial results included a year-over-year decrease in revenue of 23%. The Company reported a net loss applicable to common stockholders of $0.3 million. President Donald A. Wojnowski, Jr., stated, "Our retail business was impacted by the unprecedented weather conditions -- including four hurricanes -- that hit Florida during the quarter. A weak stock market that many attributed to investor uncertainty surrounding the election cycle in the U.S. also adversely factored into our third quarter results. Looking forward, we are hopeful that our plan to focus on our core businesses and our return to profitability remains on track." Financial Results Total revenues for the three months ended September 30, 2004, were $4.2 million, a decrease of $1.3 million, or 23%, compared to $5.5 million for the same period in 2003. The decrease in revenue was primarily the result of a decrease in commission and fee revenues resulting from a change in business mix, market conditions, and business interruption due to weather related conditions affecting all aspects of the business. This was partially offset by the establishment of market-making and trading operations during the third quarter of 2003. These operations resulted in a contribution of 25% of total revenues for the third quarter of 2004 and generated no revenue in the corresponding period last year. Total operating expenses for the three months ended September 30, 2004, were $4.5 million compared to total operating expenses of $5.8 million for the same period in 2003. The decrease was primarily due to lower commissions and clearing costs associated with lower transaction volumes and lower general and administrative expenses. For the three months ended September 30, 2004, the Company reported a net loss applicable to common stockholders of $(331,640) or $(0.10) per basic and diluted share, compared to a net loss of $(606,282), or $(0.12) per basic and diluted share for the same period in 2003. Financial Condition At September 30, 2004, the Company had total assets of $1.6 million the majority of which consisted of receivables from clearing brokers, which include interest bearing cash balances held with clearing brokers. Stockholders' deficit was $(1,809,701) at September 30, 2004. The audit report contained in the Company's Annual Report on Form 10-K for the year ended December 31, 2003, contains an explanatory paragraph that raises doubt about the Company's ability to continue as a going concern because the Company has had net losses from continuing operations in 2003 and 2002, a stockholders' deficit and has uncertainties relating to regulatory investigations. About Empire Financial Holding Company Empire Financial Holding Company, through its wholly owned subsidiary, Empire Financial Group, Inc., provides full-service retail brokerage services through its network of independently owned and operated offices and discount retail securities brokerage via both the telephone and the Internet. Through its market-making and trading division, the Company offers securities order execution services for unaffiliated broker dealers and makes markets in domestic and international securities. Empire Financial also provides turn-key fee based investment advisory and registered investment advisor custodial services through its wholly owned subsidiary, Empire Investment Advisors, Inc. At Sept. 30, 2004, Empire Financial's balance sheet showed a $1,809,701 stockholders' deficit, compared to an $801,183 deficit at Dec. 31, 2003. ENRON CORP: Plan of Reorganization Declared Effective ----------------------------------------------------- Attorneys for Enron Corp. and its debtor-affiliates, Weil, Gotshal & Manges LLP, in New York, notify the U.S. Bankruptcy Court for the Southern District of New York that the Debtors' Fifth Amended Plan of Reorganization took effect yesterday, November 17, 2004. The Reorganized Debtors will make distributions on Allowed Secured Claims, Allowed Priority Claims, Allowed Administrative Expense Claims and Allowed Convenience Claims within 20 days of the Effective Date. Distributions will not be made on account of Allowed Unsecured Claims until the Court has approved an appropriate reserve methodology. The Reorganized Debtors anticipate that the first distributions on Allowed Unsecured Claims will be made in April 2005. Administrative Expense Claims Bar Date All holders of claims against the Debtors arising or accruing from December 2, 2001, through and including November 17, 2004, are required to file with the Court, on or before 5:00 p.m. on January 17, 2005, a request for payment on account of their Administrative Expense Claims against any of the Debtors. Headquartered in Houston, Texas, Enron Corporation filed for chapter 11 protection on December 2, 2001 (Bankr. S.D.N.Y. Case No. 01-16033) following controversy over accounting procedures, which caused Enron's stock price and credit rating to drop sharply. 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: CCE Holdings Joint Venture Completes CrossCountry Purchase ----------------------------------------------------------------- CCE Holdings, LLC, a joint venture of Southern Union Company (NYSE:SUG) and GE Commercial Finance Energy Financial Services, completed its acquisition of 100% of the equity interests of CrossCountry Energy, LLC, from Enron Corp. and its affiliates. Also, CCE Holdings completed the divestiture of its interests in Northern Plains Natural Gas Company, LLC and NBP Services, LLC to ONEOK, Inc., for $175 million. Southern Union chairman George L. Lindemann stated, "This acquisition represents several very important milestones for Southern Union. We have established a solid and forward-looking partnership with GE Commercial Finance, we have become one of the largest interstate pipeline companies in the country, and, most importantly, we have created a strong foundation of assets to drive our earnings growth." Thomas F. Karam, president of Southern Union, added, "While this acquisition continues the transformation of Southern Union into a premier interstate pipeline company, the real work begins now. Our efforts are focused on swiftly moving CrossCountry Energy and Panhandle Energy under an integrated management organization led by Stan Horton, a more than 30-year industry veteran. We believe this platform will drive significant synergies that will enhance shareholder value." "Our partnership with Southern Union reflects our keen interest in teaming up with leading energy companies to help them grow," said Alex Urquhart, president and CEO of EFS. "In addition, it draws on GE's deep energy and finance expertise." CCE Holdings paid Enron approximately $2.45 billion in cash for CrossCountry Energy, including the assumption of certain consolidated debt. CrossCountry Energy is comprised of approximately 7,400 miles of natural gas pipelines with approximately 4.2 Bcf/d of natural gas capacity. CrossCountry Energy owns 100% of the Transwestern Pipeline and 50% of Citrus Corp. - which, in turn, owns 100% of Florida Gas Transmission Company. An affiliate of El Paso Corp. owns the remaining 50% of Citrus Corp. Southern Union has funded a portion of its equity investment in CrossCountry Energy through the settlement of a forward sale equity offering, which took place in July 2004. The company received approximately $142 million in proceeds upon the issuance of 8,242,500 shares of common stock to affiliates of JP Morgan and Merrill Lynch, joint book-running managers of the offering. Southern Union utilized bridge financing provided by affiliates of JP Morgan and Merrill Lynch until such time that it accesses the capital markets to permanently finance the remainder of its investment. JP Morgan served as financial advisor to Southern Union in connection with this transaction. Southern Union has named Stanley C. Horton president and COO of its combined pipeline operations, including CrossCountry Energy and Panhandle Energy. Mr. Horton served as CrossCountry Energy's president and CEO since 2003 and previously served as chairman and CEO of Enron Transportation Services, which included the company's North American pipeline businesses, among other operations. He has chaired the Gas Industry Standards Board (2000), the Interstate Natural Gas Association of America (2001) and the Natural Gas Council (2002). The CCE Holdings joint venture is governed by an Amended and Restated Limited Liability Company Agreement and the management of CCE Holdings' pipeline operations is governed by an Administrative Services Agreement. Both Agreements were filed in a Form 8-K with the Securities and Exchange Commission on November 9, 2004 and are accessible through Southern Union's web site at http://www.southernunionco.com/ Investor Call & Webcast Southern Union will host a special investor call and live webcast on Monday, November 22 at 2:00 p.m. Eastern Time to discuss the acquisition and outlook. To participate, dial 800-884-5695 (international callers dial 617- 786-2960) and enter passcode 10066175, or visit http://www.southernunionco.com/ A corresponding presentation will also be available through Southern Union's Web site prior to the call. A replay of the call will be available for one week by dialing 888-286-8010 (international callers dial 617-801-6888) and entering passcode 80796708. CrossCountry holds interests in and operates Transwestern Pipeline Company, Citrus Corp. and Northern Plains Natural Gas Company - which make up Enron's North American interstate natural gas pipeline system. The pipeline system owned or operated by CrossCountry is comprised of approximately 9,700 miles of pipeline and approximately 8.6 Bcf/d of natural gas capacity. About GE Commercial Finance Energy Financial Services GE Commercial Finance Energy Financial Services -- http://www.geenergyfinancialservices.com-- based in Stamford, Conn., annually invests about $3 billion in the world's most capital-intensive industry, energy. With more than $11 billion in assets under management, EFS offers structured equity, leveraged leasing, partnerships, project finance and broad-based commercial finance to the global energy industry from wellhead to wall socket. GE Commercial Finance, which offers businesses around the globe an array of financial products and services, has assets of over US$220 billion and is headquartered in Stamford, Conn., USA. General Electric (NYSE:GE) is a diversified technology, media and financial services company dedicated to creating products that make life better. For more information, visit http://www.ge.com/ About Southern Union Company Southern Union Company, headquartered in Wilkes-Barre, Pa., is engaged primarily in the transportation and distribution of natural gas. Through its Panhandle Energy subsidiary, Southern Union owns and operates Panhandle Eastern Pipe Line Company, Trunkline Gas Company, Sea Robin Pipeline Company, Trunkline LNG Company and Southwest Gas Storage Company. Collectively, the pipeline assets operate more than 10,000 miles of interstate pipelines that transport natural gas from the Gulf of Mexico, South Texas and the Panhandle regions of Texas and Oklahoma to major markets in the Midwest and Great Lakes region. Trunkline LNG, located in Lake Charles, La., is one of the nation's largest liquefied natural gas import terminals. Through its local distribution companies, Missouri Gas Energy, PG Energy and New England Gas Company, Southern Union also serves nearly one million natural gas end-user customers in Mo., Pa., R.I. and Ma. For further information, visit http://www.southernunionco.com/ Headquartered in Houston, Texas, Enron Corporation filed for chapter 11 protection on December 2, 2001 (Bankr. S.D.N.Y. Case No. 01-16033) following controversy over accounting procedures, which caused Enron's stock price and credit rating to drop sharply. Judge Gonzalez confirmed the Company's Modified Fifth Amended Plan on July 15, 2004, and numerous appeals followed. The Debtors' confirmed chapter 11 Plan took effect on Nov. 17, 2004. Martin J. Bienenstock, Esq., and Brian S. Rosen, Esq., at Weil, Gotshal & Manges, LLP, represent the Debtors in their restructuring efforts. ENRON CORP: Court Approves Settlement Agreement with ETOL --------------------------------------------------------- Enron North America Corp. and Enron Teesside Operations Limited are parties to certain contracts, including an ISDA Master Agreement dated December 31, 1998. As credit support for the Contracts, Enron Corp. issued in ETOL's favor, a Guarantee Agreement dated December 31, 1998. Barry J. Dichter, Esq., at Cadwalader Wickersham & Taft, LLP, in New York, relates that on April 11, 2003, ETOL notified ENA through a letter that it was terminating the ISDA Agreement and designating April 14, 2003, as the Early Termination Date by reason of ENA's bankruptcy filing, which is an event of default under the ISDA Agreement. On April 15, 2003, Ian Brown and Nicholas James Dargan were appointed as ETOL's joint administrative receivers pursuant to the powers contained in a debenture made between ETOL and National Westminster Bank plc. The Receivers act as agents of ETOL at all times without personal liability. As of September 27, 2004, no liquidator has been appointed to ETOL under the English Law. The ISDA Agreement provides that it is to be governed by English law. ETOL believes that its attempted termination of the ISDA Agreement would have been valid under English Law. However, the automatic stay under the U.S. Bankruptcy Code renders the Termination Letter ineffective and void ab initio in its entirety. ETOL was unable to make an application to the English courts for a determination of the parties' rights under the ISDA Agreement without risking a violation of the automatic stay. ENA was not prepared to consent to the application. After thorough review and consideration of the facts and circumstances, ENA and ETOL concluded that an English court likely would grant comity as to the effect of the automatic stay or refer any applicant to the U.S. Bankruptcy Court for the Southern District of New York for a determination of the issues. Mr. Dichter tells the Court that that the Safe Harbor provisions provided by Section 560 of the Bankruptcy Code are not available to ETOL because the approximately 15-month delay after the initiation of Enron's bankruptcy case before the Termination Notice was sent, establishes that the attempted termination was not "because of" Enron's Chapter 11 filing or any of the other Safe Harbors provided by the Bankruptcy Code. The imposition of the Bankruptcy Law, specifically the automatic stay provisions, renders the Termination Notice void ab initio in its entirety. Consequently, ETOL is not a non-defaulting party under the ISDA Agreement and is not entitled to any right of setoff in respect of its obligations to ENA under the Agreement. Furthermore, ETOL's entry into administrative receivership is itself an Event of Default under the ISDA Agreement, thereby entitling ENA to terminate the Agreement. ENA and ETOL reached an agreement as to the settlement of unpaid amounts in connection with the termination of the Contracts and revocation of the Guarantee, to the extent not already terminated or revoked. The Settlement Agreement: -- requires ETOL to pay ENA a termination payment in connection with the termination of the Contracts and revocation of the Guarantee; -- terminates any further obligations of ENA and ETOL to each other under the Intercreditor Deed; and -- requires the parties to exchange mutual releases of obligations and other specified matters related to the Contracts and Guarantee. Pursuant to Rule 9019 of the Federal Rules of Bankruptcy Procedure and the Safe Harbor Agreements Termination Protocol, Judge Gonzalez approves the Settlement Agreement. The Settlement Agreement resolves any disagreement as to the forward value of the Contracts, Mr. Dichter states. The Settlement Agreement will allow ENA to capture value for its estates and creditors, and will enable parties to avoid potential future disputes and litigation regarding the termination payments due pursuant to the Contracts. Headquartered in Houston, Texas, Enron Corporation filed for chapter 11 protection on December 2, 2001 (Bankr. S.D.N.Y. Case No. 01-16033) following controversy over accounting procedures, which caused Enron's stock price and credit rating to drop sharply. Judge Gonzalez confirmed the Company's Modified Fifth Amended Plan on July 15, 2004, and numerous appeals followed. The Debtors' confirmed chapter 11 Plan took effect on Nov. 17, 2004. 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. 129; Bankruptcy Creditors' Service, Inc., 15/945-7000) EXIDE TECHNOLOGIES: Castlerigg Discloses 7.5% Equity Stake ---------------------------------------------------------- Castlerigg Master Investments Ltd., Sandell Asset Management Corp., Castlerigg International Limited, Castlerigg International Holdings Limited, and Thomas E. Sandell, as a group, beneficially own 1,799,218 shares of Exide Technologies' common stock. This comprises approximately 7.5% of the outstanding common stock of Exide Technologies. In a regulatory filing with the Securities and Exchange Commission dated November 8, 2004, Mr. Sandell discloses that the shares are owned directly by Castlerigg Master Investments. Castlerigg Holdings is the controlling shareholder of Castlerigg Master Investments and Castlerigg International is the controlling shareholder of Castlerigg Holdings. SAMC is the Investment Manager of the Castlerigg Entities. The controlling shareholder of SAMC is Mr. Sandell, a citizen of Sweden. Castlerigg Master Investments, Castlerigg International, Castlerigg Holdings, and SAMC are British Virgin Islands companies. Mr. Sandell relates that the funds used to purchase the Shares were obtained from a combination of the general working capital of the investment entities managed by Castlerigg and margin account borrowings made in the ordinary course of business. "The purpose of the acquisition of the Shares is for investment purposes, and the acquisitions of the Shares were made in the ordinary course of business and were not made for the purpose of acquiring control of Exide." SAMC representatives have recently engaged in preliminary discussions with members of Exide's board of directors, as well as with several Exide shareholders, regarding Exide, including but not limited to its operations and board composition. According to Mr. Sandell, Castlerigg may engage in further communications with one or more Exide shareholders, officers, directors or representatives on a variety of possible subjects regarding ways to increase shareholder value. Mr. Sandell notes that some of the suggestions SAMC might make may affect control of Exide and may relate to: -- changes to the board of directors or management of Exide, -- the merger, acquisition or liquidation of Exide, -- the divestiture of certain assets of Exide, -- a change in the present capitalization or dividend policy of Exide, or -- a change in Exide's charter or by-laws. Mr. Sandell provides the SEC with a list of transactions effected during the past 60 days: Person Amount of Date of effecting securities Price per transaction transaction involved share or unit ----------- ----------- ---------- ------------- 09/14/04 SAMC 100,000 16.0000 09/21/04 SAMC 25,000 15.8500 09/21/04 SAMC 1,100 15.8237 09/21/04 SAMC 17,000 15.9869 09/22/04 SAMC 43,008 15.9516 09/22/04 SAMC 15,000 16.0000 09/23/04 SAMC 25,000 15.9970 09/23/04 SAMC 73,892 16.0025 09/24/04 SAMC 61,000 16.0500 09/27/04 SAMC 39,000 15.9583 10/01/04 SAMC 47,800 15.9779 10/04/04 SAMC 5,200 16.0211 10/05/04 SAMC 47,000 16.0637 10/07/04 SAMC 33,619 15.6793 10/07/04 SAMC 69,000 15.6123 10/13/04 SAMC 48,591 15.4782 Headquartered in Princeton, New Jersey, Exide Technologies is the worldwide leading manufacturer and distributor of lead acid batteries and other related electrical energy storage products. The Company filed for chapter 11 protection on April 14, 2002 (Bankr. Del. Case No. 02-11125). Matthew N. Kleiman, Esq., and Kirk A. Kennedy, Esq., at Kirkland & Ellis, represent the Debtors in their restructuring efforts. Exide's confirmed chapter 11 Plan took effect on May 5, 2004. On April 14, 2002, the Debtors listed $2,073,238,000 in assets and $2,524,448,000 in debts. (Exide Bankruptcy News, Issue No. 55; Bankruptcy Creditors' Service, Inc., 215/945-7000) EXIDE TECHNOLOGIES: S&P Revises Outlook on BB- Rating to Negative ----------------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on Exide Technologies to negative from stable. The action was taken because of the company's weaker-than-expected earnings during the first half of fiscal 2005 (ending March 31, 2005) and the expectation that high raw material costs and difficult competitive conditions will cause full-year earnings and cash flow to fall below previously expected levels. As a result, credit measures, liquidity, and the rating could be pressured over the next two years if some improvement in results fails to occur. The 'BB-' corporate credit rating on the Lawrenceville, New Jersey-based company was affirmed. Exide, a global supplier of transportation, network, and motive power batteries, has total debt, including the present value of operating leases, of about $650 million. "We expect earnings and cash flow improvements in the second half, which should allow credit statistics to remain consistent with current levels. Operations should benefit from recent hedging activities, price increases, and restructuring actions," said Standard & Poor's credit analyst Martin King. "Failure to report improved results, however, would cause credit protection measures to deteriorate and could strain liquidity if the company is unable to meet recently revised covenant requirements, possibly leading to a rating downgrade." Exide's operating performance has suffered from the dramatic rise in the cost of lead, a key component in battery production that currently makes up about one-third of Exide's cost of sales. Average lead prices rose 70% during the company's second quarter from the year-earlier period. Exide has attempted to raise prices to offset the increase in lead prices, but it has been somewhat constrained by tough competition caused by excess industry production capacity. Most of Exide's competitors hedge a portion of their lead requirements to minimize the impact of sharp price increases. Exide was unable to hedge its lead requirements while it was in bankruptcy. The company emerged from bankruptcy in May 2004 and, since then, has put in place hedges that cover one-third of its requirements for the second half of fiscal 2005. Over time, Exide would like to hedge about half of its forward requirements on a six-month basis. FINOVA GROUP: Reports Status of Senior Notes Prepayment ------------------------------------------------------- During the third quarter of 2004, The FINOVA Group made a $326,400,000 partial principal prepayment on its 7.5% Senior Secured Notes Due 2009 with Contingent Interest Due 2016, which reduced the outstanding principal to $2,400,000,000. FINOVA made a $118,700,000 partial prepayment on the Senior Notes in October 2004. FINOVA was scheduled to make another $118,700,000 prepayment on Nov. 15, 2004. In a regulatory filing with the Securities and Exchange Commission, Richard A. Ross, FINOVA's Senior Vice-President and Chief Financial Officer and Treasurer, discloses that, following the prepayments, cumulative principal prepayments through November 15, 2004, will total $801,300,000 or 27% of the $3,000,000,000 principal amount outstanding as of December 31, 2003. In accordance with the terms of the Indenture, FINOVA is required to use any excess cash, as defined in the Indenture, to make semi-annual interest and principal payments on the Senior Notes. Additionally, the Indenture permits voluntary prepayments at FINOVA's option. FINOVA believes principal prepayments may not continue at the same pace, as FINOVA's asset pool continues to decline and generally contains less desirable assets than previously collected or sold. FINOVA does not have sufficient assets to fully repay this debt, and the Indenture prohibits the company from engaging in new business. According to Mr. Ross, FINOVA will rely on the liquidation of its remaining assets as its only meaningful source of liquidity. Following repayment of the Berkadia Loan in February 2004, the Senior Notes have a first priority security interest in substantially all of FINOVA's assets. Mr. Ross warns stockholders that they should not expect any payments or distributions from FINOVA. The Indenture, he says, contemplates that as principal payments are made on the Senior Notes, FINOVA stockholders will receive a distribution equal to 5.263% of each principal prepayment. "Ninety-five percent of the remaining available cash after establishment of cash reserves as defined in the Indenture will be used to make prepayments of principal on the Senior Notes and 5% is identified for distributions to or repurchases of stock from common stockholders," Mr. Ross reveals. "However, the Indenture prohibits FINOVA from making distributions to and repurchases from stockholders if the payments would render FINOVA insolvent, would be a fraudulent conveyance or would not be permitted to be made under applicable law." FINOVA has a negative net worth of $571,900,000 as of September 30, 2004 or $1,200,000,000 if the Senior Notes are considered at their principal amount due. Based on FINOVA's current financial condition, including having only $811,100,000 of net financial assets, it is highly unlikely that there will be funds available to fully repay the outstanding principal on the Senior Notes at maturity or make any 5% distribution to common stockholders. As a result, there would not be a return to FINOVA's stockholders. Headquartered in Scottsdale, Arizona, The Finova Group, Inc., provides commercial financing to small and midsized businesses; other services include factoring, accounts receivable management, and equipment leasing. The firm has three segments: Commercial Finance, Specialty Finance, and Capital Markets. FINOVA targets such markets as transportation, wholesaling, communication, health care, and manufacturing. Loan write-offs had put the firm on shaky ground. The Company and its debtor-affiliates and subsidiaries filed for Chapter 11 protection on March 7, 2001 (U.S. Bankr. Del. 01-00697). Daniel J. DeFranceschi, Esq., at Richards, Layton & Finger, P.A., represents the Debtors. FINOVA has since emerged from Chapter 11 bankruptcy. Financial giants Berkshire Hathaway and Leucadia National Corporation (together doing business as Berkadia) own FINOVA through the almost $6 billion lent to the commercial finance company. (Finova Bankruptcy News, Issue No. 52; Bankruptcy Creditors' Service, Inc., 215/945-7000) FABRICATION & DESIGN: Voluntary Chapter 11 Case Summary ------------------------------------------------------- Debtor: Fabrication & Design, Inc. P.O. Box 877 St. Paul, Virginia 24283 Bankruptcy Case No.: 04-74602 Type of Business: The Debtor provides services in metal fabrication. See http://www.fabrication-design.com/ Chapter 11 Petition Date: November 15, 2004 Court: Western District of Virginia (Roanoke) Judge: William F. Stone, Jr. Debtor's Counsel: Robert T. Copeland, Esq. Copeland & Bieger P.O. Drawer 1296 Abingdon, VA 24210 Tel: 276-628-9525 Total Assets: $568,000 Total Debts: $1,358,607 The Debtor did not file a list of its 20-Largest Creditors. FLAVIUS CDO: Fitch Affirms Junk Ratings on Four Note Classes ------------------------------------------------------------ Fitch Ratings affirmed these classes of notes issued by Flavius CDO Ltd.: -- $142,262,695 class A-1 senior secured fixed-rate notes affirmed at 'A-'; -- $22,462,427 class A-2A senior secured fixed-rate notes affirmed at 'BBB'; -- $25,000,000 class A-2B senior secured fixed-rate notes affirmed at 'CCC'; -- $10,000,000 class B senior secured fixed-rate notes remain at 'C'; -- $7,500,000 class C secured fixed-rate notes remain at 'C'; -- $6,250,000 class D secured fixed-rate notes remain at 'C'. Flavius is comprised of a static portfolio of assets held physically, as well as three series of assets that are referenced through credit-linked notes -- CLNs. Assets held physically consist of corporate bonds and sovereign debt, while asset-backed securities -- ABS, CDOs and corporate bonds are referenced through the CLNs. Since the previous rating action on February 5, 2004, negative performance by certain assets has been mitigated by improved performance from other assets and principal repayments to the class A-1 and A-2A notes allowing Flavius' performance to remain stable. FULTON VILLAGE: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Fulton Village Purveyors, Inc. 26 Fulton Fish Market New York, New York 10038 Bankruptcy Case No.: 04-17341 Type of Business: The Company is a wholesale and retail fish dealer located at Fulton Fish Market. Chapter 11 Petition Date: November 16, 2004 Court: Southern District of New York (Manhattan) Judge: Stuart M. Bernstein Debtor's Counsel: Richard Klass, Esq. 16 Court Street, 29th Floor Brooklyn, New York 11241 Tel: (718) 643-6063 Fax: (718) 643-9788 Total Assets: $893,199 Total Debts: $4,792,092 Debtor's 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Stolt Sea Farm, Inc. Trade Debt $764,715 350 Long Beach Boulevard Stratford, Connecticut 06615 J.P.'s Shellfish, Inc. Trade Debt $601,463 P.O. Box 666 Eliot, Maine 03903 Calkins & Burke, Ltd. Trade Debt $351,619 c/o Arnold A. Arpino, Esq. 155 East Main Street Smithtown, New York 11787 Heritage Salmon Trade Debt $349,695 874 Main Street-Blacks Harbor New Brunswick E5H 1E6 Canada Nordic Group, Inc. Trade Debt $333,256 286 Congress Street Boston, Massachusetts 02210 Dockside Marketing Group Ltd. Trade Debt $226,553 648 Central Park Avenue Suite 148 Scarsdale, New York 10583 Robert Pompilio Loans to Corporation $197,000 47 Alysia Court Staten Island, New York 10309 True North Salmon Trade Debt $164,652 Seafresh Trade Debt $160,000 North Landing Trade Debt $123,414 Ipswich Shellfish Trade Debt $115,819 Bergie's Seafood Trade Debt $108,564 Bristol Trade Debt $90,367 Tempest Fisheries Trade Debt $87,120 Mortillaro Lobster Trade Debt $56,408 Lisbon Seafood Trade Debt $43,718 Atlantic Salmon of Maine Trade Debt $36,666 Old Point Packing Trade Debt $34,970 Coast Seafood Trade Debt $30,096 Eastern Fisheries Trade Debt $29,749 GLOBAL CROSSING: Court Permits AGX Trustee to Examine 16 Parties ---------------------------------------------------------------- At the request of Robert L. Geltzer, the AGX Debtors' Chapter 7 Trustee, the U.S. Bankruptcy Court for the Southern District of New York directs and compels 16 parties to produce certain documents and to appear for examination, pursuant to Rule 2004(b) of the Federal Rules of Bankruptcy Procedure, concerning the AGX Debtors' acts, conduct, property, liabilities and financial condition or any matters which may affect the administration of the Debtors' estates. The parties required to undergo examination are: (1) Wells Fargo Bank Minnesota, National Association (2) Asia Netcom Corp. Ltd. (3) Walter F. Beran, Director & Compensation Committee Chairman (4) Eric Hippeau, Director & Compensation Committee Member (5) Myron Ullman, Director & Compensation Committee Member (6) Monte Baier, Assistant General Counsel (7) Marc Brown, Director & Compensation Committee Member (8) Jeremiah Lambert, Chairman of the Board (9) Scott Ballantyne, Payroll Department (10) Paul Crosio, Senior Vice-President for Human Resources (11) Janet Troxell, Payroll Department (12) Charles F. Carroll, General Counsel - Asia Region (13) John Legere, former Chief Executive Officer (14) Stefan Riesenfield, Chief Financial Officer (15) John Scanlon, Chief Executive Officer (16) William H. Barney, Chief Operating Officer According to James M. Altman, Esq., at Bryan Cave, LLP, in New York, as special litigation counsel to the Chapter 7 Trustee, Wells Fargo Bank Minnesota, National Association, William Barney and the AGX Debtors entered into an escrow agreement on February 14, 2002, which included payment to Mr. Barney of $975,000, depending on the occurrence of one of a number of events, including Mr. Barney's resignation from employment with AGX for a Good Reason Event or on the institution of a voluntary case under Title 11 of the United States Code. Mr. Altman explains that examination of Wells Fargo is essential to determine, among other things, whether Mr. Barney, or other directors and officers, breached their fiduciary duty to the Debtors in negotiating, executing, and his receiving payments under the Escrow Agreement. Wells Fargo is required to produce documents concerning the Escrow Agreement, including payments made by Wells Fargo to Mr. Barney or on his behalf. The AGX Chapter 7 Trustee relates that Asia Netcom Corp. Ltd. entered into a contract where ANC purchased substantially all of the Debtors' assets in March 2003. In connection with the negotiation and execution of the purchase and sale agreement, three of the AGX Debtors' executives, Charles F. Carroll, John M. Scanlon, and Stefan C. Riesenfeld, executed consulting agreements with ANC, under which they were to be paid certain sums in exchange for management consulting services. Any sums paid by ANC pursuant to the Consulting Agreements may have reduced the purchase price to be paid by ANC for the AGX Debtors' assets. ANC also negotiated and entered into employment agreements with three of the AGX Debtors' executives: -- William Barney as President and Chief Operating Officer; -- Gregory Freiberg as Senior Vice President of Finance; and -- Mark Simpson as Senior Vice President and Chief Technology Officer. ANC will produce documents pertaining to: (i) the negotiation and execution of the sale by the AGX Debtors and the purchase by ANC of substantially all of the AGX Debtors' assets in March 2003; (ii) the negotiation and execution of the Consulting Agreements; (iii) any financial transactions taken by ANC in connection with the Consulting Agreements; and (iv) the negotiation and execution of, and the payments made under, the ANC Employment Agreements. The AGX Chapter 7 Trustee also wants to examine the 14 individuals to determine, among other things: -- whether any payments of Employment Compensation constitute preferences or fraudulent conveyances; -- whether any assets have been concealed; -- whether any preferential transfer or fraudulent conveyance causes of actions exist; -- whether any officer or director has breached his or her fiduciary duty to Debtors; and -- whether any assets have been used for the personal benefit of any of the AGX Debtors' directors and officers. The 14 Individual Examinees are required to produce documents relevant to Employment Compensation. Headquartered in Florham Park, New Jersey, Global Crossing Ltd. -- http://www.globalcrossing.com/-- provides telecommunications solutions over the world's first integrated global IP-based network, which reaches 27 countries and more than 200 major cities around the globe. Global Crossing serves many of the world's largest corporations, providing a full range of managed data and voice products and services. The Company filed for chapter 11 protection on January 28, 2002 (Bankr. S.D.N.Y. Case No. 02- 40188). When the Debtors filed for protection from their creditors, they listed $25,511,000,000 in total assets and $15,467,000,000 in total debts. Global Crossing emerged from chapter 11 on Dec. 9, 2003. (Global Crossing Bankruptcy News, Issue No. 69; Bankruptcy Creditors' Service, Inc., 215/945-7000) GLOBALNET INT'L: Parent Inks Lease Settlement Pact with Cisco ------------------------------------------------------------- GlobalNet Corporation (OTCBB:GLBT), a major provider of international telecommunications services, has reached a contractual settlement with Cisco Systems Capital Corporation, from whom the GlobalNet's principal operating subsidiary, GlobalNet International, LLC, had leased the majority of the telecommunications equipment used in its wholesale telephony business. In exchange for a $750,000 cash payment by GlobalNet to Cisco, all leasehold obligations owed by LLC to Cisco will be satisfied and GlobalNet will take title to the leased equipment. The settlement eliminates $2.8 million in debt obligations from GlobalNet's consolidated balance sheet, a $225,000 monthly payment towards the debt obligations and allows GlobalNet to deploy the newly-acquired leased equipment to the maximum benefit of the GlobalNet's overall VoIP business. Earlier this month, GlobalNet announced an agreement with its principal shareholder whereby its major shareholder Growth Enterprise Fund, S.A. (GEF) has surrendered to GlobalNet for cancellation 100,000 shares of Series A Convertible Preferred Stock, which represents all of the GlobalNet's outstanding preferred stock. The preferred stock is valued at over $14 million and was redeemable monthly for cash payments totaling $250,000 or 156,250,000 shares of common stock, which GlobalNet has been making since January 1, 2004. The cancellation represents a monthly cash savings for GlobalNet of $250,000 and a total cash savings of over $14,000,000. When combined with the Cisco Systems Capital Corporation settlement this represents $16.8 million in debt settlement and eliminates $475,000 in monthly obligations resulting from these settlements. LLC is currently in reorganization under Chapter 11 of the U.S. Bankruptcy Code, in the United States Bankruptcy Court for the Southern District of New York. The settlement with Cisco was approved by the bankruptcy court. GlobalNet also filed an extension of time to report its results for the quarter ended Sept. 30, 2004, which otherwise would have been due Monday. GlobalNet expects to file its third quarter Form 10-QSB within the extension of time requested. About GlobalNet Corporation GlobalNet Corporation is one of the top ten U.S. service providers of outbound traffic to Latin America and counts among its customers more than 30 Tier 1 and Tier 2 carriers. GlobalNet provides international voice, data, fax and Internet services on a wholesale basis over a private IP network to international carriers and other communication service providers in the United States and internationally. GlobalNet's state-of-the-art IP network, utilizing the convergence of voice and data networking, offers customers economical pricing, global reach and an intelligent platform that guarantees fast delivery of value-added services and applications. More information may be obtained from its Web site at http://www.gbne.net/ Headquartered in New York, New York, Globalstar Telecommunications -- http://www.globalstar.com/-- provides global mobile and fixed wireless voice and data services. The Company filed for chapter 11 protection on June 30, 2004 (Bankr. S.D.N.Y. Case No. 04-14480). Robert R. Leinwand, Esq., at Robinson Brog Leinwand Greene Genovese & Gluck P.C., represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it did not disclose its assets but listed $1,823,799,468 in total debts. GRAFTECH FINANCE: Moody's Rates Proposed Senior Sec. Facility Ba3 ----------------------------------------------------------------- Moody's Investors Service assigned a Ba3 rating to GrafTech Finance Inc.'s proposed new senior secured revolving credit facility and affirmed all existing ratings for GrafTech Finance and its parent company, GrafTech International Ltd. GrafTech Finance Inc. is a special purpose finance company. The new revolving credit facility will be for $225 to 275 million, of which up to $25 million will be available in the form of letters of credit. The new facility matures July 15, 2010 and will replace a Euro175 million (approx. US$226 million) facility that matures February 22, 2006. GrafTech's rating outlook remains stable. These rating actions were taken: * New rating assigned -- Ba3 to GrafTech Finance's proposed senior secured revolving credit facility maturing July 15, 2010. * Ratings affirmed for GrafTech Finance -- B2 for the $450 million of 10.25% guaranteed senior unsecured notes due 2012. Ratings affirmed for GrafTech: (i) B1 senior implied rating, (ii) B3 senior unsecured issuer rating, (iii) B2 for the $225 million of 1.625% convertible debentures due 2024, and (iv) SGL-2 speculative grade liquidity rating. GrafTech's ratings reflect: (1) its high leverage and negative net worth; modest cash flow; (2) the cyclical nature of its primary end-user markets, the steel and aluminum industries; (3) potential cost pressures related to reduced global production of needle coke, a key raw material; and (4) its exposure to changing energy costs and currency rates. Its ratings are supported by its significant market share for graphite and carbon electrodes, market and production-base diversity, industry-leading cost position, and good liquidity. GrafTech's stable outlook reflects a favorable business outlook given increased steel and aluminum production, expanding sales and margins, and good liquidity. The primary factors that could lead to a positive rating outlook include attainment of consistently positive free cash flow and sizable debt reduction. Factors that could lead to a negative outlook include a downturn in global steel market conditions, higher needle coke prices, or debt-financed acquisitions, dividends or stock repurchases. Over the last year, GrafTech has been able to increase production volumes and selling prices for graphite electrodes, which has been one of the contributors to its 16% increase in net sales. However, while its operating margins and cash flow have increased, operating and administrative costs have offset much of the top-line improvement. Therefore, the company's free cash flow remains slightly negative. Cost pressures could worsen due to declining supplies of needle coke, which represents about 30% of GrafTech's production costs. Unocal, one of the largest US producers of needle coke, announced that it was selling certain of its assets at its Lemont, Illinois facility and that the buyer does not intend to use the assets for needle coke production. While GrafTech has contracted for 95% of its anticipated 2005 needle coke needs and has locked in the price for approximately 90% of that volume, a shortage of needle coke is likely to impact GrafTech's production costs beyond 2005. Also, in October, the company announced that higher costs for global work processes, information systems and Sarbanes-Oxley compliance had impacted earnings. These costs will be incurred into early 2005. The company also plans to add employees and resources in its Advanced Energy Technology group as that segment grows, and it plans to increase capex in order to expand its graphite electrode production capacity, primarily at its plants in South Africa and France. At the beginning of the year, Moody's was anticipating a gradual improvement in GrafTech's credit metrics and a return to positive cash from operating activities. While higher costs may pressure our ratings, Moody's believes the current ratings can accommodate modest margin erosion as long as there is no significant reversal of graphite electrode prices and overall revenues. If steel markets continue to be strong, then higher needle coke costs, since they impact all graphite electrode producers, may be the catalyst for higher electrode prices, just as strong steel demand has allowed the steel companies to offset higher costs with higher selling prices. The new senior secured revolving credit facility is guaranteed, on a senior secured basis, by GrafTech, its domestic subsidiaries (excluding AET), and UCAR S.A. (Swissco). The facility is secured by substantially all the assets of GrafTech, its domestic subsidiaries (excluding AET), Swissco, and by a pledge of the capital stock representing GrafTech's 97.5% ownership in AET, 100% of the equity of Swissco and 65% equity ownership of Swissco's first-tier subsidiaries. This is a change from the existing credit facility, where the banks have the guarantee of AET and a pledge of its assets, but do not have a guarantee or pledge of Swissco's assets and only have 65% of the equity of Swissco. Moody's believes that the assets securing the credit facility (approximately $400 million of book value) provide adequate collateral protection for bank creditors, and have notched the credit facility up one notch from GrafTech's senior implied rating. The terms of the new credit facility are very accommodating with respect to additional indebtedness, investments and acquisitions, which can be as large as $200 million, capital expenditures, asset sales and spin offs, and dividends and distributions. GrafTech International Ltd., headquartered in Wilmington, Delaware, is a leading global manufacturer of graphite and carbon electrodes, cathode blocks, and other graphite and carbon products. GRAFTECH FINANCE: S&P Rates Proposed $225M Credit Facility 'BB-' ---------------------------------------------------------------- Standard & Poor's Rating Services assigned its 'BB-' bank loan rating and recovery rating of '1' to GrafTech Finance Inc.'s proposed $225 million revolving credit facility. GrafTech Finance is a wholly owned financing subsidiary of GrafTech International Ltd. (B+/Negative/--). "These ratings indicate that lenders can expect full recovery of principal in the event of default," said Standard & Poor's credit analyst Dominick D'Ascoli. Ratings are based on preliminary documentation and subject to Standard & Poor's review of final documentation. The new revolving credit facility will replace an existing E175 million facility that matures in 2006. The proposed revolving credit facility is guaranteed by GrafTech International and all its U.S. subsidiaries, except Advanced Energy Technology Inc. It is also guaranteed by UCAR S.A. Standard & Poor's estimates that for 2004, the U.S. guarantors will account for approximately one third of total EBITDA. The ratings on GrafTech International reflect its aggressive financial leverage, poor free cash flow generation, significant exposure to the cyclical steel industry, and uncertainties and concerns pertaining to needle coke. Somewhat offsetting these negative factors are the company's favorable cost position compared with its competitors, good market position in graphite electrodes, and currently favorable industry conditions. GrafTech International manufactures carbon-based materials throughout the world for use in various applications. Its primary product is graphite electrodes, which accounted for 68% of the $800 million in sales generated in the 12 months ended September 30, 2004. Because graphite electrodes are primarily used in electric arc steel furnaces, the company is exposed to the cyclical steel industry, which is currently enjoying extremely good fundamentals. Indeed, favorable conditions in the steel industry are translating to improved graphite electrode demand and prices, increasing the company's average contract realizations for 2005, which are 60% locked in. HAYES LEMMERZ: Will Host 3rd Quarter Conference Call on Dec. 10 --------------------------------------------------------------- Hayes Lemmerz International, Inc. (NASDAQ: HAYZ) reported that it will host a telephone conference call to discuss the Company's fiscal year 2004 third quarter financial results on December 10, 2004, at 9:30 a.m. (ET). To participate by phone, please dial 10 minutes prior to the call: (800) 399-3882 from the United States and Canada (706) 634-4552 from outside the United States Callers should ask to be connected to Hayes Lemmerz earnings conference call, Conference ID#1431581. The conference call will be accompanied by a slide presentation, which can be accessed that morning through the Company's Web site, in the Investor Kit presentations section at: http://www.hayes-lemmerz.com/investor_kit/html/presentations.html A replay of the call will be available from 12:00 Noon (ET), December 10, 2004 until 11:59 p.m. (ET), December 17, 2004, by calling (800) 642-1687 (within the United States and Canada) or (706) 645-9291 (for international calls). Please refer to Conference ID#1431581. An audio replay of the call is expected to be available on the Company's Web site beginning 48 hours after completion of the call. Hayes Lemmerz International, Inc., is a world leading global supplier of automotive and commercial highway wheels, brakes, powertrain, suspension, structural and other lightweight components. The Company filed for chapter 11 protection on December 5, 2001 (Bankr. D. Dela. Case No. 01-11490). The Debtors' confirmed chapter 11 Plan took effect on June 3, 2003. Eric Ivester, Esq., and Mark S. Chehi, Esq., at Skadden, Arps, Slate, Meager & Flom, represented the Debtors in their restructuring efforts. (Hayes Lemmerz Bankruptcy News, Issue No. 56; Bankruptcy Creditors' Service, Inc., 215/945-7000) HEALTH & NUTRITION: Sept. 30 Balance Sheet Upside-Down by $828K --------------------------------------------------------------- Health & Nutrition Systems International, Inc. (OTC Bulletin Board: HNNSQ) reported the results of operations for the three- and nine-month periods ended Sept. 30, 2004. HNS reported a profit of $185,899 for the three months ended September 30, 2004, compared to net profit of $183,835 in the same period of 2003, which represented a net profit of $.05 per share. The net loss for the nine months ending September 30, 2004, was ($773,788), which represented a net loss of ($.20), compared to a net profit of $344,479 and a $.09 per share for the corresponding period in 2003. Revenues for the three months ended September 30, 2004, were $2,370,380, compared to $1,867,887 for the same period in 2003, an increase of $502,493. Operating expenses were $1,236,849 for the three months ended September 30, 2004, compared to $1,181,034 for the same period in 2003, an increase of $55,815. Advertising expenses increased $32,026 while general and administrative expenses increased by $19,343, compared to the same period in 2003. Gross profit for the three months ended September 30, 2004, was $1,429,216, or 60% of revenue, compared to $1,100,512, or 59% of revenue, for the same period in 2003. Revenues for the nine months ended September 30, 2004, were $5,249,928, compared to $4,369,984 for the same period in 2003, an increase of $879,944. Operating expenses were $3,717,867 for the nine months ended September 30, 2004, compared to $2,498,217 for the same period in 2003, an increase of $1,219,650. Advertising expenses increased $697,470, while general and administrative expenses increased $517,008, as compared to the same period in 2003. Gross profit for the nine months ended September 30, 2004, was $2,968,651 or 57% of revenue, compared to $2,597,907, or 59% of revenue, for the same period in 2003. Operating expenses rose significantly as a percentage of sales, to 71%, increasing by $1,219,650 as compared to the corresponding period last year. The higher costs of doing business, as reflected in this rise in operating expenses, was the major factor contributing to the Company's net loss for the nine-month period. This trend abated somewhat in the three-month period ending September 30, 2004 period. Industry trends, however, as well as a longer term trend reflecting deteriorating operating performance, spurred the HNS Board of Directors to file for bankruptcy protection under Chapter 11 of the federal bankruptcy laws on October 15, 2004. The Company is currently operating as debtor in possession. At Sept. 30, 2004, Health & Nutrition's balance sheet showed an $827,848 stockholders' deficit, compared to a $1,013,747 deficit at June 30, 2004. Headquartered in West Palm Beach, Florida, Health & Nutrition Systems International, Inc. -- http://www.hnsglobal.com/-- develops and markets weight management products in over 25,000 health, food and drug store locations. The Company's products can be found in CVS, GNC, Rite Aid, Vitamin Shoppe, Vitamin World, Walgreens, Eckerd and Wal-Mart. The Company's HNS Direct division distributes to independent health food stores, gyms and pharmacies. The Company filed for chapter 11 protection on Oct. 15, 2004 (Bankr. S.D. Fla. Case No. 04-34761). Arthur J. Spector, Esq., at Berger Singerman, represents the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed $1,182,382 in total assets and $2,196,129 in total Debts as of June 30, 2004. INTERSTATE BAKERIES: Section 341 Meeting Reset to Dec. 15 --------------------------------------------------------- Because Interstate Bakeries Corp. and its debtor-affiliates have not filed their Schedules of Assets and Liabilities and Statements of Financial Affairs, the Section 341 Meeting of the Debtors' creditors is rescheduled to Dec. 15, 2004, at 9:00 a.m. The Meeting will be held at the U.S. Courthouse, Room 2110B, 400 E. 9th St., in Kansas City, Missouri. All creditors are invited, but not required, to attend. This Official Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible officer of the Debtors under oath. 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. 5; Bankruptcy Creditors' Service, Inc., 215/945-7000) K. HOVNANIAN: Moody's Places Ba3 Rating on $100M Senior Sub. Notes ------------------------------------------------------------------ Moody's Investors Service assigned a Ba2 to $200 million of senior notes and a Ba3 to $100 million of senior subordinated notes of K. Hovnanian Enterprises, Inc. At the same time, Moody's confirmed all of the company's existing ratings, including the senior implied rating, issuer rating, and the ratings on the company's existing senior notes at Ba2 and on its existing senior subordinated notes at Ba3. The ratings outlook is positive. The positive ratings outlook reflects the company's continuing improvement in its financial results and credit profile and Moody's expectation that the company will continue to execute its acquisition-based growth strategy in a disciplined manner. The ratings acknowledge Hovnanian's increased size, scale and market penetration, continuing success in diversifying its operating profits, smooth integration of previous acquisitions, long history, and significant management ownership. At the same time, however, the ratings consider Hovnanian's higher-than- average business risk profile given its apparent appetite for acquisitions, somewhat greater use of debt leverage than that of its peers, capacity under its credit agreement that could lead to substantial additional debt incurrence, integration risks associated with its most recent group of acquisitions, long land position (although heavily optioned), and the cyclical nature of the homebuilding industry. The ratings confirmed are: * Ba2 senior implied rating * Ba2 senior unsecured issuer rating * Ba2 on $150 million of 10.5% senior notes due 10/01/2007 * Ba2 on $100 million of 8% senior notes due 04/01/2012 * Ba2 on $215 million of 6.5% senior notes due January 15, 2014 * Ba2 on $150 million of 6.375% senior notes due December 15, 2014 * Ba3 on $150 million of 8.875% senior subordinated notes due April 1, 2012 * Ba3 on $150 million of 7.75% senior subordinated notes due May 15, 2013 * (P)Ba2/(P)Ba3/(P)Ba3/(P)B1 prospective ratings on $162 million of various securities that could be offered under a multiple seniority shelf registration All of K. Hovnanian Enterprises' debt is guaranteed by the parent company, Hovnanian Enterprises, Inc., and by its restricted operating subsidiaries. The company's credit statistics, which for years trailed those of most of its Ba2 and Ba3 peer group, caught up with, and began surpassing, its peer group comparables in fiscal 2002, with substantial improvement seen in fiscal 2003 and 2004 and continued strengthening expected in fiscal 2005. Particularly strong were the company's returns-ROE, ROA, and ROC-as well as its gross margins. The latter metric, 25.6% for the last 12 months ended July 31, 2004, was noteworthy considering that Hovnanian forgoes a substantial amount of the profit potential inherent in building a home by owning substantially less land than that of its peer group. While debt leverage, as measured by homebuilding debt/capitalization (although not by debt/EBITDA), still stood out as among the more aggressive in the peer group, the company's deleveraging momentum has been clear, and Moody's expects the company to maintain an average net homebuilding debt/capitalization ratio of below 50% during fiscal 2005. Going forward, the ratings outlook will depend largely on the company's reducing and maintaining its homebuilding debt leverage well below the 50% target, growing its equity base, and successfully integrating its recent and any further acquisitions while continuing to generate above-average returns. Factors that could stress the outlook and ratings will include material problems in integrating its acquired companies or any significant releveraging of the balance sheet for acquisitions, share repurchases, or because of major impairment charges. Established in 1959 and headquartered in Red Bank, New Jersey, Hovnanian Enterprises, Inc., designs, constructs and markets single-family detached homes and attached condominium apartments and townhouses. Revenues and net income for the last 12 months ended July 31, 2004, were $3.8 billion and $306 million, respectively. KMART HOLDING: Merges with Sears to Create 3rd Largest Retailer --------------------------------------------------------------- Kmart Holding Corporation (NASDAQ:KMRT) and Sears, Roebuck and Co. (NYSE:S) have signed a definitive merger agreement that will combine Sears and Kmart into a major new retail company named Sears Holdings Corporation. Sears Holdings will be the nation's third largest retailer, with approximately $55 billion in annual revenues, 2,350 full-line and off-mall stores, and 1,100 specialty retail stores. Both Sears, Roebuck and Kmart have made significant strides in transforming their organizations, and the merger will further accelerate this process for both companies. Sears Holdings will be headquartered in Hoffman Estates, Illinois, and Kmart will continue to have a significant presence in Troy, Michigan. The combined business will have a broader retail presence and improved scale through a national footprint of nearly 3,500 retail stores. The combined company will also benefit from improved operational efficiency in areas such as procurement, marketing, information technology and supply chain management. Under the terms of the agreement, which was unanimously approved by both companies' boards of directors, Kmart shareholders will receive one share of new Sears Holdings common stock for each Kmart share. Sears, Roebuck shareholders will have the right to elect $50.00 in cash or 0.5 shares of Sears Holdings (valued at $50.61 based on Tuesday's closing price of Kmart shares) for each Sears, Roebuck share. Shareholder elections will be prorated to ensure that in the aggregate 55 percent of Sears, Roebuck shares will be converted into Sears Holdings shares and 45 percent of Sears, Roebuck shares will be converted into cash. The current value of the transaction to Sears, Roebuck shareholders is approximately $11 billion. The transaction is expected to be tax- free to Kmart shareholders and tax-free to Sears, Roebuck shareholders to the extent they receive stock. Edward S. Lampert, chairman of Kmart, will be the chairman of Sears Holdings. He will be joined in an Office of the Chairman by Alan J. Lacy, current chairman and chief executive officer of Sears, and Aylwin B. Lewis, current president and chief executive officer of Kmart. Mr. Lacy will be vice chairman and chief executive officer of Sears Holdings; Mr. Lewis will be president of Sears Holdings and chief executive officer of Kmart and Sears Retail. Glenn R. Richter, currently executive vice president and chief financial officer of Sears, Roebuck, will be executive vice president and chief financial officer of Sears Holdings. William C. Crowley, currently senior vice president - finance of Kmart and a Kmart Board member will be executive vice president, finance and integration of Sears Holdings. Messrs. Lampert, Lacy, and Lewis will join a ten-member Sears Holdings board of directors, which will include a total of seven members of the current Kmart board and three members of the current Sears, Roebuck board. Sears Holdings will act as the holding company for the Sears and Kmart businesses, which will continue to operate separately under their respective brand names. Mr. Lampert said, "The combination of Kmart and Sears is extremely compelling for our customers, associates and shareholders as it will create a powerful leader in the retail industry, with greatly expanded points of distribution, leading proprietary home and apparel brands and significant opportunities for improved scale and operating efficiencies. The merger will enable us to manage the businesses of Sears and Kmart to produce a higher return than either company could achieve on its own." ESL Investments and its affiliates, which are controlled by Mr. Lampert, have agreed to vote all Kmart and Sears, Roebuck shares they own in favor of the merger and to elect stock in the transaction with respect to their shares of Sears, Roebuck. Mr. Lacy said, "The combination will greatly strengthen both the Sears and Kmart franchises by accelerating the Sears off-mall growth strategy and enhancing the brand portfolio of both companies. This will clearly be a win for both companies' customers while significantly enhancing value for all shareholders. We will have a total combined store base of nearly 3,500 stores and the leading service organization in the industry capable of a major expansion to serve the needs of existing Kmart and Sears customers." Mr. Lewis said, "Kmart has made great progress over the past 18 months to strengthen the organization in terms of profitability and product offerings. We believe the combination of Kmart and Sears will create a true leader in the retail industry - both as a key part of local communities and as a national presence. Together, we will further enhance our capabilities to better serve customers by improving in-store execution and ultimately transforming the customer's in-store experience." Sears Holdings will feature a powerful home appliance franchise as well as strong positions in tools, lawn and garden, home electronics, and automotive repair and maintenance. Key proprietary brands include Kenmore, Craftsman, and DieHard. The company will have a broad apparel offering, including such well- known labels as Lands' End, Jaclyn Smith, and Joe Boxer as well as the Apostrophe and Covington brands. It will also have Martha Stewart Everyday products, which are now offered exclusively in the U.S. by Kmart and in Canada by Sears Canada. Kmart specialty retail stores will continue to carry their current lineup in proprietary home and fashion lines including Thalia Sodi, Jaclyn Smith, Joe Boxer, Martha Stewart Everyday, Route 66 and Sesame Street. The combination of the two companies is conservatively estimated to generate $500 million of annualized cost and revenue synergies to be fully realized by the end of the third year after closing. The transaction, after giving effect to estimated synergies, is expected to be significantly accretive to earnings per share in the first year before one-time restructuring costs. The companies expect to realize approximately $200 million in incremental gross margin from revenue synergies by capitalizing on cross-selling opportunities between Kmart and Sears' proprietary brands and by converting a substantial number of off-mall Kmart stores to the Sears nameplate in addition to the 50 Kmart stores Sears acquired earlier this year. The company expects to achieve annual cost savings of over $300 million principally through improved merchandising and non- merchandising purchasing scale as well as improved supply chain, administrative and other operational efficiencies. In addition, the combined company will complete a full store asset review as part of a plan to monetize non-strategic real estate assets as appropriate. Mr. Crowley and Mr. Richter will jointly lead an integration team of key operating executives from both companies to drive planning and execution of the integration of the companies' operations. The merger, which is expected to close by the end of March 2005, is subject to approval by Kmart and Sears shareholders, regulatory approvals and customary closing conditions. Lehman Brothers served as financial advisor to Kmart, and Simpson Thacher & Bartlett LLP provided legal counsel to Kmart. Morgan Stanley served as financial advisor to Sears, and Wachtell, Lipton, Rosen & Katz provided legal counsel to Sears. About Sears, Roebuck and Co. Sears, Roebuck and Co. is a leading broadline retailer providing merchandise and related services. With revenues in 2003 of $41.1 billion, the company offers its wide range of home merchandise, apparel and automotive products and services through more than 2,300 Sears-branded and affiliated stores in the U.S. and Canada, which includes approximately 870 full-line and 1,100 specialty stores in the U.S. Sears also offers a variety of merchandise and services through sears.com, landsend.com, and specialty catalogs. Sears is the only retailer where consumers can find each of the Kenmore, Craftsman, DieHard and Lands' End brands together -- among the most trusted and preferred brands in the U.S. The company is the largest provider of product repair services with more than 14 million service calls made annually. For more information, visit the Company's Web site at http://www.sears.com/ Headquartered in Troy, Michigan, Kmart Corporation (n/k/a KMART Holding Corporation) -- http://www.bluelight.com/-- is a mass merchandising company that offers customers quality products through a portfolio of exclusive brands that include Thalia Sodi, Jaclyn Smith, Joe Boxer, Martha Stewart Everyday, Route 66 and Sesame Street. The Company filed for chapter 11 protection on January 22, 2002 (Bankr. N.D. Ill. Case No. 02-02474). Kmart emerged from chapter 11 protection on May 6, 2003. John Wm. "Jack" Butler, Jr., Esq., at Skadden, Arps, Slate, Meagher & Flom, LLP, represented the retailer in its restructuring efforts. The Company's balance sheet showed $16,287,000,000 in assets and $10,348,000,000 in debts when it sought chapter 11 protection. LEVEL 3: Moody's Assigns B3 Rating to Proposed $450 Mil. Facility ----------------------------------------------------------------- While affirming Level 3 Communications, Inc.'s Caa2 senior implied rating, Moody's Investors Service assigned a B3 rating for subsidiary Level 3 Financing, Inc.'s proposed $450 million bank credit facility due in 2011, and upgraded $500 million of existing guaranteed senior unsecured notes previously issued by Financing to Caa1 from Caa2. Moody's also downgraded the existing senior unsecured debt of Parent to Ca from Caa2, and assigned a Ca rating to Parent's proposed $200 million convertible note issuance due 2011. The widening of notching among Level 3's debt ratings reflects both the contractual and structural subordination associated with the introduction of operating company guarantees and security into the capital structure and the weaker relative recovery prospects that result therefrom. Moody's has taken these rating actions at: -- Level 3 Communications, Inc: * Issuer level ratings: (1) Senior implied rating -- affirmed at Caa2 (2) Speculative grade liquidity rating -- affirmed at SGL-1 (3) Senior unsecured issuer rating -- downgraded to Ca from Caa2 * Senior unsecured debt ratings: (1) $200 million proposed convertible note offering due in 2011 -- assigned a Ca (2) 9.125% Senior notes due in 2008 -- downgraded to Ca from Caa2 (3) 11% Senior notes due in 2008 -- downgraded to Ca from Caa2 (4) 10.5% Senior discount notes due in 2008 -- downgraded to Ca from Caa2 (5) 10.75% Senior Euro notes due in 2008 -- downgraded to Ca from Caa2 (6) 12.875% Senior discount notes due in 2010 -- downgraded to Ca from Caa2 (7) 11.25% Senior Euro notes due in 2010 -- downgraded to Ca from Caa2 (8) 11.25% Senior notes due in 2010 -- downgraded to Ca from Caa2 (9) 2.875% Convertible senior notes due in 2010 -- downgraded to Ca from Caa2 * Subordinated debt ratings: (1) 6% Convertible subordinated notes due in 2009 -- downgraded to C from Ca (2) 6% Convertible subordinated notes due in 2010 -- downgraded to C from Ca -- Level 3 Financing, Inc. (Level 3 Communication's intermediate holding subsidiary): * $450 million guaranteed senior secured bank credit facility due in 2011 -- assigned a B3 * $500 million guaranteed senior unsecured 10.75% notes due in 2011 -- upgraded to Caa1 from Caa2 The outlook for all ratings is stable. The Caa2 senior implied rating reflects Level 3's limited financial flexibility given its substantial debt levels, inability to generate free cash flow, and its weak coverage metrics in an industry that is under considerable pricing pressure. The highly competitive broadband sector, characterized by overcapacity, continues to experience significant price compression, and with few carriers consolidating, Moody's believes the industry may undergo another wave of financial restructuring before pricing stabilizes. In addition, certain core product areas such as managed modem service, where Level 3 currently has an approximate 50% market share, are experiencing secular declines in demand as customers migrate to higher bandwidth products. Level 3's long-term competitive strength will rely on its ability to leverage its existing infrastructure to compete in areas with higher expected growth such as residential, enterprise, and wholesale VoIP. Moody's is concerned that Level 3's high fixed charges and capital investment required to support the revenue and earnings growth necessary to service its significant debt obligations will continue to erode the company's liquidity, and potentially the company's ability to compete effectively over the long term. Supporting the rating are Level 3's high operating margins and strong liquidity. Level 3's high operating margins indicate that the company is experiencing a higher than industry average level of network efficiency, a potential competitive advantage longer term. The company's high cash balances, on the other hand, allow the company to effectively deal with a challenging competitive environment by funding near term investment needs. The stable rating outlook reflects Moody's view that Level 3's ratings are not likely to change during the next 12 to 18 months as business challenges are already factored into the company's present ratings. The company's high cash balance also reduces the probability of default and downward rating pressure over the intermediate term. Nevertheless, Moody's does not expect Level 3 to generate positive free cash flow until at least 2006, which leaves considerable uncertainty about the company's ability to fully satisfy all of its obligations over the longer-term. Moody's also notes that Level 3 will face considerable refinancing risk beginning in 2008 as its senior unsecured bonds at Parent begin to mature. If the company is unable to refinance these obligations as maturity dates approach, the rating outlook and/or ratings are likely to deteriorate. Moody's believes that the proposed transaction, consisting of a tender offer for the 2008 notes at a discount, a $450 million senior secured bank loan facility at Financing and a $200 million senior unsecured convertible note issuance at Parent, supports Level 3's long-term credit strength by improving the company's maturity profile and modestly reducing its overall interest burden. Moody's notes, however, that this partial refinancing is likely only the first step toward refinancing its intermediate- term maturities. Widening of the notching among Level 3's debt obligations reflects the introduction of guarantees and security into the consolidated capital structure. The B3 rating for the new $450 million senior secured bank credit facility of Financing reflects its priority position in the company's capital structure, as well as the benefits of its collateral and guarantee package. At closing, the bank credit facility will benefit from senior secured guarantees from the Parent company and certain non-regulated subsidiaries, as well as a pledge of the tangible and intangible assets of these initial guarantors. The facility will also benefit from a pledge of the stock of Level 3 Communications, LLC, Level 3's primary telecommunication operating subsidiary. Upon the receipt of regulatory approval, the guarantee from and assets of Level 3 Communications, LLC will replace those of the non-regulated subsidiaries. The B3 rating reflects Moody's belief that there is a sufficient amount of asset coverage enhancing the likelihood that, in a distressed scenario, the senior secured lenders would realize full recovery. The B3 rating is predicated on two assumptions: first, Level 3 Communications, LLC will successfully obtain regulatory approval to guarantee and provide security to the facility; secondly, the size of the senior secured obligation will not increase significantly relative to projected earnings. In the event that either assumption fails to hold, the senior secured bank credit facility rating is likely to fall. The upgrade of the $500 million 10.75% senior unsecured bond of Financing reflects the recently added unconditional senior unsecured guarantee by Level 3 Communications, LLC. Moody's believes that this guarantee sufficiently improves the structurally senior attributes of these notes in terms of rights of payment and liquidation preference to merit a rating one notch higher than the Caa2 senior implied. These bonds also benefit from an inter-company subordination agreement, which, in the event of bankruptcy, ranks Level 3 Communications, LLC's $500 million inter-company obligation to Financing ahead of its significant ($11.9 billion as of October 2003) inter-company obligation to Parent. The downgrade of the existing senior unsecured debt and the convertible subordinated debt of Parent incorporates the contractual and structural subordination of these obligations to the senior secured lenders as well as the guaranteed senior unsecured notes of Financing. The Ca ratings reflect Moody's view that the senior unsecured Parent company debt has weak anticipated recovery prospects as a result of constituting more than 10x trailing twelve month EBITDA. Full recovery, therefore, would require Level 3 to grow rapidly, essentially by taking market share in a tough competitive environment. Moody's rates Parent's senior subordinated notes two notches below its senior debt to reflect their very low and highly equity-like relative ranking. Level 3 has a financial strategy that prefunds anticipated capital investment and results in strong liquidity, as reflected in its SGL-1 liquidity rating. Level 3's lack of available externally committed financing and limited alternate sources of liquidity only marginally impair its liquidity profile due to its high cash balances. Furthermore, Moody's believes that the company's value in a distressed scenario would depend more on the strength of its customer relationships and contracts than on underlying tangible network assets. With over $850 million in cash and marketable securities on its balance sheet as of September 30, 2004, Moody's believes that Level 3 has sufficient cushion to continue funding shortfalls in operating cash flow and investment requirements at current levels for at least three years. The company's near-term obligations are relatively light. Other than approximately $118 million in 2005 maturities associated with the GMAC Commercial Mortgage, the company does not have any debt maturing until 2008. Moody's, however, anticipates that Level 3's liquidity will weaken over the intermediate term as it continues to fund operational shortfalls and investment needs with existing cash. In the event that Level 3's cash on hand continues to fall and its ability to generate free cash flow fails to materialize over the next twelve months, its liquidity rating will likely deteriorate. Level 3 is a leading nationwide communication provider and software distributor, with 2003 annual sales of approximately $4.0 billion. It is headquartered in Broomfield, Colorado. LEVEL 3: Fitch Junks Planned $200 Million Senior Convertible Notes ------------------------------------------------------------------ Fitch Ratings assigned a 'B-' senior secured rating to the seven-year $450 million senior secured term loan facility at Level 3 Financing, Inc. (Level 3 Financing). Likewise, Fitch has upgraded the senior unsecured rating at Level 3 Financing to 'CCC+' from 'CCC'. Additionally, Fitch has assigned a 'CCC-' senior unsecured rating to the proposed issuance of $200 million of senior convertible notes due 2011 by Level 3 Communications, Inc. Fitch has also downgraded the senior unsecured rating of Level 3 to 'CCC-' from 'CCC' and affirmed the 'CC' convertible subordinated debt rating. The Rating Outlook is Stable. Fitch's rating actions reflect the introduction of secured debt into the consolidated capital structure, as well as the guarantee of the senior unsecured notes at Level 3 Financing and the impact of these changes on the recovery prospects of the different debt classes. Fitch's ratings also reflect Level 3's high leverage, which is expected to remain near 10 times (x) through 2005, expectation of negative free cash flow at least through 2005, the large debt maturity amount in 2008, customer concentration, and the competitive landscape. The new seven-year $450 million secured term loan facility at Level 3 Financing has covenants that mirror those in the company's $500 million senior unsecured notes at this intermediate holding company. The new facility does not have covenants related to minimum interest coverage, maximum leverage, minimum tangible net worth, or cash conversion. However, Level 3 has various lien limitations, the most material being that the company and its subsidiaries may not incur liens on any property to secure debt with the exception of liens that do not exceed 1.5 times (x) consolidated cash flow available for fixed charges of parents and restricted subsidiaries. Also, the company can incur liens associated with securing purchase debt in an aggregate amount not to exceed 5% of the parent's consolidated tangible assets. The facility will be used to fund Level 3's tender offer for cash up to $450 million aggregate principal amount of various debt securities due 2008. If successful, the tender will reduce 2008 outstanding debt maturities from $2.37 billion to approximately $1.92 billion. From a credit perspective, this is a positive movement in a material maturity risk for the company. With the exception of approximately $144 million of maturities in 2005, Level 3 does not have any maturities until 2008. The secured rating also reflects the recovery prospects of the term loan facility. It should be noted that this rating reflects Fitch's expectation that Level 3 will be successful in obtaining regulatory approval for its regulated entity, Level 3 Communications, LLC and its subsidiaries to guarantee and pledge assets to secure the loan. Additionally, Fitch is recognizing the improved recovery prospects of the unsecured notes at Level 3 Financing as a result of the unsecured guaranty by Level 3 Communications, LLC that was approved on October 20, 2004, by the required public utility commissions. Level 3 is also issuing $200 million of new senior convertible notes due 2011 that will support the company's liquidity profile. These notes rank pari passu with all other senior unsecured debt at Level 3. Level 3 has been experiencing increasing negative free cash flow as a result of significantly higher capital spending associated with new services and contracts, lower dark fiber sales, and integration costs associated with recent acquisitions. Level 3 is expected to generate approximately $280 million to $310 million of negative free cash flow in 2004. Fitch believes that a cash flow neutral position will not be achieved prior to 2006 for Level 3. Level 3 had $856 million of cash and marketable securities as of the end of the third-quarter 2004. The addition of the cash from the new convertible issuance will enhance the company's flexibility to fund future cash flow needs, 2005 maturities, and make opportunistic acquisitions, as well as continue to address its 2008 maturity level. The downgrade of the debt ratings at Level 3 reflect the reduced recovery prospects associated with this debt due to the more senior priority of the new $450 million secured term loan and the guaranteed $500 million senior notes at Level 3 Financing. Not withstanding all the near-term credit issues surrounding Level 3, an important issue that will influence its long-term competitive and financial position is its success in attracting VoIP operators to its service portfolio. The company has shown initial success with VoIP winning requests for proposals associated with this service, as well as signing many value added reseller agreements. Fitch expects that VoIP-based services will be successful in penetrating the traditional wireline market with a meaningful impact starting in 2006 and beyond. Fitch's Stable Rating Outlook reflects the company's strong cash position and the expectation that it will continue to meet its obligations through at least 2007. MICROCELL TELECOMMS: Moody's Withdraws Ratings After Debt Payment ----------------------------------------------------------------- Moody's Investors Service withdrew all ratings for Microcell Telecommunications, Inc., and its subsidiary, Microcell Solutions Inc., as Microcell has been acquired by Rogers Wireless, Inc., and all outstanding debt has been repaid. Ratings affected by this action: * Microcell Telecommunications Inc. -- Senior Implied Rating Caa1 (withdrawn) -- Issuer Rating Ca (withdrawn) * Microcell Solutions Inc. -- 1st Priority Senior Secured B3 (withdrawn) * Revolving bank loan, due February 2010 C$50 million * Term Loan A, due February 2011 C$200 million -- 2nd Priority Senior Secured Caa2 (withdrawn) * Term Loan B, due August 2011 C$200 million Microcell Telecommunications, Inc., is now owned by Rogers Wireless, Inc., and collectively they are the largest wireless business in Canada. Microcell is headquartered in Montreal, Quebec, Canada. Rogers Wireless and Rogers Communications are headquartered in Toronto, Ontario, Canada. NAPIER ENVIRONMENTAL: Reports Third Quarter 2004 Financial Results ------------------------------------------------------------------ Napier Environmental Technologies, Inc. (TSX:NIR) reported results for the third quarter. Sales at $1.7 million were $0.1 million less than the third quarter of 2003. Gross Profit at $0.4 million was $0.2 million less than last year. Gross Margins at 26% were 6 percentage points lower than the 32% in 2003 due primarily to a provision to write down obsolete inventory. Operating expenses were $0.1 million lower than last year's level of $1.1 million. The net loss was $0.7 million, which is $0.1 million more than the prior year due to lower gross profit. Weaker than anticipated sales conditions in the third quarter combined with a seasonal slowdown in the current quarter have further eroded the company's financial position, and it now has insufficient financial resources to meet all of its existing creditor obligations. On November 3, 2004, the company filed a Notice of Intention to Make a Proposal under the Bankruptcy and Insolvency Act. The Notice of Intention filing allows Napier to maintain operations while completing necessary changes to improve its business and develop a restructuring proposal for creditors. As previously announced, the company is working to refine its business model - with a greater focus on existing core patents, products and customers, and a significant reduction in SG&A costs. The objective will be to move forward with a solid plan that leverages the proven effectiveness of its products and the validation of some of the world's leading coating and home improvement companies. This will be accomplished through a strategic review process over the next 100 days. Additional financing or investment may be required during the period to ensure that the company can complete the restructuring process. There can be no assurance that the company will successfully emerge from its reorganization proceedings. Approval of a Plan and emergence from reorganization proceedings are subject to a number of conditions. Full audited annual financial statements, including management's discussion and analysis, can be found on the company's Web site - http://www.napierenvironmental.com/under "investor relations/financials" as well as at http://www.sedar.com/ About the Company Napier Environmental Technologies manufactures environmentally safer wood treatments and paint removal products for commercial and consumer markets. NATIONAL MUSIC: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: National Music Service Incorporated East 122 Montgomery Spokane, Washington 99207 Bankruptcy Case No.: 04-08409 Type of Business: The Debtor provides audio video production and computer & audio visual services. Chapter 11 Petition Date: November 16, 2004 Court: Eastern District of Washington (Spokane/Yakima) Judge: Patricia C. Williams Debtor's Counsel: David E. Eash, Esq. Huppin Ewing Anderson & Paul 221 North Wall, Suite 500 Spokane, WA 99201 Tel: 509-838-4261 Fax: 509-838-4906 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Internal Revenue Service $1,668,124 WADC-9999 Ranch Cordova, CA 95743 Lehman Commercial Paper, Inc. $590,000 745 7th Avenue New York, NY 10019 Travis County Attorney General $183,215 1010 Lavaca St. P.O. Box 1748 Austin, TX 78767 State of Ohio $154,430 WA ST Employment Security $144,244 Commonwealth of PA $135,827 City of Spokane, PPT $102,459 Washington St. Employment Security $88,353 Virginia R. Womach $85,984 State of Texas $77,613 State of Tennessee $71,531 BDO Seidman, LLP $70,025 Washington State $69,409 State of New York $54,086 Florida Dept. of Revenue $52,300 State of North Carolina $44,763 Florida, Sarasota $40,054 Florida Dept. of Revenue $40,054 State of Michigan-Department $39,254 Dept. of Revenue Canada $37,768 NEVADA POWER: S&P Assigns 'BB' Rating to $250 Million Bonds ----------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BB' rating to the $250 million general and refunding bonds issued by Nevada Power. Standard & Poor's also assigned its '1' recovery rating to the bonds, indicating a high expectation of full recovery of principal. The '1' rating incorporates the overcollateralization of the G&R bonds with utility property at the utilities. The proceeds will serve as long-term funding for the acquisition of Duke Energy's Moapa gas plant and for some initial construction costs, which has been thus far funded by the $350 million secured bank revolving line of credit. This line will continue to be available for use as a construction revolver as well as for general working capital needs at Nevada Power. Ratings on Sierra Pacific Resources and its utility subsidiaries Nevada Power Co. and Sierra Pacific Power Co. reflect a weak consolidated business and financial profile. An uncertain but stabilizing regulatory climate in Nevada and a short generation capacity position that creates exposure to the volatile wholesale power markets are the principal sources of business risk for SRP. The negative outlook reflects a financial profile that is still slightly weak for the rating, and the risk posed by the exposure to wholesale power markets until NPC can build new generation -- this exposure may result in power procurement costs significantly higher than forecast and cause liquidity and cost recovery issues. However, with much improved prospects for not having to make termination payments to Enron following the recent federal court ruling and continued collection of deferred power costs, SRP and its subsidiaries' outlook could be revised to stable if consolidated financial ratios improve to levels consistent with the 'B+' corporate credit rating. NEXTEL PARTNERS: Subscriber Growth Cues Moody's to Upgrade Ratings ------------------------------------------------------------------ Moody's Investors Service upgraded the ratings for Nextel Partners, Inc., and its subsidiary Nextel Partners Operating Corp. The rating outlook remains positive. The affected ratings are: -- Nextel Partners, Inc. * Senior Implied rating -- upgraded to B1 from B2 * Issuer rating -- upgraded to B3 from Caa1 * Speculative grade liquidity rating -- confirmed at SGL-2 * 12.5% Senior Discount Notes due 2009 -- upgraded to B3 from Caa1 * 8.125% Senior Notes due 2011 -- upgraded to B3 from Caa1 -- Nextel Partners Operating Corp. * $100 million senior secured revolving credit facility -- upgraded to Ba3 from B1 * $700 million senior secured term loan C -- upgraded to Ba3 from B1 The rating upgrades are driven by the continued success of Nextel Partners in rapidly growing its subscriber base, while at the same time improving profitability and turning free cash flow positive. The positive rating outlook continues to reflect Moody's expectation that the company will further improve its financial position and that the ratings could be upgraded again in the intermediate term should the amount of free cash flow generated increase as expected. The B1 senior implied rating reflects the very good financial and operating performance of the company, offset by the still high degree of debt leverage. Nextel Partners has increased its subscriber base by over 30% in the 12 months ended September 2004, and maintained above average revenue per user (mid to high $60's) and below average monthly churn (1.5% or less). Notwithstanding that rapid subscriber growth, Nextel Partners has produced free cash flow (cash from operations less capital expenditures and spectrum acquisitions) in each of the past four quarters. Nonetheless the total amount of that free cash flow ($48 million) represents only 2.6% of the company's total debt burden of $1.6 billion. The Ba3 rating on the $800 million of secured credit facilities available to the company's subsidiary, Nextel Partners Operating Corp., reflects Moody's opinion of the strong asset coverage available to these lenders, notwithstanding the quite large proportion of these obligations in the company's capital structure. The $700 million of term loans outstanding represent less than $500 per subscriber, a very good ratio for the wireless industry's highest paying, lowest churning subscribers. The B3 rating on the senior unsecured notes of the ultimate parent holding company, Nextel Partners, Inc., reflects their structural subordination to the liabilities of the company's subsidiaries, including the abovementioned credit facilities. The positive rating outlook reflects Moody's opinion that given the still steep trajectory of the company's credit improvement, the ratings are likely to be upgraded again within the next 12 to 18 months, especially as the company approaches generating free cash flow of 10% of its total debt. The ratings are likely to stabilize or move lower should Nextel Partners not be able to continue to grow its subscriber base faster than the wireless industry, and see its above average operating metrics (ARPU and churn) deteriorate closer to industry averages, or capital spending increases dramatically thereby reducing free cash flows. In Moody's opinion, Nextel Partners possesses a "good" liquidity profile with meaningful free cash flow generation, $100 million of available revolving credit, and good covenant cushion, warranting an SGL-2 rating. As the company's cash flows continue to improve and covenant cushion expands, the speculative grade liquidity rating is likely to be upgraded. Headquartered in Kirkland, Washington, Nextel Partners is a provider of wireless telecommunications services serving over 1.5 million subscribers with LTM revenues of $1.3 billion. OGLEBAY NORTON: Judge Rosenthal Confirms Plan of Reorganization --------------------------------------------------------------- The Honorable Joel B. Rosenthal of the U.S. Bankruptcy Court for the District of Delaware confirmed Oglebay Norton Company's Second Amended Joint Plan of Reorganization on Nov. 16. The confirmation affirms that all reorganization requirements have been met under the U.S. Bankruptcy Code and clears the way for Oglebay Norton to emerge from chapter 11 protection. The Company said it expects to be able to satisfy all conditions to effectiveness of its Plan and anticipates emerging from chapter 11 by the end of December or early January. On Oct. 5, 2004, the judge refused to confirm the company's plan because of concerns about the adequacy of insurance for future tort liability claims related to asbestos and silica products. During the Nov. 16 rehearing, the Debtors explained to the Court that the objecting tort claimants comprise only 15% of the total number of tort claimants, which means that the majority do not object to the confirmation of the Plan. According to the Debtors, they have two sources of insurance from which to satisfy the tort claims -- the London Trust Fund and their own insurance policies. "The confirmation of our Plan signals a new beginning for Oglebay Norton," said Michael D. Lundin, president and chief executive officer. "The court has affirmed that our plan of reorganization is reasonable and provides the best value for creditors. The company will emerge from bankruptcy court protection with a de- levered balance sheet, strong momentum and a continued focus on serving our customers." Mr. Lundin credited the commitment of the company's employees and the support of customers, vendors and lenders for preserving and growing the business during bankruptcy. He thanked the creditors' committee and management's outside advisors for their hard work in expeditiously navigating the chapter 11 process. Mr. Lundin said the company intends to continue to pursue the strategic operating plan that management put in place in 2002, but was unable to execute fully due to the financial challenges that culminated in the chapter 11 filing. "We are confident in our ability to implement this strategy and return Oglebay Norton to sustained profitable growth while generating cash flow to pay down debt," Mr. Lundin said. As previously disclosed, the strategic Plan is based on the company's core competencies of extracting, processing and providing minerals. The strategy is to expand current markets and develop new ones for the Company's core limestone and limestone fillers businesses while maximizing the profitability of the industrial sands, lime and marine units. Management remains in active discussions to sell all or portions of the Company's mica operations. In accordance with the terms of the Plan of reorganization, as of the close of business on the confirmation date of the plan, the stock transfer register for the common stock of the company will be closed. The Company and its agents will have no obligation to recognize the sale or transfer of any shares of common stock after the confirmation date of the plan. On the effective date of the Plan, the common stock will be cancelled. Headquartered in Cleveland, Ohio, Oglebay Norton Company -- http://www.oglebaynorton.com/-- 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. PAXSON COMMS: Third Quarter EBITDA Up $2.2 Million From 2003 ------------------------------------------------------------ Paxson Communications Corporation (AMEX:PAX), the owner and operator of the nation's largest broadcast television station group and the PAX TV network reaching 87% of U.S. households (approximately 95 million homes), reported its financial results for the quarter ended Sept. 30, 2004. Financial Highlights: -- Net revenues for the third quarter of 2004 increased 2.6% to $65.9 million, compared to $64.2 million for the third quarter of 2003. This increase was primarily due to increased revenues from long form paid programming. -- The Company's EBITDA for the third quarter of 2004 increased $2.2 million to $15.1 million, compared to $12.9 million for the third quarter of 2003. This increase was primarily due to a reduction of $3.0 million in music license fees resulting from the conclusion of a dispute and the commencement of a new agreement with a music license organization during the third quarter of 2004. -- The Company's free cash flow decreased to negative $12.1 million for the three months ended September 30, 2004, compared to free cash flow of negative $11.5 million for the three months ended September 30, 2003. This decrease was primarily due to increased program rights payments. Paxson's Chairman and Chief Executive Officer, Lowell "Bud" Paxson, commented, "We continue to generate stable revenues and EBITDA and are looking to improve our top-line with our new programs that are targeted to a viewing audience that is more appealing to advertisers. In the meantime, we continue to operate as efficiently as possible, while working through alternatives with our advisors, Bear Stearns and Citigroup, toward unlocking the value of our national distribution platform." Commenting on the outlook for the fourth quarter of 2004, Paxson's Chief Financial Officer, Richard Garcia, added, "We continue to focus on controlling our costs and preserving our liquidity. We ended the third quarter with $89.9 million of cash on hand. We currently expect our revenues for the fourth quarter of 2004 to increase low to mid single digits compared to the fourth quarter of 2003. Our fourth quarter EBITDA is estimated to be in the $10 million to $12 million range." Gross revenues (defined as net revenues plus agency commissions) for the three months ended September 30, 2004, increased 1.8% to $76.4 million, compared to gross revenues of $75.0 million for the three months ended September 30, 2003. Net revenues for the three months ended September 30, 2004, increased 2.6% to $65.9 million, compared to net revenues of $64.2 million for the three months ended September 30, 2003. Gross revenues for the nine months ended September 30, 2004, increased 3.1% to $241.9 million compared to gross revenues of $234.6 million for the nine months ended September 30, 2003. Net revenues for the nine months ended September 30, 2004, increased 3.2% to $207.0 million, compared to net revenues of $200.7 million for the nine months ended September 30, 2003. Revenue increases for both the three and nine months ended September 30, 2004, were primarily due to increased revenues from long form paid programming. The Company's EBITDA for the three months ended September 30, 2004, increased by $2.2 million to $15.1 million, compared to EBITDA of $12.9 million for the three months ended September 30, 2003. The Company's EBITDA increase for the three months ended September 30, 2004, was primarily due to a reduction of $3.0 million in music license fees resulting from the conclusion of a dispute and the commencement of a new agreement with a music license organization during the third quarter of 2004. The Company's EBITDA for the nine months ended September 30, 2004, was $38.7 million, compared to EBITDA of $45.3 million for the nine months ended September 30, 2003. The Company's EBITDA decrease for the nine months ended September 30, 2004, was primarily due to increased personnel costs, increased promotional expenses and increased legal fees arising from litigation with the Company's former insurance carrier over World Trade Center property and business interruption coverage matters, as well as an increase in programming amortization expense of $2.7 million in the first quarter of 2004 related to the Company's decision to shorten the expected useful life of its original program Just Cause. In addition, during the nine months ended September 30, 2003, the Company benefited from legal settlements of $2.2 million and a reduction in its bad debt reserve of $1.5 million related to the decrease in receivables that resulted from the Company's shift in 2003 to more prepaid long form advertising. The Company believes that net loss attributable to common stockholders is the financial measure calculated and presented in accordance with generally accepted accounting principles ("GAAP") that is most directly comparable to EBITDA. The Company's net loss attributable to common stockholders was $58.0 million, or $0.85 per share, for the three months ended September 30, 2004, compared to a net loss attributable to common stockholders of $54.0 million, or $0.80 per share, for the three months ended September 30, 2003. The Company's net loss attributable to common stockholders for the three months ended September 30, 2004, includes the $3.0 million reduction in music license fees which was offset by a $4.6 million adjustment of programming to net realizable value, as well as increased dividends on preferred stock resulting from compounding dividends and from the adjustment of the rate at which dividends accrue on the Company's Series B preferred stock including costs associated with the determination of the rate adjustment. The Company's net loss attributable to common stockholders was $167.0 million or $2.46 per share for the nine months ended September 30, 2004, compared to a net loss of $94.5 million or $1.40 per share for the nine months ended September 30, 2003. The increase in the Company's net loss attributable to common stockholders for the nine months ended September 30, 2004, resulted from an adjustment of programming to net realizable value and the increased dividends, as well as gains on sales of broadcast assets of $56.3 million recognized in 2003. The Company believes that cash flow from operating activities is the financial measure calculated and presented in accordance with GAAP that is most directly comparable to free cash flow. The Company's cash flow from operating activities was negative $7.9 million for the three months ended September 30, 2004, compared to negative $6.3 million for the three months ended September 30, 2003. The Company's cash flow from operating activities was negative $25.2 million for the nine months ended September 30, 2004, compared to positive $13.1 million for the nine months ended September 30, 2003. The Company's free cash flow decreased to negative $12.1 million for the three months ended September 30, 2004, compared to free cash flow of negative $11.5 million for the three months ended September 30, 2003. This decrease was primarily due to increased program rights payments. The Company's free cash flow was negative $37.5 million for the nine months ended September 30, 2004, compared to free cash flow of negative $3.3 million for the nine months ended September 30, 2003. The decrease in free cash flow for the first nine months of 2004 compared to the nine months ended September 30, 2003, was due primarily to programming rights payments made under the letter of credit arrangements that relate to original programming that premiered throughout the 2003/2004 broadcast season and decreased EBITDA. Balance Sheet Analysis The Company's cash and short-term investments decreased by $21.9 million during the third quarter to $89.9 million as of September 30, 2004. The Company's total debt increased $12.6 million during the third quarter to $991.4 million as of September 30, 2004. The increase in total debt for the quarter resulted primarily from accretion on the Company's 12-1/4% senior subordinated discount notes. About the Company Paxson Communications Corporation owns and operates the nation's largest broadcast television distribution system and the PAX TV network. PAX TV reaches 87% of U.S. television households via nationwide broadcast television, cable and satellite distribution systems. PAX TV's original programming slate for the 2004-2005 broadcast season features three unscripted series, "Cold Turkey," "Model Citizens" and "Second Verdict;" a new scripted drama, "Young Blades"; two entertaining variety programs, "America's Most Talented Kids" and "World Cup Comedy," executive produced by Kelsey Grammer; and two fast-paced game shows, "On the Cover" and "Balderdash." Returning series include all-new episodes of PAX's top-rated dramas, "Doc" and "Sue Thomas: F.B.Eye." For more information, visit PAX TV's Web site at http://www.pax.tv/ * * * As reported in the Troubled Company Reporter on August 27, 2004, Standard & Poor's Ratings Services lowered its corporate credit rating on Paxson Communications Corp. to 'B-' from 'B' due to the lack of convincing progress toward completing a strategic transaction that would boost liquidity. The outlook is negative. The West Palm Beach, Florida-based television station owner and operator had approximately $978.8 million of debt outstanding on June 30, 2004. "The rating action reflects Standard & Poor's concerns that Paxson has not executed a strategic transaction, including either an investment by a strategic partner or an outright sale of the company, that assures long-term liquidity," said Standard & Poor's credit analyst Alyse Michaelson. In the absence of a viable longer-term strategy, concerns related to the cash flow generating capabilities of Paxson's assets, its onerous debt burden with certain debt requiring cash interest in 2006, and the redemption request by the National Broadcasting Company, Inc., have intensified. Liquidity is far from sufficient to fund NBC's roughly $575 million redemption request, although the redemption request cannot trigger a default. PINNACLE FOODS: Moody's Changes Ratings Outlook to Negative ----------------------------------------------------------- Moody's Investors Service changed the rating outlook for Pinnacle Foods Holding Corporation to negative from stable and affirmed all existing ratings for the company. Ratings affected include the company's B1 senior secured, B3 senior subordinated, and B1 senior implied rating. The change in outlook to negative reflects lower than expected earnings and cash flow since Pinnacle's acquisition of Aurora Foods, combined with the expectation of additional weakening in credit measurements in the first half of 2005, and uncertainty about the timing and extent of benefits from actions being taken to turn around sales and realize operational cost savings. Aurora's performance continued to weaken prior to Pinnacle's March 2004 acquisition of the company, and the stabilization of the business after the acquisition has been more difficult than anticipated. In addition, frozen dinner category weakness has negatively impacted Pinnacle's existing business, and input cost increases have affected both businesses. As a result, Pinnacle plans up front spending for initiatives to increase sales and distribution, which is expected to be largely funded from seasonal and other working capital reduction, with anticipated benefits realized in the latter part of 2005. The ratings could be downgraded if lower than expected free cash flow after working capital requires reliance on incremental debt to fund upfront spending and if resulting sales and cost savings are less than expected, resulting in Debt/adjusted EBITDA levels remaining above 5.5x over the next year. The outlook could stabilize in the next twelve to eighteen months if Pinnacle's initiatives are successful in improving sales and earnings and result in Debt/EBITDA reducing to levels in the range of 5x. Pinnacle Foods Holding Corporation's ratings are: i) $130 million senior secured revolving credit, maturing 2009 -- B1, ii) $542 million term loan B, maturing 2010 -- B1, iii) $400 million senior suboridnated notes, maturing 2013 -- B3, iv) Senior implied rating -- B1, v) Unsecured issuer rating -- B2, vi) Rating outlook -- negative. Pinnacle's ratings are limited by high leverage, a weak balance, and earnings pressures. The Aurora business platform, which had been burdened with excessive debt, volatile management, and weak systems, had materially weakening trends prior to its acquisition by Pinnacle. Sales, market share and product profitability all had been declining, with the decline accelerating in 2004. Aurora's weakness, along with the negative impact of high input costs and intense competition in frozen meals on Pinnacle's Swanson business, have resulted in much lower earnings and less debt pay-down than expected when the acquisition was agreed to in late 2003. Pinnacle's strategies to turn around performance include major investment in new products and marketing, the results and success of which will take time to manifest. The ratings also consider that Pinnacle's major products are in mature categories, where growth is difficult to sustain, and that a consolidating food retailer customer base is exerting increasing negotiating leverage over suppliers, seeking supplier investment in supply chain efficiencies and product support and restraining suppliers' pricing flexibility. Pinnacle's ratings gain support from the scale and diversity gained from the Aurora acquisition, which more than doubled sales and added well-known brands (Mrs. Pauls, Van de Kamp's, Aunt Jemima, Lender's, Log Cabin, Mrs. Butterworth's, and Duncan Hines) in five categories (frozen fish, frozen breakfast, frozen bagels, syrups, and baking mixes and frostings) to Pinnacle's well-known brands (Swanson and Vlasic) in two major categories (frozen dinners and pickles). The brand portfolio benefits from high brand awareness, established market positions, and national reach. The ratings also consider the benefits to cash flow from the large tax shield resulting from the Aurora acquisition. In addition, the ratings take into account Pinnacle management's experience with branded food portfolios. Pinnacle's debt is high, at about $974 million (9/30/04), representing about 5.8x pro forma LTM adjusted EBITDA. Leverage is expected to increase over the near term with material up front costs for marketing and new product distribution that are targeted to stabilize and turn around performance. Over the intermediate term, achievement of operational cost savings and an effective sales response to the new marketing initiatives could lead to higher earnings and cash flow, enabling reduction in debt and leverage. Free cash flow is supported by minimal cash taxes, but earnings weakness in the near term restrains potential debt pay-down. The balance sheet includes goodwill and intangibles representing 69% of assets, and a reasonable return on assets depends on turning around performance. Interest coverage is adequate, at about 2.2x LTM adjusted EBITDA less capital spending. The ratings assume a proposed amendment is approved by Pinnacle's bank group, which will amend financial covenants to maintain liquidity. The senior secured revolver and term loan are not notched up from the senior implied rating because they represent the majority of pro forma combined debt. Security includes all tangible and intangible assets of Pinnacle (and Aurora), and direct and indirect domestic subsidiaries. In addition, the stock of the borrower, direct and indirect subsidiaries and 65% of foreign subsidiaries will be pledged, and direct and indirect subsidiaries will provide guarantees. Pinnacle's operations are essentially all domestic. Although tangible asset coverage in a distressed scenario would not cover full principal, enterprise value coverage could be achieved at a reasonably modest multiple. The senior subordinated notes are notched down from the senior implied rating to reflect their subordinated position in the capital structure. They are issued by the same entity that is borrower under the credit facilities and are guaranteed by subsidiaries. In a distressed scenario, the notes would rely on intangible enterprise value at a relatively high multiple for meaningful coverage of principal. Pinnacle Foods Corporation, with $1.8 billion of LTM revenues, has headquarters in Cherry Hill, New Jersey. PINNACLE FOODS: Weak Half-Year Performance Cues S&P to Cut Ratings ------------------------------------------------------------------ Standard & Poor's Ratings Services lowered its ratings on Mountain Lake, New Jersey-based Pinnacle Foods Holding Corp. The corporate credit and senior secured notes ratings have been lowered to 'B+' from 'BB-', and the company's subordinated debt rating has been lowered to 'B-' from 'B'. At the same time, Standard & Poor's placed all its outstanding ratings on Pinnacle on CreditWatch with negative implications. Pinnacle, a branded packaged food company, had about $953 million of lease-adjusted total debt outstanding at April 30, 2004. "The rating actions follow the company's weaker-than-expected operating performance in the second half of its fiscal year ended July 31, 2004," said Standard & Poor's credit analyst Ronald B. Neysmith. In addition, Pinnacle has received a temporary waiver under the company's credit agreement, arising from the failure to timely furnish its audited financial statement for the fiscal year ended July 31, 2004. Pinnacle has until November 24, 2004, to deliver its audited financial statements. The company is also in negotiations with its banking syndicate to amend covenants on both its total leverage and interest coverage ratios. Pinnacle's weak performance stems from operating challenges originating from the delayed closing of its acquisition of Aurora Foods Inc. (which closed in March 2004) and increased competition within the frozen foods category. While Pinnacle's management has been working to rationalize its product portfolio and revitalize brands, Standard & Poor's remains concerned about the company's ability to do so given the heightened competitive environment. Credit measures are weak, and the company is currently negotiating with its bank syndicate to amend financial covenants beginning with the first quarter of fiscal 2005, ended October 31, 2004. Before resolving the CreditWatch listing, Standard & Poor's will review the company's audited financial statements, when available, and monitor the firm's efforts to secure covenant-loosening amendments to its existing senior credit facility. Should the company fail to deliver its audited financial statements or secure covenant relief in a timely fashion, the ratings could be lowered further. Moreover, Standard & Poor's review will also focus on the firm's current operating environment and its integration of Aurora. POWDER SPRINGS: Wants to Hire Paul Reece as Bankruptcy Counsel -------------------------------------------------------------- Powder Springs Petroleum, LP, asks the U.S. Bankruptcy Court for the Northern District of Georgia, Atlanta Division, for permission to employ Paul Reece Marr, PC, as its counsel. Paul Reece is expected to: a) provide the Debtor with legal advice regarding its powers and duties as debtor-in-possession in the continued operation and management of its business and property; b) prepare on the Debtor's behalf the necessary applications, answers, orders and other legal papers pursuant to the Bankruptcy Code; and c) perform all other legal services in the chapter 11 proceeding for the Debtor in which may be reasonably necessary. Paul Reece Marr, Esq., will be the lead attorney in this proceeding. Mr. Marr will bill the Debtor at his current hourly rate of $225. To the best of the Debtor's knowledge, the Firm is "disinterested" as that term is defined in Section 101(14) of the Bankruptcy Code. Headquartered in Powder Springs, Georgia, Powder Springs Petroleum, LP, operates a gasoline station. The Company filed for chapter 11 protection on Nov. 9, 2004 (Bankr. N.D. Ga. Case No. 04-98081). When the Debtor filed for protection from its creditors, it listed $5,711,543 in total assets and $10,711,716 in total debts. POWDER SPRINGS: Section 341(a) Meeting Slated for Dec. 16 --------------------------------------------------------- The United States Trustee for Region 21 will convene a meeting of Powder Springs Petroleum, LP's creditors at 9:00 a.m., on December 16, 2004, at Room 365, Russell Federal Building located at 75 Spring Street Southwest in Atlanta, Georgia. This is the first meeting of creditors required under 11 U.S.C. Sec. 341(a) in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Headquartered in Powder Springs, Georgia, Powder Springs Petroleum, LP, operates a gasoline station. The Company filed for chapter 11 protection on Nov. 9, 2004 (Bankr. N.D. Ga. Case No. 04-98081). Paul Reece Marr, Esq., in Atlanta, Georgia, represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $5,711,543 in total assets and $10,711,716 in total debts. PREMCOR REFINING: S&P Affirms 'BB-' Corporate Credit Rating ----------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'BB-' corporate credit ratings on The Premcor Refining Group, Inc., and parent Premcor USA, Inc., and revised its outlook on the companies to positive from stable. As of September 30, 2004, Old Greenwich, Connecticut-based Premcor had approximately $1.8 billion of debt outstanding. The outlook revision reflects Premcor's significantly improved liquidity, which provides it with greater ability to withstand a potential period of weak margins. As of September 30, 2004, Premcor's cash balance was $710 million, up from $500 million at year-end 2003, and the increase was generated largely through free operating cash flow. "A ratings upgrade will hinge on how the company either consumes or conserves liquidity as it strives to meet its heavy capital- spending requirements through 2006," said Standard & Poor's credit analyst Steven Nocar. "A ratings upgrade could occur in mid-2005 if the company is able to fund its burdensome capital spending needs internally and can demonstrate that it will continue to do so through the peak spending period," continued Mr. Nocar. The ratings on Premcor reflect its position as a leveraged, independent oil refiner operating in a very competitive, capital- intensive, and erratically profitable industry. PRESTIGE BRANDS: S&P Low-B & Junk Ratings on CreditWatch Positive ----------------------------------------------------------------- Standard & Poor's Ratings Services revised to positive from negative its CreditWatch listing of its 'B' corporate credit and senior secured first-lien debt ratings and 'CCC+' senior subordinated and senior secured second-lien debt ratings for Prestige Brands, Inc. The ratings were placed on CreditWatch on July 28, 2004. At June 30, 2004, the Irvington, New York-based manufacturer and marketer of personal care products had about $696 million of debt outstanding, pro forma for the Vetco, Inc., acquisition, which closed in October 2004. "The CreditWatch revision to positive implications is based on the company's Nov. 12, 2004, S-1 Amendment filing with the SEC for an IPO of about $477 million in common stock," said Standard & Poor's credit analyst Patrick Jeffrey. The S-1 Amendment was filed under Prestige Brands Holdings, Inc. Standard & Poor's believes the company's ratings could be raised one notch should Prestige complete the IPO, use the proceeds to significantly reduce leverage, and demonstrate a financial policy consistent with the higher rating. The previous negative listing was based on the company's S-1 filing with the SEC for an IPO of income deposit securities (IDS) representing shares of common stock and senior subordinated notes. Standard & Poor's believed this structure would have significantly reduced the company's financial flexibility as a result of the anticipated high dividend payout rate. Standard & Poor's analysis will focus on the company's capital structure, its expected operating performance, and management's financial policies, in assessing the potential for a higher rating. REGENCY GAS: Moody's Assigns Low-B Ratings to Debts ---------------------------------------------------- Moody's Investors Service assigned first-time ratings to the bank loans of Regency Gas Services, LLC. Subject to a satisfactory review of final documentation, Regency's first-lien term facility is rated B1 senior secured and its second-lien term facility, B3 senior secured, both with a stable outlook. The senior implied rating is B1. Moody's also assigned a Speculative Grade Liquidity rating of SGL-3. These ratings are restrained by the commodity price sensitivity of its gas gathering and processing business and the start-up nature of the company. However, the ratings also recognize the experience of Regency's new management team and the meaningful amount of equity being invested. Regency is a privately owned midstream company formed by Charlesbank Capital Partners, LLC, a private equity firm. Charlesbank has agreed to sell Regency to another private equity firm, Hicks, Muse, Tate & Furst, Inc., with closing expected in December. The proceeds from the term facility being rated are being used to help fund HMTF's $405 million purchase of Regency, repay existing indebtedness, and implement a hedging program. The B1 senior implied rating equals the B1 senior secured rating of the first-lien tranche, because the collateral (substantially all of Regency's assets and equity in subsidiaries) represents the value of the enterprise. The B3 rating on the second-lien tranche reflects its subordinate claim on the collateral package and junior creditor rights in event of bankruptcy. Under the intercreditor agreement, the second-lien creditors agree to subordinate their claims to those of not only the first-lien creditors and hedge counterparties, but also to any debtor-in-possession financing the company may obtain. Rating Rationale Regency's ratings are restrained by: (1) the company's relatively small asset base (total assets of $257 million in August 2004, comprising five processing plants and gathering systems and a transmission system); (2) commodity price-sensitive margins; higher exposure to processing versus the less volatile gathering/transportation relative to its peers; (3) volume risk subject to natural declines in the mature gas basins where the company operates, third-party drilling activity, and competition from established midstream companies, some with greater financial resources; (4) near-term interest coverages (pro forma estimated EBITDA/interest at 3x) weakened by acquisition debt (4.9x for pro forma 2004 year-end); (5) the short operating history of Regency, which was formed in April 2003 and built on assets acquired substantially from two transactions; and (6) event risk from its ownership by a private equity firm with a finite holding period. The risk factors are mitigated by: (1) a significant amount of equity capital to help offset Regency's commodity price risks; (2) good near-term outlook for gas prices which would support volumes and the value of equity gas from its percentage-of- proceeds processing contracts (29% of its near-term projected volumes, 55% of its gross margin); (3) a less volatile component of its cash flows from fee-based processing contracts (62% of projected volumes, 28% of gross margin); (4) the plan (and a condition under the term facilities) to hedge all of its expected natural gas liquids (NGL) base volumes; volumes supported by seasoned, long-lived reserves (8.5% annual declines, according to a third-party engineering study); (5) reasonable geographic diversity (gross margins coming almost equally from the Permian Basin in West Texas, the Hugoton Basin in the Mid-Continent, and North Louisiana); and (6) the modification of all of its keep-whole processing contracts (representing 9% of projected volumes, 16% of gross margin) to help protect against negative fractionation spreads. Rating Outlook and Catalysts The rating outlook over the next 12-18 months is stable, as Regency accrues a track record under HMTF's ownership and new management. The company's ratings may improve over the medium term if it successfully meets its operational plan and reduces its leverage with free cash flow as it projects. Meeting its plan depends on substantially increasing volumes and returns from internal de-bottlenecking and capacity expansion projects ($38 million of capex over 2005-6), higher capacity utilization, and new well connects. During this time frame, acquisitions are possible, though they are not part of the base plan. Moody's will also look for a successful implementation of Regency's hedging program and its effectiveness in protecting sufficient gross margin to meet its operating and debt service needs through the commodity price cycle. The company expects to hedge as much as three years out with swaps for the majority of base case ethane and propane volumes and crude puts for the remainder of its NGL volumes. It is in the process of setting up its risk management organizational infrastructure and policy. While there has been recent improvement, products by which to hedge NGLs are still fairly illiquid and short in tenor. Shifting correlations with crude prices have made hedging NGLs historically difficult, though Regency plans to base its hedging program on the lowest historic levels of correlation for conservatism. Furthermore, Regency's modified keep-whole contracts and asset optimization capabilities have yet to be tested in a down-cycle price environment to prove their effectiveness in softening margin declines. Financial Analysis The consideration of $405 million (9.5x annualized 8/04 year-to- date EBITDA, about 8.1x 2004E pro forma EBITDA adjusted to include full year's cash flow from its Waha acquisition) reflects the full current market values for midstream assets, which have been rising with acquisition activity among MLPs and higher than historic levels of NGL prices versus those for natural gas. Moody's notes that the assets within Regency have not been owned by the company for long, and their operational performance may differ from historic levels under prior ownership or HMTF's expectations. However, many of the company's mid-level managers have long tenures with the assets. HMTF will finance 57% (about $245 million) of the acquisition, hedging program, and transaction expenses with with the newly rated bank debt, and 43% (about $183 million) with equity. The acquisition financing will leave Regency with double the debt and triple the interest expense from current low levels. The company expects the re-valuation of the balance sheet and the purchase price allocation to entail a write-up of property, plant, and equipment and incurrence of some goodwill. Post closing and pro forma to include the Waha acquisition for the full year 2004, Regency estimates its year-end 2004 debt/EBITDA at about 4.9x and EBITDA/interest at about 3x. Regency estimates its maintenance capex to be about $5.7 million annually, which could be a source of financial flexibility. However, we expect Regency to spend $38 million over 2005-2006 in capital improvements that are critical to meeting its investment plan. As an LLC, Regency is not subject to income taxes. Instead, it will distribute its effective tax obligation to HMTF, in order to meet the tax obligations of the unit holders. The majority of any excess cash flow must be mandatorily used for debt reduction under the credit facilities. Credit Facilities Regency's $280 million of credit facilities are comprised of a $200 million first-lien credit facility and an $80 million second- lien bullet term loan due 12/10. In turn, the first-lien facility is subdivided into two parts with identical collateral rights: a $160 million amortizing term loan with a balloon payment on 12/09 and a $40 million revolver with L/C capacity due 6/10. The first-lien term loan has a $40 million accordion feature to allow acquisitions. These obligations of Regency, a holding company, will be supported by upstream guarantees of its operating subsidiaries and a downstream guarantee from its parent Regency Acquisition LLC, the acquisition vehicle into which HMTF will issue the $183 million equity portion of the acquisition consideration. The credit facilities are expected to have a cash sweep mechanism that would require a portion of free cash flow to be applied toward debt reduction, and sets mandatory pre-payments with proceeds from capital markets financings and asset sales. The company must first reduce all outstanding first-lien borrowings, and only after they are fully repaid, can it begin to repay the second-lien loan. Financial covenants under the credit facilities are expected to include a leverage ratio, interest coverage ratio, and maximum capital expenditures. SGL Regency's SGL-3 rating reflects overall liquidity that is Adequate over the next four quarters ending 4Q05. Its Cash Flow/Internal Cash Sources are Adequate for this timeframe. If Regency executes on its financial plan, the company should be able to meet its foreseeable obligations with internal cash flow. The low level of maintenance capex affords a measure of financial flexibility, but its growth capex will likely require some borrowings under its revolver, though in amounts that should be within its availability. Debt amortizations are nominal until their final repayment in 5-6 years. Its Alternate Liquidity/External Cash Sources is Adequate. The company should have adequate availability under its $40 million revolver to help meet foreseeable working capital needs and growth capex. Regency's Covenant Cushion Should be Adequate The covenants are set so that Regency expects to retain sufficient cushion under its covenants over the next four quarters even if the commodity price environment turns less favorable. Financial covenants under the credit facilities are expected to include a leverage ratio, interest coverage ratio, and maximum capital expenditures. As proposed currently, the leverage ratio (defined as total debt/EBITDA) will initially be set at 5.5x, stepping down sequentially to 5.25x in 2Q05, 5x in 4Q05, 4.75x in 2Q06, 4.5x in 4Q06, 4x in 2007, 3.5x in 2008, and 3x in 2009. The coverage ratio (defined as EBITDA/cash interest) is set at 2.5x initially, stepping up over time to 2.75x in 4Q05, 3x in 3Q06, 3.25x in 2007, to 3.5x in 2008, and 4x in 2009. Maximum capex will be $22 million in 2004, $40 million in 2005, $25 million in 2006, and $15 million annually thereafter. Regency's "Back Door" Sources of Liquidity are Weak Because Regency's assets are secured under its bank facilities, it has limited ability to sell assets to generate additional liquidity. Based in Dallas, Texas, Regency Gas Services LLC is a midstream gas gathering, processing, and transmission company with operations in North Louisiana, West Texas, and the Mid-Continent region. RELIANCE GROUP: Inks $30 Million Settlement with John Hancock ------------------------------------------------------------- From 1996 through 1998, Reliance Insurance Company wrote workers' compensation business through an Ohio program manager affiliated with Credit General Insurance Company. John Hancock Life Insurance Company assumed business that was derived from the workers' compensation exposures written by RIC and other insurers, as well as Accident, Medical and Disability covers. During the period between 1992 and 1998, John Hancock agreed to accept from RIC various cessions of the CGIC business. From 1996 through 1998, RIC and John Hancock entered into reinsurance contracts where RIC obligated itself to accept from John Hancock various cessions of the Accident, Medical and Disability covers. On December 9, 1999, John Hancock demanded arbitration to rescind the largest of the business written with CGIC, in which RIC acted as an "issuing" carrier. John Hancock sought to invalidate or reduce its obligation to repay RIC for losses under the policies, arguing that the program manager improperly handled the program. The arbitration, involving extensive discovery and motion practice, was scheduled for a two-week hearing before a reinsurance arbitration panel commencing on Oct. 18, 2004. The parties spent significant time and expense prosecuting and defending the arbitration. While neither party concedes liability, the outcome is far from certain. To reduce legal expenses and bring finality to the dispute, the parties have agreed to resolve their differences through a Commutation, Settlement Agreement and Release. RIC and John Hancock will commute all their obligations. In exchange, John Hancock will pay RIC $30,000,000, representing the commutation amount. M. Diane Koken, Insurance Commissioner of Pennsylvania and Liquidator of RIC, has made efforts to ensure that the Settlement is fair and reasonable and in the best interests of RIC's policyholders, claimants and the general public. Keith Kaplan, a career reinsurance expert, established that: (a) John Hancock's contribution of $30,000,000 is a reasonable compromise; (b) the payment will be made shortly, producing a greater benefit to the estate than if the Liquidator had to wait for future payments; (c) the expense and uncertainty of arbitration will be removed; and (d) all applicable reinsurance claims against RIC by John Hancock are released. The Liquidator asks Judge James G. Collins of the Commonwealth Court of Pennsylvania to approve the Settlement. Headquartered in New York, New York, Reliance Group Holdings, Inc. -- http://www.rgh.com/-- is a holding company that owns 100% of Reliance Financial Services Corporation. Reliance Financial, in turn, owns 100% of Reliance Insurance Company. The holding and intermediate finance companies filed for chapter 11 protection on June 12, 2001 (Bankr. S.D.N.Y. Case No. 01-13403) listing $12,598,054,000 in assets and $12,877,472,000 in debts. The insurance unit is being liquidated by the Insurance Commissioner of the Commonwealth of Pennsylvania. (Reliance Bankruptcy News, Issue No. 63; Bankruptcy Creditors' Service, Inc., 215/945-7000) RIG VENTURES INC: Case Summary & 18 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Rig Ventures, Inc. 6665 East 14th Street P.O. Box 3111 Brownsville, Texas 78503 Bankruptcy Case No.: 04-71067 Type of Business: The Debtor buys and sells ship and offshore rigs. Chapter 11 Petition Date: November 11, 2004 Court: Southern District of Texas (McAllen) Judge: Richard S. Schmidt Debtor's Counsel: John Kurt Stephen, Esq. Cardena Whitis and Stephen 100 South Bicentennial Boulevard McAllen, TX 78501-7050 Tel: 956-631-3381 Total Assets: $1,950,397 Total Debts: $2,484,160 Debtor's 18 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Emilio Sanchez $1,137,076 145 Calle Jacaranda Brownsville, Texas 78520 Sanship, Inc. $320,479 6665 E. 14th Brownsville, Texas 78523 Unifab International $200,000 6665 E. 14th Brownsville, Texas 78523 Tex Mex Cold Storage $106,700 Fleming & Hewitt $88,516 King LeBanc & Bland LLP $63,515 Esco Marine Inc. $20,783 Dewitt Stern $17,777 U.S Department of Labor $10,000 R & R Marine Maintenance, Inc. $5,306 Sherriff & Tax Collector $4,708 Internal Revenue Service $4,072 Richard Zimmerman $1,880 Burton McCumber & Prichard $1,360 Schwab Court Reporting Service $910 A Better Court Reporting Service $632 DVS Legal Tech Solutions $279 Schwab Court Reporting Service $167 SAFETY-KLEEN: Wants Claims Objection Deadline Extended to June 16 ----------------------------------------------------------------- Reorganized Safety-Kleen Corporation, its affiliates, and Oolenoy Valley Consulting, LLC, as trustee of the Safety-Kleen Creditors' Trust, ask the United States Bankruptcy Court for the District of Delaware to extend the deadline to object to proofs of claim through and including June 16, 2005. Eric M. Davis, Esq., at Skadden, Arps, Slate, Meagher & Flom, LLP, explains that without the extension, all creditors could suffer an unfair dilution of their claims and the Reorganized Debtors and the Trustee could be forced to incur significant administrative costs in attempting to complete the reconciliation of all remaining unsecured claims by the current objection deadline. The Reorganized Debtors and the Trustee have worked diligently to resolve or object to outstanding claims. Approximately 15,000 unsecured claims, 1,940 priority claims and 1,650 secured claims have been filed against the Debtors. Since the Effective Date, the Trustee has filed 15 omnibus objections to claims -- eight since the previous request for an extension -- and the Reorganized Debtors have filed additional five objections. Moreover, the Trustee and the Reorganized Debtors have resolved several thousand claims through orders granting omnibus objections and reclassifying, reducing or expunging these claims. Notwithstanding the efforts on the part of the Reorganized Debtors and the Trustee, and due to the large number of claims filed, numerous claims remain unresolved. Mr. Davis states that the Reorganized Debtors and the Trustee are continuing to negotiate with parties that have responded to prior claim objections and to review and reconcile all of the remaining claims. In light of these various time-consuming tasks, and the substantial progress they have made to date, the Reorganized Debtors and the Trustee need additional time to review the claims and to file claims objections, if appropriate. Headquartered in Delaware, Safety-Kleen Corporation -- http://www.safety-kleen.com/-- provides specialty services such as parts cleaning, site remediation, soil decontamination, and wastewater services. The Company, along with its affiliates, filed for chapter 11 protection (Bankr. D. Del. Case No. 00-02303) on June 9, 2000. The Debtors' confirmed chapter 11 plan took effect on December 24, 2003. Gregg M. Galardi, Esq., at Skadden, Arps, Slate, Meagher, represented the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $3,031,304,000 in assets and $3,333,745,000 in liabilities. (Safety-Kleen Bankruptcy News, Issue No. 83; Bankruptcy Creditors' Service, Inc., 215/945-7000) SBA COMMS: Launches Cash Tender Offer for 10-1/4% Sr. Notes ----------------------------------------------------------- SBA Communications Corporation (Nasdaq: SBAC) is commencing a cash tender offer and consent solicitation for any and all of its $236,526,000 outstanding principal amount of 10-1/4% Senior Notes due 2009, CUSIP Number 78388JAE6. The Offer and Consent Solicitation are scheduled to expire at 12:00 midnight, New York City time, on Tuesday, Dec. 14, 2004, unless extended. Holders tendering their Notes under the indenture will be required to consent to certain proposed amendments to the indenture governing their Notes, which will eliminate substantially all of the restrictive covenants, the merger and consolidation covenant and certain events of default. Adoption of the Proposed Amendments requires the consent of holders of at least a majority of the aggregate principal amount of the outstanding Notes under the indenture. Holders may not tender their Notes without delivering consents and may not deliver consents without tendering their Notes. Holders who validly tender their Notes on or prior to 5:00 p.m., New York City time, on November 30, 2004, unless extended (the "Consent Date"), will receive the total consideration of $1,060.75, consisting of (i) the tender price of $1,050.75 and (ii) the consent premium of $10.00, per $1,000 principal amount of Notes (if such notes are accepted for purchase). Holders who validly tender their Notes after the Consent Date but on or prior to the Expiration Date will receive the tender price of $1,050.75 per $1,000 principal amount of Notes (if such notes are accepted for purchase). In either case, Holders who validly tender their Notes also will be paid accrued and unpaid interest up to, but not including, the date of payment for their Notes (if such notes are accepted for purchase). The Offer and Consent Solicitation are subject to the satisfaction of certain conditions, including consummation of the required financing, as well as other customary conditions. The Company intends to use the proceeds of a debt financing to fund the purchase of the Notes and the payment of any applicable consent premium pursuant to the Offer and Consent Solicitation. The terms of the Offer and Consent Solicitation are described in SBA's Offer to Purchase and Consent Solicitation Statement dated November 16, 2004, copies of which may be obtained from D.F. King & Co., Inc. SBA has engaged Deutsche Bank Securities, Inc., to act as dealer manager and solicitation agent in connection with the Offer and Consent Solicitation. Questions regarding the Offer and Consent Solicitation may be directed to Deutsche Bank Securities Inc., High Yield Capital Markets, at 212-250-5655, Attn: Alexandra Barth. Requests for documentation may be directed to D.F. King & Co., Inc., the information agent for the Offer and Consent Solicitation, at 800-431-9643 (U.S. toll-free) and 212-269-5550 (for Banks and Brokers). This press release is not an offer to purchase or a solicitation of acceptance of the offer to purchase, which may be made only pursuant to the terms of the Offer to Purchase and Consent Solicitation Statement and related Consent and Letter of Transmittal. The Offer and Consent Solicitation are being made solely by the Offer to Purchase and Consent Solicitation Statement dated November 16, 2004, and related documents (as they may be amended from time to time), and those documents should be consulted for additional information regarding delivery procedures and the conditions for the Offer and Consent Solicitation. SBA is a leading independent owner and operator of wireless communications infrastructure in the United States. SBA generates revenue from two primary businesses -- site leasing and site development services. The primary focus of the company is the leasing of antenna space on its multi-tenant towers to a variety of wireless service providers under long-term lease contracts. Since it was founded in 1989, SBA has participated in the development of over 25,000 antenna sites in the United States. For additional information about SBA, please contact Pam Kline, Vice- President-Capital Markets, at (561) 995-7670. About the Company SBA is a leading independent owner and operator of wireless communications infrastructure in the United States. SBA generates revenue from two primary businesses -- site leasing and site development services. The primary focus of the Company is the leasing of antenna space on its multi-tenant towers to a variety of wireless service providers under long-term lease contracts. Since it was founded in 1989, SBA has participated in the development of over 25,000 antenna sites in the United States. At Sept. 30, 2004, SBA Communications' balance sheet showed a $27,472,000 stockholders' deficit, compared to a $43,877,000 deficit at Dec. 31, 2003. SIGHT RESOURCE: 2002 & 2003 Financials Still Unaudited ------------------------------------------------------ Sight Resource Corporation's 2002 and 2003 year-end financial statements still have not been audited or certified. In view of the Company's Chapter 11 bankruptcy filing, and in view of the resignation of the independent accounting firm previously engaged to audit the Company's financial statements, it is doubtful that the statements will ever be certified. Under the circumstances, Chief Financial Officer Donald Radcliff discloses in a regulatory filing dated Nov. 9, 2004, with the Securities and Exchange Commission, the Company is presently unable to generate GAAP compliant statements for the quarters ended: -- March 29, 2003, -- June 28, 2003, -- September 27, 2003, -- March 27, 2004, -- June 26, 2004, and -- September 25, 2004. Reduction of Operations Prior to its bankruptcy filing, the Company operated six retail optical chains. Those were: -- Cambridge Eye Associates (Massachusetts and New Hampshire), -- Vision World (Rhode Island), -- E. B. Brown Opticians (Ohio and Pennsylvania), -- Eyeglass Emporium (Indiana), -- Vision Plus (Louisiana and Mississippi), and -- Kent Optical (Michigan). Immediately prior to the bankruptcy filing, the Company assigned leases covering 20 Kent Optical locations to a third party purchaser. In connection with its bankruptcy filing, the Company requested and obtained permission from the U.S. Bankruptcy Court for the Southern District of Ohio to reject leases of: -- 30 of the 32 E. B. Brown Optician stores, -- all 15 Vision Plaza stores, -- the two remaining stores operated under the Kent Optical name, and -- one Eyeglass Emporium store. As of June 23, 2004, the Company discontinued operations in the stores previously operated in locations covered by the leases as to which approval to reject was requested and has been obtained. The Company's continuing operations include: -- 19 stores operating under the name of Cambridge Eye Associates, -- six stores operating under the name Vision World, -- six stores operating under the name Eyeglass Emporium, and -- one E. B. Brown Optician stores. As a result, the scope of the Company's operations during the third quarter of 2004 is much reduced from the scope of those operations during the third quarter of 2003. Postpetition Operations By Form 8-K Report filed with the SEC on October 27, 2004, the Company furnished certain consolidated balance sheet information and consolidated operating statement information from its operating reports for the period from June 24, 2004 (the date of the filing of its petition under Chapter 11 of the Bankruptcy Code) to September 30, 2004, filed with the United States Bankruptcy Court for the Southern District of Ohio. As that information reflects, the Company sustained an operating loss during its third fiscal quarter of 2004 (quarter ended September 25, 2004). Largely because of the reduced scale of the Company's operations, that loss is believed to be significantly less than the operating loss sustained during the third quarter of 2003. As of Sept. 30, 2004, the Company reported a $7,270,000 stockholders' deficit. From June 24 through Sept. 30, 2004, the Company posted a $151,000 net loss. Headquartered in Cincinnati, Ohio, Sight Resource Corporation -- http://www.sightresource.com/-- manufactures, distributes and sells eyewear and related products and services through retail eye care centers. The Company filed for protection on June 24, 2004 (Bankr. S.D. Ohio Case No. 04-14987). Jennifer L. Maffett, Esq., and Louis F. Solimine, Esq., at Thompson Hine LLP, represent Sight Resource and its debtor-affiliates in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $5,400,000 in total assets and $12,500,000 in total debts. SNACKIE JACK: Ontario Securities Commission Puts Default Status --------------------------------------------------------------- Snackie Jack's Ltd. (CUB:SNCJF) is considered by the Ontario Securities Commission to be in default of its obligations for the filing of its financial statements for the year ended Nov. 30, 2003. This situation arises from the Company's use of an auditor who was not, at the time of his report, in compliance with the Canadian Public Accountability Board. The Company will re-file the financial statements after they have been prepared by a public accounting firm that has entered into a participation agreement with the CPAB and is in compliance with any restrictions or sanctions imposed by the CPAB. About the Company Snackie Jack's Ltd. manufactures and sells soy snacks. The Company currently sells plain, barbecue, and roasted garlic flavored soy chips. SPIEGEL INC: Court Allows Deutsche Bank Claim for $24,575,433 ------------------------------------------------------------- Judge Blackshear of the U.S. Bankruptcy Court for the Southern District of New York approves a stipulation signed by: -- Spiegel, Inc., -- Deutsche Bank AG, New York - Cayman Islands Branches, and -- Deutsche Bank AG, New York Branch, as servicer for Swing Street, allowing Deutsche Bank a secured claim against Spiegel for $24,575,433. On September 30, 2003, Deutsche Bank New York filed a proof of claim -- Claim No. 2726 -- against Spiegel for $24,597,800. Spiegel's books and records show Deutsche Bank New York as having a claim for $24,575,433. Deutsche Bank New York has assigned 86.67% its Claim to Swing Street. Headquartered in Downers Grove, Illinois, Spiegel, Inc. -- http://www.spiegel.com/-- is a leading international general merchandise and specialty retailer that offers apparel, home furnishings and other merchandise through catalogs, e-commerce sites and approximately 560 retail stores. The Company filed for Chapter 11 protection on March 17, 2003 (Bankr. S.D.N.Y. Case No. 03-11540). James L. Garrity, Jr., Esq., and Marc B. Hankin, Esq., at Shearman & Sterling, represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $1,737,474,862 in assets and $1,706,761,176 in debts. (Spiegel Bankruptcy News, Issue No. 33; Bankruptcy Creditors' Service, Inc., 215/945-7000) SPIEGEL INC: Court Approves IBM Settlement Agreements ----------------------------------------------------- Spiegel, Inc., scheduled IBM Corporation and IBM Credit, LLC, as having a $983,702 general unsecured non-priority claim on its Schedules of Assets and Liabilities. In addition, Eddie Bauer, Inc., scheduled the IBM Entities as having a $129,377 general unsecured non-priority claim, while Spiegel Group Teleservices, Inc., scheduled that the IBM Entities have a claim for $345. On July 10, 2003, IBM Credit filed Claim No. 315 against Spiegel for $278,318. On September 19, 2003, IBM Corp. filed Claim No. 1776 against Spiegel for $470,670. The IBM Entities have not filed a proof of claim against any other Debtor. The Debtors have reviewed their books and records and found that the IBM Entities have general unsecured non-priority claims against: * Spiegel for $417,281; * Eddie Bauer for $25,528; * Eddie Bauer-Canada for $35,347; and * Spiegel Group Teleservices for $182. The Debtors also found out that there exists a prepetition credit in favor of Ultimate Outlet, Inc., against the IBM Entities equal to $18,607. The Debtors and the IBM Entities have engaged in good-faith discussions to resolve the IBM claims. The parties agree that: (a) IBM Credit is deemed to have allowed general unsecured non-priority claims against Spiegel and Eddie Bauer for $9,927 and $8,011, and no other claims against the Debtors; (b) IBM Corp. is deemed to have allowed general unsecured non- priority claims against: -- Spiegel for $388,747; -- Eddie Bauer for $17,517; -- Eddie Bauer-Canada for $35,346; and -- Spiegel Group Teleservices for $182; and (c) The Stipulation will constitute a valid withdrawal of the Proofs of Claim and the withdrawal will be with prejudice. * * * Judge Blackshear of the U.S. Bankruptcy Court for the Southern District of New York approves the parties' stipulation. Headquartered in Downers Grove, Illinois, Spiegel, Inc. -- http://www.spiegel.com/-- is a leading international general merchandise and specialty retailer that offers apparel, home furnishings and other merchandise through catalogs, e-commerce sites and approximately 560 retail stores. The Company filed for Chapter 11 protection on March 17, 2003 (Bankr. S.D.N.Y. Case No. 03-11540). James L. Garrity, Jr., Esq., and Marc B. Hankin, Esq., at Shearman & Sterling, represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $1,737,474,862 in assets and $1,706,761,176 in debts. (Spiegel Bankruptcy News, Issue No. 33; Bankruptcy Creditors' Service, Inc., 215/945-7000) SPIEGEL INC: Eddie Bauer Wants to Reject Menlo Park Store Lease --------------------------------------------------------------- Eddie Bauer, Inc., seeks permission from U.S. Bankruptcy Court for the Southern District of New York to: * reject an unexpired non-residential real property lease at Menlo Park Shopping Center, in City of Edison, New Jersey, effective as of January 31, 2004; * enter into and perform under a Lease Rejection and Claim Settlement Agreement with Shopping Center Associates; and * enter into and perform under a new, temporary lease for the same real property with Shopping Center Associates. Eddie Bauer had previously determined that it was best to stop operating certain of its stores. In May 2003, Eddie Bauer closed 60 of its stores and terminated or rejected their related leases. In December 2003 and January 2004, Eddie Bauer rejected and terminated leases for 30 additional establishments. Andrew V. Tenzer, Esq., at Shearman & Sterling, LLP, in New York, relates that the Eddie Bauer store located at Menlo Park, together with its existing unexpired lease, is part of a lease portfolio of approximately 17 stores with Shopping Center Associates. The Menlo Park Store Lease will expire January 31, 2008, and the approximate monthly rent under it is $54,000. Eddie Bauer initially planned to close the Menlo Park Store together with the second batch of stores closed. However, as part of the renegotiation of the store leases portfolio, Shopping Center Associates offered Eddie Bauer a rent reduction to a rate equal to: (i) the greater of $120,000 per year; or (ii) 10% of Eddie Bauer's Adjusted Gross Sales, as that term is defined in the Lease; plus (ii) the charges for Eddie Bauer's actual use of certain utilities, for a one-year term under the Temporary Lease, in exchange for keeping the Menlo Park Store open through January 31, 2005. Eddie Bauer and Shopping Center Associates have agreed to the rejection of the original lease and to enter into the Temporary Lease to effectuate their agreement. Pursuant to the Lease Rejection and Claim Settlement Agreement: (a) Shopping Center Associates will be allowed a prepetition claim for $19,235 and a lease rejection damage claim for $643,640, less credit for mitigation payments already received by Shopping Center Associates of $120,000 rent and $48,833 for utility costs for the period February 1, 2004, through January 31, 2005, for a net Lease rejection claim of $474,806. (b) The parties will execute the Temporary Lease effective as February 1, 2004, with a termination date of January 31, 2005. (c) Shopping Center Associates will pay Eddie Bauer $247,944, which represents the return of overpayment of rent for the Menlo Park Store from February 1, 2004, through September 30, 2004, after deduction of an agreed administrative claim for $9,786, and a deduction of the $168,883 rent and charges estimated to be due under the Temporary Lease through January 31, 2005. (d) Eddie Bauer will waive its rights to any security deposit and unpaid tenant allowances and will release Shopping Center Associates of and from all claims in connection with the Lease or the underlying premises. (e) Except for third party claims, Shopping Center Associates will release Eddie Bauer of and from all claims in connection with the Lease or the underlying premises. Mr. Tenzer says that given the Menlo Park Store's relative lack of profitability, there is no justification for maintaining the Menlo Park Store in the long term. Therefore, in an effort to minimize administrative and prepetition expenses, Eddie Bauer deems the rejection appropriate. Headquartered in Downers Grove, Illinois, Spiegel, Inc. -- http://www.spiegel.com/-- is a leading international general merchandise and specialty retailer that offers apparel, home furnishings and other merchandise through catalogs, e-commerce sites and approximately 560 retail stores. The Company filed for Chapter 11 protection on March 17, 2003 (Bankr. S.D.N.Y. Case No. 03-11540). James L. Garrity, Jr., Esq., and Marc B. Hankin, Esq., at Shearman & Sterling, represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $1,737,474,862 in assets and $1,706,761,176 in debts. (Spiegel Bankruptcy News, Issue No. 34; Bankruptcy Creditors' Service, Inc., 215/945-7000) STELCO INC: Inks 20-Month Supply Agreement with General Motors -------------------------------------------------------------- Stelco, Inc. (TSX:STE) reached agreement with General Motors with respect to a contract commencing April 1, 2005, and ending December 31, 2006. While recent contracts with General Motors have typically been for one year, the new arrangement covers a longer period. Conditions to the agreement include written confirmation by November 18, 2004, that Stelco has entered into a memorandum of agreement with USWA Lake Erie Local 8782 for a new collective agreement, which will be effective for the duration of the General Motors contract. This condition is consistent with the previously announced deadline set by General Motors in October with respect to Stelco's labor situation. In addition, the General Motors agreement is conditional on court approval by November 22, 2004, of the General Motors agreement as well as the two Deutsche Bank commitments previously announced by the Company. Those Deutsche Bank commitments in turn require a satisfactory General Motors contract be in place. Stelco will be seeking approval of the Deutsche Bank commitment letters and the General Motors agreement on November 22, 2004. On November 15, Stelco filed court materials with the Ontario Superior Court of Justice for the hearing. Stelco, Inc. -- http://www.stelco.ca/-- which is currently undergoing CCAA restructuring proceedings, is a large, diversified steel producer. Stelco is involved in all major segments of the steel industry through its integrated steel business, mini-mills, and manufactured products businesses. Consolidated net sales in 2003 were $2.7 billion. STORAGE COMPUTER: Recurring Losses Spur AMEX's Delisting Notice --------------------------------------------------------------- Storage Computer Corporation (AMEX:SOS), a provider of high- performance storage and data delivery software systems, has received notice from The American Stock Exchange Staff indicating that the Company is subject to delisting from the exchange as it no longer complies with the following listing standard: (a) The Company has sustained losses in its five most recent fiscal years and has not maintained shareholders equity of at least $6 million; (b) The Company has sustained losses in three of its four most recent fiscal years and has not maintained shareholders of equity of at least $4 million; and (c) The Company has sustained losses in two of its most recent fiscal years and has not maintained stockholders equity of at least $2 million (The Company had stockholders equity of $777,095 at June 30, 2004) The Company will appeal this staff determination and requested a hearing before a committee of the Exchange. The stock will continue to trade on the AMEX during the appeal period. There can be no assurance that the Company's request for continued listing will be granted. About Storage Computer Corporation Storage Computer Corporation (AMEX:SOS) -- http://www.storage.com/ -- is a provider of high performance storage software solutions focused on developing advanced storage architectures to address the emerging needs of high-bandwidth and other "performance- impaired" applications. Storage Computer's technology supports a variety of applications including advanced database activities, wide area networked storage and sophisticated business continuity topologies http://www.storage.com/ * * * Going Concern Doubt In its latest Form 10-Q for the quarterly period ended June 30, 2004, Storage Computer reported that it has suffered recurring losses from operations and negative cash flows that raise substantial doubt about its ability to continue as a going concern. Management recognizes that the Company's continuation as a going concern is dependent upon its ability to generate sufficient cash flow to allow the Company to satisfy its obligations on a timely basis. The generation of sufficient cash flow is dependent on the successful expansion of the Company's share of the market for its software, controlling costs and securing new financing. TENNECO AUTOMOTIVE: Moody's Rates Planned $500M Sr. Sub. Notes B3 ----------------------------------------------------------------- Moody's Investors Service assigned a B3 rating to Tenneco Automotive, Inc.'s proposed $500 million 8.625% guaranteed senior subordinated notes offering, which will fully refinance all of the company's existing $500 million 11.625% senior subordinated notes issue. The refinancing transaction will result in $15 million of annual cash interest savings, and will extend the maturity of the company's subordinated obligations by five years. Moody's additionally affirmed all of Tenneco's existing ratings and improved the company's rating outlook to positive, from stable. More specifically, Moody's assigned these new rating for Tenneco: -- B3 rating for Tenneco's proposed 8.625% guaranteed senior subordinated unsecured notes due November 2014, to be issued under Rule 144A with registration rights Moody's affirmed these ratings for Tenneco: -- B1 rating for Tenneco's $800 million aggregate of guaranteed first-lien senior secured credit facilities, consisting of: * $220 million revolving credit facility due December 2008; * $180 million term loan B letter of credit/revolving loan facility due December 2010 (cash-collateralized by the lenders); * $400 million term loan B facility due December 2010; -- B2 rating for Tenneco's $475 million of 10.25% guaranteed senior secured second-lien notes due 2013; -- B1 senior implied rating; -- B2 senior unsecured issuer rating; -- B3 rating for Tenneco's $500 million of 11.625% guaranteed senior subordinated unsecured notes due October 2009, which rating will be withdrawn once these notes are called for redemption. The ratings continue to reflect Tenneco's highly leveraged balance sheet, with total debt/EBITDAR leverage (including off-balance sheet items) exceeding 4.5x. The company will notably utilize approximately $52 million of balance sheet cash to finance the $29 million prepayment premium for the existing subordinated notes, along with accrued interest and fees and expenses associated with the refinancing. Tenneco's revolving credit facilities and cash balance may also be pressured over the course of the next year to finance a more than $100 million aggregate cash need that is expected to result as the Big 3 OEM's proceed with discontinuing their respective accelerated payment programs for accounts receivable. In the unanticipated event that the company's approximately $145 million aggregate of off-balance sheet accounts receivables securitization arrangements in North America and Europe were to cease, additional refinancing pressure would result. Tenneco has some exposure to rising commodity prices for steel and other raw materials, despite the fact that the company is managing the current crisis well relative to other automotive suppliers. The company's operating cash flow was negatively impacted by approximately $10 million due to escalated steel prices during the third quarter of 2004. Tenneco's performance is also likely to be negatively affected by uncertainty surrounding North American light vehicle production levels, a slowdown in the growth of automobile sales in China, the need to further improve the cost structure of its European operations, and the ongoing consolidation of the domestic and European aftermarkets which is generating a powerful and aggressive customer base of cost-focused automotive retailers. Longer product lives of automotive parts continues to adversely affect aftermarket demand for some of Tenneco's products -- most recently attributable to the increased use of stainless steel within new OEM exhaust systems in Europe. While Tenneco has realized favorable working capital investment swings over the past few years, Moody's believes that this is unlikely to be sustainable as a substantial source of future cash flows. The ratings and change in outlook to positive more favorably reflect Tenneco's significant diversity of customers and vehicle platforms, along with its geographic balance, blending of original equipment and aftermarket exposure for similar product lines, high variable cost structure, growing percentage of manufacturing in lower-cost countries, effective use of global supply chain management, good liquidity, and increased emphasis on technology and the development of value-added products with higher dollar content. Tenneco has meaningful relationships with Asian transplants in North America, and is also strengthening its revenue base in Europe. The company's revenues and margins are also benefiting from increases in heavy-duty truck demand and new applications for the growing diesel market. Demand for Tenneco's light vehicle product lines is also improving due to the safety focus of its ride control product division, and the increased global regulation for more environmentally friendly and fuel- efficient emissions products. Tenneco believes that its exposure to rising steel prices is manageable, based upon the status of negotiations for price recovery from customers and the fact that its stainless steel pricing contract does not roll off until 2005. While there is a lag associated with any surcharges or price increases and any additional spot price increases would necessitate further negotiations, some price recovery is beginning to be realized. Negotiations for incremental compensation have been most successful with regard to Tenneco's heavy duty and aftermarket product lines. Management is additionally evaluating the substitution of alternative materials within some product lines. The proposed subordinated debt refinancing will improve annualized free cash flow by $15 million and will push out the maturity of $500 million debt obligations to 2014. The first meaningful funded debt maturity that the company will face is the expiration of it $220 million revolving credit facility in December 2008. This facility currently has no outstanding balance, but may have to be called upon over the next year to replace the discontinued OEM early pay arrangements. Tenneco continues to have the option to up-size the revolving credit facility to a maximum of $275 million, subject to receipt of additional lender commitments. Liquidity is currently good, given approximately $160 million of pro forma cash following the subordinated debt refinancing transaction and about $355 million of unused capacity under the company's external credit facilities after accounting for letters of credit. Tenneco's base cash need approximates $50 million (per management), and there is significant cushion under the company's financial covenant requirements. Future events that have potential to drive Tenneco's ratings higher include: (1) debt reduction through steadily improving operations and working capital improvements; (2) a sale of common equity with the net proceeds applied to further debt reduction; (3) generation of material new business awards with a broadened customer base, continued growth in market share; (4) evidence that new emissions and safety regulations are driving new business generation and meaningful increases in content per vehicle; (5) realization of improved margins within the European operations, extension of the company's product line without margin dilution; and (6) steadily rising margins. Future events that have potential to drive Tenneco's outlook or ratings lower include: (1) meaningful declines in North American and European OEM production volumes; (2) material increases in raw materials prices that cannot be passed on to customers, deteriorating liquidity and interest coverage; (3) loss of a major customer, evidence of declining market shares; (4) increasing customer price compression; (5) unanticipated warranty liabilities; (6) a material acquisition which does not clearly improve the company's competitive position or which negatively affects leverage; (7) a major strike by workers at either Tenneco's plants or those of a major customer or supplier; spiraling steel costs; or (8) indications that the "sweet spot" for replacement parts has extended beyond the 6-to-10 year time frame. The B3 rating of the proposed $500 million senior subordinated unsecured notes reflects their contractual subordination to all of Tenneco's senior debt obligations. The new notes will be guaranteed on a senior subordinated basis by all material domestic subsidiaries that guarantee the senior secured credit facility. The new notes will be effectively subordinated to all secured obligations of the borrower and guarantors, which are substantial given the almost $1.3 billion of aggregate first-lien and second- lien senior secured credit commitments. The new notes will additionally be structurally subordinated to all liabilities (including trade payables) of the non-guarantor foreign subsidiaries, which notably account for about 60% of consolidated revenues and assets. The new notes will not be callable until November 2009, but will have a 35% equity issuance clawback. They will additionally contain a change of control redemption provision at 101, limitations upon additional indebtedness and restricted payments, and a 30-day grace period for non-payment of interest. For the last twelve months ended September 30, 2004, total gross debt/EBITDAR leverage adjusted for off-balance sheet receivables financings, the present value of operating leases, and letters of credit and contingent obligations approximated 4.6x. Total net debt/EBITDAR leverage on the same basis for the period (with net debt defined as total debt net of cash exceeding a base level of $50 million) approximated 4.4x. LTM EBIT coverage of cash interest for the period was 1.5x, and should improve on a pro forma basis for the new subordinated notes issuance to 1.7x. The EBIT return on total assets was satisfactory at about 7.0%. Tenneco, headquartered in Lake Forest, Illinois, is a leading manufacturer of automotive ride control (approx. 37% of sales) and emissions control (approx. 63% of sales) products and systems for both the worldwide original equipment market and aftermarket. Leading brands include Monroe (R), Rancho (R), and Fric Rot ride control products and Walker (R) and Gillet emission control products. Annual revenues exceed $4.0 billion. THOMPSON DINING LP: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------------- Lead Debtor: Thompson Dining, L.P. PO Box 568 Kennedale, Texas 76060 Tel: (817) 996-7298 Bankruptcy Case No.: 04-91121 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Thompson Restaurant Management, Inc. 04-91103 Thompson Restaurant Management EC 04-91105 Thompson Restaurant Management LR, Inc. 04-91106 Thompson Restaurant Management GSW, Inc. 04-91107 Thompson Restaurant Management 12265, Inc. 04-91108 Thompson Restaurant Management 9125, Inc. 04-91109 Thompson Restaurant Management 7456, Inc. 04-91110 Thompson Restaurant Management 7222, Inc. 04-91113 Thompson Dining, Inc. 04-91117 Type of Business: The Company operates a restaurant. Chapter 11 Petition Date: November 15, 2004 Court: Northern District of Texas (Ft. Worth) Judge: D. Michael Lynn Debtor's Counsel: Linda S. Kennon, Esq. Smith Underwood & Perkins Two Lincoln Center, Suite 600 5420 LBJ Freeway Dallas, Texas 75240 Tel: (972) 661-5114 Fax: (972) 661-5691 Total Assets Total Debts ------------ ----------- Thompson Dining, L.P. $1 M to $10 M $1 M to $10 M Thompson Restaurant Management, Inc. $100,000 to $500,000 $100,000 to $500,000 Thompson Restaurant Management EC $0 to $50,000 $0 to $50,000 Thompson Restaurant Management LR, Inc. $100,000 to $500,000 $100,000 to $500,000 Thompson Restaurant Management GSW, Inc. $50,000 to $100,000 $50,000 to $100,000 Thompson Restaurant Management 12265, Inc. $0 to $50,000 $0 to $50,000 Thompson Restaurant Management 9125, Inc. $100,000 to $500,000 $50,000 to $100,000 Thompson Restaurant Management 7456, Inc. $100,000 to $500,000 $100,000 to $500,000 Thompson Restaurant Management 7222, Inc. $100,000 to $500,000 $100,000 to $500,000 Thompson Dining, Inc. $0 to $50,000 $0 to $50,000 Consolidated List of the Debtors' 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Burger King Corporation Unsecured Trade Debt $1,000,000 5505 Blue Lagoon Drive, 8th Floor Miami, Florida 33126 Attn: Thomas Archer Tarrant County Taxes $306,000 Assessor/Collector Tarrant County Administration Building 100 East Weatherford Fort Worth, Texas 75196 Mrs. Bairds Trade Debt $200,000 7301 South Freeway Fort Worth, Texas 76134 Gexa Energy Trade Debt $53,000 MBM Corporation Trade Debt $50,000 David Childs Taxes $15,000 Muzak Trade Debt $9,500 Federal Heath Sign Company Trade Debt $9,000 Jerry's Cleaning Service Trade Debt $7,000 Maverick Engineering Trade Debt $6,000 LSI Industries Trade Debt $4,000 MPA Plumbing Trade Debt $3,500 Facilite Corporation Trade Debt $3,000 Binswanger Glass Trade Debt $2,700 Amtech Trade Debt $2,500 Coca-Cola USA Trade Debt $1,801 Hernandez Lawn Service Trade Debt $1,600 Terminex International Trade Debt $1,200 Complaint LP Century Surety Company Trade Debt $800 CIT Financing Trade Debt $501 UAL CORP: Wants Court Nod to Pay Amendment Fees to DIP Lenders -------------------------------------------------------------- UAL Corporation and its debtor-affiliates ask the U.S. Bankruptcy Court for the Northern District of Illinois for permission to pay certain fees in connection with a Waiver, Consent and Ninth Amendment to their Revolving Credit, Term Loan and Guaranty Agreement. Section 4(b)(ii) of the Final Club DIP Order provides that without further Court order, the Debtors are authorized to execute, deliver and perform amendments to the Club DIP Facility. Therefore, the Debtors are legally sanctioned to enter into the Ninth Amendment, but need Court approval of the Ninth Amendment Fees, because the Final Club DIP Order does not explicitly authorize fees associated with postpetition amendments and modifications to the Club DIP Facility. Even the most casual observers are aware of the dire conditions facing the airline industry. The Debtors might not comply with the Club DIP Facility's EBITDAR covenants in the fourth quarter, which under current terms would constitute a default. Thus, the Debtors and the Club DIP Lenders are in the process of finalizing terms of covenant relief and other liquidity-driven modifications to the Club DIP Facility, as envisioned in the Ninth Amendment. Once finalized, the Debtors will file the Ninth Amendment with the Court. The Ninth Amendment provides for several significant changes to the Club DIP Facility including: (a) Waiver -- waiver of any default if the Debtors fail to satisfy the EBITDAR covenant in Section 6.05 for the 12- month periods ending on October 31, 2004, November 30, 2004 and December 31, 2004; (b) Consent -- consent to (x) the Debtors' retention of 100% of the (i) Orbitz proceeds, and (ii) the exchange of slots with British Airways PLC, and (y) use arrangements (i) between the Debtors and All Nippon Airways, Co., Ltd., for 2 pairs of slots at Narita Airport, and (ii) between the Debtors and Jet Airways (India) Pvt. Ltd., for 2 pairs of slots at London Heathrow Airport; and (c) Amendments -- revision of the minimum cash covenant to increase the minimum of unrestricted cash required to be on hand from $600,000,000 to $750,000,000 by amending Section 6.13 of the Club DIP Facility. By December 15, 2004, the Debtors will deliver to the Lenders a status report on the Borrower's and Guarantors' progress in realizing the additional cost savings projected in the November 5, 2004 business plan. For the modifications, the Debtors will pay the Club DIP Lenders, as arrangers and underwriters, $2,500,000 in fees. James H.M. Sprayregen, Esq., at Kirkland & Ellis, tells Judge Wedoff that the Debtors should be allowed to pay the Fees because the Ninth Amendment provides substantial financial benefits, protections and waivers. The Fees are the result of arm's-length negotiations and are reasonable and customary. The Ninth Amendment will allow the Debtors to avoid potential EBITDAR covenant defaults during the fourth quarter of 2004. It will also enable sales proceeds to be used for operations rather than repayment of the Club DIP Facility. Headquartered in Chicago, Illinois, UAL Corporation -- http://www.united.com/-- through United Air Lines, Inc., is the holding company for United Airlines -- the world's second largest air carrier. The Company filed for chapter 11 protection on December 9, 2002 (Bankr. N.D. Ill. Case No. 02-48191). James H.M. Sprayregen, Esq., Marc Kieselstein, Esq., David R. Seligman, Esq., and Steven R. Kotarba, Esq., at Kirkland & Ellis, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $24,190,000,000 in assets and $22,787,000,000 in debts. (United Airlines Bankruptcy News, Issue No. 66; Bankruptcy Creditors' Service, Inc., 215/945-7000) UAL CORP: Judge Wedoff Approves EPA Settlement Agreement -------------------------------------------------------- On June 6, 2003, the Environmental Protection Agency filed Claim No. 42359 against UAL Corporation and its debtor-affiliates, based on alleged violations of the Resource Conservation and Recovery Act, 42 U.S.C. Sections 6901-6992k. The EPA Claim stems from findings at the Debtors' San Francisco Maintenance Center at San Francisco International Airport. On the same day, the California Department of Toxic Substances Control, a department of the California State government, filed general unsecured Claim No. 42363. The CDTSC Claim is based on alleged violations of the California Hazardous Waste Control Law, Chapter 6.5 of Division 20 of the California Health & Safety Code, stemming from discoveries at SFMC at SFO. The EPA alleged that the amounts asserted in the Claims are secured by the United States' setoff right as memorialized in the Tax Refund Settlement. To reduce the administrative and transactional costs associated with this dispute, the parties engaged in negotiations. Pursuant to a Settlement with the EPA, the Debtors agree to conduct an independent audit of their Environmental Compliance Management System and submit a report describing the findings to the EPA by March 31, 2006. The report will describe any follow-up actions taken in response. In addition, the Debtors will pay an $850,000 civil penalty that will be divided to: (a) the EPA, which will have an allowed secured setoff claim for $550,000; and (b) the DTSC, which will have an allowed general unsecured claim for $300,000. The automatic stay will be lifted on the Effective Date of the Settlement. This will allow setoff by the United States Government, on the EPA's behalf, for $550,000 from the funds administratively frozen by the Tax Refund Settlement. Judge Wedoff of the U.S. Bankruptcy Court for the Northern District of Illinois finds the terms reasonable and approves the Settlement. Headquartered in Chicago, Illinois, UAL Corporation -- http://www.united.com/-- through United Air Lines, Inc., is the holding company for United Airlines -- the world's second largest air carrier. The Company filed for chapter 11 protection on December 9, 2002 (Bankr. N.D. Ill. Case No. 02-48191). James H.M. Sprayregen, Esq., Marc Kieselstein, Esq., David R. Seligman, Esq., and Steven R. Kotarba, Esq., at Kirkland & Ellis, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $24,190,000,000 in assets and $22,787,000,000 in debts. (United Airlines Bankruptcy News, Issue No. 64; Bankruptcy Creditors' Service, Inc., 215/945-7000) UAL CORP: Engineers Want Stay Lifted to Pursue California Suit -------------------------------------------------------------- UAL Corporation and its debtor-affiliates employed Kambiz Adibzadeh in 1998[*] and Farzod R. Shironi in 1987[*] to work as engineers at one of the Debtors' locations in California. The Debtors terminated both men on November 1, 2001. On October 10, 2002, the Engineers filed a multi-count Complaint for damages based on employment discrimination, intentional infliction of emotional distress, negligent infliction of emotional distress, tortious termination in violation of public policy and breach of implied contract. The case is captioned Farzod Shironi, Hector Hernandez and Kambiz Adibzadeh vs. United Air Lines, Clovis Shem, Michele Bassi, Gene Pugnier, Larry Slate, Lou Mancini, James Miccio, Martin Baumann, Sam Rawls, Steve Lewis and Does 1-60, Case No. 2002068406. The Engineers filed the Complaint in the Superior Court of California, Alameda County. The individually named defendants were dismissed from the Complaint some time after the lawsuit was filed. [**] According to Monica C. O'Brien, Esq., the Complaint alleges that the Debtors, their managers and supervisors, engaged in a continuous and ongoing pattern of discriminatory and harassing conduct towards the Engineers. Also, the Engineers were wrongfully terminated. Messrs. Kambiz and Farzod filed Claims for $2,800,000 and $3,500,000. Ms. O'Brien notes that a determination of the liquidated amount of the Engineers' Claims can only be achieved through adjudication of the Complaint. Judicial economy and convenience militate for the California Court as the proper forum. The Engineers ask the U.S. Bankruptcy Court for the Northern District of Illinois to modify the automatic stay provisions of 11 U.S.C. Section 362 so they may proceed with their California Superior Court Action to liquidate the amount of the Claims against the Debtors' estate. Headquartered in Chicago, Illinois, UAL Corporation -- http://www.united.com/-- through United Air Lines, Inc., is the holding company for United Airlines -- the world's second largest air carrier. The Company filed for chapter 11 protection on December 9, 2002 (Bankr. N.D. Ill. Case No. 02-48191). James H.M. Sprayregen, Esq., Marc Kieselstein, Esq., David R. Seligman, Esq., and Steven R. Kotarba, Esq., at Kirkland & Ellis, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $24,190,000,000 in assets and $22,787,000,000 in debts. (United Airlines Bankruptcy News, Issue No. 64; Bankruptcy Creditors' Service, Inc., 215/945-7000) [*] Scriviner's error corrected on May 23, 2005. [**] Explanatory paragraph added May 23, 2005, at Mr. Farzod's behest. US AIRWAYS: Progresses in Talks with Flight Attendants ------------------------------------------------------ Modest progress was made Tuesday in negotiations between the Association of Flight Attendants-CWA and US Airways for achieving long-term cost savings at the troubled carrier. "The company needs to resolve these negotiations quickly," insisted Perry Hayes, president of the AFA Master Executive Council at US Airways. "AFA wants US Airways to succeed, but the company's success cannot be on the backs of the flight attendants." Mr. Hayes noted that the latest talks took place in the wake of a decision by the AFA Board of Directors to call for a nationwide strike should any contracted carrier abrogate an existing collective bargaining agreement, an action US Airways has asked a bankruptcy court to permit. The potential for a job action, combined with the December 2 scheduling of a hearing on management's request and the upcoming Thanksgiving holiday weekend creates an environment that may be conducive to more concrete and realistic discussions, Mr. Hayes said. Negotiations have adjourned for the week, but are scheduled to resume early next week. The union hopes to reach an agreement before Thanksgiving. More than 46,000 flight attendants, including 5,200 at US Airways, join together to form AFA, the world's largest flight attendant union. AFA is part of the 700,000-member strong Communications Workers of America, AFL-CIO. Visit AFA at http://www.afanet.org/ Headquartered in Arlington, Virginia, US Airways' primary business activity is the ownership of the common stock of: * US Airways, Inc., * Allegheny Airlines, Inc., * Piedmont Airlines, Inc., * PSA Airlines, Inc., * MidAtlantic Airways, Inc., * US Airways Leasing and Sales, Inc., * Material Services Company, Inc., and * Airways Assurance Limited, LLC. Under a chapter 11 plan declared effective on March 31, 2003, USAir emerged from bankruptcy with the Retirement Systems of Alabama taking a 40% equity stake in the deleveraged carrier in exchange for $240 million infusion of new capital. US Airways and its subsidiaries filed another chapter 11 petition on September 12, 2004 (Bankr. E.D. Va. Case No. 04-13820). Brian P. Leitch, Esq., Daniel M. Lewis, Esq., and Michael J. Canning, Esq., at Arnold & Porter LLP, and Lawrence E. Rifken, Esq., and Douglas M. Foley, Esq., at McGuireWoods LLP, represent the Debtors in 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: Wants Hilton Hotels to Honor Agreements --------------------------------------------------- As part of their regular business, US Airways, Inc., and its debtor-affiliates provide lodging for their employees, namely their flight crews, and for inconvenienced passengers whose flights are cancelled, delayed or who have been denied boarding for various reasons. On any given night, the Debtors may purchase 1,700 hotel rooms throughout the United States, the Caribbean and Europe. To meet the lodging needs of their flight crews and passengers, the Debtors must have access to hotel rooms with a certain level of services at reasonable prices in the cities where their crews stay overnight. To meet these needs, the Debtors are party to several accommodation agreements with hotels in the United States, the Caribbean and Europe. These accommodation agreements with hotels are critical because the Debtors: (a) purchase hotel rooms in blocks at reduced rates; and (b) can guarantee that lodging will be available for their various constituencies in many markets. In certain markets, tax exemptions allow the Debtors to benefit from the long-term continued and uninterrupted purchase of large blocks of hotel rooms. According to Brian P. Leitch, Esq., at Arnold & Porter, in Denver, Colorado, the Debtors selected MHI, LLC, doing business as Hilton Wilmington Riverside, Hilton Philadelphia Airport Hotel, Savannah DeSoto Hilton and Canterbury Hotel, also known as The Canterbury Hotel Corporation, as long-term partners to satisfy various constituencies with the quantity, quality and price of the rooms provided. Under the parties' Agreements, the Debtors receive reduced rates and take advantage of the tax exemptions. Since the Debtors' bankruptcy filing, however, the Hotels have refused to perform in accordance with the Hotel Agreements. Upon learning of the Hotels' refusal, the Debtors attempted to negotiate for the resumption of services. The Hotels have stated that they will not make rooms available to the Debtors under any circumstances. Mr. Leitch tells the U.S. Bankruptcy Court for the Eastern District of Virginia that the failure of the Hotels to perform in accordance with the Hotel Agreements has caused the Debtors harm, including monetary damages. The Debtors have had to scramble to purchase hotel rooms at increased prices and have not been able to take advantage of the tax exemptions that were an important component of the Hotel Agreements. As a result, the Debtors ask Judge Mitchell to: (1) declare that the Hotel Agreements are property of the Debtors' bankruptcy estate; (2) declare that the Hotel Agreements are executory contracts subject to assumption or rejection prior to confirmation of a plan of reorganization; (3) compel the Hotels to adhere to the terms of the Hotel Agreements, pending assumption or rejection by the Debtors; and (4) find that each of the Hotels violated the automatic stay. The Debtors also seek an award for damages, including actual damages, costs, attorneys' fees and punitive damages, in amounts to be determined at trial. Mr. Leitch emphasizes that the Hotels' services are vital to the continued operations and the reorganization efforts of the Debtors. Failure and refusal of the Hotels to perform is disruptive to the Debtors' crews, customers and overall business operations. The Debtors have no reasonable alternative to obtain similar hotel rooms and services in the quantity, quality and at the cost provided under the Hotel Agreements. Mr. Leitch further notes that the Debtors' restructuring depends on the uninterrupted performance from their suppliers and service providers and the enforceability of their contracts. Headquartered in Arlington, Virginia, US Airways' primary business activity is the ownership of the common stock of: * US Airways, Inc., * Allegheny Airlines, Inc., * Piedmont Airlines, Inc., * PSA Airlines, Inc., * MidAtlantic Airways, Inc., * US Airways Leasing and Sales, Inc., * Material Services Company, Inc., and * Airways Assurance Limited, LLC. Under a chapter 11 plan declared effective on March 31, 2003, USAir emerged from bankruptcy with the Retirement Systems of Alabama taking a 40% equity stake in the deleveraged carrier in exchange for $240 million infusion of new capital. US Airways and its subsidiaries filed another chapter 11 petition on September 12, 2004 (Bankr. E.D. Va. Case No. 04-13820). Brian P. Leitch, Esq., Daniel M. Lewis, Esq., and Michael J. Canning, Esq., at Arnold & Porter LLP, and Lawrence E. Rifken, Esq., and Douglas M. Foley, Esq., at McGuireWoods LLP, represent the Debtors in 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. 71; Bankruptcy Creditors' Service, Inc., 215/945-7000) VINFRED INTERIOR: Case Summary & 19 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Vinfred Interior Systems Co., Inc. P.O. Box 33 Oakmont, Pennsylvania 15139 Bankruptcy Case No.: 04-34995 Type of Business: The Debtor is a builder and contractor. Chapter 11 Petition Date: November 12, 2004 Court: Western District of Pennsylvania (Pittsburgh) Judge: Judith K. Fitzgerald Debtor's Counsel: Stanley A. Kirshenbaum, Esq. 1602 Law & Finance Building 429 Fourth Avenue Pittsburgh, PA 15219 Tel: 412-261-5107 Fax: 412-288-0217 Estimated Assets: $500,000 to $1 Million Estimated Debts: $1 Million to $10 Million Debtor's 19 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Carpenters Contribution Trade Debt $360,196 Accounts P.O. Box 640879 Pittsburgh, PA 15230 Iupat District #57 Comb Employee Benefits $196,800 Funds 5 Hot Metal Street, Suite 200 Pittsburgh, PA 15203 Ciesco Inc. Trade Debt $154,446 109 Millers Lane P.O. Box 5099 Harrisburg, PA 17110 Sherwin Williams Co. Trade Debt $106,137 Atlas Wholesale Supply Inc. Trade Debt $103,403 Heritage Agency Trade Debt $90,382 Lupini Construction Co. Trade Debt $72,176 Wholesale Builders Supply Trade Debt $68,763 Laborers Combined Funds Employee Benefits $43,696 Gypsum Services Trade Debt $41,343 Polyvision Corporation Trade Debt $32,320 Triangle Fastener Corp. Trade Debt $25,821 Best Line Equipment Trade Debt $22,317 Masterwork Trade Debt $20,663 Irwin Builders Supply Trade Debt $15,936 West Elizabeth Lumber Co. Trade Debt $14,972 RJ Bridges Corp. Trade Debt $13,320 NC Sanitation Inc. Trade Debt $12,675 Pittsburgh Prof. Cleaning Trade Debt $11,758 Service WEIRTON STEEL: Debra Davidson Wants to Pursue Claim --------------------------------------------------- Kevin M. Pearl, Esq., at Frankovitch Anetakis Colantonio & Simon, in Weirton, West Virginia, relates that on November 4, 2004, Debra Davidson was passenger in a 1996 Mercury Sable operated by Tina L. Spano traveling north on West Virginia Route 2 in Weirton, Brooke County, West Virginia. Ricky D. Thomas, an employee of Weirton Steel Corporation acting within the scope of his employment, was the operator of a 1997 Ford F-250 also traveling north on West Virginia Route 2 in Weirton, Brooke County. When Ms. Davidson's vehicle came to a stop to make a left turn onto Elmer Avenue from West Virginia Route 2, Mr. Thomas failed to slow his vehicle or bring it to a stop, causing it strike the rear of Ms Davidson's vehicle with great force. As a direct result of Mr. Thomas' negligent, careless, and reckless conduct, Ms. Davidson: (a) sustained severe and disabling injuries; (b) was forced to seek medical treatment and incur medical expenses; and (c) has and will in the future incur pain and suffering, mental anguish, aggravation, inconvenience, loss of enjoyment of life, loss of ability to function and past and future medical expenses. Ms. Davidson understands that Wausau Insurance Company has issued and delivered to Weirton a policy of insurance wherein Wausau Insurance agrees to pay all sums, which Weirton becomes liable to pay should damages be imposed on it by law for injuries sustained by any person injured in a motor vehicle accident in a motor vehicle operated by Weirton's employees. Mr. Pearl notes that the Wausau Policy was in effect on November 4, 2002, the day of the accident. The policy also provides that Weirton's insolvency or bankruptcy will not release Wausau Insurance from the payment of damages for injuries sustained during the term or within the coverage of the policies. However, the automatic stay resulting from Weirton's Chapter 11 petition prevents Ms. Davidson from pursuing her rightful claim. Accordingly, Ms. Davidson asks the United States Bankruptcy Court for the Northern District of West Virginia to modify the automatic stay afforded by Section 362 of the Bankruptcy Code so as to permit her to pursue a claim against Weirton. Mr. Pearl relates that in the event Ms. Davidson is permitted to pursue her claim, any claim she will file against Weirton will be defended by Wausau Insurance's counsel and the defense of that lawsuit will be at no expense to Weirton. Furthermore, the continuation of the lawsuit will not hinder, burden, delay or be inconsistent with Weirton's Chapter 11 proceedings. 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's confirmed Plan of Liquidation became effective on Sept. 8, 2004. (Weirton Bankruptcy News, Issue No. 37; Bankruptcy Creditors' Service, Inc., 215/945-7000) WORLDCOM INC: Disputes HickoryTech's $1.2 Million Claim ------------------------------------------------------- HickoryTech Corporation (Nasdaq: HTCO) reported that its claims against MCI/WorldCom, Inc., for $1.2 million in receivables, owed to HickoryTech at the time of WorldCom's 2002 bankruptcy, are being contested by WorldCom. MCI/WorldCom Inc. contested HickoryTech Corporation's (Nasdaq: HTCO) $1.2 million claim, filed against WorldCom at the time of its bankruptcy in 2002. The receivables represented network access fees incurred by WorldCom in 2002 for its use of HickoryTech's telephone network. HickoryTech wrote off $750,000 of these receivables in 2002. HickoryTech's president and CEO John Duffy said, "This bankruptcy occurred in 2002. Now in 2004, WorldCom is objecting to the $1.2 million in receivables. We understand that many telephone companies are receiving the same disappointing news; HickoryTech is not being singled out. However, we still have a potential exposure of approximately $500,000. At this time it is too early to predict an outcome or the potential impact on our fourth- quarter financial results. We are pursuing legal remedies to collect as much of the $1.2 million in valid receivables as possible." About HickoryTech HickoryTech Corporation is a diversified communications company headquartered in Mankato, Minn., with more than 400 employees in Minnesota and Iowa. In its 107th year of operation, HickoryTech offers a full array of telecommunications products and services to business and residential customers including: local voice, long distance, Internet, broadband services and IP networking; IP Telephony, call center management and data network solutions; and telecom and carrier access billing solutions. To learn more about HickoryTech Corporation, visit the company's Web site at http://www.HickoryTech.com/ Headquartered in Clinton, Mississippi, WorldCom, Inc., now known as MCI -- http://www.worldcom.com/-- is a pre-eminent global communications provider, operating in more than 65 countries and maintaining one of the most expansive IP networks in the world. The Company filed for chapter 11 protection on July 21, 2002 (Bankr. S.D.N.Y. Case No. 02-13532). On March 31, 2002, the Debtors listed $103,803,000,000 in assets and $45,897,000,000 in debts. The Bankruptcy Court confirmed WorldCom's Plan on October 31, 2003, and on April 20, 2004, the company formally emerged from U.S. Chapter 11 protection as MCI, Inc. WYNN LAS VEGAS: Launches Sr. Debt Offering & Consent Solicitation ----------------------------------------------------------------- Wynn Las Vegas, LLC, a subsidiary of Wynn Resorts Limited (Nasdaq:WYNN), commenced a cash tender offer for any and all of the $247,580,000 aggregate principal amount of outstanding 12.0% Second Mortgage Notes due 2010 issued by Wynn Las Vegas, LLC and Wynn Las Vegas Capital Corp. The tender offer is scheduled to expire at 12:01 a.m., New York City time, on Dec. 11, 2004, unless extended or earlier terminated. In conjunction with the tender offer, Wynn Las Vegas, LLC, is also soliciting consents to adopt certain amendments to the indenture and related documents pursuant to which the notes were issued. The solicitation of consents is scheduled to end at 9:00 a.m., New York City time, on November 22, 2004, unless extended or earlier terminated. Holders will be entitled to withdraw their tenders and revoke their consents pursuant to the tender offer before 9:00 a.m., New York City time, on November 22, 2004. The proposed indenture amendments would, among other things: -- eliminate substantially all of the restrictive covenants; -- eliminate most events of default (other than for failure to make payments of interest or principal); -- release certain guarantees; and -- provide for the release of certain collateral. Subject to certain conditions, holders of notes who tender their notes (and thereby consent to the proposed amendments) on or before November 22, 2004, will receive a consent payment and the tender offer consideration, which includes a premium. Holders who tender after 9:00 a.m. on November 22, 2004, and before December 11, 2004, will receive only the tender offer consideration, which includes a premium, but no consent payment. Wynn Las Vegas, LLC, is making the tender offer and consent solicitation as part of a refinancing of its existing debt. Wynn Las Vegas, LLC, intends to finance the tender offer and consent solicitation with a portion of approximately $2.2 billion of new debt financing it intends to arrange. The tender offer and consent solicitation are subject to the valid tender of, and delivery of consents with respect to, a majority of the outstanding principal amount of notes (excluding notes held by affiliates of the issuers), arranging new debt financing and other customary general conditions. Deutsche Bank Securities, Inc., and Banc of America Securities, LLC, are acting as the exclusive dealer managers and solicitation agents. MacKenzie Partners, Inc., is acting as the information agent. Wells Fargo Bank, National Association is acting as depositary in connection with the tender offer and consent solicitation. Copies of the Offer to Purchase and Consent Solicitation Statement, Letter of Transmittal and Consent, and other related documents may be obtained from the information agent at: MacKenzie Partners, Inc. 105 Madison Avenue, New York, New York 10016 800-322-2885 (toll free) 212-929-5500 (collect) Additional information concerning the terms of each Offer and Consent Solicitation may be obtained by contacting Deutsche Bank Securities, Inc. 800-553-2826 (U.S. toll free) 212-250-4270 (collect) -- or -- Banc of America Securities, LLC 888-292-0070 (U.S. toll free) 704-388-4813 (collect) Wynn Las Vegas, LLC is constructing, and will own and operate, the Wynn Las Vegas hotel and casino resort. The new casino resort has been designed to be the pre-eminent luxury hotel and destination casino resort on the Las Vegas Strip. Wynn Las Vegas is the concept of Stephen A. Wynn, the Chairman of the Board and Chief Executive Officer of Wynn Resorts, Limited. Wynn Las Vegas is expected to open to the public in April 2005. * Boston Consulting Welcomes John Rose to New York Office --------------------------------------------------------- John S. Rose, a leading media and entertainment consultant, has joined The Boston Consulting Group as a director to help build the firm's media and technology practice. Mr. Rose will be based in BCG's New York office. Mr. Rose was executive vice president at EMI Group PLC for the past three years, responsible for strategy and corporate development, new media, industry and government affairs, and global asset management. Before EMI, Mr. Rose spent almost 20 years with McKinsey & Company, where he was a director and co-led the global media and entertainment practice. At EMI, Mr. Rose was responsible for developing and overseeing the firm's digital business, crafting its anti-piracy efforts, leading its cost restructuring, and heading up board-level initiatives to identify and evaluate strategic options for the group. He also sits on numerous music-industry and not-for-profit boards such as those of WNYC, Young Audiences, and the IFPI. About The Boston Consulting Group The Boston Consulting Group is a management consulting firm. It was founded in 1963 and now has 60 offices in 37 countries. Its primary focus is corporate and business strategy, including operational and systems strategy. It has served companies in all major industries and developed countries and also has offices and clients in several developing countries. Please visit its Web site at http://www.bcg.com/which contains a subscription service for its publications. * Stroock & Stroock Names Four New Partners ------------------------------------------- Stroock & Stroock & Lavan, LLP, a national law firm with offices in New York, Los Angeles and Miami, named four new partners, effective Jan. 1, 2005. "Our new partners have not only demonstrated commitment to our clients, but have shown themselves to be market leading practitioners," said Thomas E. Heftler, Stroock Co-Managing Partner. "We are proud of their achievements, and we look forward to a long partnership." The new partners and their practices are: -- Ian G. DiBernardo (Intellectual Property, New York) Mr. DiBernardo, 34, represents both emerging and established technology companies in essentially all aspects of intellectual property law, including complex corporate transactions, patent prosecution, patent infringement and validity opinions and litigation. He has represented clients in a variety of industries, including computer software and systems, financial services, life sciences and bioinformatics and Internet and e-commerce services. His transactional practice includes mergers and acquisitions, financings, joint ventures and general licensing, outsourcing and professional services agreements. -- Brett Lawrence (Financial Restructuring, New York) Mr. Lawrence, 38, has represented financial investors, bondholder committees, official creditor committees and secured creditors. He regularly counsels clients involved in bankruptcies, restructurings, recapitalizations and related securities transactions, including both public and private companies that are engaged in restructuring, divestiture or filing for bankruptcy. -- Todd E. Lenson (Corporate, New York) Mr. Lenson, 33, focuses on corporate transactional matters, including mergers and acquisitions, public and private securities offerings, private equity and venture capital financings and general corporate matters. Mr. Lenson has represented clients in a wide variety of industries, including REITs, energy companies, private equity firms and other specialty finance companies. He has significant experience with corporate governance matters, including the Sarbanes-Oxley Act. -- Stephen J. Newman (Litigation, Los Angeles) Mr. Newman, 34, has extensive experience in the defense of class actions and "quasi-class" actions brought under California's Unfair Competition Law (Business and Professions Code Section 17200) and has represented a broad range of companies in such cases, including banks, insurers, retailers and manufacturers. In addition to class action and unfair competition defense, he has handled litigation involving a variety of other issues, including securities fraud, accountants' malpractice, actuaries' malpractice and insurance. Stroock & Stroock & Lavan, LLP, established in 1876, is a law firm providing transactional and litigation guidance to leading multinational corporations, investment banks, and venture capital firms in the U.S. and abroad. Stroock's emphasis on client service and innovation has made it one of the nation's leading law firms for 125 years. Stroock's practice areas include corporate finance, legal services to financial institutions, energy, financial restructuring, intellectual property, litigation and real estate. For more information, please visit Stroock's Web site at http://www.stroock.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 ***