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/raid1/www/Hosts/bankrupt/TCR_Public/041207.mbx T R O U B L E D C O M P A N Y R E P O R T E R Tuesday, December 7, 2004, Vol. 8, No. 269 Headlines 220 MADISON INC: Case Summary & 19 Largest Unsecured Creditors 24 HOUR FITNESS: Moody's Rates Proposed $130 Million Term Loan B1 A & M INTERNATIONAL: Case Summary & 20 Largest Unsecured Creditors ADVANCED MICRO: Fitch Lifts Senior Unsecured Debt Rating to B AES CORP: Moody's Reviewing Low-B & Junk Ratings & May Upgrade AIRNET COMMS: Board Authorizes 1-for-10 Reverse Stock Split AMERICAN SKIING: S&P Withdraws Junk Rating After Refinancing AMERICAN TOWER: Improved Cash Flow Cues Moody's to Lift Ratings AMERISOURCEBERGEN: S&P Raises Senior Unsecured Debt Rating to BB+ ANDREW CORP: Nasdaq to Delist 7.75% Convertible Preferred Stock APPLIED EXTRUSION: Wants Confirmation Hearing Set on Dec. 26 ARCH COAL: S&P Puts B+ Rating on $1 Billion New Debt Securities ARDENT HEALTH: S&P Places Single-B Ratings on CreditWatch Negative ASSET BACKED: Fitch Puts 'BB+' Rating on $9.66M Class M7 Certs. ASTROPOWER, INC.: Judge Walrath Confirms Chapter 11 Plan BISTRO 2000-7: Moody's Withdraws Ratings on Four Tranches BOMBARDIER INC: Fitch Pares Senior Unsecured Debt Ratings to 'BB' BPL ACQUISITION: Moody's Rates Planned Sr. Sec. Term B Loan Ba3 BURLINGTON: Court Extends Claims Objection Deadline to Mar. 31 CAJUN FUNDING: Moody's Puts B3 Rating to Planned $155M Sr. Notes CASUAL MALE: Longacre and TeleCheck Told to Battle in State Court CATHOLIC CHURCH: Files for Chapter 11 Protection in E.D. Wash. CATHOLIC CHURCH: Spokane Case Summary & 19 Unsecured Creditors CATHOLIC: Portland Wants Tort Claims Bar Date Moved to April 29 CENTURY ALUMINUM: Moody's Puts B1 Rating on $175M Sr. Unsec. Notes CHESAPEAKE CORP: Majority of Noteholders Agree to Amend Debentures CHI-CHI'S: Selling Margaritaville Name to Jimmy Buffett for $100K CMS ENERGY: Fitch Upgrades Ratings & Revises Outlook to Positive COLUMBUS MCKINNON: S&P Changes Outlook on B Rating to Stable COMMUNITY HEALTH: Launches $250 Million Private Debt Offering COMMUNITY HEALTH: Fitch Rates Proposed $250M Senior Sub. Notes B+ COMMUNITY HEALTH: S&P Rates Proposed $250M Senior Sub. Notes 'B' COMPOSITE SOLUTIONS: Bankruptcy Court Dismisses Chapter 7 Petition CROWN CASTLE: Prices Cash Tender Offer for Convertible Sr. Notes CROWN PACIFIC: Plan Projects 44.5% Recovery by Unsecured Creditors DAN RIVER: Judge Drake Approves Debtors' Disclosure Statement DIGITAL LIGHTWAVE: Holding Annual Stockholders' Mtg. on Jan. 14 DII INDUSTRIES: Bankr. Court Approves Seaton Settlement Agreement DIVERSIFIED ASSET: Moody's Junks $27M Class B Sr. Sub. Sec. Notes DOLE FOOD: Fitch Assigns Low-B Ratings and Says Outlook is Stable EL CONEJO BUS LINES: Case Summary & 20 Largest Unsecured Creditors FAIRFAX FINANCIAL: Sells $200 Million of New 7-3/4% Senior Notes FAIRFAX FINANCIAL: Investors Tendered $112 Million of Notes FIRST HORIZON: Fitch Affirms Low-B Ratings on Four Issue Classes FOOTSTAR, INC.: One Liberty Sells Lease-Related Claims FRANKLIN CAPITAL: Receives $3.8 Million from Private Placement GADZOOKS INC: Hires Retail Veteran Monty Standifer as New CFO GMAC COMMERCIAL: Moody's Junks $26.6 Mil. Class F Cert. Rating HARVEST NATURAL: S&P Withdraws Single-B Ratings After Redemption HEARME: To Make Final Cash Distribution to Stockholders Next Week HILB ROGAL: S&P Revises Outlook on 'BB' Rating to Negative HOELTER TECH: To File for Chapter 11 Protection Due to Losses HUDBAY MINING: Moody's Rates Proposed $200M Secured Notes at B3 HUFFY CORP: Look for Bankruptcy Schedules on Dec. 20 HUFFY CORP: Committee Taps McDonald Hopkins as Counsel HUNTSMAN INTL: S&P Junks Proposed $350M Senior Subordinated Notes ICARUS HOLDING: 8th Cir. Looks to Georgia Supreme Court for Help IMPATH INC: To Pay Unsecured Claims Now with 6-5/8% Interest INNOPHOS INC: Moody's Revises Outlook on Low-B Ratings to Negative INTERSTATE BAKERIES: Closing 85-Year Old Bakery in South Carolina INTERSTATE BAKERIES: Creditors Want to Retain FTI as Advisors JILLIAN'S ENT: Judge Stosberg Confirms Joint Liquidating Plan KB TOYS: Exclusive Plan-Filing Period Extended to Jan. 14 KB TOYS: Angelo Gordon May Provide Exit Financing Pact KEYSTONE CONSOLIDATED: Wants Plan Solicitation Period Extended LANDRY'S RESTAURANTS: Moody's Rates Planned $850M Debts Low-B LEVEL 3: S&P Lowers Rating to SD Following Tender Offer Completion LNR PROPERTY: S&P Puts B+ Rating on $1.7B Senior Secured Facility MAAX CORPORATION: S&P Junks Proposed Senior Discount Notes MANAGED INFORMATION: Case Summary & 24 Largest Unsecured Creditors MCI INC: Agrees to $13 Million Management Buyout of Proceda MERRIMAC PAPER: ESOP Stock Redemption Claims Remain Subordinated MILL SERVICES: Moody's Gives Planned $360M New Loans Low-B Ratings ON SEMICONDUCTOR: Moody's Affirms Low-B & Junk Ratings PINNACLE ENTERTAINMENT: Closes $100 Million Sr. Sub. Debt Offering PITTSBURGH CITY: Fitch Puts BB Rating on Rating Watch Positive PRIMEDEX HEALTH: James Goldfarb Resigns from Board of Directors PURVI: Wants to Hire Lefkovitz & Lefkovitz as Bankruptcy Counsel RCN CORP: Wants Court to Approve City of Chicago Release Pact RECYCLED PAPERBOARD: Wants to Hire Greenbaum as Bankruptcy Counsel RECYCLED PAPERBOARD: Wants to Hire Bederson Company as Accountants ROBINS CONTRACTING: Case Summary & 20 Largest Unsecured Creditors SBA COMMUNICATIONS: S&P Junks $250 Million Senior Debt Ratings SCHLOTZSKY'S INC.: Committee Attacks NS Assoc.'s Secured Claims SCOTT ACQUISITION: Has Until Jan. 10 to Make Lease Decisions SCOTT ACQUISITION: Gets Okay to Hire Ordinary Course Professionals SOLA INT'L: Inks Merger Pact with Carl Zeiss & EQT III SOUTHEAST AIRLINES: Suspends Operations & Cancels All Flights ST. PAUL PORT: S&P's Rating Tumbles to D Following Payment Failure SUPERIOR PLUS: S&P Revises Outlook on Ratings to Negative TERRA INDUSTRIES: Workman's $10 Mil. Judgment Withstands Appeal TIRO INDUSTRIES: Gets Access to GE's Cash Collateral VENTAS INC: Declares $0.325 Per Share Regular Quarterly Dividend VOUGHT AIRCRAFT: Moody's Rates Planned $650M Sr. Sec. Debt Ba3 WERNER HOLDING: Liquidity Concerns Prompt S&P to Junk Ratings WESTPOINT STEVENS: Has Dec. 10 to Reject Myrtle Property Lease * Number of Bankruptcy Filings Down in Fiscal Year 2004 * Loan Pricing & Deutsche Bank Team Up to Offer CDO Asset Pricing * Large Companies with Insolvent Balance Sheets ********* 220 MADISON INC: Case Summary & 19 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: 220 Madison, Inc. 601 Ashley Drive, Suite 1200 Tampa, Florida 33602 Bankruptcy Case No.: 04-23290 Chapter 11 Petition Date: December 3, 2004 Court: Middle District of Florida (Tampa) Debtor's Counsel: Lara Roeske Fernandez, Esq. Trenam, Kemker, Scharf, Barkin, Frye, O'Neill & Mullis, P.A. P.O. Box 1102 Tampa, FL 33601 Tel: 813-223-7474 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 19 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Intervest Bank $217,340 625 Court Street Clearwater, FL 33756 601 Ashley, Inc. $174,466 601 Ashley Drive, Ste. 1200 Tampa, FL 33602 Chesapeake Atlantic Properties $96,250 601 N. Ashley Drive, Ste. 1200 Tampa, FL 33602 TECO $50,481 State of Florida, Dept. of Revenue $45,863 Commercial Property Services $34,853 City of Tampa $23,210 Abell Garcia Architect $19,393 Asbestos Certified Technicians, Inc. $9,295 Levin & McMillan $6,978 ThyssenKrupp $6,000 Lamn, Krielow, Dytrych & Co. $4,676 Holland & Knight LLP $4,236 Aquasure, Inc. $3,244 Insect I.Q., Inc. $2,095 National Elevator Inspections Services $1,597 Granville Scott, Inc. $800 Verizon $704 The Plant Manager $626 24 HOUR FITNESS: Moody's Rates Proposed $130 Million Term Loan B1 ----------------------------------------------------------------- Moody's Investors Service assigned a B1 rating to the proposed $130 million tack-on tranche B term loan facility of 24 Hour Fitness Worldwide, Inc., and affirmed existing credit ratings. The ratings outlook has been changed from stable to positive reflecting consistent free cash flow generation, growing revenues and improving credit metrics. The ratings also reflect the company's significant lease adjusted leverage, anticipated increases in growth capital expenditures and growing competition in the fitness industry. This is a summary of the ratings: * $130 million Tack-on Tranche B Term Loan Facility due 2009, assigned B1. * $75 million Senior Secured Revolving Credit Facility, due 2008, B1; * $273 million Senior Secured Term Loan, due 2009, B1; * Senior Implied, B1; * Senior Unsecured Issuer Rating, B3. The ratings outlook is positive. Proceeds from the proposed $130 million tack-on tranche B term loan facility and approximately $66 million of cash on hand will be used to repay all of the company's senior and junior subordinated notes including accrued interest and related transaction fees and expenses. On a pro forma basis for the refinancing, cash interest and total interest expense are expected to be reduced by $9.3 million and $23.6 million, respectively. The ratings are constrained by the company's high lease adjusted debt levels, low levels of tangible assets and projected increases in capital expenditures needed to fund the company's growth strategy. Capital expenditures are expected to increase substantially due to the company's plan to aggressively open new fitness clubs over the next few years. Capital expenditures are expected to increase from $57 million in 2003 to about $76 million and $91 million in 2004 and 2005, respectively. The company's rent expense was $155 million in 2003 and will continue to increase as the company expands its club base. The ratings benefit from strong free cash flows generated from a base of over 300 fitness clubs. 24 Hour Fitness is the second largest fitness club operator in the United States and its cash flows should continue to benefit from the maturation of the significant number of fitness clubs opened in the last few years. Demographic changes and the growing awareness of the importance of physical fitness should increase total memberships in fitness clubs. The company's focus on increasing its revenues from personal training and nutritional products should also benefit operating margins and cash flows. However the company faces a number of challenges. The fitness club industry is highly fragmented and the number of fitness club competitors continues to increase. Membership attrition rates in the industry have been high and operating costs continue to rise significantly. The positive ratings outlook reflects the expectation that 24 Hour Fitness will continue to generate substantial free cash flow after capital expenditures which will be utilized to repay borrowings under the term loan. The ratings would likely be upgraded if the company is successful in expanding its revenue base and improving its operating margins and leverage ratios. The ratings or outlook could be pressured if the company is unable to maintain free cash flow levels or the company increases debt levels to finance a significant acquisition or special dividend. Free cash flow to debt for the year ended 2004, before and after the adjustment for redeemable preferred stock, is expected to be about 13% and 11%, respectively. Total adjusted debt, as adjusted to include the redeemable preferred stock and the capitalization of operating leases, to EBITDA before rent expense is expected to be about 5 times in 2004. EBITDA less capital expenditures coverage of interest is expected to be about 1.5 times in 2004 and over 2.5 times in 2005. The senior secured credit facility is secured by substantially all of the tangible and intangible assets of the company and its direct and indirect domestic subsidiaries and 65% of the stock of its first tier foreign subsidiaries. The term loan requires amortization of 1% per annum through June 2008, with the remainder amortizing in equal quarterly installments during the final four quarters of the facility. A mandatory prepayment of 50% to 75% of excess cash flow (as defined) will be required depending on the leverage ratio of the company. The issuer rating has been notched two levels below the senior implied rating reflecting the structural subordination to operating company liabilities. Headquartered in San Ramon, California, 24 Hour Fitness Worldwide, Inc. is the second largest fitness club operator with 321 fitness clubs in the Unites States and 13 in Asia. The company has approximately 2.8 million members. Revenues for 2003 were approximately $980 million. A & M INTERNATIONAL: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------------ Debtor: A & M International, Inc. 3229 East Prospect Street Indianapolis, Indiana 46203 Bankruptcy Case No.: 04-22098 Type of Business: The Debtor is engaged in the business of industrial painting. Chapter 11 Petition Date: December 2, 2004 Court: Southern District of Indiana (Indianapolis) Judge: James Coachys Debtor's Counsel: Jeffrey M. Hester, Esq. William J. Tucker & Associates 429 North Pennsylvania Street, Suite 400 Indianapolis, IN 46204 Tel: 317-833-3030 Fax: 317-833-3031 Estimated Assets: $100,000 to $500,000 Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ International Painters and Suit for unpaid $164,736 Allied Trades Industry contributions Pension Fund 1750 New York Ave., N.W. Suite 501 Washington, DC 20006 International Union of Agreed Judgment $81,808 Painters & Allied Trades Health and Welfare Fund P.O. Box 50440 Indianapolis, IN 46250 NES Rentals Business Trade Debt $27,005 P.O. Box 8500 Philadelphia, PA 19178 Porter Paint Business Trade Debt $22,029 Slattery & Holman Accounting services $13,925 August Mack Environmental, Business Trade Debt $10,730 Inc. TNEMEC Company, Inc. Business Trade Debt $9,292 Marco Business Trade Debt $8,857 American Express Credit card $6,983 purchases IDS Stocking Distributor Business Trade Debt $6,379 Indiana Dept. of Revenue Withholding tax $6,137 obligation Quality Rentals Business Trade Debt $5,087 Allied Equipment Business Trade Debt $4,982 Rainbow 3, Inc. Business Trade Debt $4,978 Advanta Bank Corp. Credit card $4,852 purchases Republic Waste Services Trash removal $4,678 US Minerals Business Trade Debt $4,565 Pillar Group Insurance services $4,000 Underwood Machinery Business Trade Debt $3,262 Transport, Inc. Phoenyx Solutions Business Trade Debt $3,221 ADVANCED MICRO: Fitch Lifts Senior Unsecured Debt Rating to B ------------------------------------------------------------- Fitch Ratings upgraded Advanced Micro Devices, Inc.'s senior unsecured debt to 'B' from 'B-', while the undrawn $100 million senior secured US revolving credit facility has been upgraded to 'BB-' from 'B' due to the secured position and collateral package. The Rating Outlook is Stable. Fitch's action affects approximately $1.4 billion of debt. The positive rating actions reflect AMD's improved product portfolio, which has enabled the company to increase share in the microprocessor market and maintain the leading position in flash memory, and increased gross margins, driven primarily by higher volume and product mix. Additionally, intermediate term liquidity has been modestly improved due mostly to recent refinancing activity, which extended 2005 and 2006 maturities to 2012 and increased the percentage of unsecured debt in the capital structure. However, the ratings continue to reflect AMD's significant ongoing capital spending and research and development requirements, improving but minimal share in the microprocessor market with limited pricing power, historic negative free cash flow and operating losses, which have improved but will remain pressured, expectations for continued high debt levels, and exposure to the volatile cash flows and cyclical demand of the semiconductor market. The Stable Rating Outlook considers AMD's positive operating and financial trends over the past two years, which have helped fund a portion of capital expenditures. In the third quarter ended Sept. 26, 2004, AMD's gross margins expanded for the ninth consecutive quarter, improving to 40.5% from 34.3% for the prior year and 37.9% for the second quarter ended June 27, 2004, despite a 20% sequential decline in sales for the flash memory segment, which was offset by a more than 20% increase in its microprocessors segment. While recognizing AMD's encouraging operating performance, Fitch considers the historic cyclicality of the semiconductor industry, which is expected to be essentially flat in 2005 and could decline as new and more efficient capacity becomes available during the year resulting in lower utilization rates and more aggressive pricing. However, the company has improved its cost structure as a result of upgrading process technologies and past restructurings and has also achieved a higher sales mix, particularly for processors addressing the enterprise market, which may mitigate some pricing pressures. Nonetheless, Fitch believes that AMD remains susceptible to experiencing significant operating losses due to its relatively low operating margins and potential pricing actions from competitors. Fitch remains concerned about AMD's lack of free cash flow as the company continues to make significant capital investments for advanced technology manufacturing facilities -- fabs -- and ongoing R&D to support its product technology. However, AMD's need to build advanced technology manufacturing capabilities limits its ability to scale back capital spending should the market rapidly deteriorate or the company's financial condition worsen. Nonetheless, AMD has secured commitments for approximately $1.7 billion of financing for its new 300mm fab, which will cost approximately $2.5 billion (the majority of the funding gap is expected to be funded with free cash flow) and is anticipated to be ready for full-scale production in 2006. In addition, AMD has recently taken steps to reduce incremental expenditures and share risk by renewing its R&D partnership agreement with IBM and signing an outsourcing deal with the world's third largest foundry, Chartered Semiconductor, to gain access to additional advanced technology manufacturing capacity. As of Sept. 26, 2004, AMD's liquidity was sufficient to meet near-term obligations and is supported by cash and cash equivalents of approximately $1.2 billion, the aforementioned undrawn $100 million secured revolving credit facility expiring July 2007, and an undrawn Euro 700 million secured term loan facility expiring 2011 related to its next generation Dresden facility, which AMD expects to draw down in 2006. The company has used more than $1.8 billion of free cash flow since 2000, which is expected to continue to be a drain on liquidity due primarily to higher capital expenditures and R&D expenses. Nonetheless, recent improvements in profitability have resulted in free cash flow usage of only $20 million for the latest-twelve-months -- LTM -- ended September 26, 2004. Total debt was $2 billion at quarter-end and consists of $600 million 7-3/4% senior unsecured notes due 2012, $500 million 4-3/4% convertible senior debentures due 2022 but putable in 2009, and $403 million 4-1/2% convertible senior notes due 2007, which AMD has subsequently reduced to approximately $200 million through piecemeal exchange-for-equity offers. These notes may be converted by the holders at any time and are currently in-the- money, potentially resulting in further debt reduction for AMD. The remaining approximately $520 million of debt consists of various secured loans and capital leases. AMD's debt and capital lease obligations are less than $200 million per year through 2006, approximately $239 million in 2007 (assuming no conversion of the remaining 4-1/2% senior notes), and $1.1 billion thereafter (excluding the Euro 700 million term loan facility). AES CORP: Moody's Reviewing Low-B & Junk Ratings & May Upgrade -------------------------------------------------------------- Moody's Investors Service placed the ratings of The AES Corporation (AES, B1 Senior Implied) under review for possible upgrade. Ratings placed under review are: * senior secured credit facilities and first priority senior secured notes, rated Ba3; * second priority senior secured notes and Senior Implied rating, rated B1; * senior unsecured notes, rated B2; * senior subordinated notes and junior subordinated notes, rated B3; and * AES Trust Preferred Securities, rated Caa2. Separately Moody's affirmed the company's Speculative Grade Liquidity rating of SGL-2. The rating action reflects continued progress in reducing parent debt and improvement in cash flow generation. Furthermore, the rating action reflects the successful restructuring of AES's Brazilian businesses, the improving regulatory environment in Brazil, and the company's good liquidity profile. AES recently announced it has called for redemption $331 million of parent debt, thereby achieving its 2004 goal of paying down $800 million of recourse debt. Additionally, management has targeted $600 million of debt reduction for late 2005/early 2006. Moody's expects that AES's parent company debt will total approximately $5.1 billion at year-end 2004. AES's consolidated funds flow from operating activities for the nine months ended September 30, 2004, improved considerably to $1.4 billion, from approximately $780 million the prior comparable period, and to $1.7 billion on a trailing twelve month basis due to strong operating performance in all business lines and reduced consolidated interest expense. On a parent only basis, adjusted operating cash flow, measured by subsidiary distributions less parent overhead and interest expense, is expected to improve to approximately 8% of year-end projected parent company debt, and is expected to cover interest expense approximately 2 times. Moody's expects AES's year-end liquidity, which includes unrestricted cash balances and availability under its multi-year revolver, to exceed $500 million. Its nearest debt maturity is $142 million of convertible junior subordinated debentures due August 2005. Moody's review will focus on the prospects for continued improvement in cash flow generation and the anticipated pace for debt reduction beyond 2005. The review will also consider the degree to which subsidiary distributions could be increased and the company's expectations relating to investment activity. While we expect AES to continue to be opportunistic in seeking new investments, we continue to anticipate that any new investments would be funded in a manner consistent with the maintenance of an improving credit profile. The AES Corporation is a global power company with generation and distribution assets in Europe, Asia, Latin America, Africa, and the United States. AIRNET COMMS: Board Authorizes 1-for-10 Reverse Stock Split ----------------------------------------------------------- AirNet Communications Corporation's (NASDAQ:ANCC) Board of Directors has approved the implementation of a reverse stock split of AirNet's common stock based upon a ratio of one-for-ten. At the annual meeting of stockholders held September 28, 2004, the stockholders of AirNet voted to grant the Board of Directors the authority to effect the reverse stock split of AirNet's common stock. The record date for the reverse stock split is Wednesday, Dec. 8, 2004 and the split is effective as of the opening of the Nasdaq National Market on Thursday, Dec. 9, 2004. On a pre-split basis, AirNet has 96,037,229 shares of common stock outstanding as of December 2, 2004. The reverse stock split will reduce the number of shares of common stock outstanding to approximately 9,603,722. The reverse stock split affects all AirNet Communications common stock, stock options, warrants and senior convertible debt outstanding immediately prior to the record date of the reverse stock split. Instead of issuing any fractional shares as a result of the split, AirNet will make a cash payment equal to the market value of the fraction to which the stockholder otherwise would be entitled. Stockholders as of the record date will receive instructions for exchanging pre-split old common stock certificates for post-split new common stock certificates from AirNet's transfer agent, Continental Stock Transfer & Trust Company. For more information regarding the reverse stock split, stockholders are urged to review AirNet's Proxy Statement dated September 28, 2004. In order to indicate to the investment community the effect of the reverse split, the Company's ticker symbol is expected to change to "ANCCD" for twenty trading days after post-split trading begins. AirNet's ticker symbol will revert to its original "ANCC" twenty trading days after post-split trading begins. About AirNet AirNet Communications Corporation is a leader in wireless base stations and other telecommunications equipment that allow service operators to cost-effectively and simultaneously offer high-speed wireless data and voice services to mobile subscribers. AirNet's patented broadband, software-defined AdaptaCell(R) SuperCapacity(TM) adaptive array base station solution provides a high-capacity base station with a software upgrade path to high- speed data. The Company's AirSite(R) Backhaul Free(TM) base station carries wireless voice and data signals back to the wireline network, eliminating the need for a physical backhaul link, thus reducing operating costs. The Company's RapidCell(TM) base station provides government and military communications users with up to 96 voice and data channels in a compact, rapidly deployable design capable of processing multiple GSM protocols simultaneously. AirNet has 69 patents issued or filed and has received the coveted World Award for Best Technical Innovation from the GSM Association, representing over 400 operators around the world. More information about AirNet may be obtained by visiting the AirNet Web site at http://www.airnetcom.com/ * * * As reported in the Troubled Company Reporter on March 10, 2004, Deloitte & Touche LLP expressed doubt about AirNet Communications Corporation's ability to continue as a going concern following a review of the company's financial statements for the year ended December 31, 2003. Deloitte expressed similar doubts in fiscal years 2001 and 2002. AMERICAN SKIING: S&P Withdraws Junk Rating After Refinancing ------------------------------------------------------------ Standard & Poor's Ratings Services withdrew its ratings including the 'CCC' corporate credit rating on American Skiing Co. following the completion of the company's refinancing, which replaces its existing resort credit facility and its 12% senior subordinated notes with a new $230 million senior secured credit facility. The new facility consists of a $125 million first lien loan (including a $40 million revolving credit line) due November 2010 and a $105 million second lien term loan due 2011. The company also exchanged its 10.5% repriced convertible exchangeable preferred stock for junior subordinated debt due 2012, and it extended the maturity of its existing $18 million in junior subordinated notes to 2012. AMERICAN TOWER: Improved Cash Flow Cues Moody's to Lift Ratings --------------------------------------------------------------- Moody's Investors Service upgraded the ratings of American Tower Corporation and its subsidiaries. The upgrade is based upon the improved free cash flow profile of the company since Moody's raised the rating outlook to positive in April of this year. The affected ratings are: -- American Tower Corporation * Senior Implied -- B1 (upgraded from B2) * Speculative Grade Liquidity -- SGL-1 (upgraded from SGL-2) * 7.5% Senior Notes due 2012 -- B3 (upgraded from Caa1) * 9.375% Senior Notes due 2009 -- B3 (upgraded from Caa1) * 5.0% Convertible Notes due 2010 -- B3 (upgraded from Caa1) * 7.125% Senior Notes due 2012 -- B3 (upgraded from Caa1) * $200 million 7.125% Senior Notes due 2012 -- B3 (assigned) -- American Towers, Inc. (fka American Tower Escrow Corporation) * 12.25% Senior Subordinated Discount Notes due 2008 -- B2 (upgraded from B3) * 7.25% Senior Subordinated Notes due 2011 -- B2 (upgraded from B3) -- American Tower, LP and American Towers, Inc. (co-borrowers) * $400 million senior secured revolving credit facility expiring 2011 -- Ba3 (upgraded from B1) * $300 million senior secured term loan A maturing 2011 -- Ba3 (upgraded from B1) * $400 million senior secured term loan B maturing 2011 -- Ba3 (upgraded from B1) The B1 senior implied rating reflects the improved free cash flow profile of the company as revenues grow, operating expenses stay relatively flat, and interest expense, capital expenditures and tower acquisition spending decline. For the LTM Sept-04, American Tower generated $225.5 million in cash from operations and spent only $44.3 million on capital expenditures, yielding free cash flow of $181.2 million (before acquisition spending), or 5.6% of total balance sheet debt, supportive of a B1 rating. To date, not all of that free cash flow has been used to reduce debt, as the company spent $57.9 million on acquisitions (primarily in Mexico and Brazil), partially offset by divestiture proceeds, in this period. Going forward, Moody's expects such acquisition spending to decline, and that free cash flow will be used to pay down debt. Consequently, Moody's is retaining the positive ratings outlook on the American Tower ratings as we expect free cash flow to increase and debt balances to be reduced, accelerating the improvement in the ratio of free cash flow to total debt. The ratings are likely to be upgraded as free cash flow approaches 10% of total debt. The ratings would be negatively affected if acquisition and investment spending does not decline, or free cash flow is otherwise materially diverted (such as for dividends or share repurchases) from debt reduction. Longer term, Moody's remains concerned that capital spending may have to increase from current levels as for the first nine months of 2004 capital spending represented less than 20% of depreciation expense for the same period. The Ba3 rating on the senior secured credit facilities of reflects their priority position in the company's capital structure with upstream guarantees from the company's primary operating subsidiaries and strong collateral coverage as the $699 million of outstanding term loans are secured by assets with a net PP&E balance of over $2 billion from over 13,600 wireless towers. The B2 rating on the subordinated unsecured debt at the ATI level reflects the relative ranking of these obligations behind the bank debt, but ahead of the parent company senior unsecured debt. These creditors benefit from guarantees from the company's primary operating subsidiaries, however these guarantees are subordinated to the guarantees provided to the senior secured bank lenders. The B3 rating on the senior unsecured debt at the ultimate parent holding company reflects the subordinated, unguaranteed nature of these obligations as they rank behind all the liabilities of the subsidiaries, including the aforementioned rated debt. Moody's is upgrading American Tower's speculative grade liquidity rating to SGL-1 as the company's liquidity profile is now "very good" in Moody's opinion. While American Tower has used some of its cash, as well as the proceeds from recent debt offering, to repurchase debt, American Tower generates free cash flow in excess of its modest upcoming mandatory amortization requirements (less than $10 million). Further, the company has full access to its undrawn $400 million revolving credit facility as the company has significant cushion to the requirement of the financial covenants in its secured credit facility. Based in Boston, American Tower Corporation is an independent owner and operator of wireless communications and broadcast towers in the U.S., Mexico, and Brazil with LTM revenues of $770 million. AMERISOURCEBERGEN: S&P Raises Senior Unsecured Debt Rating to BB+ ----------------------------------------------------------------- Standard & Poor's Ratings Services raised its rating on AmerisourceBergen Corp.'s senior unsecured debt to 'BB+' from 'BB', equalizing it with the corporate credit rating (BB+/Positive/--), which was affirmed. The senior unsecured debt is no longer considered materially disadvantaged in the capital structure due to the removal of security under the company's new $700 million bank agreement, although the accounts receivable facility is still secured. The bank loan rating was withdrawn, as the new facility is not rated. In connection with the bank refinancing, the company is retiring a $180 million term loan. In addition, the company is calling the $300 million of convertible securities due 2008 for redemption in December 2004. Although the debt redemption moderately strengthens the company's financial profile, industry challenges constrain the ratings at this time. A changing economic model for drug distribution led to substantial drops in operating profit in the most recent quarter (ended September 2004) for AmerisourceBergen, as well as for its two major competitors. AmerisourceBergen, with $49 billion in pharmaceutical distribution revenues (excluding bulk shipments), competes with Cardinal Health Inc. and McKesson Corp., which have comparable U.S. pharmaceutical distribution revenue bases of $36 billion and $40 billion, respectively. Other competitors include regional and local wholesalers and self-distributing drugstore chains. "The ratings on AmerisourceBergen are based on the highly competitive (albeit growing) industry in which it operates, as well as the challenges of transitioning to a new business model," said Standard & Poor's credit analyst Mary Lou Burde. "These factors are mitigated by the company's leading position as a pure drug distributor, economies of scale, geographic and customer diversity, moderate leverage, and solid cash flow protection." The company is gaining purchasing power and boosting operating efficiency through a rationalization of its distribution network following the 2001 merger of AmeriSource Health Corp. and Bergen Brunswig Corp. The company achieved $150 million in annual synergies ahead of schedule in June 2004. ANDREW CORP: Nasdaq to Delist 7.75% Convertible Preferred Stock --------------------------------------------------------------- Andrew Corporation, a global communications systems and equipment supplier, received a Nasdaq Staff Determination on Nov. 29, 2004, indicating that Andrew's Series A 7.75% Convertible Preferred Stock (NASDAQ:ANDWP) fails to comply with the minimum number of round lot shareholders requirement for continued listing of the Series A Preferred Stock set forth in Nasdaq Marketplace Rule 4450(h)(4), and that the Series A Preferred Stock will, therefore, be delisted from the Nasdaq National Market at the opening of business on Dec. 8, 2004. Andrew does not intend to appeal the Nasdaq Staff Determination. The Series A 7.75% Convertible Preferred Stock may become eligible to trade on the OTC Bulletin Board or in the "Pink Sheets" if a market maker makes application to register in and quote the security in accordance with SEC Rule 15c2-11, and such application is cleared. Andrew had 120,414 shares of Series A 7.75% Convertible Preferred Stock outstanding at September 30, 2004. The Series A 7.75% Convertible Preferred Stock has no par value and a liquidation preference of $50 per share plus accrued and unpaid dividends. On or after February 20, 2005, Andrew may, at its option, cause all of the outstanding shares of the Convertible Preferred Stock to be automatically converted into common stock at the then prevailing conversion ratio. About the Company Andrew Corporation (NASDAQ:ANDW) designs, manufactures and delivers innovative and essential equipment and solutions for the global communications infrastructure market. The company serves operators and original equipment manufacturers from facilities in 35 countries. Andrew -- http://www.andrew.com/-- headquartered in Orland Park, Illinois, is an S&P 500 company founded in 1937. * * * As reported in the Troubled Company Reporter on July 09, 2004, Standard & Poor's Ratings Services assigned its 'B+' rating to Andrew Corp.'s $240 million 3.25% convertible subordinated notes due Aug. 15, 2013. In addition, Standard & Poor's assigned its preliminary BB/B+ ratings to the company's $750 million Rule 415 shelf registration for senior unsecured/subordinated debt. A 'BB' corporate credit rating also was assigned to Andrew Corp. The outlook is stable. As a result of the Allen Telecom and Celiant Corp. acquisitions in July 2003 and June 2002, respectively, Andrew Corp. is one of the leading global suppliers of communications products and systems to the wireless subsystem infrastructure market. The company provides total customer solutions, including virtually all components of a wireless base station that are outsourced by major network original equipment manufacturers and operators. As of March 31, 2004, total debt outstanding was about $353 million, adjusted for operating leases. "The ratings reflect a below-average business profile due to the highly competitive and cyclical spending environment of the wireless and cable television industries in which the company operates, as well as its acquisitive growth strategy," said Standard & Poor's credit analyst Rosemarie Kalinowski. "This is partially offset by a solid financial profile for the rating and the company's strong market position in wireless infrastructure components." APPLIED EXTRUSION: Wants Confirmation Hearing Set on Dec. 26 ------------------------------------------------------------ Applied Extrusion Technologies, Inc. and its debtor-affiliates, ask the authority of the U.S. Bankruptcy Court for the District of Delaware to: (a) schedule a confirmation hearing to: (1) approve the Debtors' solicitation and Disclosure Statement, (2) approve the Solicitation Procedures, and (3) consider confirmation of the Debtors' Plan of Reorganization (b) establish deadlines and procedures for filing objections to approve the solicitation and Disclosure Statement, & the solicitation procedures or confirmation of the Plan, and (c) approve the form and manner of notice of the confirmation hearing. The Debtors submit that a combined hearing is the best interest of judicial economy and will promote the expedient reorganization of the Debtors. The adverse effects of the chapter 11 filing on the Debtors' businesses and going concern value will be minimized and the benefit to the creditors will be maximized through prompt distribution and the reduction of administrative expenses of the estate. The Debtors request that the Court schedule the Confirmation Hearing on or before December 26, 2004. The Debtors also propose that the last day for filing objections to approve a disclosure statement or confirm a plan of reorganization will be December 20, 2004. A reply to the objections received must be sent by 12:00 noon December 24, 2004 by the Debtors and any other parties supporting confirmation of the plan. The Debtors also propose that the Court order objections to approve the solicitation and Disclosure Statement, approve the solicitation procedures, or confirm the Plan, must: (a) be in writing, (b) comply with the Bankruptcy Rules and the Local Rules of this Court, (c) indicate the name of the objector and the nature and amount of any claim or interest asserted by the objector against the estate of property of the Debtors, (d) state with particularity the legal and factual basis for such objection, and (e) be filed with the Clerk of Court. The objections must be filed together with the proof of service and served by personal service or by overnight delivery to be received no later than 4:00 p.m., December 20, 2004: (a) Counsel to the Debtors: Shearman & Sterling LLP 599 Lexington Avenue New York, New York 10022 Attn: Douglas P. Bartner, Esq. Mona A. Touma, Esq. (b) Counsel to the Debtors: Young Conaway Stargatt & Taylor, LLP The Brandywine Building 1000 West Street, 17th Floor Wilmington, Delaware 19801 Attn: Pauline K. Morgan, Esq. Edward J. Kosmowski, Esq. (c) Counsel to the Committee: Milbank, Tweed, Hadley & McCloy LLP One Chase Manhattan Plaza New York, New York 10005 Attn: Dennis F. Dunne, Esq. Risa M. Rosenberg, Esq. Abhilash M. Raval, Esq. (d) Counsel to the DIP Agent: Paul, Hastings, Janofsky & Walker LLP 1055 Washington Boulevard Stamford, Connecticut 06901 Attn: Leslie Plaskon, Esq. Richard Denhup, Esq. The Debtors further propose that all supplements to the Plan and all Exit Facility documents must be filed with the Court on December 16, 2004, and the documents must be available through the office of the Clerk of Court or from the Debtors' counsel. Within two days of the entry of the Scheduling Order pursuant to Bankruptcy Rule 2002, the Debtors propose to mail by first class U.S. mail or via Bankruptcy Services' web site -- http://bsillc.com/-- to all: (a) known creditors, (b) indenture trustees, (c) equity interest holders, (d) the Office of the U.S. Trustee, and (e) all parties requesting notice a copy of a notice appropriate for the specific creditor or equity interest holder of, inter alia: (a) commencement of these chapter 11 cases, (b) the date, time and place of the Confirmation Hearing, (c) the date, time and place of the meeting of creditors pursuant to Section 341 of the Bankruptcy Code, (d) the deadline and procedures for filing objections to the adequacy of the solicitation and Disclosure Statement and to confirm the Plan, (e) notice of the automatic stay, and (f) instructions for obtaining copies of the solicitation and Disclosure Statement and the Plan. Headquartered in New Castle, Delaware, Applied Extrusion Technologies, Inc. -- http://www.aetfilms.com/ -- develops & manufactures specialized oriented polypropylene (OPP) films used primarily in consumer products labeling and flexible packaging application. The Company and its debtor-affiliate filed for chapter 11 protection on Dec. 1, 2004 (Bankr. D. Del. Case No. 04-13388). Edward J. Kosmowski, Esq., and Pauline K. Morgan, Esq., at Young Conaway Stargatt & Taylor and Sheldon K. Rennie, Esq., at Fox Rothschild O'Brien & Frankel LLP represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $407,912,000 in total assets and $414,957,000 in total debts. ARCH COAL: S&P Puts B+ Rating on $1 Billion New Debt Securities --------------------------------------------------------------- Standard & Poor's Rating Services its preliminary 'B+' senior unsecured and 'B+' subordinated debt ratings to Arch Coal Inc.'s $1 billion universal shelf. Standard & Poor's also affirmed its existing ratings on Arch Coal, Inc., and subsidiary Arch Western Finance LLC. The outlook is stable. "The ratings on Arch Coal reflect the company's vast and diversified base of coal reserves and strong industry conditions, offset by difficult operating conditions, particularly in the east, and a very aggressive financial profile," said Standard & Poor's credit analyst Dominick D'Ascoli. Arch is one of the top U.S. coal producers, with 2003 production of around 126 million tons, pro forma for the recent acquisition of the Triton Coal Co.'s North Rochelle, Powder River Basin mine in Wyoming, and the remaining 35% interest in Canyon Fuel Co. With these acquisitions, Arch Coal accounted for approximately 12% of total 2003 U.S. coal production. The St. Louis, Missouri-based company operates numerous mines in the eastern and western coal producing regions of the U.S. Over two-thirds of Arch's reserves consist of higher-margin compliance coal, which meets sulfur emission requirements under Phase II of the federal Clean Air Act. ARDENT HEALTH: S&P Places Single-B Ratings on CreditWatch Negative ------------------------------------------------------------------ Standard & Poor's Ratings Services placed its single-B ratings on Ardent Health Services, Inc., on CreditWatch with negative implications. The CreditWatch listing reflects our increasing concerns about the hospital chain's ability to control its operations in a period of rapid growth and manage its tightened liquidity. Ardent's growth is illustrated by its ballooning revenues, which have increased by about 70% since 2003, taking into account its recent acquisition of Hillcrest HealthCare System. Ardent announced that it will lower its earnings in a financial restatement for 2003 and for the first two quarters of 2004. The restatement stems from accounting adjustments at its largest subsidiary, Lovelace Sandia Health System, and will result in an annualized reduction in earnings of about $20 million. The company will not release any financial statements until the end of the first quarter in 2005. Ardent is in the process of changing its financial accounting procedures to address these issues. Meanwhile, liquidity is tighter because Ardent has agreed with its banks not to draw on the revolving credit facility. "We are furthermore concerned about the potential for additional financial adjustments due to information technology issues," said Standard & Poor's credit analyst David Peknay. "The announcement of a $26 million impairment charge relating to the consolidation of information systems could indicate greater acquisition integration challenges than originally anticipated." Standard & Poor's expects to review management's efforts to better control its activities and handle its funding needs through the possible near-term sale of its Samaritan Hospital and through bank borrowing negotiations. ASSET BACKED: Fitch Puts 'BB+' Rating on $9.66M Class M7 Certs. --------------------------------------------------------------- Asset Backed Securities Corporation home equity loan trust, series 2004-HE8, is rated as follows by Fitch Ratings: -- $769,202,000 class A1 & A2 certificates 'AAA'; -- $52,149,000 class M1 certificates 'AA+'; -- $55,529,000 class M2 certificates 'A'; -- $17,383,000 class M3 certificates 'A-'; -- $15,935,000 class M4 certificates 'BBB+'; -- $13,037,000 class M5 certificates 'BBB'; -- $9,657,000 class M6 certificates 'BBB-'; -- $9,658,000 privately offered class M7 certificates 'BB+'. The 'AAA' rating on the senior certificates reflects the 20.35% total credit enhancement provided by: * the 5.40% class M1, * the 5.75% class M2, * the 1.80% class M3, * the 1.65% class M4, * the 1.35% class M5, * the 1% class M6, * the 1% class M7, and * the 2.40% initial overcollateralization. All certificates have the benefit of monthly excess cash flow to cover losses. The class A1 certificates will have the benefit of the certificate guaranty insurance policy issued by Financial Security Assurance, Inc. The class A1 policy will, in general, guarantee accrued and unpaid interest on the class A1 certificates. Fitch's 'AAA' rating on the class A1 is without regard to the class A1 policy. In addition, the ratings reflect the quality of the loans, the integrity of the transaction's legal structure as well as the primary servicing capabilities of Ocwen Federal Bank FSB (rated 'RPS2' by Fitch) and U.S. Bank National Association as trustee. As of the cut-off date, Dec. 1, 2004, the mortgage pool consists of closed-end, first and second lien, fixed-rate and adjustable- rate mortgage -- ARM -- loans with an aggregate principal balance of $965,728,011. The mortgage pool will be divided into Subgroup 1, which will consist of conforming balance loans and Subgroup 2, which will consist of non-conforming balance loans. The weighted average mortgage loan rate is approximately 7.269% and the weighted average remaining term to maturity -- WAM -- is 352 months. The average principal balance of the mortgage loans as of the cut-off date is approximately $177,775. The weighted average original loan-to-value ratio -- OLTV -- is 79.91% and the weighted average Fair, Isaac & Co. -- FICO -- score is 624. The properties are primarily located in: * California (40.65%), * Florida (6.49%), and * New York (5.94%). ASTROPOWER, INC.: Judge Walrath Confirms Chapter 11 Plan -------------------------------------------------------- The Honorable Mary F. Walrath of the U.S. Bankruptcy Court for the District of Delaware confirmed the liquidating chapter 11 plan filed by AstroPower, Inc., at a hearing in Wilmington, Del., last week. As previously reported in the Troubled Company Reporter, AstroPower sold substantially all of its assets. The plan creates a trust that will distribute the proceeds of those asset sales to creditors in order of their statutory priority. The Trust intends to commence and prosecute a lawsuit as detailed in the Troubled Company Reporter on Oct. 26, 2004, against Xantrex Technology, Inc., and Raymond James Ltd. to recover more than $1,000,000 from a premature stock sale. Headquartered in Wilmington, Delaware, AstroPower Inc., produced the world's largest solar electric (photovoltaic) cells and a full line of solar modules. The Company filed for chapter 11 protection on February 1, 2004 (Bankr. Del. Case No. 04-10322). Derek C. Abbott, Esq. at Morris, Nichols, Arsht & Tunnell, represents the Debtor. Adam G. Landis, Esq., and Kerri K. Mumford, Esq., at Landis Rath & Cobb LLP, represent the Official Committee of Unsecured Creditors. When the Company filed for protection from its creditors, it estimated debts and assets of more than $100 million. BISTRO 2000-7: Moody's Withdraws Ratings on Four Tranches --------------------------------------------------------- Moody's Investors Service has withdrawn the ratings of four tranches issued by BISTRO 2000-7. According to Moody's, the ratings were withdrawn because the tranches were called on November 30,2004. BISTRO 2000-7 closed in July of 2000. The ratings of theSE tranches have been withdrawn: Issuer: BISTRO 2000-7 Tranche Descriptions: U.S. $403,591,808 Level 1 Tranche Due 2005 Prior rating: Aaa Current rating: Withdrawn Tranche Descriptions: U.S. $100,897,952 level 2 Tranche Due 2005 Prior rating: A2 Current rating: Withdrawn Tranche Descriptions: U.S. $60,538,771 level 3 Tranche Due 2005 Prior rating: Baa2 Current rating: Withdrawn Tranche Descriptions: U.S. $80,718,362 level 4 Tranche Due 2005 Prior rating: Ba3 Current rating: Withdrawn BOMBARDIER INC: Fitch Pares Senior Unsecured Debt Ratings to 'BB' ----------------------------------------------------------------- Fitch Ratings downgraded Bombardier Inc.'s and Bombardier Capital Inc.'s senior unsecured debt and credit facilities to 'BB' from 'BBB-'and BBD's preferred stock to 'B+' from 'BB+'. Fitch has withdrawn the 'F3' commercial paper rating. The ratings have been removed from Rating Watch Negative, where they were placed on Oct. 12, 2004. The Rating Outlook is Negative. Due to the existence of a support agreement and demonstrated support by the parent, BC's ratings are linked to those of BBD. These ratings cover approximately $6.1 billion of debt and preferred stock. The downgrade reflects: (1) poor free cash flow performance due primarily to slowing growth at Bombardier Transportation -- BT; (2) weak operating margins; and (3) continuing concerns regarding regional jet -- RJ -- backlog (1.5 years of production) and production rates. Free cash flow and margins are not expected to improve materially in the near term. The two-notch downgrade also reflects concerns that renewed bank facilities in fiscal 2006 (F2006) may contain covenants or security provisions that could weaken the position of existing debt holders. While the Negative Outlook focuses on all of these issues, stabilization in BBD's operating performance could result in Fitch revisiting the Outlook in the near term. Other general rating concerns include the potential need for further restructuring actions, the uncertain timing of margin improvement, the impact of exchange rate fluctuations on financial results and planning, and the sizable pension deficit. Additional concerns related to the RJ operation include competitive pressures from Embraer, the cash requirements of a possible 100-seat aircraft program, the weak aircraft financing market, and poor order visibility. Factors supporting the ratings include: (1) BBD's current liquidity position; (2) the recovery in the business jet market, which could offset much of the decline in RJ production in F2006; and (3) BBD's level of debt compared to revenues, which could allow modest improvement in margins to drive noticeable improvement in credit protection measures. Other issues supporting the ratings include significant progress on the multi-year restructuring plan, leading market positions in most segments, the more conservative strategy at BC, and the cost cutting actions at both Bombardier Aerospace -- BA -- and BT. Cash flow deterioration in F2005 is the main driver of the ratings actions. Excluding BC, cash usage (cash from operations less capital expenditures) was $152 million in the fiscal third quarter, offsetting what had been better than expected cash usage in the first half. The primary cause of the lower cash generation was lower advance payments at BT, which resulted from slowing orders. The outlook for cash flow in F2006 is unclear, and Fitch believes that cash flow will likely be pressured due to continued uncertainty at BT, restructuring costs, and pension contributions. Fitch is also concerned with the potential cash flow impact of the C-Series regional jet, which the company could decide to develop starting in F2006. BBD's liquidity (excluding BC) remained strong at the end of the third quarter, with $2 billion of cash and $2.2 billion of credit facility availability. An additional $600 million is available under a BC credit facility, although BBD has indicated that it will not renew this facility in F2006. Fitch notes that approximately $500 million of the cash on hand at BBD is related to advances extended by BC to the parent, and much of BBD's cash will be used to pay debt maturities at BC. BBD and BC have sufficient liquidity to meet cash obligations in the intermediate term. These obligations mostly consist of approximately $1 billion of debt maturities in the next five quarters, including $300 million of accelerated maturities resulting from rating triggers being breached. BBD (ex-BC) has $6.2 billion of credit facilities, with no borrowings outstanding, but with nearly $4 billion of issued letters of credit. Approximately $2 billion of BBD's credit facilities will mature in F2006, and renewal of these facilities could require additional covenants or security of some type. Fitch believes that BBD's solid liquidity position could be enhanced by selling non-core assets. Growth at BT is slowing due to some contract deferrals in Europe, mainly Germany. BBD is now estimating transportation growth of 0%-2% compared to the previous 3%-5% expectation. There were no significant contract adjustments in the third quarter, and margins were in line with Fitch's expectations. BT's restructuring appears to be on track, and BT announced 2,200 additional employment reductions in response to the slowing market. The RJ production rate reduction announced on Dec. 1 (F2006 production of 131 aircraft, down from the previous rate of 145) was expected, and Fitch believes that further cuts for F2006 are a possibility. Further production rate reductions will not necessarily lead to negative rating actions, but will be evaluated on the basis of several factors including how BBD manages the reductions and the timing and magnitude of the reductions. RJ production reductions will also be evaluated in the context of BBD's overall business, given that business jet improvements and the BT restructuring could offset the impact of lower RJ deliveries. BBD is seeing improved demand and better pricing for its business jets, consistent with industry-wide conditions. Orders were up significantly in the first nine months of the year (100 compared to 43). Because of higher projected F2006 business jet deliveries, Fitch estimates that Bombardier Aerospace could reduce RJ deliveries further and still deliver a total number of aircraft in F2006 that is comparable to total deliveries in F2005. As a result, Fitch's concerns related to BA deliveries are increasingly focused on the F2007 outlook. Margin improvement continues to be a key credit issue for BBD's debt ratings. Margins at BT were 2.5% in the third quarter, and the company has estimated that margins will be around this level in the next few quarters. At BA, margins were slightly negative in the third quarter, but they improved sequentially. BA's margins continue to be pressured by increased depreciation & amortization related to new business jet programs, sales incentives, foreign currency, and higher interest expense allocation due to the debt issuance earlier this year. Failure to improve margins or the discovery of additional problem contracts at BT could lead to additional rating actions. BPL ACQUISITION: Moody's Rates Planned Sr. Sec. Term B Loan Ba3 --------------------------------------------------------------- Moody's Investors Service assigned a rating of Ba3 senior secured to BPL Acquisition, L.P.'s proposed term loan B. Later this month, Moody's expects to withdraw the Ba1 senior secured rating on Holdco's existing term loan when it is fully repaid with the new term loan, and concurrently to lower Holdco's senior implied rating to Ba3 from Ba1 so that it will be equal to the new bank loan rating. Holdco's senior implied and senior secured ratings are the same, because the collateral represents the value of the enterprise. Holdco's rating outlook is stable. The ratings and outlook of Buckeye Partners, L.P. (Partners, Baa2 senior unsecured), the general partnership of which is Holdco's sole asset, are unaffected by this refinancing. The rating on Holdco's replacement loan is lower than its existing one, because of the significant increase in debt and weakened coverages that will result from this refinancing. Furthermore, proceeds from the new loan will also be used toward a special dividend that will meaningfully decapitalize Holdco. This transaction indicates Holdco's tolerance for financial risk and prospects for recurrent re-leveraging in the future. Rating Outlook and Catalysts The stable outlook incorporates this refinancing and Partners' existing assets. Moody's may well revisit Holdco's rating and outlook periodically upon any major investment by Partners and re-leveraging by Holdco. The Wood River acquisition (the largest ever acquisition for Partners) that followed months after its new sponsorship suggests that Partners may make larger and more frequent acquisitions than before. Our ratings and outlook incorporate the expectation that Holdco will maintain interest coverages comfortably above the 1.75x minimum in the proposed loan covenants, and that organic credit accretion may be limited by Holdco's demonstrated willingness to re-leverage. It is possible that the ratings of Holdco and Partners diverge over time. Moody's notes that a ringfencing structure is in the process of being put in place. This ringfencing will more clearly separate the credits of Holdco and Partners and support the widening of their ratings. It may help to cushion Partners' ratings from significant declines in Holdco's ratings. A deterioration in Partners' credit profile will likely have a magnified negative effect on Holdco's, as it has no asset other than its interests in the Partners' GP. Conversely, an improvement in Partners' ratings may not have a symmetric effect on Holdco's, if higher cash flows serve as an impetus for debt-financed distributions. Partners' maintaining its ratings and outlook (Baa2 sr. uns./stable outlook) is conditioned on its issuing adequate equity in a timely manner, so as to finance its recent and ongoing investments in line with its stated financial policies (50% debt/50% equity), and to relieve what we understand to be temporary stress on its credit metrics resulting from its recent Wood River acquisition. Over the same coming quarters, we will also monitor Partners' progress in generating the level of cash flows from its Wood River assets in the timeframe it currently expects to cause its credit metrics to recover. Following our review of Partners' latest forecast, key metrics factored into its ratings include distribution coverage ratio of at least 100% and adjusted debt/gross cash flow of about 5x initially but returning to its historic 4x range within the near term. Delay in de-leveraging and persistent variance from assumed credit metrics will cause us to reassess the rating outlooks for both Partners and Holdco. Moody's notes that Partners' current ratings reflect a company with lower acquisition event risk than its MLP peers. Heightened M&A activity would cause us to reconsider Partners' ratings. Financial Analysis Holdco draws roughly $20 million of cash flows from Partners as its general partner. The increase in debt from the refinancing will double annual debt service from about $5 million currently to about $11 million. Consequently, its interest coverage ratio (pre-debt service cash flow/debt service) will fall from about 3x currently to about 2x for the near term. Consequently, debt/cash flow will be well above our previous near-term expectations (9x 2004 pro forma for the proposed term loan). The Proposed Refinancing Holdco proposes to place a new $165 million term loan B and to use the proceeds to repay its existing $100 million term loan in full and to make a $60 million dividend to Carlyle/Riverstone Global Energy & Power Fund II, L.P. -- Sponsors. The refinancing re-levers Holdco in anticipation of higher cash flows (in the form of general partner incentive distributions) it expects to receive from Partners following the latter's $517 million Wood River acquisition that closed in October (which was unanticipated when the Sponsors acquired Partners' general partner interest this past spring) and accelerates the return of capital to the Sponsors. The special dividend would represent a significant portion of the Sponsors' current equity investment. As currently proposed, the new term loan is a 7-year loan. Many of the basic terms are similar to those for the current loan. It is secured by all of Holdco's assets (i.e., equity of the general partner in Holdco). It amortizes by 1% a year and has a bullet payment at maturity. It has a cash sweep mechanisms that require a higher proportion of free cash flow to be applied toward debt reduction at lower interest coverage levels. The only financial covenant is a minimum 1.75x interest coverage. Events of default include Partners' consolidated debt/EBITDA exceeding certain thresholds: 5.75x initially, stepping down to 5.25x in 9/30/05, and to 4.75x after 12/31/05. New features proposed for the term loan include a 6-month interest reserve and an accordion feature that allows Holdco to make additional borrowings $35 million subject to minimum ratings and coverages (yet to be determined). BPL Acquisition L.P. is owned by Carlyle/Riverstone Global Energy & Power Fund II, L.P., a private equity firm based in New York, NY. It is the owner of the general partner of Buckeye Partners, L.P., a master limited partnership headquartered in Emmaus, Pennsylvania. BURLINGTON: Court Extends Claims Objection Deadline to Mar. 31 -------------------------------------------------------------- The United States Bankruptcy Court for the District of Delaware extended Burlington Industries, Inc. and its debtor-affiliates' deadline to file objections to General Claims to: (1) allow the Trust to assert objections to any remaining Claims that it becomes aware of; (2) assert additional grounds for objection to Claims that the Trust may discover as it prosecutes pending Claims objection; (3) preserve any newly discovered objections to the Claims; and (4) ensure that the Debtors' estates' interests are protected. The Court extends the General Claims Objection Bar Date until March 31, 2005. 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. 57; Bankruptcy Creditors' Service, Inc., 215/945-7000) CAJUN FUNDING: Moody's Puts B3 Rating to Planned $155M Sr. Notes ---------------------------------------------------------------- Moody's Investors Service assigned a rating of B3 to the proposed second-lien senior notes of Cajun Funding Corporation. Together with $82 million of common equity, $165 million of net proceeds from real estate sale & leaseback transactions, and $7 million of seller notes, proceeds from the new debt will finance the purchase of Church's Chicken for $390 million. In accordance with requirements of the new owner Crescent Capital, which is the U.S. affiliate of the Bahrain-based First Islamic Investment Bank, the transaction is structured to comply with Islamic law that forbids payment of interest. Negatively impacting the company's ratings are the company's high financial leverage and the challenges in permanently fixing factors that caused sales declines during 2002 and 2003. However, in spite of the substantial debt burden, the domestic and international development potential of the Church's concept and Moody's expectation that the company will achieve at least a portion of the projected post-acquisition administrative efficiencies benefit our opinion of the company. This is the first time that Moody's will rate Church's on a stand-alone basis, as the company was previously a division of AFC Enterprises, Inc (B1 senior implied rating under review for upgrade). Ratings assigned are: -- $155 million second-lien senior notes at B3, -- Speculative Grade Liquidity Rating at SGL-3, -- Senior Implied Rating at B2, and the -- Issuer Rating at Caa1. The rating outlook is stable. The ratings consider the challenges in growing revenue at Church's because of the uncertainty of consumer demand for bone-in fried chicken, the company's high financial leverage and low fixed charge coverage following the transaction, and the structure that separates operating cash flows from the debt issuer. Vulnerability to wholesale prices for poultry (which climbed in 2003 and peaked during the summer of 2004), the small size of Church's relative to many quick-service restaurant operators, and the need to make steady progress at the anticipated post- transaction operating efficiencies in order to maintain an adequate liquidity position also adversely impact our view of the credit risks facing the company. However, the ratings recognize that the established position of the Church's brand among growing segments of the U.S. population, the domestic and international development potential of the concept, and the removal of menu and geography restrictions derived from AFC Enterprises' ownership of Popeyes, another chicken quick service restaurant chain. Year-to-date positive comparable store sales following mediocre performance during 2002 and 2003 and Moody's belief that the company can obtain a portion of post-transaction operating efficiencies also positively impact the ratings. The stable outlook reflects Moody's expectation that the company's financial profile will improve as: (1) franchisees and the company continue opening new stores, (2) the company stimulates sales with new marketing programs and menu items, and (3) uses a portion of discretionary cash flow to improve the balance sheet. Ratings could be negatively impacted if the recent operating improvements do not prove permanent, circumstances cause financial stress at a meaningful proportion of franchisees, or the company overspends its liquidity while developing new stores. Ratings could eventually go up as higher average unit volume leads to materially better financial flexibility, high-margin franchisee revenue becomes a reliably larger fraction of revenue, and the company achieves worthwhile returns on investment with its planned development program. These ratings do not require the achievement of post-transaction operating efficiencies at the pace projected by management. The Speculative Grade Liquidity Rating of SGL-3 considers that Church's should generate enough operating profit to cover cash interest payments and a normal level of maintenance capital expenditures. However, postponement of post-transaction operating efficiencies could cause free cash flow to fall to breakeven. Moody's expects that the company will remain in compliance with its bank loan covenants, but comfortable compliance requires a portion of the post-transaction operating efficiencies. Also constraining the rating is the limited availability of alternate liquidity, given the existing pledge of all assets. The B3 rating on the second-lien senior notes recognizes the separation of operating cash flow from the issuing entity Cajun Funding Corp because of the need to distinguish the entity owned by Crescent Capital from the interest payer. Fundco is a special purpose vehicle formed for the purpose of holding debts associated with this transaction. The operating entity Cajun Operating Company will sell assets to Fundco and then sign long-term lease agreements for those assets. Rent from Opco will be sufficient for Fundco to make cash interest payments on the several debts. Opco does not guarantee the debts at Fundco, but the distinct entities are designed to consolidate into one in the event of a default. The rated notes are subordinated to the unrated $20 million revolving credit facility to the extent of collateral. In a hypothetical distressed scenario with the revolving credit facility fully utilized, even assuming consolidation of the entities, Moody's believes that recovery would rely on enterprise value given likely liquidation proceeds relative to book value for tangible assets such as restaurant equipment and leasehold improvements. Pro-forma for the transaction, debt protection measures such as lease adjusted leverage and fixed charge coverage are appropriate for the assigned ratings. Average unit volume has recovered over the past few quarters as the company has paid attention to operating fundamentals such as speed of service and menu variety, but high poultry prices and economic concerns among several core customer segments have pressured operating margin. The ratings incorporate Moody's expectation that Church's, which has now reported positive domestic comparable store sales for four consecutive quarters, will permanently stabilize within the next year. Moody's believes that free cash flow will remain small as the company uses most operating cash to maintain the existing store base and to develop new corporate stores. Cajun Funding Corp and Cajun Operating Company, with headquarters in Atlanta, Georgia, will operate 282 and franchise 1259 Church's Chicken quick service restaurants in the U.S., Puerto Rico, and 15 other countries. Revenue at Church's for the four quarters ending October 3, 2004 was about $258 million. CASUAL MALE: Longacre and TeleCheck Told to Battle in State Court ----------------------------------------------------------------- TeleCheck Services, Inc. is, or at least was, a creditor in Casual Male Corp. and its affiliates' chapter 11 cases, owed $700,000. Longacre Master Fund, Ltd., offered to buy TeleCheck's claim and thinks it did buy the claim. Casual Male, apparently, sent payments under its confirmed chapter 11 plan to TeleCheck rather than Longacre. Longacre filed suit against TeleCheck in the Supreme Court of New York County to enforce its agreement. TeleCheck, in turn, removed the proceeding to U.S. District Court for the Southern District of New York pursuant to 28 U.S.C Sec. 1452(a). The District Court then referred the matter to Judge Gerber in the Bankruptcy Court. Longacre opposed the application for removal, arguing that New York state court is the appropriate forum for the parties to duke it out. "Upon consideration of the matter, the Court concludes that it has subject matter jurisdiction, but that remand on equitable grounds is appropriate," Judge Gerber says in a written decision. Subject Matter Jurisdiction Section 1334 of the Judicial Code, 28 U.S.C. Sec. 1334, confers subject matter jurisdiction on the district courts (and hence bankruptcy courts) with respect to bankruptcy matters. Section 1334(b) confers three types of jurisdictional authority over proceedings: * "Arising under" jurisdiction relates to federal question claims of a particular type -- specifically, those federal questions that have their origin in title 11 of the United States Code (i.e., the Bankruptcy Code), and where relief is sought based upon a right created by title 11. * Case law in this district states that a claim "arises in" bankruptcy if, by its very nature, the claim can only be brought in a bankruptcy case because it has no existence outside of bankruptcy. Other decisions have described the test more broadly -- that a proceeding "arises in" bankruptcy when it is not based on any right expressly created by title 11, but "would have no practical existence but for the bankruptcy." Claims against the estate are in this category, even pre-petition ones based on state law. Many "arising under" matters litigated in bankruptcy cases also fall in the "arising in" category, and vice-versa. * "Related to" jurisdiction applies to those matters that do not meet the criteria for the first two categories but that nevertheless relate to a bankruptcy case. The principles underlying "related to" subject matter jurisdiction determinations were discussed at some length in In re ML Media Partners, L.P. v. Century/ML Cable Venture (In re Adelphia Communications Corp.), 285 B.R. 127, 136-137 (Bankr. S.D.N.Y. 2002) (Gerber, J.), and Blackacre Bridge Capital, LLC v. Korff (In re River Center Holdings, LLC), 288 B.R. 59, 64-65 (Bankr. S.D.N.Y. 2003) (Gerber, J.). Under the Second Circuit's decision in In re Cuyahoga Equipment Corp., 980 F.2d 110, 114-115 (2d Cir. 1992), the test applied in the S.D.N.Y. and elsewhere to establish "related to" jurisdiction under section 1334(b) is the existence of a "conceivable effect" on the bankruptcy estate. Under the standards outlined above, Judge Gerber says, it is plain that Longacre's suit "arises in" a bankruptcy case because this claims trading dispute "would have no practical existence but for the bankruptcy." If the Debtors had not filed bankruptcy petitions, there would be no claims against the estate to sell. TeleCheck's claim, and thus Longacre's cause of action, would not exist. The Fourth Circuit's opinion in Bergstrom v. Dalkon Shield Claimants' Trust (In re A.H. Robins Co., Inc.), 86 F.3d 364 (4th Cir. 1996), illustrates this point. Thus, Judge Gerber reasons, Longacre's suit against TeleCheck "arises in" a bankruptcy case under title 11, and the Bankruptcy Court has subject matter jurisdiction over the action under Sec. 1334(b). Remand on Equitable Grounds However, Judge Gerber continues, even where a district or bankruptcy court has subject matter jurisdiction over a removed proceeding under 28 U.S.C. Sec. 1334, it still has the power, in its discretion, to remand the proceeding to state court. Another provision of the Judicial Code, 28 U.S.C. Sec. 1452(b), grants district courts (and hence bankruptcy courts) the discretion to remand "on any equitable ground" proceedings previously removed by a party to the proceeding. That statute provides in relevant part, "The court to which such claim or cause of action is removed may remand such claim or cause of action on any equitable ground." The case law interpreting this provision has fleshed out the meaning of "any equitable ground," which is not defined in Sec. 1452(b). The factors relevant to a determination as to whether to remand under Sec. 1452(b) are sometimes called the "Drexel factors," named after a decision in which they were articulated, Drexel Burnham Lambert Group, Inc., v. Vigilant Ins. Co. (In re Drexel Burnham Lambert Group, Inc.), 130 B.R. 405, 407 (S.D.N.Y. 1991) (Edelstein, J.). The Drexel factors are: (1) the effect on the efficient administration of the bankruptcy estate; (2) the extent to which issues of state law predominate; (3) the difficulty or unsettled nature of the applicable state law; (4) comity; (5) the degree of relatedness or remoteness of the proceeding to the main bankruptcy case; (6) the existence of the right to a jury trial; and (7) prejudice to the involuntarily removed defendants. Judge Gerber sees that remand of Longacre's claims would have no effect on the efficient administration of the Debtors' estate. The Debtors have already paid TeleCheck's claim; thus, the distribution on the claim has already left the Debtors' estate. Longacre seeks monetary damages from TeleCheck directly, and based on Longacre's representations that it is seeking recovery only from TeleCheck, the Debtors do not oppose, and indeed support, remand of the dispute to the New York County Supreme Court. Likewise, this is a not a controversy between the alleged transferee and transferor of a claim under Fed. R. Bankr. P. 3001(e)(2), where determination of the controversy is necessary or desirable to direct the estate as to the appropriate recipient of the distribution on the claim, or to determine the voting rights with respect to the claim. Here, the distribution has already been made; the claim has already been voted, and, indeed, the Debtors' plan had already been confirmed by the time that the remand controversy was argued. There is no particular administrative advantage to the estate, or vis-a-vis the needs and concerns of other creditors, to adjudicate this controversy here. Longacre's complaint asserts classic state law causes of action for breach of contract. Because the dispute primarily concerns the rights of two non-debtor parties under the alleged contract, equitable remand is appropriate, Judge Gerber rules. Martin Eisenberg, Esq., at Emmet Marvin & Martin, LLP, represents Longacre Master Fund, Ltd., in this matter, and Matthew H. Charity, Esq., at Baker & Hostetler LLP, represents TeleCheck Services, Inc. Casual Male Corp. with its debtor-affiliates filed for chapter 11 protection on May 18, 2001 (Bankr. S.D.N.Y. Case No. 01-41403). After a number of section 363 sales, the Debtors, together with their Creditors' Committee, confirmed a liquidating plan of reorganization on November 18, 2003, to distribute approximately $70 million. Adam C. Rogoff, Esq., at Cadwalader, Wickersham & Taft represents the Debtors. When the Company filed for protection from its creditors, it listed $299,341,332 in total assets and $244,127,198 in total debts. CATHOLIC CHURCH: Files for Chapter 11 Protection in E.D. Wash. -------------------------------------------------------------- The Roman Catholic Church for the Diocese of Spokane filed for chapter 11 protection in the United States Bankruptcy Court for the Eastern District of Washington after failing to settle 28 pending sexual abuse claims. As reported in the Troubled Company Reporter on Nov. 25, 2004, Bishop William Skylstad said in a press statement that Chapter 11 Reorganization will provide a fair, just, and equitable mechanism for the payment of valid claims against the Diocese of Spokane, while allowing it to maintain the historic mission of the Catholic Church in Eastern Washington. "No process can guarantee justice. The Chapter 11 Reorganization process does, however, provide a framework for the fair resolution of valid claims," Bishop Skylstad explained. The Diocese of Spokane has identified approximately 125 potential claimants who were victimized by priests serving in Eastern Washington. Approximately half of those 125 have retained legal counsel. Those claims are in various stages of litigation. The Diocese of Spokane also acknowledged that there may be other victims who have yet to step forward. The 28 pending claims arose out of the actions of Patrick O'Donnell, a former Spokane Diocesan priest. "By filing for Chapter 11 Reorganization, we will temporarily stop litigation. Likewise, it will stop the expense of litigation. All claims will be presented in one court, and will be examined by one standard. All claims will be treated equally, fairly, with justice. The diocese will continue its ministry and mission. "In the end, Chapter 11 Reorganization also will give everyone -- both the victims and the diocese -- a sense of finality and closure, with fairness, justice, and equity. Valid claims will be settled; the diocese will continue its ministry." Civil tort claimants seek $75,790,000 in damages, which far exceeds the net worth of the diocese. The Diocese has maintained insurance coverage with several different carriers over the years. The defense of most of the claims -- including the payment of the majority of the attorney's fees in defending the Diocese -- have, at least to this point, been covered by the insurance carriers. The Diocese continues to work with its various carriers towards the full resolution of the claims. Bishop Skylstad added that the chapter 11 bankruptcy proceeding would protect the Diocese's assets that serve more than 97,000 parishioners. Critics said Bishop Skylstad was trying to avoid a trial that would expose the lengths to which the church went to protect serial pedophiles, the Associated Press reports. "Everyone suffers when Skylstad chooses to protect his secrets and his image rather than show courage and compassion," David Clohessy, national director for Survivors Network of those Abused by Priests, told Nicholas K. Geranios of AP. The Roman Catholic Church of the Diocese of Spokane filed for chapter 11 protection (Bankr. E.D. Wash. Case No. 04-08822) on Dec. 6, 2004. Michael J. Paukert, Esq., at Paine, Hamblen, Coffin, Brooke & Miller LLP, represent the Spokane Archdiocese in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $11,162,938 in total assets and $81,364,055 in total debts. 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: Spokane Case Summary & 19 Unsecured Creditors -------------------------------------------------------------- Debtor: The Catholic Bishop of Spokane aka The Catholic Diocese of Spokane PO Box 1453 Spokane, Washinghton 99210-1453 Tel: (509) 358-7300 Bankruptcy Case No.: 04-08822 Type of Business: The Company is a not-for-profit ecclesiastical entity that ministers to Roman Catholics and others in Eastern Washington. See http://www.dioceseofspokane.org/ Chapter 11 Petition Date: December 6, 2004 Court: Eastern District of Washington (Spokane/Yakima) Judge: Patricia C. Williams Debtor's Counsel: Michael J. Paukert, Esq. Paine, Hamblen, Coffin, Brooke & Miller LLP 717 West Sprague Avenue, Suite 1200 Spokane, Washington 99201 Tel: (509) 455-6000 Fax: 509-838-0007 Total Assets: $11,162,938 Total Debts: $81,364,055 Debtor's 19 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Civil Tort Claimants $75,790,000 Saint Mary Presentation $973,337 310 North Main Deer Park, Washington 99006 Catholic Cemeteries - Holy Cross $735,520 7200 North Wall Street Spokane, Washington 99208 Safeco Specialty Claims $600,000 PO Box 34756 Seattle, Washington 98124-1756 Sacred Heart - Othello $266,846 616 East Juniper Othello, Washington 98812 Sacred Heart - Wilbur $193,670 606 Southwest Alder Wilbur, Washington 99185 Self Insurance Fund $158,865 PO Box 1453 Spokane, Washington 99210 Saint Joseph - Colbert $156,587 3720 East Colbert Road Colbert, Washington 99005 Sacred Heart Church $133,280 Our Lady of the Valley $111,437 All Saints School $102,881 Self Insurance Fund $90,743 Our Lady of the Lake $89,219 Sacred Heart - Wilbur $84,195 Saint Rose of Lima - Cheney $76,256 Bishop White Seminary $75,416 Pontifical North American $74,100 Morning Star Boys Ranch $67,234 Self Insurance Fund $64,469 CATHOLIC: Portland Wants Tort Claims Bar Date Moved to April 29 --------------------------------------------------------------- The Archdiocese of Portland in Oregon amends its request to establish a deadline for filing tort claims. Portland asks Judge Perris to: (a) establish April 29, 2005, at 5:00 p.m., Prevailing Pacific Time, as the deadline by which proofs of tort claim must be filed; (b) approve its revised proof of claim form; and (c) approve a two-fold widespread notice program that will provide actual or publication notice to all known and potential creditors. Each holder of a Claim is required to file by either delivering in person, by courier service or by first-class mail, an original written proof of claim so as to be received on or before the Claims Bar Date by the Debtor's Claims Agent, Bankruptcy Management Corporation. BMC will not accept proofs of claim sent by facsimile or telecopy transmission. Only persons whose Claims have been paid in full are not required to file a proof of claim on or before the Claims Bar Date. Any person who settled a Claim against the Debtor before the Petition Date, but has not yet been paid or fully paid on account of the claim, must still file a proof of claim on account of his or her Claim. Proof of Claim Form The proposed amended Proof of Claim Form is intended to elicit only the specific information Portland and its insurers need to begin the analysis of the Archdiocese's potential liability for Tort Claims, and ultimately to resolve issues in the Chapter 11 case that are key to the reorganization plan process and Portland's successful emergence from bankruptcy. The proposed Proof of Claim Form includes those questions and information provided in the Official Proof of Claim Form 10, which is regularly filed in Chapter 11 by general commercial creditors. The Proof of Claim Form seeks information: -- to enable Portland and others to locate the claimant; -- about the persons involved, the timing, and the nature of the claim; and -- about professionals and others the claimant consulted with about the injury and the Claim. The information will provide a basis for addressing some of the key issues that will ultimately put a fair value on Portland's liability for Tort Claims. Portland further asks the Court to declare that: * the failure of any holder of a Tort Claim to use the Proof of Claim Form will result in the Claim being deemed invalid as improperly filed, and of no force and effect. * if any Tort Claim that is filed on or before the Claims Bar Date is deemed invalid as improperly filed because it was not filed using the Proof of Claim Form, then the holder of the Claim will be entitled to cure the omission by filing, within the period of the later of: (i) 10 business days from receipt of notice by Portland that the Claim has been deemed an improperly filed Claim; and (ii) the Claims Bar Date, a claim on the Proof of Claim Form. * Any Tort Claim that is filed using the Proof of Claim Form but fails to provide the information requested is subject to disallowance upon further Court order if the information is not provided within a period of the later of: (i) 10 business days after receipt of notice by Portland that the required information is missing; and (ii) the Claims Bar Date. The Proof of Claim Form will be filed with BMC, and the name of all claimants filing a claim for childhood sexual misconduct will be kept confidential. BMC will work with the Clerk's office to develop a procedure for keeping the proof of claim confidential. Absent a Court order, only Portland, Portland's insurers, the claimant, and the claimant's attorney will have access to the proof of claim. If a claimant completes Section B of the Proof of Claim Form, BMC will segregate the proof of claim from those proofs of claim in which Section B is not completed and keep the Section B proofs of claim confidential pursuant to the procedures developed with the Clerk's office. Although the proofs of claim will be kept confidential, this will not prevent Portland, Portland's insurers, and their attorneys from utilizing the information contained there, including the claimant's name, in conducting their investigations into the facts and circumstances surrounding the claim. Failure to File a Proof of Claim Form Any holder of a Claim against Portland who is required, but fails, to file proof of the claim in accordance with the Claims Bar Date Order on or before the Claims Bar Date will not be counted as a creditor for voting or distribution purposes under any plan of reorganization. The Claim is subject to discharge upon confirmation of a plan. The only exception to this filing requirement should be for minors and those persons who establish "repressed memory" as a valid basis for failure to file a claim. An example of this narrow exception would be: -- a minor who has been abused but has not told his or her parents or another adult about the abuse; or -- an adult who has blocked memory of all occurrences of the abuse but who later remembers the abuse after confirmation of a plan. Although these claims qualify as current claims under the Bankruptcy Code definition of a claim, the Debtor recognizes that any notice to these claimants will likely prove to be insufficient. Portland intends to deal with these claims through both publication notice and the appointment of a "future claimants representative." Use of the term "future claimants" for these creditors should not be confused with a claim, which accrues in the future. The claims exist now. Use of the term "future claimants" simply means that these creditors may assert their claims in the future. Notice Procedures Portland intends to adopt these procedures for providing notice of the Tort Claims Bar Date: (A) Actual Notice Actual notice of the Claims Bar Date will be sent to: -- all known creditors; -- the attorneys for all known tort creditors; -- all households on the current mailing lists for the 124 parishes and 24 missions within the Archdiocese; -- all known potential claimants whose identities and addresses Portland has ascertained from review of its files. Portland will also ask all attorneys who have represented or are representing clients with claims of childhood sexual misconduct to submit to Portland the name and address of any person he or she believes may be a potential claimant. For purposes of providing actual notice to all persons or entities who have commenced judicial, administrative, or other actions or proceedings, including (x) settlement proceedings or (y) otherwise initiated an action against Portland asserting a Claim that has not been settled or has been settled but not paid or fully paid, Portland will mail to unrepresented claimants and to the attorneys for represented claimants: -- the Claims Bar Date Order; -- a notice of the Claims Bar Date; and -- a number of copies of the Proof of Claim Form equal to the estimated number of claimants represented by a law firm or attorney. The Claims Bar Date Notice contains special instructions to the law firms and attorneys. It will list, in an exhibit to the Notice, all holders of Claims who, Portland believes, are represented by the attorney or law firm. The attorney or law firm will be required to examine the list and, within 10 business days after receipt of the Claims Bar Date Notice, return a copy of the list to BMC with notations showing any claimants that the attorney or law firm does not represent or no longer represents, and the address of the claimant, if known. Moreover, the Claims Bar Date Notice instructs attorneys or law firms to advise BMC, within 10 days after receipt of the Claims Bar Date Notice, of any claimants to whom the attorneys or law firms want BMC to send directly the Claims Bar Date Notice and a Proof of Claim Form. BMC will mail the claims materials directly to the claimants within 10 business days after receipt of the information. To assist any attorneys or law firms who wish to send copies of the Claims Bar Date Notice or the Proof of Claim Form directly to any of their clients, BMC will provide them with extra copies of the Claims Bar Date Notice or a Proof of Claim Form, together with postage-paid envelopes for the mailing. The Notice Procedures are designed to assist attorneys in getting any required information to the underlying holders of Claims so that the Proof of Claim Forms can be completed and returned in a timely fashion. (B) Publication Notice Portland has developed a special "plain English" notice that it intends to use in a comprehensive, broad-based mailing and media notice program. The broad-based direct mailing and media notice program is designed to provide notice to potential claimants in areas where claims have arisen or where potential claimants may now be located. The Mailing and Media Notice Program is designed to ensure comprehensive notice to individuals and entities who could potentially hold Claims. The Mailing and Media Notice Program provides for the dissemination of the Claims Publication Notice by using: * direct mailings, * newspapers, * diocesan publications, * church bulletins, * alumni publications, * a special Web site, and * nationwide press releases and other media publicity. The primary target of the Mailing and Media Notice Program will be persons who attended or now attend Catholic churches and schools in western Oregon, these being the locations where the alleged acts giving rise to the sexual misconduct Claims are most likely to have occurred. Portland intends to mail a copy of the Claims Bar Date Notice to each household on the mailing lists for the 124 parishes and 24 missions within the Archdiocese. Portland also plans to accomplish nationwide notice by publication in USA Today, and the Wall Street Journal, newspapers of general circulation throughout the United States, and by nationwide dissemination of its press releases. Portland will publish notice regionally in 19 newspapers throughout Oregon, Washington, Idaho and California. Of the more than 200 claims asserted against Portland since 1999, almost 90% of the claimants live or reside in Oregon. Of the remaining 11%, approximately half live in Washington or California. Portland believes that any presently unknown claimants are more likely than not to reside in these same states. Furthermore, the nationwide notice process and general publicity about the case will provide notice of the Claims Bar Date to potential claimants living both inside and outside of the focused target area. The Publication Notice to be published in connection with the Mailing and Media Notice Program includes a toll-free telephone number that potential claimants may call to obtain more information, including a copy of the Proof of Claim Form, Notice of the Claims Bar Date, information concerning the procedures for filing a proof of claim, and referral to an independent third party counselor if a potential claimant wants to discuss his or her situation regarding the filing of a claim. Any person referred to counseling will not be charged for the counseling services. All discussions between that person and the counselor will be kept strictly confidential unless that person fails to file a Proof of Claim by the Claims Bar Date and later attempts to assert a Claim. In that event the counselor will be free to provide to Portland the person's name, the dates the person conferred with the counselor, and the information that was discussed which would have been required to be included in the Proof of Claim Form. The Notice also contains a special website address for the Debtor's Claims Agent http://www.bmccorp.netfrom which a claimant can review information about the history of the bankruptcy case and can download copies of the Proof of Claim Form and the Claims Bar Date Notice. The Debtor estimate the cost for the proposed Mailing and Media Notice Program to be $265,000. Responses (1) ACE Property and Casualty Insurance Company ACE asserts that nothing in the Order approving Portland's request should constitute an acknowledgement by the U.S. Bankruptcy Court for the District of Oregon as to the validity of the so-called "repressed memory" theory which has not been adopted by the Oregon courts, or that there are really any claimants to be represented by the representative for that class. ACE maintains that it should be made clear in any Order providing for the appointment of a representative for alleged repressed memory claimants that the appointment of the representative does not excuse claimholders who are required by applicable law to file claims from doing so by the Claims Bar Date. (2) Tort Committee The Official Committee of Tort Claimants in the Archdiocese of Portland in Oregon's Chapter 11 case wants the form of Notice to be used in connection with the actual, formal notice to known potential tort claimants and that the proposed Proof of Claim form be used by all tort claimants. The Tort Committee further proposes that the Notice and Proof of Claim forms be sent to known potential claimants by a neutral party rather then by Portland, together with a cover letter from a survivor, probably the Chairman of the Tort Committee. The Tort Committee asserts that the Court should appoint a representative of unknown claimants. The Tort Committee agrees with Portland that there can be one representative for all unknown tort claimants, including minors. Albert N. Kennedy, Esq., at Tonkon Torp, LLP, in Portland, Oregon, contends that the Unknown Claims Representative should represent and advocate for all persons injured by child abuse who, on or before the Bar Date: -- have "not discovered the injury or the causal connection between the injury and the child abuse, nor in the exercise of reasonable care should have discovered the injury of the causal connection between the injury and the child abuse;" and -- have not reached the age of 18, and for those who have reached the age of 18, but for whom the statute of limitations has not yet run. Mr. Kennedy contends that Portland's attempt to limit the category of persons represented by the Unknown Claims Representative to minors and persons with "repressed memory" is unfair and unworkable. "Repressed Memory," Mr. Kennedy explains, is open to different interpretations. Repression describes only one of many psychological defense mechanisms that may be employed by victims of childhood priest abuse. A victim of childhood priest abuse may: -- utilize one or a multiple of psychological mechanisms that could be described as suppression, repression, denial or otherwise; -- block some or most, but not all, memories relating to the abuse; and -- block all feelings relating to the abuse and may block any linkage between the abuse and the injury. This blockage may render the individual incapable of understanding the injury or the causal connection between the injury and the child abuse. The Tort Committee believes that a final Bar Date can be established only after the universe of known, potential claimants has been determined and the Unknown Claims Representative has been appointed. There is no indication that Portland has completed its investigation and identification of known potential tort claimants, nor is there any indication that Portland has begun an investigation with respect to known holders of "other" claims. Mr. Kennedy notes that Portland has stated in its Schedules of Assets and Liabilities and Statement of Financial Affairs, and in other pleadings that there are "others" who have an interest in the property held by Portland. These persons have potential claims and, to the extent that they can be identified Portland, are entitled to actual formal notice. Mr. Kennedy also adds that, although both Portland and the Tort Committee agree that a web page and a hotline should be established as a component of the notice process, the design, content and other mechanics have not been determined. 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. 11; Bankruptcy Creditors' Service, Inc., 215/945-7000) CENTURY ALUMINUM: Moody's Puts B1 Rating on $175M Sr. Unsec. Notes ------------------------------------------------------------------ Moody's Investors Service assigned a B1 rating to Century Aluminum Company's $175 million senior unsecured convertible notes due 2024. The convertible notes are unconditionally guaranteed on a senior unsecured basis by all of the company's existing domestic restricted subsidiaries. Proceeds from the notes were used to partially finance the tender offer for Century's existing senior secured first mortgage notes and to pay premiums and other expenses. In the tender offer $315.5 million of secured mortgage notes were redeemed leaving only $9.9 million outstanding and therefore Moody's has withdrawn the B1 rating on the first mortgage notes. Due to the significant reduction in this secured debt instrument, the senior unsecured and convertible notes have not been notched down and are rated at the senior implied level. Moody's affirmed the existing ratings of Century. The rating outlook is positive. This rating action was taken: * Assigned a B1 rating to the $175 million of 1.75% senior unsecured guaranteed convertible notes due 2024 These ratings were affirmed: * The Ba3 rating for Century's $100 million senior secured revolving credit facility, * The B1 rating for Century's $250 million 7.5% senior notes due 2014 * Century's B1 senior implied rating, and * Century's B3 senior unsecured issuer rating. The B1 rating on the convertible notes reflects the parity that now exists to the $250 million senior unsecured notes due 2014 following the company's providing of the same subsidiary guarantee structure that the notes have. Century's ratings continue to reflect its relatively high leverage, exposure to a single commodity-priced product, primary aluminum, and higher cost base compared to many of its integrated competitors, risks associated with alumina and electrical power supply arrangements, and high customer concentration. Additionally, the ratings reflect the company's increased debt level following its acquisition of Nordural Aluminum ehf, Iceland, and the additional borrowings and equity contributions required to complete the facility's expansion over the next two years. Moody's notes the initial expansion plans of 90,000 MTPY have been increased by a further 32,000 MTPY for total estimated costs of $454 million. Positive factors supporting the ratings include the stability provided by Century's business model, which uses long-term supply and sales contracts to minimize mismatches between alumina and aluminum prices and capture a sales premium above the London Metal Exchange -- LME -- aluminum price. This -- along with aluminum hedging -- enabled the company to generate free cash flow in each of the last three fiscal years, when LME prices were often below $0.65/pound. Also, while the company's debt has risen with the acquisition of Nordural, the new financings extend the company's debt maturity profile and lower its average cost. Additionally, Moody's ratings and the positive rating outlook recognize the increased earnings base and lower cost of operations provided by the acquisition of Nordural, and the limited completion and operating risk related to its planned expansion. Finally, the current favorable aluminum pricing environment is expected to continue for several quarters and generate greater operating cash flow, which should reduce the amount of additional debt required to finance the Icelandic smelter expansion. The current LME aluminum price is approximately 83>/pound, well above the 68>/pound 10-year average price. Given the anticipated deficit of global aluminum supply expected over the near-term, Moody's expects that pricing will continue to be favorable through at least 2005, when additional global capacity is expected to come on line. Century's operating performance through the first nine-months of 2004 improved significantly on a year over year basis as increased shipments and higher aluminum prices resulted in sharply higher levels of revenue and operating income. However, cost increases in the third quarter due to greater replacement of reduction cells than anticipated, higher fuel surcharges at the Mt. Holly plant and increased administrative expenses, partially mitigated the level of earnings and margin advancement evidenced in the company's performance for the first six months of 2004. While operating fundamentals continue strong in the fourth quarter of 2004, Moody's anticipates that continued power cost issues at Mt. Holly could again contribute to cost increases. Nonetheless, year on year performance advancement should remain favorable. Net income was impacted by a $47.4 million loss on the early extinguishment of a significant level of first mortgage notes, however the company anticipates annual interest expense savings of approximately $16 million from the refinancing activities undertaken in 2004. Debt levels ($526 million at Sept. 30, 2004) continue to increase in line with the funding for Nordural's expansion. Factors that would improve the rating and outlook would include a successful completion of the Nordural expansion and the reduction of associated debt in a timely manner. Conversely, delays in the expansion of Nordural combined with aluminum pricing falling below its longer term historical average would result in a review of the rating and outlook. Headquartered in Monterey, California, Century Aluminum Company has ownership interests in four aluminum production facilities with annual capacity of 1.4 million pounds of aluminum. Century had revenues of $782 million in 2003. CHESAPEAKE CORP: Majority of Noteholders Agree to Amend Debentures ------------------------------------------------------------------ Chesapeake Corporation (NYSE: CSK) disclosed the results to date in its previously announced cash tender offer to purchase any and all of its outstanding $85.0 million aggregate principal amount of 7.20% Debentures due March 15, 2005 and solicitation of consents to proposed amendments to the indenture governing the debentures. As of 5:00 p.m. Eastern Standard Time on Dec. 2, 2004, tenders and consents had been received for approximately $66.8 million in aggregate principal amount of the debentures, representing approximately 78.5% of the outstanding debentures. The percentage of consents received exceeds the requisite consents needed to amend the indenture governing the debentures. Chesapeake and The Bank of New York, the trustee under the indenture, have executed a supplemental indenture to effect the proposed amendments. However, the proposed amendments will not become operative with respect to the debentures and the indenture until the tendered Notes are accepted for purchase by Chesapeake. If the tender offer is terminated or withdrawn, the proposed amendments will not become operative. The proposed amendments would eliminate the principal restrictive covenants in the indenture and would permit satisfaction and discharge of any debentures not tendered in the offer. Debentures tendered on or prior to the Consent Payment Deadline will be settled on the initial settlement date, which is expected to be on or about December 8, 2004. The tender offer is being made pursuant to an Offer to Purchase and Consent Solicitation Statement and a related Consent and Letter of Transmittal, dated November 18, 2004. The tender offer is scheduled to expire at 5:00 p.m., New York City time, on Dec. 20, 2004, unless extended or earlier terminated. Chesapeake intends to pay amounts due in connection with the tender offer and consent solicitation, together with related fees and expenses, with the net proceeds from the previously announced offering of Senior Subordinated Notes due 2014. The offer is subject to the satisfaction of certain conditions, including the Company having entered into arrangements satisfactory to it with respect to financing sufficient to complete the tender offer, and other customary conditions. The exact terms and conditions of the tender offer and consent solicitation are specified in, and qualified in their entirety by, the Offer to Purchase and Consent Solicitation Statement and related materials have been distributed to holders of the debentures, copies of which may be obtained from the information agent: Global Bondholder Services Corporation U.S. Toll Free: (866) 873-6300 Collect: (212) 430-3774 Chesapeake has engaged Banc of America Securities LLC to act as the exclusive dealer manager and solicitation agent in connection with the tender offer and consent solicitation. Questions regarding the Offer may be directed to: Banc of America Securities LLC High Yield Special Products U.S. Toll Free: (888) 292-0070 Collect: (704) 388-9217 About the Company Chesapeake Corporation is a leading international supplier of value-added specialty paperboard and plastic packaging with headquarters in Richmond, Virginia. The Company is one of Europe's premier suppliers of folding cartons, leaflets and labels, as well as plastic packaging for niche markets. Chesapeake has more than 50 locations in Europe, North America, Africa and Asia and employs approximately 6,100 people worldwide. * * * As reported in the Troubled Company Reporter on Dec. 03, 2004, Moody's Investors Service rated Chesapeake Corporation's new EUR100 million Senior Subordinated Notes B2. Chesapeake intends to use the net proceeds from this issue to fund a tender offer of its $85.0 million 7.2% senior unsecured debentures due March 15, 2005, with the balance available for general corporate purposes which may include funding near term debt maturities. Should the tender offer be successful, Moody's will withdraw the applicable rating. Moody's also affirmed Chesapeake's Ba3 senior implied and B1 senior unsecured and issuer ratings. The outlook remains stable. CHI-CHI'S: Selling Margaritaville Name to Jimmy Buffett for $100K ----------------------------------------------------------------- Chi-Chi's, Inc., asks the U.S. Bankruptcy Court for the District of Delaware for permission to sell its intellectual property rights in the Margaritaville brand name to Jimmy Buffett for $100,000. Chi-Chi's tells the Bankruptcy Court that while it would ordinarily tee up an auction, there are many sticky issues that make it difficult for a third-party to use the Margaritaville name. Chi-Chi's owns the Margaritaville name and leases it to Mr. Buffett, but everybody associates the Margaritaville name with Mr. Buffett and the products he markets under that name. Chi-Chi's believes Mr. Buffett is the only logical purchaser that won't draw the company into protracted litigation. Chi-Chi's also believes Mr. Buffett's offer is fair and reasonable. Last month, Chi-Chi's obtained an order from the Bankruptcy Court extending its exclusive periods afforded under 11 U.S.C. Sec. 1121 by another year. Specifically, the Honorable Charles G. Case extended the company's exclusive right to file a chapter 11 plan through Oct. 3, 2005, and gave the company an extension, through Dec. 7, 2005, to solicit acceptances of that plan from its creditors. As reported in the Class Action Reporter on Feb. 24, 2004, Chi-Chi's has to resolve claims asserted by some 600 Hepatitis Claimants, three of which died from the virus after eating tainted green onions imported from Mexico at a restaurant located in the Beaver Valley Mall, about 25 miles northwest of Pittsburgh, in November 2003. Chi-Chi's reports approximately 250 of those claims have been settled to date. It's impossible, the Debtor indicates, to propose a confirmable plan until the extent of the Hepatitis Claims is quantified. Headquartered in Irvine California, Chi-Chi's, Inc., is a direct or indirect operating subsidiary of Prandium and FRI-MRD Corporation and each engages in the restaurant business. The Debtors filed for chapter 11 protection on October 8, 2003 (Bankr. Del. Case No. 03-13063-CGC). Bruce Grohsgal, Esq., Laura Davis Jones, Esq., Rachel Lowy Werkheiser, Esq., and Sandra Gail McLamb, Esq., at Pachulski, Stang, Ziehl Young & Jones represent the Debtors in their restructuring efforts. The Debtors estimated $50 to $100 million in assets and more than $100 million in liabilities when they filed for bankruptcy. CMS ENERGY: Fitch Upgrades Ratings & Revises Outlook to Positive ---------------------------------------------------------------- Fitch Ratings upgrades these credit ratings for the debt obligations of CMS Energy Co. and Consumers Energy Co.: * CMS -- Senior secured bank loan to 'BB' from 'BB-'; -- Preferred securities and trust preferred securities to 'B' from 'B-'; * Consumers -- Senior secured debt to 'BBB-'from 'BB+'; -- Preferred securities and trust preferred securities to 'BB-'from 'B'. The 'B+' senior unsecured rating for CMS and the 'BB' senior unsecured rating for Consumers have been affirmed. The Rating Outlook for CMS has been revised to Positive from Stable. The Rating Outlook for Consumers remains Stable. Approximately $6.7 billion of debt is affected. The rating changes follow a recent review of the credits and reflects Fitch's latest assessment of the company's financial position and business strategy. Over the past 18 months, management has taken various actions, including the successful refinancing of secured bank facilities and the completion of the majority of targeted asset sales, which have benefited CMS' credit profile and have resulted in a stabilization of CMS' credit quality. Consequently, the company now has reduced business risk, improved access to capital markets, and lower levels of consolidated debt. The ratings also recognize CMS' ownership of a regulated utility, Consumers, and the stable dividends and enterprise value relating to that investment. CMS is strongly dependent on cash flow from Consumers to service parent debt obligations. Qualitative factors that positively affect the ratings of CMS and Consumers also include recent favorable regulatory developments in Michigan. The Positive Outlook for CMS takes into consideration the improvement in CMS' financial profile due to lower parent debt levels and an improved liquidity position, with no material debt maturities through 2006. Events that could result in further positive rating action include the ability to demonstrate continued improvement in the ratio of consolidated debt to cash flow from operations and further parent debt reduction. Events that could adversely affect ratings include credit deterioration at Consumers or the inability to refinance maturing CMS parent debt. Fitch notes that CMS will be dependent on additional asset sales or accessing capital markets to refinance a part of the debt maturing 2007 and 2008, when $468 million and $410 million of parent debt becomes due. The upgrade of Consumers' senior secured debt reflects the utility's strong business characteristics, stable and predictable cash flows, as well as sound electric and gas distribution franchises. Recently, the utility received final orders from the Michigan Public Service Commission -- MPSC -- on several regulatory filings, including a gas rate case, a stranded cost case, a securitization case and a gas depreciation case. Overall, Fitch views the rate proceedings as having a slightly positive impact on the ratings of Consumers. In particular, the ability to recover approximately $628 million of costs primarily associated with environmental compliance over the next five years will be beneficial to the utility's cash flow. Fitch expects Consumers to file for an electric rate case by year-end 2004, with an anticipated implementation date of Jan. 1, 2006. Recent actions by the MPSC should result in reduced financial exposure to commodity risk and loss of margin due to electric competition, will have favorable implications for Consumers. CMS is a utility holding company whose primary subsidiary is Consumers, a regulated electric and gas utility serving more than 3.4 million customers in western Michigan. CMS also has operations in natural gas pipelines and independent power production. COLUMBUS MCKINNON: S&P Changes Outlook on B Rating to Stable ------------------------------------------------------------ Standard & Poor's Ratings Services affirmed its ratings, including its 'B' corporate credit rating, on Columbus McKinnon Corp. At the same time, Standard & Poor's revised its outlook on the Amherst, New York-based supplier of material handling equipment to stable from negative. At Oct. 3, 2004, Columbus McKinnon had approximately $304 million of debt outstanding, including the present value of operating leases. "The outlook revision reflects Columbus McKinnon's improving credit profile resulting, in part, from improved earnings and cash flow performance," said Standard & Poor's credit analyst Eric Ballantine. "In addition, Columbus McKinnon has sufficient availability under its $50 million revolving credit facility to meet its near-term funding needs. Since Columbus McKinnon typically generates a modest amount of annual free cash flow -- $10 million to $20 million -- its liquidity profile is consistent with its business objectives and with the stable outlook." The company holds the No. 1 or No. 2 position in the material- handling, lifting, and positioning products industry. It manufactures hoists (roughly half of product revenues), chain and forged attachments, industrial cranes, and industrial components. As a result of improving end-market conditions and a focus on cost reductions, Columbus McKinnon improved its operating margins and cash generation. In addition, it has focused on selling off non- core business segments, mainly within the company's solutions group. The company's leveraged balance sheet and weak credit protection measures limit upside ratings potential. Columbus McKinnon's niche business positions, improving cost structure, and recovering end-markets limit downside risk. COMMUNITY HEALTH: Launches $250 Million Private Debt Offering ------------------------------------------------------------- Community Health Systems, Inc. (NYSE:CYH) has commenced with a private offering of $250 million aggregate principal amount of senior subordinated notes due 2012. The senior subordinated notes are being offered in an unregistered offering pursuant to Rule 144A and Regulation S under the Securities Act of 1933. Community Health Systems intends to offer to exchange the unregistered notes for substantially identical registered senior subordinated notes. The senior subordinated notes will not be registered under the Securities Act of 1933 or the securities laws of any state and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements under the Securities Act of 1933 and any applicable state securities laws. This press release does not constitute an offer to sell or the solicitation of an offer to buy any of the notes or any other securities. Community Health Systems intends to use the net proceeds from the offering to repay borrowings under the revolving tranche of its senior secured credit facility, with any remaining proceeds being used to repay the term tranche of its senior secured credit facility. About the Company Located in the Nashville, Tennessee suburb of Brentwood, Community Health Systems is a leading operator of general acute care hospitals in non-urban communities throughout the country. Through its subsidiaries, Community Health Systems currently owns, leases or operates 71 hospitals in 22 states. Its hospitals offer a broad range of inpatient medical and surgical services, outpatient treatment and skilled nursing care. Shares in Community Health Systems are traded on the New York Stock Exchange under the symbol "CYH." * * * Fitch Ratings assigned a 'B+' rating to Community Health Systems, Inc.'s planned $250 million senior subordinated notes issue. Fitch also affirmed Community's 'BB' rated, $1.625 billion secured credit facility and 'B+' rated convertible subordinated notes due 2008. The Rating Outlook is Stable. At the same time, the proposed $250 million notes carries 'B' rating from S&P. COMMUNITY HEALTH: Fitch Rates Proposed $250M Senior Sub. Notes B+ ----------------------------------------------------------------- Fitch Ratings assigned a 'B+' rating to Community Health Systems, Inc.'s planned $250 million senior subordinated notes issue. Fitch also affirmed Community's 'BB' rated, $1.625 billion secured credit facility and 'B+' rated convertible subordinated notes due 2008. The Rating Outlook is Stable. Proceeds from the issue are expected to term-out borrowings under the company's $425 million revolving bank facility which were drawn down to fund Community's recent share repurchase. At the time the share repurchase was announced, Fitch affirmed Community's ratings and noted that while the increase in borrowing was rather large, Community's credit profile had been trending positively. Industry issues such as bad debt have taken their toll on Community's margins but the company has fared better than its peers in this regard and pricing remains fairly strong (especially for rural providers like Community). Despite the increase in debt, leverage and coverage remain appropriate for the category. Fitch anticipates that at year-end 2004 leverage will be between 3.5 times (x) and 3.7x and coverage will be between 6.0x and 6.2x. Fitch does expect Community to remain fairly aggressive with regards to acquisitions, however, the level of activity is dependent on the pipeline and current multiples. Community's rating reflects the validity of the company's business model and its leading market presence, experienced management and track record of successful acquisitions, offset by modestly high leverage and acquisition-associated risks. Fitch notes that several provisions of the Medicare Prescription Drug, Improvement and Modernization Act of 2003 -- MMA -- have had a better-than- anticipated, positive impact on rural hospital providers such as Community. Concerns center on acquisition-associated risks and that the company's model relies, to some degree, on acquisitions to sustain current growth and margin momentum. Other concerns include industry-wide issues such as bad debt expense, slower- than-expected volume trends, sustainability of private-pay rate increases, and the highly regulated nature of the industry. COMMUNITY HEALTH: S&P Rates Proposed $250M Senior Sub. Notes 'B' ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B' rating to hospital operator Community Health Systems Inc.'s proposed $250 million in senior subordinated notes due 2012, which are issued under Rule 144A with registration rights. Proceeds will be used to repay existing debt. The company's total debt outstanding as of Sept. 30, 2004, was $1.8 billion. At the same time, Standard & Poor's affirmed its other ratings on Community Health Systems and its wholly owned subsidiary, CHS/Community Health Systems Inc. "The speculative-grade ratings on Brentwood, Tennessee-based Community Health Systems reflect Standard & Poor's concern about the company's aggressive acquisition activity and the uncertain future reimbursement levels it can expect to receive from the government and other third-party payors," said Standard & Poor's credit analyst David Peknay. The company, operating 71 hospitals in 22 states, primarily in small, non-urban markets with stable or growing populations, has seen its revenues nearly double since 2001. Community acquires weak, underperforming hospitals and attempts to build revenues by enhancing physician recruitment and broadening services. The company has acquired about 20 hospitals since 2001, and will likely continue at this rate. This will create possible integration challenges that make it more difficult to turn around acquired assets as expected. Community's diversified hospital portfolio and strong position as sole provider in the majority of its communities help mitigate these risks. Overall profitability remains tied to changes in reimbursement by the government and other third-party payors, which are coming under increasing economic and political pressures. Managed care's smaller rate increases and Community Health's own increasing bad debts have hurt the company's operating margins. For these reasons, as well as the weak condition of its recently acquired hospitals, the company's margins declined to just below 15% as of September 2004 from 17% in 2003 and 18% in 2002. Standard & Poor's expects these margins to stabilize, however, as the company's bad debt expenses level off in a stronger economy and as operating improvements bear fruit. At the same time, Community Health's profitability will also be influenced by any change in regulations and by unforeseen economic developments. COMPOSITE SOLUTIONS: Bankruptcy Court Dismisses Chapter 7 Petition ------------------------------------------------------------------ On Nov. 18, 2004, the United States Bankruptcy Court for the Southern District of California dismissed the voluntary petition for liquidation under Chapter 7 of the U.S. Bankruptcy Code filed by Composite Solutions, Inc. (OTC BB: KIPS) on Oct. 11, 2004. CSI will not resume its former operations, but is pursuing other options for reorganizing the corporation via a Chapter 11 bankruptcy and acquisition of another operating entity. Headquartered in La Jolla, California, Composite Solutions, Inc., has provided components for the aerospace, defense, marine, oil, commercial and recreational industries. The Company filed a chapter 7 petition on Oct. 11, 2004 (Bankr. S.D. Cal. Case No. 04-08830). Radmila A. Fulton of San Diego, California represented the Debtor in its chapter 7 case. When the Debtor filed for chapter 7 protection, it estimated less than $100,000 in total assets and more than $1 million in total debts. CROWN CASTLE: Prices Cash Tender Offer for Convertible Sr. Notes ---------------------------------------------------------------- Crown Castle International Corp. (NYSE: CCI) disclosed the pricing for its cash tender offer for any and all of its outstanding 4% Convertible Senior Notes due 2010. The tender offer is being made upon the terms and conditions in the Offer to Purchase and related Letter of Transmittal dated November 8, 2004. The tender offer will expire at midnight, New York City time, on December 7, 2004, unless extended or terminated. Tenders of the Convertible Notes may be withdrawn at any time prior to the Expiration Date. The purchase price for each $1,000 principal amount of Convertible Notes was determined pursuant to the pricing formula set forth in the Offer to Purchase, that is based upon the volume-weighted average price of the Company's common stock, subject to a minimum price of $750.00 and a maximum price of $1,795.05 per $1,000 principal amount of Convertible Notes, plus accrued and unpaid interest through, but excluding, the date of purchase. Under the terms of the tender offer, the purchase price for each $1,000 principal amount of Convertible Notes will be the maximum purchase price under the pricing formula, which is $1,795.05 per $1,000 principal amount of Convertible Notes, plus accrued and unpaid interest through, but excluding, the date of purchase. The volume-weighted average price of the Company's common stock during the averaging period contemplated by the pricing formula is $16.8746. The closing of the tender offer is conditioned upon the satisfaction of certain conditions described in the Offer to Purchase. This press release is merely a notification of the pricing of the tender offer and is neither an offer to purchase nor a solicitation of an offer to sell the Convertible Notes. The tender offer is being made only pursuant to the Offer to Purchase and related Letter of Transmittal dated November 8, 2004. Holders of Convertible Notes should read the Tender Offer Statement on Schedule TO, the Offer to Purchase, related Letter of Transmittal and other tender offer documents filed with the Securities and Exchange Commission on November 8, 2004, and any subsequently filed amendments or exhibits thereto, because they contain important information. The Tender Offer Statement on Schedule TO, the Offer to Purchase, related Letter of Transmittal and other tender offer documents filed with the SEC may be obtained free of charge from the SEC's website at http://www.sec.gov/ Holders of Convertible Notes may also request copies of the Tender Offer Statement on Schedule TO, the Offer to Purchase, related Letter of Transmittal and other filed tender offer documents free of charge by contacting the Information Agent at: MacKenzie Partners, Inc. 105 Madison Avenue New York, N.Y. 10016 Attn: Steve Balet Toll-Free: (800) 322-2885 Collect: (212) 929-5500 Questions regarding the tender offer may be directed to the Depositary: The Bank of New York Corporate Trust Operations Reorganization Unit 101 Barclay Street 7 East, New York, N.Y. 10286 Attn: Carolle Montreuil Tel. No. (212) 815-5920 About the Company Crown Castle International Corp. engineers, deploys, owns and operates technologically advanced shared wireless infrastructure, including extensive networks of towers. Crown Castle offers significant wireless communications coverage to 68 of the top 100 United States markets and to substantially all of the Australian population. Crown Castle owns, operates and manages over 10,600 and over 1,300 wireless communication sites in the U.S. and Australia, respectively. For more information on Crown Castle visit: http://www.crowncastle.com/ * * * As reported in the Troubled Company Reporter on June 30, 2004, Standard & Poor's Ratings Services placed its ratings of Houston, Texas-based wireless tower operator Crown Castle International Corp. (including the 'B-' corporate credit rating) and operating company Crown Castle Operating Co. on CreditWatch with positive implications. Approximately $4 billion of leased-adjusted debt is outstanding. The CreditWatch placement follows Crown Castle's announcement of a definitive agreement to sell its U.K. tower subsidiary for about $2 billion. The prior positive outlook had recognized the potential for meaningful reduction in debt leverage, and the earmarking of $1.3 billion of proceeds from the announced disposition could accelerate the deleveraging process. However, a key factor in the rating analysis will be the use of the approximate $740 million balance of net sale proceeds. The company notes that these monies will be used either for further debt reduction or for expansion of its U.S. portfolio. To the extent that Crown Castle opts not to apply the bulk of the $740 million to debt reduction, Standard & Poor's will review management's expansion plans, including the potential cash flow from newly built and/or purchased towers. "If Crown Castle purchases extant towers, factors that will be considered in evaluating the credit impact will include the quality of existing tenants per tower, contract terms applicable to purchased tenants, the potential for new tenants, and tenant diversity," said Standard & Poor's credit analyst Michael Tsao. CROWN PACIFIC: Plan Projects 44.5% Recovery by Unsecured Creditors ------------------------------------------------------------------ The Honorable Rudolph J. Haines of the U.S. Bankruptcy Court for the District of Arizona put his stamp of approval on a Disclosure Statement prepared by Crown Pacific Partners L.P. to explain its liquidating chapter 11 plan. Crown will now transmit the disclosure document to creditors and solicit their acceptance of the plan. Bank of America and Crown's other secured lenders, owed $292 million, will receive 525,000 acres of tree farms located in Oregon and Washington in exchange for their debt. A new company formed pursuant to the plan will be owned by the lenders and will operate the timber business. A liquidating trust will be formed pursuant to the plan to sell some sawmills and lumberyards and distribute the sale proceeds to creditors. Unsecured creditors, owed $213.4 million, are projected to recover 44.5% of what they're owed via the liquidating trust. Some structurally senior holders of general unsecured claims, owed $5.6 million, are projected to recover 62.8% of what they're owed. As previously reported in the Troubled Company Reporter, Interfor bought three Crown Pacific mills in Port Angeles and Marysville, Washington, and in Gilchrist, Oregon, for US$57.3 million, plus working capital estimated at US$16 million. Crown also sold three lumberyards for about $66 million pursuant to Sec. 363 of the Bankruptcy Code. Judge Haines will consider the merits of the company's plan at a confirmation hearing on Dec. 20. Confirmation Objections, if any, must be filed and served by Dec. 13. 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. DAN RIVER: Judge Drake Approves Debtors' Disclosure Statement ------------------------------------------------------------- The Honorable W. Homer Drake, Jr., of the U.S. Bankruptcy Court for the Northern District of Georgia, put his stamp of approval on the Disclosure Statement filed by Dan River, Inc., and its debtor- affiliates to explain the company's chapter 11 plan of reorganization. The company may now distribute the disclosure document and solicit acceptances of its plan from creditors. Dan River's plan proposes to cancel existing equity and swap $167 of pre-petition bond debt for most of the equity in Reorganized Dan River. General unsecured creditors, owed approximately $57.5 million, will receive a basket of cash and new reshuffled shares that's projected to return a 25% dividend on their prepetition claims. Judge Drake will convene a confirmation hearing on Jan. 4, 2005, to consider the merits of the Plan. Objections, if any, to plan confirmation must be filed and served by Dec. 30. Headquartered in Danville, Virginia, Dan River Inc. -- http://www.danriver.com/-- is a designs, manufactures and markets textile products for the home fashions, apparel fabrics and industrial markets. The Company and its debtor-affiliates filed for chapter 11 protection on March 31, 2004 (Bankr. N.D. Ga. Case No. 04-10990). James A. Pardo, Jr., Esq., at King & Spalding represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $441,800,000 in total assets and $371,800,000 in total debts. DIGITAL LIGHTWAVE: Holding Annual Stockholders' Mtg. on Jan. 14 --------------------------------------------------------------- Digital Lightwave, Inc.'s (Nasdaq:DIGL) Board of Directors approved plans to hold the next Annual Meeting for fiscal year 2003 on Jan. 14, 2005, and separately, a Special Meeting of the Stockholders of the Company during the first quarter of 2005. Annual Stockholders Meeting Fiscal Year 2003 The Company's Annual Meeting of Stockholders for the fiscal year ended Dec. 31, 2003, will be held on January 14, 2005, at the principal offices of the Company in Clearwater, Florida. Stockholders of record as of Dec. 16, 2004, will be asked to vote on the routine election of members of the Board of Directors and the ratification of the appointment of the independent auditors for fiscal year 2004. The official Notice of Meeting, Proxy Statement and the Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2003, will be distributed to the Company's stockholders in the coming weeks. Special Meeting of the Stockholders The Company filed a Preliminary Proxy Statement detailing proposals which will be submitted for approval of the Company's stockholders at the Special Meeting. The Board determined it would be in the best interests of the Company and its stockholders to hold a separate, Special Meeting to consider these important proposals, including: -- Amendments to the Company's 2001 Stock Option Plan; -- Approval of the conversion feature of the debt held by Optel Capital LLC that was issued on September 16, 2004, in connection with the restructuring of the Company's indebtedness to Optel, and the issuance of common stock upon possible conversion of such debt; and -- An amendment of the Company's Certificate of Incorporation to increase the number of authorized shares of Common Stock of the Company. The Special Meeting is targeted to be held during the first quarter of 2005. The official Notice of Meeting and definitive Proxy Statement will be distributed to the Company's stockholders following a review, if any, by the Securities and Exchange Commission. James Green, Chief Executive Officer of the Company, commented, "The Company has made great strides this year in restructuring its debt with Optel and streamlining its operations. The proposals scheduled for vote at the planned Special Meeting represent the culmination of almost two years of hard work to better position the Company for the future." Mr. Green added, "As we complete the business scheduled for the Special Meeting and the upcoming Annual Meeting, we look forward to returning thereafter to a routine schedule of holding Annual Meetings of Stockholders in the second quarter of each year." The solicitation of proxies for the Special Meeting and the Annual Meeting has not yet commenced, and this announcement shall not constitute a solicitation of proxies. The solicitation of proxies will be made only through the definitive proxy materials relating to the Special Meeting and the Annual Meeting that will be distributed to the Company's stockholders. The Company urges investors and stockholders to read the definitive proxy materials carefully, because they will contain certain important information. These documents and amendments to these documents will be filed with the Securities and Exchange Commission. When these and other documents are filed with the SEC, they may be obtained free of charge at the SEC's web site at http://www.sec.gov/ About the Company Based in Clearwater, Florida, Digital Lightwave, Inc. provides the global communications networking industry with products, technology and services that enable the efficient development, deployment and management of high-performance networks. Digital Lightwave's customers -- companies that deploy networks, develop networking equipment, and manage networks -- rely on its offerings to optimize network performance and ensure service reliability. The Company designs, develops and markets a portfolio of portable and network-based products for installing, maintaining and monitoring fiber optic circuits and networks. Network operators and telecommunications service providers use fiber optics to provide increased network bandwidth to transmit voice and other non-voice traffic such as internet, data and multimedia video transmissions. The Company provides telecommunications service providers and equipment manufacturers with product capabilities to cost-effectively deploy and manage fiber optic networks. The Company's product lines include: Network Information Computers, Network Access Agents, Optical Test Systems, and Optical Wavelength Managers. The Company's wholly owned subsidiaries are Digital Lightwave (UK) Limited, Digital Lightwave Asia Pacific Pty, Ltd., and Digital Lightwave Latino Americana Ltda. At September 30, 2004, Digital Lightwave's balance sheet showed a $22,560,000 stockholders' deficit, compared to a $21,140,000 deficit at December 31, 2003. DII INDUSTRIES: Bankr. Court Approves Seaton Settlement Agreement ----------------------------------------------------------------- The DII Industries, LLC and its debtor-affiliates sought and obtained United States Bankruptcy Western Court for the District of Pennsylvania approval of their settlement agreement with Halliburton Company and Seaton Insurance Company, formerly known as Unigard Insurance Company. The Seaton Settlement Agreement releases and terminates all rights, obligations, and liabilities that Seaton may owe DII Industries, LLC, Kellogg, Brown & Root, Inc., or Halliburton with respect to certain insurance policies, in consideration of a buy- out payment from Seaton to DII. In return for the Buyout Payment, all matters as to Halliburton, DII, KBR, and Seaton will proceed and be determined and governed precisely as if Seaton had been another carrier signatory to the Domestic Settlement Agreement. Halliburton, DII, KBR and Seaton have agreed that the Seaton Settlement Agreement will incorporate by reference the final terms of the Domestic Settlement Agreement. A full-text copy of the Seaton Settlement Agreement is available for free at: http://bankrupt.com/misc/Seaton_Settlement_Agreement.pdf Headquartered in Houston, Texas, DII Industries, LLC, is the direct or indirect parent of BPM Minerals, LLC, Kellogg Brown & Root, Inc., Mid-Valley, Inc., KBR Technical Services, Inc., Kellogg Brown & Root Engineering Corporation, Kellogg Brown & Root International, Inc., (Delaware), and Kellogg Brown & Root International, Inc., (Panama). KBR and its subsidiaries provide a wide range of services to energy and industrial customers and government entities in over 100 countries. DII has no business operations. DII and its debtor-affiliates filed a prepackaged chapter 11 petition on December 16, 2003 (Bankr. W.D. Pa. Case No. 02-12152). Jeffrey N. Rich, Esq., Michael G. Zanic, Esq., and Eric T. Moser, Esq., at Kirkpatrick & Lockhart LLP, represent the Debtors in their restructuring efforts. On June 30, 2004, the Debtors listed $6.255 billion in total assets and $5.295 billion in total liabilities. (DII & KBR Bankruptcy News, Issue No. 22; Bankruptcy Creditors' Service, Inc., 215/945-7000) DIVERSIFIED ASSET: Moody's Junks $27M Class B Sr. Sub. Sec. Notes ----------------------------------------------------------------- Moody's Investors Service downgraded two classes of notes issued by Diversified Asset Securitization Holdings I, L.P: * from Aa1 on watch for possible downgrade to A2, the U.S.$263,000,000 Class A Senior Secured Notes Due 2034 (Consisting of Class A-1 Floating Rate Senior Secured Term Notes Due 2034 and Class A-2 Fixed Rate Senior Secured Term Notes Due 2034); and * from B3 on watch for possible downgrade to C, the U.S.$27,000,000 Class B Fixed Rate Senior Subordinated Secured Notes Due 2034. According to Moody's, its rating action results primarily from significant deterioration in the Maximum Rating Distribution Test, breach of the Class A Overcollateralization Test, the Class B Overcollateralization Test, the Class A Interest Coverage Test, the Class B Interest Coverage Test, the Moody's Diversity Correlation Test, and the Weighted Average Coupon Test. Moody's noted that, as of the most recent monthly report on the transaction, the Maximum Rating Distribution Test was 1504 (500 max), the Class A Overcollateralization Test was 105.4% (114% min) (post October 2004 paydown), the Class B Overcollateralization Test was 91.5% (103% min) (post October 2004 paydown), the Class A Interest Coverage Test was 124.9% (127% min), the Class B Interest Coverage Test was 23.8% (109% min), the Moody's Diversity Correlation Test was 19.56 (20 min), and the Weighted Average Coupon Test was 7.43% (8.5% min). Issuer: Diversified Asset Securitization Holdings I, L.P. Class Description: U.S.$263,000,000 Class A Senior Secured Notes Due 2034 (Consisting of Class A-1 Floating Rate Senior Secured Term Notes Due 2034 and Class A- 2 Fixed Rate Senior Secured Term Notes Due 2034) Prior Rating: Aa1 on watch for possible downgrade Current Rating: A2 Class Description: U.S.$27,000,000 Class B Fixed Rate Senior Subordinated Secured Notes Due 2034 Prior Rating: B3 on watch for possible downgrade Current Rating: C DOLE FOOD: Fitch Assigns Low-B Ratings and Says Outlook is Stable ----------------------------------------------------------------- Fitch Ratings initiated coverage and assigned initial ratings for Dole Food Company, Inc., its parent, and its Bermuda subsidiary: * Dole Food Company, Inc. -- Senior secured bank facilities 'BB'; -- Senior unsecured debt 'B+'. * Dole Holding Company, LLC -- Second-lien term loan 'B+'; -- Senior subordinated note shelf offering 'B-'. * Solvest Ltd. -- Senior secured bank facilities 'BB'; This rating action affects approximately $1.9 billion of debt. The Rating Outlook is Stable. The ratings and Outlook consider Dole Food Company, Inc.'s strong global market position, the high brand awareness of the DOLE trademark, efficiencies gained from the company's business reorganization and rationalization efforts over the past five years, and favorable consumption trends as consumers become more weight and health conscious. These positives are balanced against the company's high financial leverage, lower margin commodity product orientation, uncertainty related to final implementation of the European Union's tariff-only banana import policies, and uncertainty related to future use of operating cash flow. The rating on Dole's senior unsecured debt is based on current credit metrics. Dole's leverage, as defined by total debt-to- earnings before interest, taxes, depreciation, and amortization is 4.8 times (x) and net cash flow from operations-to-total debt is 12% for the latest 12 months ending Oct. 9, 2004. Dole's interest coverage, as defined by its EBITDA-to-interest incurred, is 2.5x for the same period. Leverage has been impacted by the company's 2003 privatization which increased debt levels by approximately $1 billion and by the $175 million acquisition of J.R. Wood, a producer and marketer of branded and non-branded frozen fruit products, in 2004. Credit metrics for the latest 12 months ending Oct. 9, 2004 have also been impacted by margin pressure and higher working capital utilization. The higher rating on Dole's secured bank debt reflects the strong security provided by the company's collateral, which includes substantially all of its assets. The lower rating on Dole's second-lien term loan and subordinated notes is indicative of their junior priority and lower potential recovery. The Outlook encompasses Fitch's expectation that the current pressure on operating earnings caused by increased fuel, packaging, and production costs will be transitory in nature. While pricing flexibility is limited for Dole's commodity based products, Fitch anticipates that EBITDA margins will stabilize as these cost pressures moderate in the intermediate term. Although uncertainty exists related to the final Jan. 1, 2006, implementation of the EU tariff-only banana regime, Fitch expects the tariff amount to continue to be negotiated and as such does not expect a final decision within the next 12 months. Negative rating implications would be persistent margin pressure, a significant reduction in cash flow due to high European banana tariffs, or significant further increases in leverage. Dole Food Company is one of the world's largest producers of fresh fruit, fresh vegetables, and fresh-cut flowers. 54% of the company's revenue is generated from outside of the United States. The company's operations are fully integrated with the vast majority of growing, harvesting, processing and packaging done in South America and the Far East. 58% of Dole's tangible assets are outside of the United States. The company has four operating segments: Fresh Fruit 66% of revenues and 70% of operating income, Fresh Vegetables 18% of revenues and 19% of operating income, Packaged Foods 12% of revenues and 11% of operating income, and Fresh-Cut Flowers 4% of revenues and 0% of operating income. Dole Foods is 100% owned by its CEO and Chairman, David H. Murdock. Fitch's ratings on Dole Food Company, its parent, and subsidiary were initiated as a service to the users of its ratings and are based on public information. EL CONEJO BUS LINES: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------------ Debtor: El Conejo Bus Lines, Inc. 712 South Walton Walker Dallas, Texas 75211 Bankruptcy Case No.: 04-82977 Type of Business: The Company is the first Hispanic bus company based in the Dallas Metroplex area. El Conejo serves the Hispanic passenger market with routes from the U.S. border with Mexico and points north, including Dallas, the greater Kansas City area and Chicago. See http://www.elconojobuslines.com/ Chapter 11 Petition Date: December 3, 2004 Court: Northern District of Texas (Dallas) Judge: Harlin DeWayne Hale Debtor's Counsel: Eric A. Liepins, Esq. Eric A. Liepins, P.C. 12770 Coit Road, Suite 1100 Dallas, Texas 75251 Tel: (972) 991-5591 Estimated Assets: $0 to $50,000 Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Internal Revenue Service $533,000 1100 Comerce Street Mail code 5027-DAL Dallas, Texas 75242 Finova $330,737 c/o Norman Zable 5757 Alpha Road, Suite 504 Dallas, Texas 75240 Jesus Vassquez $203,720 200 Hunt Drive Irving, Texas 75062 Andrade Jaime $101,200 6331 Knoll Ridge Drive Dallas, Texas 75249 Scott White Memorial Hospital $77,956 North American Coach $76,103 AT&T $69,620 El Expreso Bus Company $51,887 Heriberto Puente $33,942 The Travelers Property $30,259 Stewart & Stevenson Services $25,651 Ogletree Deakins $20,000 Worlds Best Truck Stops $19,995 Accident Insurance $19,746 Russ Dallas $19,296 TNM Services $18,129 Fuel City $17,995 Lilia D. Rodriguez $17,069 Tire Distribution Systems $14,614 Irizar Mexico $13,000 FAIRFAX FINANCIAL: Sells $200 Million of New 7-3/4% Senior Notes ---------------------------------------------------------------- Fairfax Financial Holdings Limited (TSX:FFH.SV)(NYSE:FFH) reported the sale of $200 million of its 7-3/4% Senior Notes due 2012 at an issue price of 99%. Fairfax intends to use the proceeds from this offering to purchase the $112 million of debt tendered to date pursuant to its debt tender offer announced on Nov. 18, 2004, and to purchase other outstanding debt, including the EUR 45.7 million vendor note due in 2007. Prem Watsa, Chairman and CEO of Fairfax, stated; "Our financing goals for 2004 were to significantly deleverage our balance sheet, remove refinancing risk and maintain significant cash at the holding company. When we close this debt issue, our equity financing announced on Oct. 28, 2004 (which is subject to regulatory approval) and our debt tender offer, I believe we will have clearly met these goals: -- We will have meaningfully delevered by issuing $300 million of new equity. -- After purchasing the debt currently tendered to our debt tender offer and retiring the remaining $27.5 million of debt maturing in April 2005, we will have retired $409.7 million (or 75%) of our 2005, 2006 and 2008 debt maturities since January 1, 2004. -- With our holding company cash (approximately $325 million at September 30, 2004) and the approximately $300 million proceeds of our equity offering, we will have effectively removed refinancing risk until 2012 while maintaining very significant cash at the holding company." The closing of this debt financing is conditional upon the closing of Fairfax's above-mentioned equity financing and its above- mentioned debt tender offer. Banc of America Securities LLC acted as sole book-running manager for this offering, which is expected to close on or about Dec. 21, 2004. A copy of the prospectus supplement and related base shelf prospectus may be obtained from: Banc of America Securities LLC Prospectus Department 100 West 33rd Street New York, N.Y. 10001 Tel. (646) 733-4166 About the Company Fairfax Financial Holdings Limited is a financial services holding company which, through its subsidiaries, is engaged in property and casualty insurance and reinsurance, investment management and insurance claims management. * * * As reported in the Troubled Company Reporter on Nov. 12, 2004, Fitch Ratings commented that Fairfax Financial Holdings Limited's ratings and Rating Watch Negative status are unaffected by its recent disclosures via its third-quarter 2004 financial filings and investor conference held on November 8, 2004. These ratings remain on Rating Watch Negative by Fitch: * Fairfax Financial Holdings Limited -- No action on long-term issuer rated 'B+'; -- No action on senior debt rated 'B+'. * Crum & Forster Holdings Corp. -- No action on senior debt rated 'B'. * TIG Holdings, Inc. -- No action on senior debt rated 'B'; -- No action on trust preferred rated 'CCC+'. * Members of the Fairfax Primary Insurance Group -- No action on insurer financial strength rated 'BBB-'. * Members of the Odyssey Re Group -- No action on insurer financial strength rated 'BBB+'. * Members of the Northbridge Financial Insurance Group -- No action on insurer financial strength rated 'BBB-'. * Members of the TIG Insurance Group -- No action on insurer financial strength rated 'BB+'. * Ranger Insurance Co. -- No action on insurer financial strength rated 'BBB-'. The members of the Fairfax Primary Insurance Group include: * Crum & Forster Insurance Co. * Crum & Forster Underwriters of Ohio * Crum & Forster Indemnity Co. * Industrial County Mutual Insurance Co. * The North River Insurance Co. * United States Fire Insurance Co. * Zenith Insurance Co. (Canada) The members of the Odyssey Re Group are: * Odyssey America Reinsurance Corp. * Odyssey Reinsurance Corp. Members of the Northbridge Financial Insurance Group include: * Commonwealth Insurance Co. * Commonwealth Insurance Co. of America * Federated Insurance Co. of Canada * Lombard General Insurance Co. of Canada * Lombard Insurance Co. * Markel Insurance Co. of Canada The members of the TIG Insurance Group are: * Fairmont Insurance Company * TIG American Specialty Ins. Company * TIG Indemnity Company * TIG Insurance Company * TIG Insurance Company of Colorado * TIG Insurance Company of New York * TIG Insurance Company of Texas * TIG Insurance Corporation of America * TIG Lloyds Insurance Company * TIG Specialty Insurance Company FAIRFAX FINANCIAL: Investors Tendered $112 Million of Notes ----------------------------------------------------------- Fairfax Financial Holdings Limited (NYSE:FFH) (TSX:FFH.SV) disclosed that $112.0 million aggregate principal amount of Notes have been tendered pursuant to its tender offer for certain of the outstanding debt securities of Fairfax and its wholly-owned subsidiary, TIG Holdings, Inc. After giving effect to the retirement of the remaining $27.5 million of 2005 Notes at maturity, Fairfax will have retired a total of $409.7 million (or 75%) of its 2005, 2006 and 2008 debt maturities since Jan. 1, 2004. As of 5:00 p.m., New York City time, on Dec. 2, 2004, which was the early tender date, investors had tendered: -- $11.1 million aggregate principal amount of the 8-1/8% TIG Notes due 2005; -- $60.9 million aggregate principal amount of the 7-3/8% Fairfax Notes due 2006; -- $35.6 million aggregate principal amount of the Fairfax 6-7/8% Notes due 2008; and -- $4.5 million aggregate principal amount of the 8.597% TIG Capital Securities due 2027. All tendered Notes will be accepted based on the results to date, subject to the terms and conditions of the Offer. Based on the results to date, approximately: -- $27.5 million of the 2005 Notes; -- $69.4 million of the 2006 Notes; and -- $63.7 million of the 2008 Notes will remain outstanding after completion of the Offer. The remaining 2005 Notes will be paid at maturity on April 15, 2005. The remaining 2006 Notes represent approximately 25% of the amount originally issued and the remaining 2008 Notes represent approximately 36% of the amount originally issued. The Offer will expire at 12:00 midnight, New York City time, on Dec. 20, 2004, unless extended or earlier terminated by Fairfax. Notes tendered pursuant to the Offer may no longer be withdrawn. The complete terms and conditions of the Offer are set forth in the Offer to Purchase dated Nov. 18, 2004. Holders are urged to read the tender offer documents carefully. Banc of America Securities is the exclusive dealer manager for the Offer. Questions regarding the Offer may be directed to: Banc of America Securities LLC High Yield Special Products U.S. Toll-Free: 888-292-0070 Collect: 704-388-4813 Copies of the Offer to Purchase and Letter of Transmittal may be obtained from the Information Agent for the Offer, D.F. King & Co., Inc., at 800-859-8509 (U.S. toll-free) and 212-269-5550 (collect). This press release is neither an offer to purchase, nor a solicitation for acceptance of the Offer. Fairfax is making the Offer only by, and pursuant to the terms of, the Offer to Purchase. About the Company Fairfax Financial Holdings Limited is a financial services holding company which, through its subsidiaries, is engaged in property and casualty insurance and reinsurance, investment management and insurance claims management. * * * As reported in the Troubled Company Reporter on Nov. 12, 2004, Fitch Ratings commented that Fairfax Financial Holdings Limited's ratings and Rating Watch Negative status are unaffected by its recent disclosures via its third-quarter 2004 financial filings and investor conference held on November 8, 2004. These ratings remain on Rating Watch Negative by Fitch: * Fairfax Financial Holdings Limited -- No action on long-term issuer rated 'B+'; -- No action on senior debt rated 'B+'. * Crum & Forster Holdings Corp. -- No action on senior debt rated 'B'. * TIG Holdings, Inc. -- No action on senior debt rated 'B'; -- No action on trust preferred rated 'CCC+'. * Members of the Fairfax Primary Insurance Group -- No action on insurer financial strength rated 'BBB-'. * Members of the Odyssey Re Group -- No action on insurer financial strength rated 'BBB+'. * Members of the Northbridge Financial Insurance Group -- No action on insurer financial strength rated 'BBB-'. * Members of the TIG Insurance Group -- No action on insurer financial strength rated 'BB+'. * Ranger Insurance Co. -- No action on insurer financial strength rated 'BBB-'. The members of the Fairfax Primary Insurance Group include: * Crum & Forster Insurance Co. * Crum & Forster Underwriters of Ohio * Crum & Forster Indemnity Co. * Industrial County Mutual Insurance Co. * The North River Insurance Co. * United States Fire Insurance Co. * Zenith Insurance Co. (Canada) The members of the Odyssey Re Group are: * Odyssey America Reinsurance Corp. * Odyssey Reinsurance Corp. Members of the Northbridge Financial Insurance Group include: * Commonwealth Insurance Co. * Commonwealth Insurance Co. of America * Federated Insurance Co. of Canada * Lombard General Insurance Co. of Canada * Lombard Insurance Co. * Markel Insurance Co. of Canada The members of the TIG Insurance Group are: * Fairmont Insurance Company * TIG American Specialty Ins. Company * TIG Indemnity Company * TIG Insurance Company * TIG Insurance Company of Colorado * TIG Insurance Company of New York * TIG Insurance Company of Texas * TIG Insurance Corporation of America * TIG Lloyds Insurance Company * TIG Specialty Insurance Company FIRST HORIZON: Fitch Affirms Low-B Ratings on Four Issue Classes ---------------------------------------------------------------- Fitch Ratings affirmed 22 classes of these First Horizon mortgage pass-through trust: * First Horizon mortgage pass-through trust series 2002-8 -- Class A affirmed at 'AAA'; * First Horizon mortgage pass-through trust series 2002-9 -- Class A affirmed at 'AAA'; * First Horizon mortgage pass-through trust series 2003-AR1 -- Class A affirmed at 'AAA'; * First Horizon mortgage pass-through trust series 2003-AR2 -- Class A affirmed at 'AAA'; * First Horizon mortgage pass-through trust series 2003-AR3 -- Class A affirmed at 'AAA'; * First Horizon mortgage pass-through trust series 2003-AR4 -- Classes A affirmed at 'AAA'; -- Class B-1 affirmed at 'AA'; -- Class B-2 affirmed at 'A'; -- Class B-3 affirmed at 'BBB'; -- Class B-4 affirmed at 'BB'; -- Class B-5 affirmed at 'B'; * First Horizon mortgage pass-through trust series 2003-2 -- Class A affirmed at 'AAA'; * First Horizon mortgage pass-through trust series 2003-3 -- Class A affirmed at 'AAA'; * First Horizon mortgage pass-through trust series 2003-4 -- Class A affirmed at 'AAA'; * First Horizon mortgage pass-through trust series 2003-6 -- Class A affirmed at 'AAA'; * First Horizon mortgage pass-through trust series 2003-9 -- Class A affirmed at 'AAA'; * First Horizon mortgage pass-through trust series 2003-10 -- Classes A affirmed at 'AAA'; -- Class B-1 affirmed at 'AA'; -- Class B-2 affirmed at 'A'; -- Class B-3 affirmed at 'BBB'; -- Class B-4 affirmed at 'BB'; -- Class B-5 affirmed at 'B'. These affirmations, representing approximately $2.1 billion of outstanding principal, reflect collateral performance and credit enhancement generally in line with expectations. The pools are seasoned from a range of only 12 to 24 months. The pool factors (current principal balance as a percentage of original) range from approximately 21% to 85% outstanding. FOOTSTAR, INC.: One Liberty Sells Lease-Related Claims ------------------------------------------------------ ONE LIBERTY PROPERTIES, INC., disclosed at an investor conference last week that it has assigned its $854,962 bankruptcy claim against Just For Feet of Texas, Inc., a former tenant at the Lewisville, Texas retail property. ONE LIBERTY also advised that a joint venture in which it is a 50% venture partner assigned its $858,556 bankruptcy claim against Just For Feet of Texas, Inc., a tenant at the Shreveport retail property. Both of these leases had been rejected in the bankruptcy proceeding filed by Just For Feet of Texas, Inc., and Footstar, Inc. If either claim is disallowed ONE LIBERTY will have to repay a proportional amount to the Assignee of the claims. ONE LIBERTY says it can't, at this time, comment on the appropriate accounting treatment which will be applied to the receipt of these funds or the impact on its financial statements. Footstar, Inc., and its debtor-affiliates filed a chapter 11 plan with the Bankruptcy Court last month. The two-option Plan contemplates either a reorganization transaction on a stand-alone basis or a sale transaction. Footstar's enterprise value as estimated in the Plan in the range of $113 to $139 million. Headquartered in West Nyack, New York, Footstar Inc., retails family and athletic footwear. As of August 28, 2004, the Company operated 2,373 Meldisco licensed footwear departments nationwide in Kmart, Rite Aid and Federated Department Stores. The Company also distributes its own Thom McAn brand of quality leather footwear through Kmart, Wal-Mart and Shoe Zone stores. The Company and its debtor-affiliates filed for chapter 11 protection on March 3, 2004 (Bankr. S.D.N.Y. Case No. 04-22350). Paul M. Basta, Esq., at Weil Gotshal & Manges represents the Debtors in their restructuring efforts. When the Debtor filed for protection, it listed $762,500,000 in total assets and $302,200,000 in total debts. FRANKLIN CAPITAL: Receives $3.8 Million from Private Placement -------------------------------------------------------------- Franklin Capital Corporation (AMEX:FKL) reported that, as a result of the Company's receipt of additional proceeds in connection with a third closing of the Company's previously announced private placement of shares of its common stock and warrants to purchase additional shares of its common stock, the Company has received to date aggregate proceeds of approximately $3.8 million from the private placement. These proceeds will be used in connection with the Company's previously announced restructuring and recapitalization plan, including to expedite the Company's entry into the medical products/health care solutions industry and financial services industry. The shares of common stock and warrants to purchase additional shares of common stock issued in connection with the private placement have not been registered under the Securities Act of 1933, as amended, and may not be offered or sold unless they are so registered or are exempt from the registration requirements. About the Company Franklin Capital Corporation originates and services direct and indirect loans for itself and its sister company Franklin Templeton Bank and Trust, F.S.B. Eight different loan programs are offered, allowing Franklin Capital Corporation to serve the needs of prime, non-prime and sub-prime customers throughout the United States. * * * As reported in the Troubled Company Reporter on August 24, 2004, Franklin Capital Corporation's former independent accountants, Ernst & Young LLP, indicated in its reports dated March 5, 2004 and March 7, 2003 on Franklin's financial statements, substantial doubt about the company's ability to continue as a going concern. GADZOOKS INC: Hires Retail Veteran Monty Standifer as New CFO ------------------------------------------------------------- Gadzooks, Inc., asks the U.S. Bankruptcy Court for the Northern District of Texas for authority to enter into an employment agreement with Monty Standifer as the company's new chief financial officer. Mr. Standifer served as Gadzooks' CFO from 1992 to 1999, and "has an intimate knowledge of the debtor's operations and a unique ability to guide the debtor through its Chapter 11 reorganization," the company tells the Honorable Harlin DeWayne Hale. Mr. Standifer brings 27 years of retail experience to the company. He returns to Gadzooks from a stint at Buffet Partners LP. Mr. Standifer employment contract has an initial one-year term and renews automatically to two additional years. Gadzooks will pay Mr. Standifer a $240,000 annual salary, and Mr. Standifer may receive discretionary bonuses and stock options. As reported in the Troubled Company Reporter on Nov. 11, 2004, Gadzooks, Inc., filed its Plan of Reorganization with the U.S. Bankruptcy Court for the Northern District of Texas, Dallas Division, on Nov. 6, 2004. The Official Committee of Equity Security Holders and the Official Committee of Unsecured Creditors support the Debtor's Plan. Headquartered in Carrollton, Texas, Gadzooks, Inc. -- http://www.gadzooks.com/-- is a mall-based specialty retailer providing casual apparel and related accessories for youngsters, between the ages of 14 and 18. The Company filed for chapter 11 protection on February 3, 2004 (Bankr. N.D. Tex. Case No. 04-31486). Charles R. Gibbs, Esq., and Keith Miles Aurzada, Esq., at Akin Gump Strauss Hauer & Feld, LLP, represent the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed $84,570,641 in total assets and $42,519,551 in total debts. GMAC COMMERCIAL: Moody's Junks $26.6 Mil. Class F Cert. Rating -------------------------------------------------------------- Moody's Investors Service downgraded the rating of one class and affirmed or confirmed the ratings of two classes of GMAC Commercial Mortgage Securities, Inc., Mortgage Pass-Through Certificates, Series 2001-FL1 as follows: -- Class D, $3,529,961, Floating, affirmed at Aaa -- Class E, $17,244,000, Floating, confirmed at Baa3 -- Class F, $26,648,486, Floating, downgraded to Ca from Caa2. The Certificates are collateralized by two mortgage loans -- the Bank One Center Loan (77.4%) and the St. Louis Marketplace Loan (22.6%). Both loans are specially serviced. As of the November 12, 2004 distribution date, the transaction's aggregate certificate balance has decreased by approximately 84.9% to $47.4 million from $313.5 million at securitization as a result of the payoff of 19 of the 21 loans initially in the pool. On July 26, 2004 Moody's placed the rating of Class E on review for possible downgrade due to minor interest shortfalls, which were estimated to be replenished in the short-term. As expected, all interest shortfalls have been fully reimbursed to Class E resulting in its confirmation. Class F has been downgraded to Ca due to permanent interest shortfalls caused by special servicing and liquidation fees. Two additional changes to the transaction have occurred since the Certificates were placed on review for possible downgrade in July. The St. Louis Marketplace Loan, sponsored by Starwood Capital Group and Ceruzzi Properties, became REO through a deed-in-lieu of foreclosure transaction. The marketing process is underway and no loss to the trust is anticipated at this time. Also, as of last July, the Banc One Houston Loan has operated under a forbearance agreement, which expires on December 31, 2004. All indications are that the borrower will not payoff the loan at that date. Based on a current appraisal and other indicators of value, no loss to the trust is expected. Both of these loans have subordinate secured debt where losses are expected to occur. HARVEST NATURAL: S&P Withdraws Single-B Ratings After Redemption ---------------------------------------------------------------- Standard & Poor's Ratings Services withdrew its single-B ratings on Harvest Natural Resources Inc. Following the redemption of the remaining $85 million of its 2007, the company has no rated obligations. HEARME: To Make Final Cash Distribution to Stockholders Next Week ----------------------------------------------------------------- HearMe's (Pink Sheets:HEARZ) Board of Directors has approved a cash distribution to be paid out of net available assets of $.0467 per share to stockholders of record as of the Company's final record date of Nov. 26, 2001. It is currently anticipated that this distribution will be made on or about Dec. 17, 2004. Liquidating Distributions and Reserves The Company had previously hoped to make a single final liquidating distribution at this time, which is the end of the three-year wind-down period mandated under Delaware law. Because the Company has not yet reached ultimate resolution of the litigation relating to its New York lease, however, Delaware law mandates that the Company maintain its corporate existence beyond November 2004 solely with respect to such litigation. Accordingly, the Company has established an additional reserve of $375,000, which it believes will be adequate to meet any potential obligations arising out of such litigation and the Company's other expenses. An initial cash distribution of $0.18 per share totaling approximately $5,113,000 was made in March 2002 to stockholders of record as of the final record date. The proportionate interests of all of the stockholders of the Company have been fixed on the basis of their respective stock holdings at the close of business on the final record date, November 26, 2001, and any distributions made by the Company shall be made solely to stockholders of record on the close of business on the final record date, except to reflect permitted transfers. The number of outstanding shares of the Company's common stock outstanding on November 26, 2001, the date on which the Company closed its stock transfer books and discontinued recording transfers, was 28,402,908. In the case of certain stockholders with outstanding promissory notes payable to the Company, the proceeds of the Distribution will be offset against the outstanding principal and interest under such notes. In other cases, settlement agreements with certain former noteholders included provisions whereby such noteholders assigned the proceeds of any further distributions to stockholders back to the Company. In addition, pursuant to the management retention arrangements entered into in 2001 with certain individuals, in connection with the Distribution HearMe will pay the aggregate amount of approximately $96,250 to such individuals (as well as an amount equal to 7% of any future liquidating distributions). Accordingly, the aggregate cash amount to stockholders of the current Distribution is anticipated to be approximately $1,325,000. As of October 31, 2004, the Company's material assets consisted of approximately $1,780,000 in cash and cash equivalents. The Company anticipates that $1,325,000 will be distributed to stockholders in the Distribution, $46,250 will be paid in management retention bonuses relating to the Distribution ($50,000 partial payment was made in September, 2004) and $30,000 will be used to pay certain legal and accounting costs incurred since October 31, 2004. The Company's estimated future cost of liquidation, consisting of the reserves established by the Company for costs to be incurred and potential liability relating to the New York lease litigation, at December 31, 2003 was $985,000. The estimated future cost of liquidation as of October 31, 2004 was approximately $375,000, as detailed below (dollars in thousands): Estimated Future Dec. 31, Cash Oct. 31, Liquidation Expenses 2003 Adjustments Paid 2004 -------- ----------- ------ -------- Contract settlement (1) $ 595 $ (328) $ (42) $ 225 Legal (2) 167 (99) (18) 50 Management fee (3) 223 (30) (93) 100 -------- ---------- -------- -------- $ 985 $ (457) $ (153) $ 375 ======== ========== ======== ======== (1) Contract settlement reserves are comprised of amounts relating to potential liability and expenses arising out of the Company's New York lease litigation. (2) Reserves for legal expenses estimates are comprised of $50,000 for general legal fees. (3) The estimated fees include costs relating to accounting services, storage of records, bonuses to the transition team and final costs related to any shareholder distributions. New York Litigation On November 19, 2001, the Company was served with a complaint filed by Michael Ring and Frank Ring against the Company and GameSpy Industries, Inc., in the New York Supreme Court (the trial court), County of New York, alleging breach of a written lease relating to a facility in New York, New York which had been assigned to GameSpy, and seeking damages of approximately $197,000 plus attorneys' fees. In December 2001, the Company removed this matter to Federal District Court in New York and denied the allegations in the Company's Answer and Counterclaim. In January, 2004, the New York Supreme Court ruled in favor of HearMe. This decision has been appealed by the Rings and, accordingly, the matter has not been definitively resolved. Although the Company believes that its defenses are meritorious and will ultimately prevail upon appeal, the outcome of any litigation is inherently uncertain. Accordingly, the Company has retained reserves pending the outcome of this litigation. Following the ultimate resolution of this litigation, the Company expects to distribute any remaining net available assets to its stockholders in a single final distribution. About the Company HearMe (formerly Mpath Interactive) is a specialist in real-time voice technology for the Web, HearMe licenses its Voice over Internet Protocol (VoIP) technology to companies such as Raindance Communications and eshare communications. The company offers PC- to-PC and PC-to-phone applications focusing on voice conferencing, calling, and voice interaction for e-commerce sites. As part of a restructuring initiative to concentrate on its voice technology, HearMe sold its Web communities (including entertainment and games Web site Mplayer.com) to online game firm GameSpy Industries in early 2001. It later decided to totally shut down operations. Investment firm Accel Partners owns about 10% of the company. HILB ROGAL: S&P Revises Outlook on 'BB' Rating to Negative ---------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on its 'BB' counterparty credit rating on Hilb, Rogal & Hobbs to negative from stable. "The outlook revision reflects our belief that HRH's earnings will be pressured as the industry reacts to the ongoing investigation by the office of the New York State Attorney General -- NY AG -- into the payment of contingent commissions, which has led various insurance companies and insurance brokers to end certain compensation agreements," explained Standard & Poor's credit analyst Donovan Fraser. The complaint alleges that this practice motivates an insurance broker to place its clients' business with the insurer that pays the highest contingent commissions rather than with the insurer that offers the best coverage for the price, allegedly violating the brokers' fiduciary responsibility to its clients. Though the company has been neither subpoenaed nor charged by the NY AG, HRH has indicated that it has received subpoenas from Attorney Generals of other states, is the target of private litigation, and has received various requests for information from certain state insurance departments. HRH estimates full-year 2004 contingent and override commissions of $42 million, of which, $39.4 million has already been recognized as of Sept. 30, 2004. Standard & Poor's has analyzed HRH's cash flows and believes that even after any adverse effects on earnings and cash flow due to the potential loss of contingent commission income, the company will still remain in compliance with its restrictive debt covenants. As of Sept. 30, 2004, debt-to-total capital and GAAP interest coverage measured 33% and 16x respectively. Historically, the company has operated well within existing restrictive bank covenants, and Standard & Poor's expects the company to continue to maintain prudent capitalization levels and operating margins in the near term, as demonstrated by a debt-to-total capital of less than 40% and GAAP interest coverage of 10x or more. HOELTER TECH: To File for Chapter 11 Protection Due to Losses ------------------------------------------------------------- Hoelter Technologies Holding AG (OTC: HOTK) has found it necessary to file a Chapter 11 proceeding to reorganize as a result of the loss of its subsidiaries in Germany and throughout Europe. As a result of these losses and the uncertainty of the circumstances in Europe, management has determined that the best way to clean the slate is to follow this procedure. Hoelter Funding Corporation has been formed to fund the reorganization and to acquire a small Oil and Gas Company in Kentucky that will be merged into HOTK as part of a Plan of Reorganization in HOTK's upcoming Chapter Proceeding. The reorganization will include all new officers and directors as well as a new direction concentrating in the Oil and Gas industry. About the Company Hoelter Technologies Holding AG develops and markets air, water and energy filtration systems and products that remove dust and other particulate matter, as well as kill bacteria, spores, molds and other airborne allergens from treated air streams. The Company is integrally affiliated with the Hoelter Group of companies, a collection of technology-oriented, internationally operating companies engaging in the field of environmental technology. HUDBAY MINING: Moody's Rates Proposed $200M Secured Notes at B3 --------------------------------------------------------------- Moody's Investors Service assigned a B3 rating to HudBay Mining and Smelting Inc.'s proposed US$200 million secured notes due 2012. The rating outlook is stable. The B3 rating considers HBMS' exposure to zinc and copper prices, its significant reliance on one mine, its requirement to purchase significant volumes of copper, and to a lesser extent, zinc, concentrates, its financial leverage, its recent establishment as a stand-alone corporate entity, and its small size. The rating also reflects the reasonable cost position of the company's mining and smelting operations, the company's long history of mining in the Flin Flon, Manitoba area, and its experienced management team. This is the first time that Moody's has rated the debt of HBMS. These ratings were assigned: * B3 to the $200 million of senior secured notes due 2012, * B3 senior implied rating, * Caa2 senior unsecured issuer rating, and * Speculative Grade Liquidity Rating, SGL-3 The stable outlook reflects HBMS' reserve base of principally zinc ore reserves, which are sufficient to support the company's current mine plan, which runs through 2016. The outlook also reflects the company's favorable union contracts, which eliminate the possibility of strikes or lockouts through 2012. Because the company is significantly dependent on one mine and is highly exposed to both zinc prices and the Canadian dollar, an upward movement in rating is not likely unless the company diversifies or significantly reduces its financial leverage. The rating could be negatively impacted by a decline in the price of zinc or a continued strengthening of the Canadian dollar. The rating could also be lowered if the company undertakes debt-financed expansions or acquisitions that are detrimental to its capital structure and debt coverage ratios. HBMS has been mining in the Flin Flon, Manitoba area for 75 years, and has operated as a division of Anglo American since 1961. OntZinc, an Ontario based holding company with interests in the mining sector, is purchasing one-hundred percent of HBMS from Anglo American for Cdn$312 million. HBMS represents OntZInc's initial ownership of operating mining assets. Proceeds of the senior notes, along with the proceeds of a Cdn$110 million equity issue, are being used to fund the purchase of the HBMS shares. HBMS operates four mines, two concentrators, a zinc plant and a copper smelter, all in Manitoba and Saskatchewan. The company also operates a zinc oxide production facility and has a 50% interest in a metal marketing company that handles all of HBMS' metal sales and concentrate services. HBMS is heavily dependent on the 777/Callinan mine, which entered production in January 2004, and comprises 40% of production and 73% of reserves. The Trout Lake mine comprises 36% of production but only 18% of reserves, and will cease production in 2009. Under the current mine plan, only the 777 mine will be in production after 2010. In the past few years Anglo American spent approximately $435 million developing the 777 and Chisel North mines, building the zinc plant, and making other general improvements. This level of investment has left HBMS with an improved business platform. The company's cash cost of production, including metal by-product credits at current metal prices, is estimated to be US21 cents per pound. Moody's estimates HBMS' total debt to EBITDA, pro forma for full year 2004 operating results and the US$200 million note issue is 2.9x. Pro forma EBITDA to interest is also 3.8x. Adjusting debt for equipment and facility lease rentals ($3.4 million in 2004) using a multiple of 8X, and for other liabilities, including unfunded pension liabilities (Cdn$52.1 million), reclamation (Cdn$32.4 million), and post retirement obligations (Cdn$37.6 million), increases the pro forma ratio of "adjusted" debt to EBITDAR to 3.5x. HBMS liquidity is adequate, with estimated cash on hand at closing of approximately Cdn$27 million and a revolver of Cdn$50 million, with no drawings but a total of C$22 million of L/C's outstanding. The company is expected to have reasonably strong cash flow over the next 12 months given the current metal price environment, and room under its bank covenants. However, it is Moody's view that both cash flow and the cushion under the covenants could erode rapidly in either weaker zinc price or stronger Canadian dollar environments. Apart from the Cdn$22 million letters of credit issued in support of Cdn$17 million of debt with the province of Manitoba, and other ongoing business L/C's amounting to approximately Cdn$5 million, letter of credit requirements are minimal as the company assures its reclamation obligations directly with the provinces of Manitoba and Saskatchewan. Capital expenditures are expected to average about Cdn$45 million per annum over the next four years, principally for maintenance and ongoing mine development. The notes are secured by a first charge on land, and a second charge on receivables and inventories. The provinces of Manitoba and Saskatchewan have pari passu first charges on plant and equipment in respect of reclamation obligations, and the banks have a first charge on receivables and inventories. HudBay Mining and Smelting, based in Flin Flon, Manitoba is engaged in the mining and processing of zinc, copper and other by-product metals and had revenues in the fiscal year ended December 31, 2003 of Cdn$418 million. HUFFY CORP: Look for Bankruptcy Schedules on Dec. 20 ---------------------------------------------------- The Honorable Lawrence S. Walter of the U.S. Bankruptcy Court for the Southern District of Ohio gave Huffy Corporation and its debtor-affiliates more time to file their schedule of assets and liabilities, statement of financial affairs, and schedule of executory contracts and unexpired leases. The Debtors have until December 20, 2004, to file those documents. The Debtors give the Court four reasons why it should grant their motion: a) the substantial size and scope of the Debtors' businesses that consists of large, complex enterprises with operations in several states; b) the complexity of the Debtors' financial affairs; c) the limited staffing available for the Debtors to perform the required internal review of their accounts and affairs; and d) the Debtors were preoccupied with various business issues related to the commencement of their chapter 11 cases. The Debtors tell the Court that the extension will give them more time to collect, review and assemble all the necessary information from multiple locations of their businesses to accurately prepare and complete the Schedules. Headquartered in Miamisburg, Ohio, Huffy Corporation -- http://www.huffy.com/-- designs and supplies wheeled and related products, including bicycles, scooters and tricycles. The Company and its debtor-affiliates filed for chapter 11 protection on Oct. 20, 2004 (Bankr. S.D. Ohio Case No. 04-39148). Kim Martin Lewis, Esq., and Donald W. Mallory, Esq., at Dinsmore & Shohl LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $138,700,000 in total assets and $161,200,000 in total debts. HUFFY CORP: Committee Taps McDonald Hopkins as Counsel ------------------------------------------------------ The Official Committee of Unsecured Creditors in Huffy Corporation and its debtor-affiliates' chapter 11 proceedings asks the U.S. Bankruptcy Court for the Southern District of Ohio for permission to employ McDonald Hopkins Co., LPA as its counsel. McDonald Hopkins is expected to: a) assist the Committee in monitoring the Debtors' chapter 11 cases and legal activities and advise the Committee on the legal ramifications of those actions; b) provide the Committee with advice on its obligations and duties; c) execute the Committee's decisions by filing motions, objections, or other documents with the Court; d) appear before the Court on all matters related to the Debtors' chapter 11 cases in the interests of the unsecured creditors; e) negotiate on behalf of the Committee the terms of any proposed plan of reorganization; and f) take other actions necessary to protect the rights of the unsecured creditors. Sean D. Malloy, Esq., a Shareholder at McDonald Hopkins, is the lead attorney for the Committee. Mr. Malloy discloses that the Firm did not receive any retainer for its services to the Committee. Mr. Malloy reports McDonald Hopkins professionals bill: Designation Hourly Rate ----------- ----------- Shareholders $254 - 425 Associates 140 - 240 Legal Assistants 85 - 170 Law Clerks 75 Project Assistants 40 - 75 McDonald Hopkins assures the Court that it does not represent any interests adverse to the Committee, the Debtors or their estates. Headquartered in Miamisburg, Ohio, Huffy Corporation -- http://www.huffy.com/-- designs and supplies wheeled and related products, including bicycles, scooters and tricycles. The Company and its debtor-affiliates filed for chapter 11 protection on Oct. 20, 2004 (Bankr. S.D. Ohio Case No. 04-39148). Kim Martin Lewis, Esq., and Donald W. Mallory, Esq., at Dinsmore & Shohl LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $138,700,000 in total assets and $161,200,000 in total debts. HUNTSMAN INTL: S&P Junks Proposed $350M Senior Subordinated Notes ----------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'CCC+' rating to Huntsman International LLC's proposed $350 million of senior subordinated notes due 2014, based on preliminary terms and conditions. Proceeds from the new notes will be used to refinance approximately $333 million of existing 10.125% subordinated notes, and to cover related expenses. Pro forma for the completion of the financing, Salt Lake City, Utah-based Huntsman International Holdings LLC, the parent of Huntsman International, will have approximately $4 billion of debt outstanding. At the same time, Standard & Poor's placed the new notes on CreditWatch with positive implications, and said that the corporate credit ratings and issue ratings for Huntsman International Holdings (B/Watch Pos/--) and its affiliates, HMP Equity Holdings Corp. (B/Watch Pos/--), Huntsman LLC (B/Watch Pos/--), and Huntsman Advanced Materials LLC (B/Watch Pos/--), will remain on CreditWatch. On Sept. 14, 2004, Standard & Poor's placed its ratings on CreditWatch with positive implications, citing the company's announcement that it would file with the SEC to undertake an IPO of common stock. The net proceeds from the proposed offering have now been defined as $1.25 billion in the company's S-1 filing and will be used for debt reduction, primarily at HMP, Huntsman International Holdings, and Huntsman LLC. Standard & Poor's expects that the large size of the proposed equity offering, if completed as proposed, improving operating trends, and the completion of refinancing actions earlier this year, will be supportive of an upgrade (pending a full review of the company's plans and completion of the IPO). "The ratings on Huntsman International reflect a highly aggressive financial profile, the credit position of its parent, HMP Equity Holdings Corp., and vulnerability to industry cyclicality, which substantially outweigh good positions in several chemical markets," said Standard & Poor's credit analyst Kyle Loughlin. "However, Huntsman's businesses are likely to continue to benefit from the emerging upturn in the chemicals cycle and the capital structure will improve substantially following the planned IPO and use of equity proceeds for debt reduction." Standard & Poor's will complete the review of the Huntsman ratings as more information about the proposed IPO and Huntsman's business and financial prospects become available. The ratings will be removed from CreditWatch on completion of the offering. ICARUS HOLDING: 8th Cir. Looks to Georgia Supreme Court for Help ---------------------------------------------------------------- Baillie Lumber Company, LP, sold lumber to Icarus Holding, LLC, f/k/a Piedmont Hardwood Flooring, LLC, in 2001. Before Baillie's invoice was paid, Icarus sought chapter 11 protection. Prior to the chapter 11 filing, Bert F. Thompson, Icarus' principal, engaged in certain financial irregularities that harmed Icarus' liquidity, according to court records. These irregularities included the use of Icarus' assets and resources to make improvements on Mr. Thompson's hunting lodge, and the use of Icarus' assets to fund Thompson's separate company, Southern Wood Services, LLC. On Dec. 28, 2001, Icarus filed a complaint against Mr. Thompson in bankruptcy court claiming that the irregularities were fraudulent transfers. On Jan. 8, 2002, Baillie filed suit against Mr. Thompson in a Georgia state court alleging Mr. Thomson is the alter ego of Icarus and thus personally liable for the debts owed to Baillie Lumber. Baillie argues that the state alter ego claim is not the property of Icarus's estate, and that it is not trying to recover money owed to the estate. Thus, Baillie contends that Icarus and the Official Committee of Unsecured Creditors appointed in Icarus' chapter 11 case have no authority to settle the alter ego claim against Mr. Thompson. Meanwhile, Icarus and the Committee began negotiations with Thompson to settle, among other things, any alter ego suit they may have against Mr. Thompson. In 2002, the parties agreed in principle to a settlement pact calling for Mr. Thompson to pay $900,000 to the Debtor and reaffirm his personal guaranty on a $1.2 million debt owed the Debtor by Southern Wood Services, LLC. On April 17, 2002, Mr. Thompson filed a lawsuit requesting injunctive relief on the theory that the alter ego claim is property of Icarus' estate. A week later, Icarus also joined in this suit as a third-party plaintiff. On Oct. 2002, the bankruptcy court issued an order holding that Georgia law makes the alter ego claim the property of Icarus' estate, and, therefore, Icarus has the exclusive right to bring an alter ego claim against Mr. Thompson. Further, the Bankruptcy Court held that the separate alter ego suit brought by Baillie Lumber would be subject to an automatic stay. On appeal to the U.S. District Court for the Middle District of Georgia, the decision of the bankruptcy court was upheld. Baillie Lumber, in turn, appealed to the United States Court of Appeals for the Eighth Circuit. Baillie argues that its alter ego claim against a third party, in this case Mr. Thompson, was separate property. Specifically, Baillie Lumber argues that under 11 U.S.C. Sec. 541 a bankruptcy estate includes only property that the debtor possessed at the time of the bankruptcy filing, and here, Baillie Lumber claims the Georgia alter ego claim against Mr. Thompson is its own separate property. The bankruptcy court and district court granted summary judgment by interpreting Georgia law to allow a corporation's alter ego suit against its former principal, thus making any such claims property of the bankruptcy estate, 11 U.S.C. Sec. 541, and any similar claims by creditors subject to an automatic stay, 11 U.S.C. Sec. 362. Bankruptcy law in this matter, the Eighth Circuit, says, isn't complex. Section 541 establishes a debtor's bankruptcy estate and includes "all legal and equitable interests of the debtor in property as of the commencement of the case." 11 U.S.C. Sec. 541(a). This includes legal causes of action the debtor had against others at the commencement of the bankruptcy case. See Koch, 831 F.2d at 1343-44; In re Adam Furniture Indus., Inc., 191 B.R. 249, 255 (Bankr. S.D. Ga. 1996). If those causes of action, including alter ego actions, are property of the estate under section 541(a), any similar extraneous lawsuits brought by individual creditors will be subject to the automatic stay provision of 11 U.S.C. Sec. 362(a)(3). See S.I. Acquisition, 817 F.2d at 1153. "We must, therefore, look to Georgia law to determine whether Icarus is allowed to bring an alter ego action against its former principal, therefore making it property of the bankruptcy estate and Baillie Lumber's separate state action subject to the automatic stay," the Eight Circuit says. Although several circuits have examined this same issue, not all circuits have arrived at the same result. Before allowing a debtor-in-possession or trustee to bring an alter ego action on behalf of the corporation, most courts require that (1) the alter ego claim be a general claim that applies equally to all creditors, and (2) state law allows the corporate entity to bring an alter ego action against its principal. See St. Paul Fire & Marine Ins., 884 F.2d at 703-04 (interpreting state law to allow corporations to bring alter ego actions against a parent because it prevents injustice and allowing third party creditors to only bring personal and not general alter ego type claims); Koch, 831 F.2d at 1345-46. In Koch, for example, oil company creditors asserted their right to bring a separate alter ego action against a debtor corporation. The Seventh Circuit concluded that Illinois and Indiana law allowed a trustee in bankruptcy to bring an alter ego action on behalf of the debtor corporation, and therefore, the trustee had the exclusive right to bring an alter ego claim. See id. at 1346. The court reasoned that both Indiana and Illinois alter ego law was based on a doctrine that imposed liability to reach an equitable result, and, therefore, could allow a trustee to bring an alter ego suit against the principal if equity so required. See id. The Koch court noted, however, that the trustee would only be able to bring general claims that are common to all creditors of the debtor corporation, and could not avoid the personal claims of creditors that are unique to that creditor. See id. at 1348-49. In Koch, the court concluded that the oil company's claims were general to all creditors and only affected the debtor corporation directly and the oil companies indirectly. Id. at 1349. Thus, the trustee in Koch could bring an exclusive alter ego action when the claims were common to all creditors and state law allowed a corporation to sue its principal. In a subsequent opinion, the Seventh Circuit prevented a trustee from bringing an alter ego action because the claim was personal to the individual creditor and not general. See Steinberg v. Buczynski, 40 F.3d 890, 893 (7th Cir. 1994). In Steinberg, the bankruptcy trustee brought an alter ego suit against the debtor corporation's primary shareholders in an attempt to obtain money not paid to an employee pension fund. See id. at 891. The court found no evidence that the shareholders directly harmed the corporation itself by taking unreasonably high salaries or "looting" the corporate assets. Id. at 892. Only the pension fund was harmed directly. See id. Thus, the court held that an alter ego claim by the corporation itself would be improper because the injury was to the pension fund and not the corporation and creditors in general. On the other hand, the Eighth Circuit has interpreted Arkansas law to not allow alter ego actions by the corporation itself. Ozark, 816 F.2d at 1225. In Ozark, Arkansas law allowed veil piercing when "the corporate structure is illegally or fraudulently abused to the detriment of a third person." Id. (citations omitted). The court concluded that this language means that a veil-piercing action brought against a corporation is personal to the creditors themselves and cannot be brought by the corporation. See id. Thus, the veil piercing or alter ego claim is not property of the bankruptcy estate for the trustee to administer. See id. Like many courts that have addressed this issue, the Eighth Circuit holds that in order to bring an exclusive alter ego action under section 541, a bankruptcy trustee's claim should (1) be a general claim that is common to all creditors and (2) be allowed by state law. See In re iPCS, Inc., 297 B.R. 283, 297 (Bankr. N.D. Ga. 2003). In this action, the appellate court says, "we find that Baillie Lumber asserts only a general cause of action and no personal damages that are unique to them. Baillie Lumber's claim would be personal if Baillie Lumber itself was 'harmed and no other . . . creditor has an interest in the cause.'" Koch, 831 F.2d at 1348. The claim is a general one when liability extends "to all creditors of the corporation without regard to the personal dealings between such officers and such creditors." Id. at 1349. Here, the assertion is that Mr. Thompson blurred the line between himself and the corporation by taking assets of the corporation and using them to his own personal ends. Unlike the Steinberg shareholders, Mr. Thompson did "loot" the corporate assets. An alter ego action under these circumstances could be brought by all creditors of Icarus. Baillie Lumber has shown no unique or personal harm aside from the fact that each creditor would demand a different amount in compensation. By misappropriating corporate assets, Mr. Thomson caused direct harm to the corporation and only indirect harm to Baillie Lumber. Thus, the Eighth Circuit says, this action meets its first factor. However, it is unclear whether Georgia law allows a corporation to bring an alter ego action against itself. Georgia Alter Ego Law The Eighth Circuit observes that there is no Georgia law that directly addresses whether a trustee for a debtor corporation in bankruptcy can bring an alter ego action against the corporation's former principal. In Georgia, alter ego and veil-piercing actions are based on equitable principals. Acree v. McMahan, 276 Ga. 880, 585 S.E.2d 873, 882 (Ga. 2003). Georgia courts allow alter ego actions "to remedy injustices which arise where a party has overextended his privilege in the use of a corporate entity in order to defeat justice, perpetrate fraud or evade contractual or tort responsibility." Paul v. Destito, 250 Ga. App. 631, 550 S.E.2d 739, 747 (Ga. App. 2001) (citations omitted). The Georgia Supreme Court in past decisions, however, has noted that it "has been reluctant to disregard the corporate entity except where third parties were involved in dealing with the corporation and director or shareholder liability was in question, or where public policy might require looking beyond the corporate structure in the public interest." Pickett v. Paine, 230 Ga. 786, 199 S.E.2d 223, 227 (Ga. 1973). In Pickett, the court refused to pierce the corporate veil for the benefit of a minority shareholder's suit against the majority shareholder. Id. at 228. The Georgia Court of Appeals, however, has rejected the proposition that Georgia law per se "prohibits a director, officer, or shareholder from piercing the corporate veil." Paul, 550 S.E.2d at 747; see also Cheney v. Moore, 193 Ga. App. 312, 387 S.E.2d 575, 576-77 (Ga. App. 1989) (holding that a 50 percent shareholder can pierce the corporate veil). Thus, as far as we can determine there is no clear demarcation in Georgia law that allows us to say an alter ego action is property of the bankruptcy estate. The only courts in Georgia to address this issue directly are the federal bankruptcy courts, but they are divided on whether Georgia law allows a corporation to bring this type of alter ego action. Compare Adam Furniture, 191 B.R. at 255 (considering the corporation's alter ego claim as property of the estate under Georgia law), and City Communications, 105 B.R. at 1022 (interpreting Georgia law to allow corporations to bring alter ego claims), with In re Mattress N More, 231 B.R. 104, 109 (Bankr. N.D. Ga. 1998) (holding that Georgia law does not allow a corporation to bring alter ego actions). In the first case to consider the question, the City Communications court compared the Koch and Ozark cases and determined that, like the Koch court, Georgia alter ego law would allow a debtor corporation to bring general alter ego claims in bankruptcy because Georgia law was founded on equity concerns. See City Communications, 105 B.R. at 1022. The Adam Furniture court subsequently followed the same reasoning and determined Georgia law allowed a corporation's alter ego suit for equity reasons. 191 B.R. at 255. The Mattress N More court, on the other hand, rejected the reasoning of both City Communications and Adam Furniture to hold that Georgia law will not allow a corporation's alter ego suit. The court reasoned that although it might make sense for a trustee to have exclusive possession of an alter ego action, there was no basis in Georgia or bankruptcy law for such a result. See Mattress N More, 231 B.R. at 109-10. The court was troubled that a corporate entity created to shield shareholders from liability would itself assert a claim to destroy that protection. Id. at 109. Further, the court determined that it was "relatively difficult to pierce the corporate veil in Georgia." Id. Thus as the court explained, the issue is ripe for certification to the Georgia Supreme Court. Id. at 109 n. 3. Considering the split between Georgia bankruptcy courts and the uncertain state of Georgia alter ego law, the Eighth Circuit will ask the Georgia Supreme Court to answer two questions: 1. WILL GEORGIA LAW ALLOW THE REPRESENTATIVE OF A DEBTOR CORPORATION TO BRING AN ALTER EGO CLAIM AGAINST THE CORPORATION'S FORMER PRINCIPAL? 2. IF SO, WHAT IS THE MEASURE OF RECOVERY? Until the Georgia Supreme Court responds to the questions posed by the Eight Circuit, all relevant proceedings in Baillie Lumber's appeal are stayed. Icarus Holding, LLC, f/k/a Piedmont Hardwood Flooring, LLC, is a national manufacturer and distributor of hardwood flooring. Icarus filed for chapter 11 protection on Dec. 17, 2001 (Bankr. M.D. Ga. Case No. 01-55662). Grant T. Stein, Esq., and Troy J. Aramburu, Esq., at Alston & Bird, LLP, in Atlanta, represent the Debtor. IMPATH INC: To Pay Unsecured Claims Now with 6-5/8% Interest ------------------------------------------------------------ The U.S. Bankruptcy Court for the Southern District of New York approved Impath Inc.'s request to pay all unsecured creditors' claims now, before a plan of liquidation is confirmed to wrap-up the company's chapter 11 case. Unsecured claims will be paid in full, together with post-petition interest at 6-5/8%. Impath filed a plan of liquidation with the Bankruptcy Court on June 30, 2004, estimating total unsecured claims at $35 to $40 million. The debtor is solvent by every measure. The deal to pay the claims now with 6-5/8% interest obviates a brewing behind-the- scenes battle over alternative interest rates that should be paid on the claims. Headquartered in New York, New York, Impath Inc., together with its subsidiaries, is in the business of improving outcomes for cancer patients by providing patient-specific diagnostic and prognostic services to pathologists and oncologists, providing products and services to biotechnology and pharmaceutical companies, and licensing software to hospitals, laboratories, and academic medical centers. The Company filed for chapter 11 protection on September 28, 2003 (Bankr. S.D.N.Y. Case No. 03- 16113). George A. Davis, Esq., at Weil, Gotshal & Manges, LLP represents the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $192,883,742 in total assets and $127,335,423 in total debts. INNOPHOS INC: Moody's Revises Outlook on Low-B Ratings to Negative ------------------------------------------------------------------ Moody's Investors Service changed the outlook on Innophos' ratings to negative from stable due to concern over the large fine imposed on its Mexican operations, despite indications that Rhodia S.A. (B2) may retain responsibility for any liability. Moody's concern relates to Rhodia's ability, and incentive, to settle this issue in a timely manner given its current financial condition. Innophos' Coatzacoalcos plant is its largest facility and its primary source of merchant grade phosphoric acid -- MGA, any disruption to operations at this plant could have a material impact on the company's financial profile. Innophos received notice from the National Waters Commission of Mexico of penalties amounting to $132 million arising from the company's Mexican subsidiary, Innophos Fosfatados de Mexico, S. de R.L. de C.V. The company was cited for possible errors related to its payment of government duties, taxes and other charges related to the use of water by the Coatzacoalcos manufacturing plant from 1998 through 2002. Amounts levied against the company are comprised of basic claims for $36 million related to direct charges for duties, taxes and charges attributed to the usage period. Additional claims for $96 million are related to adjustments for interest, inflation and federal tax law penalties. Prior to August of 2004, the assets that now comprise Innophos were owned and operated by Rhodia. The negative outlook reflects an increase in financial and operating risk as a result of the recent action taken by the National Waters Commission of Mexico. Furthermore, the negative outlook reflects the uncertainty over the timing of a resolution, and the potential cash flow impact to Innophos, if any. In addition, reflects Moody's lack of information relating to the contractual obligations of Rhodia in its indemnification of Innophos. Rhodia has stated in its recent 6k filing that it will assume direct responsibility with respect to these events, subject to certain limitations and reservation of rights, for resolving the matter with the Mexican authorities. However, Moody's remains concerned that the potential failure of Rhodia to resolve this in a timely manner could potentially cause a disruption to operations at Innophos' facility's. Ratings Affected: * Senior Implied -- B1 * Guaranteed senior secured revolver, $50 million due 2009 -- B1 * Guaranteed senior secured term loan $220 million due 2010 -- B1 * Guaranteed senior subordinated notes, $190 million due 2014 -- B3 * Senior Unsecured Issuer Rating -- B3 * Speculative Grade Liquidity rating -- SGL-2 Innophos is a global producer of purified phosphoric acid, phosphate-based salts and acids and sodium tripolyphosphate -- STPP. The company's largest segment, phosphate-based salts and acids, are sold into food, meat, dairy and pharmaceutical applications, and personal care products. These products are also used in certain industrial applications such as water treatment, metal finishing, and specialty fertilizers. STPP is an additive used in dishwashing detergents or laundry detergents outside of the United States. Purified phosphoric acid is a key raw material for the business and is sold externally as an additive for beverages and for select industrial applications. Innophos, headquartered in Cranbury, New Jersey, is a North American producer of phosphoric acid, phosphate-based salts and acid and sodium tripolyphosphate for consumer and industrial applications. Revenues were $525 million for LTM ended September 30, 2004. INTERSTATE BAKERIES: Closing 85-Year Old Bakery in South Carolina ----------------------------------------------------------------- Interstate Bakeries Corporation (OTC: IBCIQ) disclosed plans to close its bakery in Florence, South Carolina. The 85-year-old facility makes bread and rolls, sold under several IBC brand names, including Wonder and Merita. Production capacity at the Florence bakery will be transferred to IBC bakeries in Charlotte and Rocky Mount, North Carolina. Distribution of IBC products to food stores in the South Carolina Area will be unaffected by the closure. The closing, scheduled for February 6, 2005, will affect approximately 200 employees. "Closing a bakery is a decision we never take lightly. Our employees in Florence have been solid contributors, and we are grateful for their hard work," said Tony Alvarez, IBC's chief executive officer. "However, IBC must continue to seek production efficiencies on a national scale. Our entire management team is committed to making IBC more nimble and competitive, and consistent with the best interests of the Company and its stakeholders." IBC voluntarily filed for protection under Chapter 11 of the Bankruptcy Code September 22, 2004. Most of the employees affected by this decision are represented by Local # 503 of the Bakers, Confectionery, Tobacco Workers and Grain Millers Union. 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 53 bakeries, more than 1,000 distribution centers and 1,100 bakery outlets 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: Creditors Want to Retain FTI as Advisors ------------------------------------------------------------- The Official Committee of Unsecured Creditors seeks the Court's authority to retain FTI Consulting, Inc., as its financial advisors. Laura L. Moran, Co-Chairperson of the Committee, tells the Court that the Committee is familiar with the professional standing and reputation of FTI. The Committee believes that FTI has a wealth of experience in providing financial advisory services in restructuring and reorganizations and enjoys an excellent reputation for services it has rendered in large and complex Chapter 11 cases on behalf of debtors and creditors throughout the United States. "The services of FTI are deemed necessary to enable the Committee to assess and monitor the efforts of the Debtors and their professional advisors to maximize the value of their estates and to reorganize successfully," Ms. Moran says. "Further, FTI is well qualified and able to represent the Committee in a cost- effective, efficient and timely manner." As the Committee's financial advisors, FTI will: (1) assist in the review of the Debtors' current and historical operating performance; (2) assist the Committee with information and analyses required pursuant to the Debtors' DIP financing, including, but not limited to, preparation for hearings regarding the use of cash collateral and DIP financing; (3) assist in the review of the Debtors' proposed key employee retention and other critical employee benefit programs; (4) assist and advise the Committee with respect to the Debtors' identification of core business assets, disposition of assets or liquidation of unprofitable operations; (5) assist in the review of the Debtors' performance of cost or benefit evaluations with respect to the affirmation or rejection of various executory contracts and leases; (6) assist with the valuation of the present level of operations and identification of areas of potential cost savings, including overhead and operating expense reductions and efficiency improvements; (7) assist in the review of financial information distributed by the Debtors to creditors and others, including, but not limited to, cash flows projections and budgets, cash receipts and disbursement analysis, analysis of various asset and liability accounts and analysis of proposed transactions for which Court approval is sought; (8) attend meetings and assist in discussions with the Debtors, potential investors, banks, other secured lenders, the Committee and any other official committees organized in the Debtors' Chapter 11 cases, the U.S. Trustee, other parties-in-interest and hired professionals, as requested; (9) assist in the review and preparation of information and analysis necessary for the confirmation of a plan in the Debtors' bankruptcy cases; and (10) render other general business consulting or other assistance that is not duplicative of services provided by other professionals in the Debtors' cases. FTI will receive a $150,000 monthly fee as compensation for its services, in addition to a success fee, if supported by the Committee. Michael C. Eisenband, a partner at FTI, assures the Court that the firm does not represent any other entity having an adverse interest in connection with the Debtors' bankruptcy cases. FTI will conduct an ongoing review of its files to ensure that no conflicts or other disqualifying circumstances exist or arise. 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. 8; Bankruptcy Creditors' Service, Inc., 215/945-7000) JILLIAN'S ENT: Judge Stosberg Confirms Joint Liquidating Plan ------------------------------------------------------------- The Honorable David T. Stosberg of the U.S. Bankruptcy Court for the Western District of Kentucky confirmed on Dec. 12, 2004, the Amended Joint Liquidating Plan filed by Jillian's Entertainment, Inc., and its debtor-affiliates. The Plan provides, among other things, on the Effective Date or soon after, for: * full payment, in cash, of all DIP facility claims or such other treatment agreed upon by the Debtors and the DIP lenders; * full payment of administrative claims; * full payment of priority tax claims; * full payment of other priority claims; * prepetition lender secured claims to receive their prepetition lender disbursement or such treatment as to which the Debtors and the lenders have agreed upon; * other secured claims to receive either cash equal to the fair market value upon which a lien has been asserted or the property securing the claims; * unsecured creditors to receive their pro rata share of an unsecured claim pool and the residual proceeds; * subordinated note claims and intercompany claims to receive no distribution; and * equity interests to be cancelled. The Bankruptcy Court approved the sale of substantially all of the Debtors' assets to Dave & Buster's Inc. (NYSE: DAB) and Gemini Investors III, L.P., for approximately $65 million on Sept. 24, 2004, under Section 363 of the U. S. Bankruptcy Code. The sale proceeds will be used to fund the Debtors' Liquidating Plan. A full-text copy of the Plan is available for a fee at: http://www.researcharchives.com/download?id=040812020022 Headquartered in Louisville, Kentucky, Jillian's Entertainment Holdings, Inc. -- http://www.jillians.com/-- operates more than 40 restaurant and entertainment complexes in about 20 states. The Company filed for chapter 11 protection on May 23, 2004 (Bankr. W.D. Ky. Case No. 04-33192). Edward M. King, Esq., at Frost Brown Todd LLC and James H.M. Sprayregen, Esq., at Kirkland & Ellis LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed estimated assets of more than $100 million and estimated debts of over $50 million. KB TOYS: Exclusive Plan-Filing Period Extended to Jan. 14 --------------------------------------------------------- KB Toys, Inc., has the exclusive right, through January 14, 2005, to file a chapter 11 plan. The U.S. Bankruptcy Court in Wilmington, Del., awarded the company a concomitant extension of its exclusive right to solicit acceptances of that plan through March 14, 2005, at a hearing last month. The Debtors told the Bankruptcy Court they "believe that additional time, particularly as the debtors enter their busy holiday season, is necessary to allow the debtors to operate their business during this critical time of year, finalize the negotiations of the terms of the plan and prepare to file a plan and related disclosure statement." In October, KB said it will close 141 to 238 underperforming stores by Jan. 31, and plans to continue operating approximately 600 stores throughout the United States, the Commonwealth of Puerto Rico and the American Territory of Guam, when it emerges from chapter 11 in 2005. The retailer had 1,300 stores when it filed for chapter 11 protection early this year. KB Toys, Inc. -- http://www.kbtoys.com/-- filed for chapter 11 protection (Bankr. Del. Case No. 04-10120) on January 14, 2004. Joel A. Waite, Esq., at Young, Conaway, Stargatt, & Taylor, represents the toy retailer. KB TOYS: Angelo Gordon May Provide Exit Financing Pact ------------------------------------------------------ KB Toys, Inc., asks the U.S. Bankruptcy Court for the District of Delaware for permission to reimburse up to $60,000 of due diligence fees incurred by Angelo, Gordon & Co. LP, in connection with a potential exit financing deal. An exit financing arrangement would provide the cash the company needs to pay all amounts due under a chapter 11 plan and provide the retailer with working capital financing after it emerges from chapter 11. KB Toys relates that Angelo Gordon has purchased one of the largest unsecured claims against the estate. The Bankruptcy Court will review the company's request to pay the due diligence fees at a hearing on Dec. 13, 2004. In October, KB said it will close 141 to 238 underperforming stores by Jan. 31, and plans to continue operating approximately 600 stores throughout the United States, the Commonwealth of Puerto Rico and the American Territory of Guam, when it emerges from chapter 11 in 2005. The retailer had 1,300 stores when it filed for chapter 11 protection early this year. KB Toys, Inc. -- http://www.kbtoys.com/-- filed for chapter 11 protection (Bankr. Del. Case No. 04-10120) on January 14, 2004. Joel A. Waite, Esq., at Young, Conaway, Stargatt, & Taylor, represents the toy retailer. KEYSTONE CONSOLIDATED: Wants Plan Solicitation Period Extended -------------------------------------------------------------- As previously reported in the Troubled Company Reporter, Keystone Consolidated Industries, Inc., filed its chapter 11 plan with the U.S. Bankruptcy Court. The Company wants more time to negotiate with its Official Committee of Unsecured Creditors and solicit creditors' votes to accept its plan. Specifically, Keystone asks the Bankruptcy Court to extend its exclusive solicitation period through March 31, 2005. The Committee has told the Bankruptcy Court it doesn't like Keystone's Plan. The Committee complains that Contran Corp., Keystone's parent, is exercising too much control over the restructuring and finds the plan's split of the new equity (with Contran holding the majority stake) offensive. The Creditors' Committee is comprised of six members: * The Bank of New York, as Indenture Trustee; * Pacholder Associates; * Ameren Cilco; * Peoria Disposal Company; * Midwest Mill Service; and * Independent Steel Workers Alliance. Keystone thinks the problem's soluble, indicating that talks over the past month have been fruitful and lead management to believe there's a real possibility of a consensual plan of reorganization. Keystone also indicates that it still needs to obtain exit financing. A hearing on the company's request is scheduled for Dec. 15, 2004. Headquartered in Dallas, Texas, Keystone Consolidated Industries, Inc., makes carbon steel rod, fabricated wire products, including fencing, barbed wire, welded wire and woven wire mesh for the agricultural, construction and do-it-yourself markets. The Company filed for chapter 11 protection on February 26, 2004 (Bankr. E.D. Wisc. Case No. 04-22422). Daryl L. Diesing, Esq., at Whyte Hirschboeck Dudek S.C., and David L. Eaton, Esq., at Kirkland & Ellis LLP, represent the Debtors in their restructuring efforts. When the Company filed for protection from their creditors, it listed $196,953,000 in total assets and $365,312,000 in total debts. LANDRY'S RESTAURANTS: Moody's Rates Planned $850M Debts Low-B ------------------------------------------------------------- Moody's Investors Service assigned ratings of Ba2 and B2, respectively, to the proposed bank loan and senior notes of Landry's Restaurants, Inc. Net proceeds from the new debt will provide $300 million to invest in an unrestricted subsidiary and refinance about $325 million of existing long-term debt. Negatively impacting the ratings are the company's leveraged financial condition and Moody's belief that new store development will require a material portion of discretionary cash flow, even following the expected reduction in the opening pace. However, in spite of adding incremental debt to invest in the unrestricted subsidiary, expectations for continued good performance from virtually all stores and potential financial flexibility from substantial real estate ownership benefit the ratings. This is the first time that Moody's has rated the debt of Landry's. Ratings are assigned as follows: * $250 million five-year secured Revolving Credit Facility at Ba2, * $150 million six-year secured Term Loan B at Ba2, * $450 million of ten-year senior note at B2, * Speculative Grade Liquidity rating at SGL-2, * Senior implied rating at Ba3, * Long-term issuer rating at B3. The rating outlook is stable. The ratings reflect Moody's expectation that debt protection measures will remain inferior to higher-rated restaurant operators, the expectation that new store development will use a material portion of discretionary cash flow even following a reduction in the historical pace of openings, and the intense competition within the casual dining segment of the restaurant industry. Likely limitations on generating additional liquidity from the real estate because of the liens on all assets also reduce options in case of an operating slowdown. The unrestricted subsidiary that will receive the $300 million is excluded from this credit analysis. However, the positive contribution to corporate overhead from virtually all stores, the potential financial flexibility derived from Landry's relatively unique strategy (at least among restaurant operators) to own much of its real estate, and the potential operating, marketing, and purchasing efficiencies from the company's status as the second-largest operator of casual dining seafood restaurants benefit the ratings. The medium-term scalability of the new store development program and Moody's confidence that the company will fund its investment needs from operating cash flow also partially mitigate the challenges facing the company. The stable outlook reflects Moody's expectation that the company's financial profile will steadily improve as it: (1) continues to develop successful new stores, (2) maintains average unit volume and profitability at existing stores, and (3) uses a portion of discretionary cash flow to improve the balance sheet. Ratings could be negatively impacted if average unit volume and store-level profitability stagnates, debt protection measures do not improve from current levels, or the new store development pace prompts a decrease in the liquidity cushion. The ratings also anticipate that the unrestricted subsidiary recipient of transaction proceeds will not become a distraction for Landry's. Over the longer term, ratings could be raised as debt protection measures improve (such as decline in lease-adjusted leverage toward 4.5 times and fixed charge coverage improvement to greater than 2 times) and the company achieves worthwhile returns on investment with the planned development program. The Speculative Grade Liquidity Rating of SGL-2 considers that Landry's will generate sufficient operating cash flow to finance cash interest payments, a normal level of maintenance capital expenditures, incremental working capital investment, and dividend payments. For purposes of this liquidity analysis, Moody's assumes that medium-term flexibility exists regarding cash outflows for new store development and cash dividends. Moody's believes that the revolving credit facility provides good liquidity for occasional cash flow timing differences. While the entire $250 million revolving credit facility commitment is available, Moody's anticipates that the company will not permanently utilize more of the revolving credit facility than drawn at closing (about $50 million) except for letters of credit of around $10 million that cover workers' compensation claims. The Ba2 rating on the credit facilities to be arranged by Landry's Restaurants Inc (comprised of a $250 million revolving credit facility and a $150 million term loan B) considers that this debt enjoys the guarantees of the company's operating subsidiaries and is secured by a first-lien on substantially all assets including the real estate of about 82 stores. The rating relative to the senior implied rating reflects Moody's opinion that collateral fair market value comfortably exceeds the loan commitment. The B2 rating on the senior unsecured notes issued by Landry's Restaurants Inc considers the guarantees of the operating subsidiaries. This debt is effectively subordinated to the credit facilities and ranks equally with other obligations such as $72 million in accounts payable. In a hypothetical distressed scenario with the revolving credit facility fully utilized, Moody's believes that asset fair market value roughly equals the total debt balance. Pro-forma lease adjusted leverage for the twelve months ending September 2004 approximated 5 times and fixed charge coverage was about 2 times. Restaurant margin improved to 19.9% in the first nine months of 2004 compared to 17.8% in the same period of 2003, as higher store count and modestly increased average unit volume have allowed better fixed cost leverage. Immediate liquidity consists of about $190 million in revolver borrowing capacity and $20 million in cash. The ratings anticipate that continued growth in revenue and profitability margins, combined with the expected reduction in the pace of new store development, will lead to positive free cash flow and improved debt protection measures. Landry's Restaurants, with headquarters in Houston, Texas, operates more than 300 mostly casual dining restaurants. Trade names include Joe's Crab Shack, Landry's Seafood House, Chart House, Saltgrass Steak House, and Rainforest Cafe. Revenue for the 12 months ending September 2004 was about $1.2 billion. LEVEL 3: S&P Lowers Rating to SD Following Tender Offer Completion ------------------------------------------------------------------ Standard & Poor's Ratings Services lowered its corporate credit rating on Level 3 Communications, Inc., to 'SD' -- selective default -- from 'CC', following the company's completion of its tender offer for various debt issues due in 2008. The ratings on these issues, which include the 9.125% senior notes due 2008, 11% senior notes due 2008, 10.5% senior discount notes due 2008, and 10.75% senior Euro notes due 2008, were lowered to 'D' from 'C'. These ratings were removed from CreditWatch, where they were placed with negative implications on Nov. 3, 2004. Subsequently, Standard & Poor's raised its corporate credit rating on Level 3 to 'CCC' and raised the ratings on the remaining debt due 2008 to 'CC'. The outlook is developing. The completion of the tender offer for $1.1 billion aggregate principal amount of the aforementioned issues for about $951 million cash plus accrued interest represents an approximately 14% discount from the aggregate notes' par value. Standard & Poor's considers this to be tantamount to a default on original debt issue terms. An offering of $345 million 5.25% convertible notes due 2011 and a $730 million senior secured term loan due 2011 financed the tender offers. The convertible notes and term loan also provided about $20 million cash for general corporate purposes after the tender offers, fees, and expenses. The debt repurchase has not materially reduced Level 3's onerous $5 billion debt balance or its debt-to-EBITDA ratio in excess of 10x. The transaction has reduced the company's 2008 maturities by about 46%, somewhat improving the maturity profile. However, without meaningful improvement in the wholesale long-haul telecommunications industry and stronger revenue performance, the company could be challenged to further reduce the remaining roughly $1.3 billion in 2008 maturities. "The ratings on Level 3 reflect very high credit risk from elevated debt and negative discretionary cash flow, exacerbated by soft telecommunications industry conditions, especially in the long-haul transport sector," said Standard & Poor's credit analyst Eric Geil. "The company continues to experience weak demand and declining prices from industry overcapacity and intense competition. Potential acquisition activity could also limit financial improvement. Tempering factors include a sizable cash balance and an absence of meaningful debt maturities until 2008." LNR PROPERTY: S&P Puts B+ Rating on $1.7B Senior Secured Facility ----------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on Miami Beach, Florida-based LNR Property Corp, including LNR's long-term counterparty credit rating, which was lowered to 'B' from 'BB', and removed the ratings from CreditWatch, where they were placed on Nov. 19, 2004. The outlook is stable. In addition, Standard & Poor's assigned a 'B+' rating to the company's $1.7 billion senior secured credit facility, which is expected to close concurrently with the privatization of LNR. At the same time, Standard & Poor's assigned its recovery rating of '1' to the secured credit facility. The 'B+' rating is one notch higher than the long-term counterparty credit rating; this and the recovery rating indicate a high expectation for full recovery of principal in the event of a default. "The downgrade reflects the anticipated increase in leverage, reduction in equity, and encumbered nature of the LNR's balance sheet, which will result from the recapitalization of LNR following the anticipated acquisition transaction," said Standard & Poor's credit analyst Steven Picarillo. On Aug. 30, 2004, LNR announced that it has agreed to be acquired by a newly formed company, which will be majority owned by funds managed by Cerberus Capital Management L.P. and other investors selected by Cerberus. Standard & Poor's believes that the recapitalization of the company following the acquisition will significantly weaken its balance sheet and limit LNR's financial flexibility. LNR, with $3.1 billion in assets, is a real estate investment, finance, and management company. The company operates primarily within real estate investment activities including: -- acquiring, developing, managing, and repositioning commercial and multifamily residential properties; -- investing in unrated and noninvestment grade-rated CMBS; and -- acquiring and managing portfolios of mortgage loans. "The outlook is based on the expectation that LNR will experience continued operating success based on fundamentals already in place," Mr. Picarillo said. MAAX CORPORATION: S&P Junks Proposed Senior Discount Notes ---------------------------------------------------------- Standard & Poor's Ratings Services lowered its long-term corporate credit and senior secured debt ratings to 'B' from 'B+' on Quebec- based, bathroom fixtures manufacturer MAAX Corp. At the same time, Standard & Poor's lowered its senior subordinated debt rating on the company to 'CCC+' from 'B-'. The ratings were lowered due to the proposed issuance of US$110 million of senior discount notes by MAAX's parent, MAAX Holdings Inc. Standard & Poor's also assigned a 'CCC+' debt rating to the proposed new senior discount notes, due 2012 and a 'B' corporate credit rating to the parent. The outlook is stable. Proceeds from the new notes will be used to return capital to the shareholders. The ratings were lowered to reflect the unexpected and significant increase in total debt and reduction in shareholders' equity," Standard & Poor's credit analyst Daniel Parker. "The previous ratings assigned in June 2004 were based on the expectation that leverage would be reduced quickly," Mr. Parker added. Although the proposed senior discount notes are structurally subordinated to senior subordinated notes at MAAX, Standard & Poor's notching criteria does not require the senior discount notes to be notched below the senior subordinated notes. The senior subordinated notes will remain two notches below the corporate credit rating to reflect the weak recovery prospects in a default scenario. The ratings on MAAX reflect the company's very aggressive financial policy, high leverage, and high customer concentration in the competitive bathroom fixtures industry. Partially offsetting these risks are the company's attractively positioned product mix and distribution capability, its steady profitability, and its ability to generate free cash flow. MANAGED INFORMATION: Case Summary & 24 Largest Unsecured Creditors ------------------------------------------------------------------ Debtor: Managed Information Systems, Inc. 7502 Greenville Avenue, Suite 500 Dallas, Texas 75231 Tel: (972) 386-7300 Bankruptcy Case No.: 04-82952 Chapter 11 Petition Date: December 3, 2004 Court: Northern District of Texas (Dallas) Judge: Harlin DeWayne Hale Debtor's Counsel: William L. Manchee, Esq. Manchee & Manchee, LLP 12221 Merit Drive, Suite 950 Dallas, Texas 75251 Tel: (972) 960-2240 Fax: 972-233-0713 Financial Condition as of November 30, 2004: Total Assets: $20,655 Total Debts: $1,421,987 Debtor's 24 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ TX-Dallas Four Forest Plaza Ltd. Pr $478,337 c/o Kessler Collins 5950 Sherry Lane, Suite 222 Dallas, Texas 75225 Hyperion Solution Corporation $265,510 1344 Grossman Avenue, Suite 500 Sunnyvale, California 94089 Brio Technology $151,164 4980 Great American Parkway Santa Clara, California 95054 Hart Hanks $111,948 100 Michael Angelo Way Austin, Texas 78728 Ascential Software $61,144 Dell $19,543 Bank of America $16,448 Citibank Business Card $8,637 Chase Bank Visa $6,870 Judd Thomas Smith & Company PC $4,925 Chase Bank Mastercard $4,377 Monster.Com $2,994 Office Depot $2,981 David Childs Tax Assesor $2,002 Broadwing $764 Allstate Insurance Company $720 Southwestern Bell $437 Verizon $363 Regus Business Centers $199 Deluxe Business Forms $148 ACN Communications Services, Inc. $114 Montgomery County $65 ABT Executive Suites $1 Trillium Software $1 MCI INC: Agrees to $13 Million Management Buyout of Proceda ----------------------------------------------------------- MCI (Nasdaq: MCIP) has reached an agreement to sell Proceda, its non-core IT outsourcing business in Brazil, in a management buyout transaction. Under the terms of the agreement, which is immediately effective, MCI is selling all of its shares in Proceda to the company's management and its partner Votorantim Novos Negocios for $3 million cash and the assumption of approximately $10 million in debt. Headquartered in Clinton, Mississippi, WorldCom, Inc., now known as MCI -- http://www.worldcom.com/-- is a pre-eminent global communications provider, operating in more than 65 countries and maintaining one of the most expansive IP networks in the world. The Company filed for chapter 11 protection on July 21, 2002 (Bankr. S.D.N.Y. Case No. 02-13532). On March 31, 2002, the Debtors listed $103,803,000,000 in assets and $45,897,000,000 in debts. The Bankruptcy Court confirmed WorldCom's Plan on October 31, 2003, and on April 20, 2004, the company formally emerged from U.S. Chapter 11 protection as MCI, Inc. (Worldcom Bankruptcy News, Issue No. 59; Bankruptcy Creditors' Service, Inc., 215/945-7000) * * * As reported in the Troubled Company Reporter on Sept. 22, 2004, Fitch Ratings has assigned an initial rating of 'B' to MCI Inc.'s, $5.665 billion outstanding of senior unsecured notes. The senior unsecured notes were issued in conjunction with MCI's emergence from bankruptcy on April 20, 2004. The notes are guaranteed by all existing and future restricted subsidiaries of MCI. The Rating Outlook is Negative. MERRIMAC PAPER: ESOP Stock Redemption Claims Remain Subordinated ----------------------------------------------------------------- Merrimac Paper Company, Inc., brought an adversary proceeding in its chapter 11 case asking the U.S. Bankruptcy Court for the District of Massachusetts to equitably subordinated ESOP stock redemption claims asserted by Ralph Harrison and Alan Eggert. Merrimac has maintained an Employee Stock Ownership Plan since 1985. The ESOP provides that, upon separation from employment, participants are entitled to a distribution of Merrimac stock allocated based upon their participation in the ESOP. Within 15 months of the date of the stock distribution, the ESOP participants have the right to sell, or "put," the stock distributed to them back to the ESOP or Merrimac. Mr. Harrison was employed by Merrimac from 1963 to 1999. At the time of his separation, he held the position of Human Resources Manager and owned, under the ESOP, approximately 6% of Merrimac's outstanding common stock. Upon his separation, the ESOP determined that Mr. Harrison's interest in Merrimac was valued at $1,116,200. On Jan. 1, 2000, Merrimac paid Mr. Harrison $200,000 against the value of his stock redemption. For the balance, Mr. Harrison received a promissory note dated July 19, 2000, in the principal amount of $916,300, which provided for 8.5% interest and was payable in three equal annual installments. On Jan. 4, 2001, Merrimac paid Mr. Harrison $343,203 as the first installment payment under the note but it made no subsequent payments thereunder. Mr. Harrison obtained a real estate attachment against Merrimac in Essex Superior Court in the amount of $610,000 on Sept. 12, 2002. Mr. Eggert was employed by Merrimac from 1975 until 2000. When his employment ended, he held the position of Technical Director and Executive Vice President and owned, under the ESOP, approximately 9% of Merrimac's outstanding common stock. The ESOP valued Mr. Eggert's interest upon his separation at $1,555,500. Mr. Eggert received a promissory note dated December 29, 2000, in the amount of $1,555,500, plus 8.5% interest, to be paid in three equal annual installments. Mr. Eggert never received any payments under the promissory note. On January 23, 2003, Mr. Eggert sought and obtained a real estate attachment against Merrimac in the United States District Court for the District of Massachusetts in the amount of $1,829,935 On March 17, 2003, Merrimac filed a petition for protection under Chapter 11 of the Bankruptcy Code and commenced the adversary proceeding on June 20, 2003. On November 7, 2003, the Bankruptcy Court entered a Memorandum of Decision and an Order granting summary judgment in Merrimac's favor and confirmed Merrimac's Plan of Reorganization. See Merrimac Paper Co. v. Harrison (In re Merrimac), 303 B.R. 710 (Bankr. D. Mass. 2003). The Bankruptcy Court held that: (1) it had jurisdiction over the dispute, (2) the Eggert Attachment should be avoided, (3) ERISA does not prevent the subordination of Appellants' claims, (4) mandatory subordination under 11 U.S.C. Sec. 502(b) was proper only to the extent Messrs. Harrison and Eggert's claims arose from or were related to ERISA, (5) equitable subordination under 11 U.S.C. Sec. 510(c) was proper, and (6) the liens should be transferred to the Debtor's estate. Before the bankruptcy was filed, Messrs. Harrison and Eggert commenced an action in the United States District Court for the District of Massachusetts against Merrimac, the ESOP and the administrators and trustees of the ESOP, alleging breach of contract and breach of duties imposed by ERISA. That action remains pending and is not affected by what happens in the Bankruptcy Court. Dissatisfied with the Bankruptcy Court's six-part ruling, Messrs. Harrison and Eggert appealed to the U.S. District Court for the District of Massachusetts. The District Court says it agrees with the Bankruptcy Court and holds that Messrs. Harrison and Eggert's claims should be subordinated pursuant to 11 U.S.C. Sec. 510(c) because they are based on notes related to a stock repurchase agreement. The District Court says it sympathizes with Messrs. Harrison and Eggert. "Together they have given over 50 years of service to Merrimac and they did so with the justified expectation of receiving stock or payment for their investment in the ESOP. It is, perhaps, ironic that the doctrine of equitable subordination serves to render their claims lower in priority than those of other creditors," the District Court says. The District Court points-out that courts repeatedly teach that stockholders of a corporation do not become debt creditors or stand on equal footing with trade or other creditors by virtue of selling their stock back to the corporation, see In re New Era Packaging, Inc., 186 B.R. at 336, because a corporation acquires nothing of value when it purchases its own stock. In re Main Street Brewing Co., Ltd., 210 B.R. at 664. A stockholder who accepts a promissory note in payment for his stock assumes the risk that the corporation may be insolvent when the note becomes due. Liebowitz, 56 B.R. at 224. ERISA, the District Court says, doesn't help Messrs. Harrison and Eggers. "[C]onclusory statements about the equities of this particular case do not extend to ERISA the authority to trump the bankruptcy laws," the District Court says. Merrimac Paper Company, Inc., makes a wide range of Kraft specialty and technical papers in any color. The Company files for chapter 11 protection on March 17, 2003 (Bankr. Mass. Case No. 03-41477). Andrew G. Lizotte, Esq., at Hanify & King represents the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed debts and assets of over $100 million. MILL SERVICES: Moody's Gives Planned $360M New Loans Low-B Ratings ------------------------------------------------------------------ Moody's Investors Service assigned a B1 senior implied rating to Mill Services Corporation and assigned ratings to the proposed $360 million of senior secured credit facilities being established for Mill Services' two principal operating subsidiaries, International Mill Service, Inc., and Tube City, LLC. In connection with its planned acquisition of Tube City, Mill Services is seeking to amend and increase its existing $180 million of senior secured credit facilities. The acquisition is expected to close in December 2004. The rating outlook for Mill Services is stable. These ratings were assigned: * B1 for the $265 million six-year term loan secured by a first priority lien in all the assets of the company, * B1 for the $45 million five-year revolving credit facility, which is also secured by a first lien in all assets, * B3 for the $50 million seven-year term loan secured by a second priority lien in the collateral securing the first lien facilities, * B1 senior implied, and * Caa1 senior unsecured issuer rating. These new ratings are identical to Moody's existing respective ratings for IMS, which will be withdrawn at the conclusion of the acquisition and financing. The B1 senior implied rating reflects the co-borrowers' roles as entrenched providers of mill services at over 60 North American and Eastern European steel plants and their favorable track record of retaining customers and expanding services and revenues at a broad cross section of mills. The co-borrowers often provide different services at the same mills, which in the aggregate represent a balanced mix of integrated and electric arc furnace (minimill) steel plants. Mill Services believes the acquisition will enable it to expand cross-selling opportunities to existing customers and increase its ability to win new customers. The company's business has been quite stable, which is unusual for a company in the steel industry. Stability has been enhanced by Mill Services' long-standing customer relationships, good reputation, and long-term contracts. Moody's believes that steel mills will continue to outsource non-core services such as material handling, scrap management, metal recovery and slag processing. While the majority of Mill Services' sales are linked to its customers' production levels and are, therefore, cyclical, IMS has introduced fee structures that are independent of production levels. Moody's ratings are constrained by Mill Services' high level of customer concentration and its dependence on sales to one highly cyclical industry. These factors, when combined with its highly leveraged capital structure, make Mill Services vulnerable to the loss or bankruptcy of a large customer, a general downturn in the steel industry, or shifts in outsourcing trends. Customer concentration is high -- one steel company accounts for approximately 30% of pro forma net sales and the top five account for roughly 62% of sales. While appreciative of Mill Services' market position, Moody's believes that material organic growth may be difficult to achieve. Furthermore, since the winning of new business usually requires upfront capital investment and locks it into multi-year contracts, management must exercise great care when bidding on new business in order to ensure that long-term value is created. Lastly, Mill Services' few tangible assets and the specialized nature of its fixed assets lessens the likelihood of full loan recovery should cash flow significantly diminish and the company experience a payment default. Mill Services' stable outlook is supported by its diverse customer base, long-term contracts with a current duration of six years, and Moody's favorable near-term outlook for the steel industry. The Tube City acquisition provides size and diversification benefits and should enhance the company's ability to gain new business. To the extent that these factors deliver on their potential to materially reduce debt or improve debt protection measurements over the next 18-24 months, Moody's will raise its ratings. Conversely, its ratings could be pressured by erosion of credit metrics, the loss or bankruptcy of any large customers, the loss of key members of management, and by acquisitions that are not accompanied by free cash flow. The revolver and the $265 million term loan are rated the same as the senior implied rating due to the fact that they represent a large proportion of the company's total debt. These two facilities are secured by a first priority perfected lien in all of the assets of the co-borrowers and Mill Services. The $50 million seven-year term loan is secured by a second priority lien on all assets, and is rated B3, two notches lower than the first lien facilities, due to the limited value of the tangible assets comprising the collateral and the high level of total debt relative to enterprise value. The company's services are embedded within the activities of the steel mills and are performed by Mill Services' employees utilizing company-owned equipment. The company offers numerous services including material handling, scrap management and optimization, metal recovery, slag processing, surface conditioning (also termed "scarfing"), outsourced purchasing, and other related services. Outsourcing of these services is common in the steel industry as the mills prefer to focus on core steel making activities. Mill Services has 30 customers and works at mills responsible for approximately 50% of total North American steel production. Pro forma for the transaction, Mill Services will have $327 million of debt and $90 million of book equity. Its tangible assets will be about $260 million. Steel company bankruptcies and challenging industry conditions have impacted historical results, but greatly improved steel market conditions and increased North American steel production have solidified these figures. Mill Services' liquidity will be provided by unused availability, net of about $10 million for letters of credit, under its $45 million credit facility. Mill Services' operational liquidity needs are minimal, although it may use the revolver to fund equipment purchases and growth capex. Mill Services Corporation, headquartered in Horsham, Pennsylvania, is a leading North American provider of on-site steel mill services such as material handling, scrap management, metal recovery and slag processing. Together, the two principal operating subsidiaries of Mill Services, International Mill Service, Inc., and Tube City, LLC, have operations at 61 mills. ON SEMICONDUCTOR: Moody's Affirms Low-B & Junk Ratings ------------------------------------------------------ Moody's Investors Service affirmed the debt ratings of ON Semiconductor and its subsidiary, Semiconductor Components Industries, LLC, following the announcement that ON Semi is tendering for its secured outstanding notes. Depending on the final financing structure, Moody's believes that the transaction is likely to reduce ON Semi's interest expense, increasing operating flexibility, while reducing cash or increasing debt slightly. The outlook remains positive. These ratings of ON Semi and Semiconductor Components Industries, LLC are affirmed: * Senior implied rating of B3; * $25 million secured revolving credit facility and $320 million Tranche F Term Loan maturing through November 2007, both rated B3; * Senior secured notes due 2010 rated B3; * Senior secured notes (second lien) due 2008 rated Caa1; * Senior unsecured issuer rating of Caa1. Moody's has not rated the $260 million convertible notes due 2024. ON Semi has continued to generate positive cash operating cash flow despite the slowdown in semiconductor industry growth rates, which occurred in mid-2004, indicating success at reducing operating costs and lowering the breakeven point. Ratings could rise if ON Semi continues to improve operating flexibility through a combination of controlled costs and working capital investment. Changes to the capital structure, which reduce fixed expenses and improve or maintain financial flexibility and liquidity could also drive ratings improvement. Ratings could stabilize or fall if ON Semi reverses positive operating cost trends or reduces liquidity to finance capital needs or operating losses. The ratings for the public notes will be withdrawn if the tender is successful, and the ratings for the existing bank debt will also be withdrawn if the bank facilities are refinanced. A repurchase of the secured notes will trigger an extension of the existing bank credit facility. ON Semiconductor, headquartered in Phoenix, Arizona, is a leading global manufacturer of power- and data-management semiconductors and standard semiconductor components. Revenues are forecast to be above $1.2 billion for 2004. PINNACLE ENTERTAINMENT: Closes $100 Million Sr. Sub. Debt Offering ------------------------------------------------------------------ Pinnacle Entertainment, Inc. (NYSE: PNK) has completed the public offering of $100 million aggregate principal amount of its 8.25% senior subordinated notes due 2012. The notes were issued at a price of 105.00% of par. The notes are in addition to, and are governed by, the same indenture as the $200 million aggregate principal amount of such notes previously issued. Substantially all of the net proceeds of the offering will be used to fund the Company's purchase of a portion of its outstanding 9.25% senior subordinated notes due 2007 through the cash tender offer that was commenced on November 16, 2004. Lehman Brothers Inc. and Bear, Stearns & Co. Inc. were the joint book-running managers of the offering. The notes were issued pursuant to an effective shelf registration statement on file with the Securities and Exchange Commission. A prospectus supplement relating to the offering has been filed with the SEC and is available on the SEC's website at http://www.sec.gov/ Copies of the prospectus, including the prospectus supplement relating to the offering, may be obtained from: Lehman Brothers Inc. c/o ADF Financial Services Integrated Distribution Services 1155 Long Island Avenue Edgewood, New York, 11717 Tel. No. (631) 254-7106 -- or -- Bear, Stearns & Co. Inc. c/o Prospectus Department 1 Metrotech Center Brooklyn, New York 11201 Tel. No. (347) 643-1581 This press release shall not constitute an offer to sell or a solicitation of an offer to buy the 8.25% senior subordinated notes due 2012, nor shall there be any sale of such securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction. About Pinnacle Entertainment Pinnacle Entertainment owns and operates casinos in Nevada, Mississippi, Louisiana, Indiana and Argentina, and receives lease income from two card club casinos, both in the Los Angeles metropolitan area. The Company is currently building a major casino resort in Lake Charles, Louisiana and has been selected for two casino development projects in the St. Louis, Missouri area. Each of these development projects is dependent upon final approval by the Louisiana Gaming Control Board and the Missouri Gaming Commission, respectively. * * * As reported in the Troubled Company Reporter on Aug. 05, 2004, Fitch Ratings has assigned a rating of 'B+' to the proposed $350 million senior secured bank facility of Pinnacle Entertainment (NYSE: PNK) due 2008. The facility, which consists of a $100 million senior secured revolver due 2008, a $125 million senior secured term loan due 2010, and a $125 million senior secured delayed draw term loan due 2010, replaces the existing $300 million senior secured credit facility established in December 2003. Refinancing of the bank facility provides additional liquidity to accommodate a $40 million increase in budget to $365 million for PNK's L'Auberge du Lac Casino & Resort development in Lake Charles, Louisiana. Extension of the delayed draw portion should better accommodate the timing of funding needs, and reduce funded debt and interest expense. The Outlook is Stable. To date, PNK has spent just $100 million of its final $365 million budget in Lake Charles. However, the vast majority of project costs remaining are subject to fixed price or guaranteed maximum price contracts, limiting the risk of additional budget increases. Project contingency remains consistent at roughly 6% as of June 30, 2004 despite the diminishing need for excess contingency. The $40 million budget increase at Lake Charles includes scope changes totaling $20 million for additional guestrooms, slot machines, and transportation equipment, among other items. Despite scope changes, the project remains on schedule for a Spring 2005 opening. PNK ratings reflect the company's heavy capital investment schedule through 2008 and uncertainty regarding the ultimate returns on those investments. These investments include the $365 million Lake Charles development, and two potential casino projects in St. Louis -- a $208 million property in downtown St. Louis which is expected to open in late 2006, and a $300 million project in St Louis County which is expected to open in late 2007 -- for which final approval from the Missouri Gaming Commission is required. The investments are significant in relation to the company's operating profile (with LTM EBITDA of approximately $93 million), and free cash flow will be negative over the next several years as a result. Nonetheless, the company retains a high level of liquidity, which is sufficient to fund near term projects. Pro forma for the new credit facilities and a $33 million land sale in May 2004, total liquidity exceeds $566 million, including roughly $341 million in cash on hand and $225 million in borrowing capacity. PNK benefits from a somewhat diversified portfolio of assets (albeit in a number of competitive markets such as Reno, NV and Biloxi, MS), which provides stability to operating results. Since new management assumed control in early 2002, operating results have improved markedly with same-store LTM March 31, 2004 EBITDA 40.1% higher than FYE 2001 EBITDA. This primarily reflects a particularly strong turnaround at Belterra in Vevay, Indiana and improved margin performance due to focused cost-cutting efforts. Given its dependence on overnight visitation, future results at Belterra should benefit from the $37 million hotel expansion completed in May 2004. Pro forma for the new credit facilities and May land sale, Fitch estimates net leverage stood at 3.6 times (x) at March 31, 2004. Net debt/EBITDA is expected to peak at approximately 6.0x early 2005, prior to the projected spring 2005 opening of the Lake Charles property. Leverage is then projected to drop by fiscal year-end 2005, followed by modest external borrowings required to complete the second St. Louis project. Timing of PNK's major capital investments is prudently sequenced so that financing for the St. Louis projects benefit from cash flows provided by completed projects. Over the long-term, leverage will primarily decline through incremental new store EBITDA, as debt reduction will be precluded by heavy investment spending through 2008. Failure to achieve adequate returns on the company's three projects would limit the company's capacity to reduce leverage and long-term access to new capital or refinancing requirements. Further support is derived from the relatively marketable nature of the assets underlying the debt. PNK's five U.S. casino properties provide substantial over-collateralization of senior secured debt, and more than adequate support for subordinated debt when factoring in PNK's assets under development. PNK would also have the option of bringing in equity partners for its development properties if conditions warranted. Subordinated debtholders are further subordinated as a result of this refinancing, but remain reasonably positioned behind the relatively large tranche of bank debt. PITTSBURGH CITY: Fitch Puts BB Rating on Rating Watch Positive -------------------------------------------------------------- Fitch Ratings revised the Rating Watch on the 'BB' rating on the City of Pittsburgh, Pennsylvania's approximately $840 million outstanding general obligation bonds, to Positive from Negative. The Rating Watch revision reflects the recent approval by the commonwealth of new tax revenues for Pittsburgh that should allow for tightly balanced operations in 2005 and slowly improving reserve levels over the next several years. The state's action led the city council to approve a spending plan sanctioned by the two separate, commonwealth-appointed financial review boards. The 'BB' rating and Watch Negative status had been in place since Nov. 7, 2003. GO ratings below investment grade level are unusual for U.S. local governments and typically reflect unique, acute financial pressures. For Pittsburgh, the 'BB' rating is based on extremely tight liquidity throughout 2004, leading to a projected year-end cash flow deficit of approximately $2 million that will be offset by deferral of a $4 million reimbursement payment to the city school district. Pittsburgh timely made all debt service payments in 2004 and expects to fully meet all vendor and payroll obligations for the remainder of the year. A $40 million line of credit with three regional banks has been established to meet cash flow needs in the first quarter of 2005 until the new revenues and annual property tax payments come in. Terms are reported to be 100 basis points over LIBOR; the city does not expect to draw the entire line. Fitch expects to review the 'BB' rating over the next few months. Key to rating improvement will be final adoption of a 2005 budget in mid-December by city council that complies with the spending plan approved by the oversight boards. Failure to adopt such a budget would jeopardize receipt of the newly approved taxes, which would be escrowed pending an approved fiscal plan. Fitch will also evaluate the city's compliance with imposed spending controls, revenue yield from the new taxes in relation to projections, and the city's multiyear plans to improve liquidity and meet capital needs with still-tenuous market access. Given robust state oversight and significant new revenue, Fitch anticipates a return to investment grade credit standing over a relatively short period. PRIMEDEX HEALTH: James Goldfarb Resigns from Board of Directors --------------------------------------------------------------- James Goldfarb, serving as a director for Primedex Health Systems, Inc., resigned as of Nov. 24, 2004. The company disclosed the event in a one-sentence regulatory filing with the Securities and Exchange Commission last week. As detailed in the Troubled Company Reporter on Dec. 2, 2004, some of Primedex's subsidiaries issued $19.2 million of Senior Secured Notes to certain investment funds managed by Post Advisory Group, LLC. Primedex Health Systems, through its RadNet Management subsidiary, Primedex owns and manages about 55 California facilities that offer magnetic resonance imaging (MRI), ultrasound, mammography, diagnostic radiology, and similar services. Medical services at most of these facilities are provided by Beverly Radiology Medical Group, which is almost wholly-owned by Primedex CEO Howard Berger, who also owns about 30% of Primedex. On Sept. 4, 2003, Primedex filed a Prepackaged Chapter 11 Plan of Reorganization (Bankr. C.D. Calif. LA03-33211-AA). The Bankruptcy Court confirmed the Primedex's plan on Oct. 8, 2003, and emerged from chapter 11 on Oct. 20, 2003. Anne E. Wells, Esq., at Levene, Neal, Bender, Rankin & Brill LLP, represented the company in the prepackaged chapter 11 proceeding. At July 31, 2004, Primedex Health's balance sheet showed a $60,698,000 stockholders' deficit, compared to a $53,087,000 deficit at Oct. 31, 2003. PURVI: Wants to Hire Lefkovitz & Lefkovitz as Bankruptcy Counsel ---------------------------------------------------------------- Purvi Petroleum III, LLC, asks the U.S. Bankruptcy Court for the Middle District of Tennessee for permission to employ the Law Offices of Lefkovitz & Lefkovitz as its bankruptcy counsel. Lefkovitz & Lefkovitz is expected to: a. advise the Debtor as to its rights, duties and powers as a debtor-in-possession; b. prepare and file the statements, schedules, plans, and other documents and pleadings necessary to be filed by the Debtor in its bankruptcy proceedings; c. represent the Debtor at all hearings, meetings of creditors, conferences, trials and any other proceedings in its chapter 11 case; and d. perform other legal services as may be necessary in connection with the Debtor's chapter 11 case. Steven L. Lefkovitz, a Member at Lefkovitz & Lefkovitz, is the lead attorney for the Debtor's restructuring. Mr. Lefkovitz discloses that the Firm would receive a $15,000 retainer. For his professional services, Mr. Lefkovitz will bill the Debtor $325 per hour. Mr. Lefkovitz reports Lefkovitz & Lefkovitz's professionals bill: Designation Hourly Rate ----------- ----------- Associates $160 Paralegals 65 Lefkovitz & Lefkovitz assures the Court that it does not represent any interest adverse to the Debtor or its estate. Headquartered in La Vergne, Tennessee, Purvi Petroleum III, LLC, filed for chapter 11 protection on November 30, 2004 (Bankr. M.D. Tenn. Case No. 04-14423). When the Company filed for protection from its creditors, it listed total liabilities of $16,461,000. RCN CORP: Wants Court to Approve City of Chicago Release Pact ------------------------------------------------------------- RCN Cable TV of Chicago, Inc., is a party to four separate non-exclusive franchise agreements with the City of Chicago. Under the Franchise Agreements, RCN Chicago is: (a) authorized to construct, install, maintain and operate a cable television system in Areas 1, 2, 3 and 4 of Chicago; (b) required to submit construction schedules for Areas 2, 3 and 4, and make certain fixed capital cost payments to Chicago Access Corporation; and (c) required to post, as security for its performance under the Franchise Agreements: -- Surety Bonds of $3,000,000 for each of Franchise Areas 2, 3 and 4, and $1,000,000 for Franchise Area 1, aggregating $10,000,000; and -- a $350,000 Letter of Credit for each Franchise Area for a total of $1,400,000. Modification Petition Under the Franchise Agreements, RCN Chicago is to construct cable systems in the Franchise Areas in accordance with construction schedules to be submitted and periodically updated. However, in light of the financial difficulties facing RCN Chicago, on November 12, 2002, the City approved a significantly reduced construction schedule for Franchise Area 2 for 2003. On December 10, 2002, RCN Chicago and the City entered into an agreement to amend the Franchise Agreements. This deferred RCN Chicago's construction schedule obligations. On October 3, 2003, RCN Chicago filed a proposed construction schedule and map for Franchise Area 2 for 2004. When the telecommunications industry collapsed, RCN Chicago was unable to obtain sufficient financing to maintain its operations, much less increase the scope of its operations. Among other things, RCN Chicago estimated that the cost of completing the build-out requirements for Areas 2, 3 and 4 would exceed $350,000,000. Therefore, on December 12, 2003, RCN Chicago filed a petition with the Chicago Cable Commission pursuant to 47 U.S.C. Section 545 seeking certain changes to the Franchise Agreements because they were commercially impracticable. The Modification Petition sought to eliminate any additional construction or build-out requirements, reduce the Surety Bond requirements and certain PEG capital cost payments to the CAC for Franchise Area 2, and eliminate the construction requirements and all related obligations for Franchise Areas 3 and 4. RCN's Continuing Financial Difficulties and the City's Responses Following the filing of the Modification Petition, RCN Chicago's and RCN Corporation's financial condition continued to worsen. At the same time, the City passed resolutions urging RCN Chicago to comply with the Franchise Agreements, even though RCN Chicago's financial condition made that impracticable. Ultimately, despite the pending Modification Petition, the City purported to impose multi-million dollar fines on RCN Chicago for its alleged non-compliance with the very provisions of the Franchise Agreements it sought to have modified through the Modification Petition. On February 21, 2004, the City sent demand letters to Travelers Casualty & Surety Company of America for payment under the Surety Bonds for Franchise Areas 2, 3 and 4. On February 23, the City drew down the Letters of Credit for Franchise Areas 2, 3 and 4. On April 9, 2004, almost two months after the City declared RCN Chicago in violation of the Franchise Agreements and began imposing multi-million dollar fines, the City issued its decision denying the Modification Petition and the relief requested. The Bankruptcy Filings and the Adversary Proceeding Following the initial RCN bankruptcy filings, RCN Corp. and RCN Chicago continued for several months to negotiate with the City to resolve their disputes regarding the Franchise Agreements without further litigation. Concerned that the City would continue to pursue a recovery for its purported damages and other fines and fees assessed against RCN Corp. or RCN Chicago, RCN Chicago filed its bankruptcy petition on August 5, 2004. At the same time, RCN Corp. and RCN Chicago filed an adversary complaint against the City seeking: (a) injunctive relief preventing the City from taking any further actions to collect from or assess against RCN Corp. or RCN Chicago any amounts in connection with the Franchise Agreements; (b) approval of the Modification Petition; and (c) damages for the City's alleged violations of federal law, including but not limited to Section 525 of the Bankruptcy Code. In addition, RCN Corp. and RCN Chicago filed a request for temporary restraining order. On August 6, 2004, the Bankruptcy Court held an initial hearing with respect to the TRO request. At that hearing, counsel for the City consented to a standstill until the request of RCN Corp. and RCN Chicago for a preliminary injunction could be heard and determined. Following arm's-length negotiations, the City, RCN Corp. and RCN Chicago carved a stipulation and order for a standstill pending hearing on preliminary injunction. The Bankruptcy Court approved the stipulation on August 11, 2004. Pursuant to the Standstill Order, the City was prohibited from taking any action to collect any fines, damages or penalties by drawing on the Surety Bonds, and had until September 13, 2004, to respond to the Complaint and the preliminary injunction application. RCN Corp. and RCN Chicago had until September 20, 2004, to reply. The Parties subsequently exchanged discovery requests and scheduled depositions. To facilitate settlement discussions, the Parties agreed to further extensions of the Standstill Order that were approved by the Bankruptcy Court. Pursuant to the latest extension, the City had until November 15, 2004, to file responsive pleadings to the TRO request and the preliminary injunction hearing was scheduled for December 2, 2004. On October 4, 2004, RCN Corp. and RCN Chicago filed a complaint before the U.S. District Court for the Northern District of Illinois seeking declaratory and injunctive relief against the City. That complaint was filed to preserve the statute of limitations set forth in 47 U.S.C. Section 555(a), as extended by Section 108(b) of the Bankruptcy Code, until the Bankruptcy Court could resolve certain jurisdictional issues that might have been raised by the City in the adversary proceeding. Release and Settlement Agreement Subsequently, the Parties entered into an agreement to compromise, settle and release all disputes between them. The Debtors ask the Bankruptcy Court to authorize RCN Corp. and RCN Chicago to enter into, and perform under, the Release and Settlement Agreement. The salient terms of the Settlement Agreement include: (1) The City will retain all amounts it previously drew from the Letters of Credit. Two days after the Effective Date of the Settlement Agreement, RCN Corp. will pay the City $3,450,000. (2) The Areas 3 and 4 Franchise Agreements will be rejected and all of RCN Chicago's rights and obligations under the Agreements will be extinguished. The Surety Bonds with respect to the Areas 3 and 4 Franchise Agreements will be released to RCN Corp. (3) The Areas 1 and 2 Franchise Agreements will be assumed by RCN Chicago. The Area 2 Franchise Agreement will be assumed, as modified by the Settlement Agreement. Specifically, with respect to Area 2, the Franchise Agreement will be modified so that RCN Chicago will only be required or allowed to offer cable television services to the homes and businesses that can be served by laterals from existing network facilities as of the Effective Date. Accordingly, all current and future build-out obligations set forth in the Area 2 Franchise Agreement will be terminated. Moreover, RCN Chicago will have the right to terminate the Area 2 Franchise Agreement without penalty in the event RCN Chicago determines in the future not to continue to provide cable television services in Area 2. (4) RCN Corp. will provide the City access to four dedicated dark fiber strands on certain parts of the RCN Network and six dedicated dark fiber strands in certain other parts of the RCN Network. The provision of these fibers, as set forth in a Dark Fiber IRU Agreement, will be in exchange for the City's agreement to modify the Area 2 Franchise Agreement. (5) RCN Corp will withdraw the Modification Petition and related litigation. In addition, mutual releases will be granted by RCN Corp. and the City with respect to the Franchise Agreements. (6) The Parties contemplate these events to occur before the Settlement Effective Date: -- The City has completed its review and analysis of the financial information provided by RCN Corp. regarding RCN Corp.'s financial ability to meet the construction build-out requirements set forth in the Areas 2, 3 and 4 Franchise Agreements; -- The City and RCN have executed the Dark Fiber Agreement to govern the City's use of certain RCN fibers; -- The Debtors shall have resolved their disputes with CAC and obtained Bankruptcy Court approval of any settlement; and -- Both the City and the Debtors shall have obtained all necessary approvals for entering into the Agreement and the Dark Fiber Agreement. (7) The deadline for the City to file a proof of claim in the RCN Chicago bankruptcy case will be March 31, 2005. (8) The Effective Date of the Agreement will be the later of the receipt of: -- a final order from the Bankruptcy Court approving the Agreement; or -- final City Approvals of the Agreement. A full-text copy of the Release and Settlement Agreement is available for free at: http://bankrupt.com/misc/chicago_release&settlement_agreement.pdf D. Jansing Baker, Esq., at Skadden, Arps, Slate, Meagher & Flom, LLP, in New York, explains that the Settlement Agreement allows RCN Chicago to continue to operate in Chicago under improved economic terms. Accordingly, the Agreement creates substantial value for the Debtors and their estates. In exchange, the City will receive a lump sum payment for agreeing to modify one of the franchise agreements and the right to use certain "dark" fibers. The Agreement avoids the risks of continued litigation, and must, therefore, be approved. Debtors File Dark Fiber Agreement Under Seal Mr. Baker relates that the Dark Fiber Agreement and its attachments contain commercial information that is proprietary, confidential and highly sensitive. In particular, the Confidential Material contains detailed information describing the specifications for RCN Chicago's cable network. This information is customarily not disclosed to the public or made available to other competing cable companies. The City has expressed its desire to keep information relating to the cable system confidential for a number of reasons, including security concerns. Given the highly competitive nature of the telecommunications industry, it is of the utmost importance to the Debtors and the City that the details of the Dark Fiber Agreement be kept a secret so that competitors or others may not use the information to gain a strategic advantage over the Debtors in the marketplace or cause any harm. Mr. Baker further notes that disclosure of the Confidential Material is not necessary for the protection of the public, the Debtors' creditors, or third parties because: (a) the documents containing the Confidential Materials are subject to the Court's approval; (b) the Debtors propose to provide copies of the Confidential Material to certain parties-in-interest; and (c) the Debtors' request describes the Settlement Agreement and the Dark Fiber Agreement in appropriate and sufficient detail. Hence, the Debtors seek the Court's authority to file the Dark Fiber Agreement under seal. The Debtors will make the Confidential Material available to: -- the U.S. Trustee, -- the Committee's counsel, -- counsel to other statutory committee appointed in their Chapter 11 cases, and -- other parties as ordered by the Court or agreed to by the Debtors and the City. Headquartered in Princeton, New Jersey, RCN Corporation -- http://www.rcn.com/-- provides bundled Telecommunications services. The Company, along with its affiliates, filed for chapter 11 protection (Bankr. S.D.N.Y. Case No. 04-13638) on May 27, 2004. Frederick D. Morris, Esq., and Jay M. Goffman, Esq., at Skadden Arps Slate Meagher & Flom LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $1,486,782,000 in assets and $1,820,323,000 in liabilities. (RCN Corp. Bankruptcy News, Issue No. 15; Bankruptcy Creditors' Service, Inc., 215/945-7000) RECYCLED PAPERBOARD: Wants to Hire Greenbaum as Bankruptcy Counsel ------------------------------------------------------------------ Recycled Paperboard, Inc. Of Clifton asks the U.S. Bankruptcy Court for the District of New Jersey for permission to employ Greenbaum, Rowe, Smith & Davis LLP as its general bankruptcy counsel. Greenbaum Rowe is expected to: a) assist the Debtor in the preparation of its schedules of assets and liabilities and statement of financial affairs; b) advise the Debtor with respect to its powers and duties as a debtor-in-possession in the management of its property; c) negotiate with creditors of the debtor-in-possession and take the necessary legal steps to confirm and consummate a Plan of Reorganization; d) prepare on behalf of Debtor, all necessary applications, answers, proposed orders, reports and papers to be filed in this matter; e) appear before the bankruptcy court to represent and protect the interests of the debtor-in-possession and its estate; and f) perform all other legal services for the debtor-in- possession which may be necessary and proper for its effective reorganization as well as all professional services customarily required by the Debtor. David L. Bruck, Esq., and Robert E. Schiappacasse, Esq., are the lead attorneys for Recycled Paperboard's restructuring. Mr. Bruck discloses that the Firm received a $25,000 retainer. For their professional services, Mr. Bruck will bill the Debtor $375 per hour while Mr. Schiappacasse will charge at $210 per hour. Greenbaum Rowe assures the Court that it does not represent any interest adverse to the Debtor or its estate. Headquartered in Clifton, New Jersey, Recycled Paperboard Inc., manufactures recycled mixed paper and newspaper to make index, tag & bristol, and blanks. The Company filed for chapter 11 protection on November 29, 2004 (Bankr. D.N.J. Case No. 04-47475). When the Debtor filed for protection from its creditors, it listed total assets of $17,800,000 and total debts of $41,316,455. RECYCLED PAPERBOARD: Wants to Hire Bederson Company as Accountants ------------------------------------------------------------------ Recycled Paperboard Inc. of Clifton asks the U.S. Bankruptcy Court for the District of New Jersey for permission to employ Bederson & Company LLP as its accountant. Bederson & Company is expected to: a) provide assistance to the Debtor with regards to general accounting matters; b) provide accounting services in connection with preparation of tax returns for the Debtor; and c) provide the Debtor with feasibility advice. Timothy King, C.P.A., a Partner Bederson & Company, discloses that the Firm received a $25,000 prepetition retainer. For his professional services, Mr. King will bill the Debtor $330 per hour. Mr. King reports Recycled Paperboard's professionals bill: Professional Designation Hourly Rate ------------ ----------- ----------- Edward P. Bond Senior Partner $375 Matthew Schwartz Partner 325 P. Dermot O'Neill Partner 325 Charles Lunden Partner 325 Shari Hartstein Manager 250 Kimberly Sevonty Manager 240 Anthony Cecil Manager 200 Stephen Max Manager 190 Joseph Puskas Manager 190 Robert Pieloch Senior Accountant 175 Lionel Parnes Paraprofessional 95 Carol Popola Paraprofessional 95 Bederson & Company assures the Court that it does not represent any interest adverse to the Debtor or its estate. Headquartered in Clifton, New Jersey, Recycled Paperboard Inc., manufactures recycled mixed paper and newspaper to make index, tag & bristol, and blanks. The Company filed for chapter 11 protection on November 29, 2004 (Bankr. D.N.J. Case No. 04-47475). David L. Bruck, Esq., at Greenbaum, Rowe, Smith & Davis LLP, represent the Debtor in its restructuring. When the Debtor filed for protection from its creditors, it listed total assets of $17,800,000 and total debts of $41,316,455. ROBINS CONTRACTING: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------------- Debtor: Robins Contracting, Inc. 151 Upper Lynch Creek Road Plains, Montana 59859 Bankruptcy Case No.: 04-63610 Chapter 11 Petition Date: December 2, 2004 Court: District of Montana (Butte) Judge: Ralph B. Kirscher Debtor's Counsel: William R. Baldassin, Esq. Baldassin & Associates, P.C. 1821 South Avenue West, 5th Floor Missoula, MT 59801 Tel: 406-721-2120 Estimated Assets: $0 to $50,000 Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Sterling Savings Bank $315,284 123 South Main Street Livingston, MT 59047 Sterling Savings Bank $269,820 123 South Main Street Livingston, MT 59047 Heritage Bank $165,000 P.O. Box 1830 Havre, MT 59501 Internal Revenue Service $80,584 D W Burns Plumbing & Heating $59,027 Sterling Savings Bank $48,205 D & B RMS $29,309 Montana State Fund $29,309 SafeCo Insurance $28,758 Idaha Asphalt Supply, Inc. $29,000 Petrosol International, Inc. $24,000 Black Diamond $21,288 Sterling Savings Bank $18,771 Habets Construction $15,000 Beneficial $10,201 Excel Equipment Company, Inc. $10,000 Two Tone, Inc. $10,000 Amerigas $8,590 Dennis Menders $8,500 Department of Labor & Industry $8,500 SBA COMMUNICATIONS: S&P Junks $250 Million Senior Debt Ratings -------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'CCC-' rating to Boca Raton, Florida-based wireless tower operator SBA Communications Corp.'s $250 million 8.50% senior notes due 2012, issued under Rule 144A with registration rights. Proceeds will be used to fund the repurchase of the company's $236 million in 10.25% senior notes (2009 maturity), currently being conducted through a tender offer. Existing ratings for SBA, including the 'CCC+' corporate credit rating, and its SBA Senior Finance, Inc., funding entity were affirmed. The outlook is stable. "The transaction provides a modest improvement in overall interest expense and debt repayment requirements, although not sufficient to affect the overall rating, given the company's very weak financial profile," explained Standard & Poor's credit analyst Catherine Cosentino. "The rating does, in fact, reflect SBA's substantial leverage." Total debt was about $888 million at Sept. 30, 2004, and debt to annualized EBITDA was an aggressive 11.5x for the nine months ended Sept. 30, 2004, including operating lease adjustments and excluding restructuring and asset impairment charges. The company derives its revenues from tower leases on its 3,000 sites, as well as from site development services. SBA leases antenna space on towers owned and operated by the company, primarily to the major wireless carriers and their affiliates under long-term contracts with annual rent escalator provisions. The leasing business accounts for about 60% of total revenues and 90% of EBITDA. In site development services, the company serves as a consultant to wireless service providers in areas of site acquisition, network planning, radio frequency engineering, and construction. This business accounts for about 40% of total revenues and about 10% of EBITDA. The company's relatively sizable exposure to the low-margin site development business contributes to a low EBITDA margin relative to other tower operators. SCHLOTZSKY'S INC.: Committee Attacks NS Assoc.'s Secured Claims --------------------------------------------------------------- The Official Committee of Unsecured Creditors appointed in Schlotzsky's, Inc.'s chapter 11 case asks the Honorable Leif M. Clark of the United States Bankruptcy Court for the Western District of Texas, San Antonio Division, for permission to sue NS Associates I Ltd. The Committee says its review of NS Associates' liens and security interests in the Debtors' trademarks and intellectual property shows that they aren't as solid as NS Associates asserts. If the Committee can invalidate those liens, greater value could flow to unsecured creditors. As reported in the Troubled Company Reporter on Jan. 13, 2004, Schlotzsky's modified and extended the terms of its note payable with its largest creditor, NS Associates I Ltd. "These changes are very positive for the Company as they significantly decrease the Company's debt service requirements for the next two years," Monica Landers, a Company spokesperson, said at the time. In exchange for reduced payments and interest rates, NS Associates received a security interest in Schlotzsky's trademarks and other intellectual property. In addition, John C. Wooley, president and CEO of Schlotzsky's, and Jeffrey J. Wooley, senior vice president, each agreed to extend certain prior loans that they had made to the Company and to subordinate those loans to the security interest held by NS Associates. Headquartered in Austin, Texas, Schlotzsky's, Inc. -- http://www.schlotzskys.com/-- is a franchisor and operator of restaurants. The Debtors filed for chapter 11 protection on August 3, 2004 (Bankr. W.D. Tex. Case No. 04-54504). Amy Michelle Walters, Esq., and Eric Terry, Esq., at Haynes & Boone, LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from its creditors, they listed $111,692,000 in total assets and $71,312,000 in total debts. SCOTT ACQUISITION: Has Until Jan. 10 to Make Lease Decisions ------------------------------------------------------------ The Honorable Peter J. Walsh of the U.S. Bankruptcy Court for the District of Delaware extended, until January 10, 2005, the period within which Scott Acquisition Corp., and its debtor-affiliates, can elect to assume, assume and assign, or reject their unexpired nonresidential real property leases. The Debtors explain to the Court that they are tenants to certain non-residential real property leases and sub-lessors under certain unexpired non-residential real property leases. The majority of those unexpired leases are store locations where the Debtors conduct their business, while the rest are their corporate offices and parking lot locations. The Debtors remind the Court that since the Petition Date, they have been preoccupied with the continued operation of their business and addressing creditor issues and concerns in relation to their bankruptcy proceedings. They have only decided to reject five unexpired leases, which were approved by the Court on October 12, 2004. The Debtors explain that the extension will give them more time to analyze and evaluate strategies with respect to their remaining unexpired leases and determine which of the leases would fit within the their overall business plan and geographic focus. The Debtors assure Judge Walsh that the extension will not prejudice the landlords under the unexpired leases and they are current on all post-petition rent obligations under the leases. The Court's order does not prejudice the Debtors' right to seek a further extension of their lease decision period. It also does not prejudice the rights of the landlords or sub-landlords under the unexpired leases to seek a Court order to compel the Debtors to assume or reject the leases before the January 10 extension deadline. Headquartered in Winter Haven, Florida, Scott Acquisition Corp., is a retailer of a wide range of building materials and home improvement products serving the "do-it-yourself" market for individual homeowners, as well as the professional builder and commercial markets. The Debtors filed for protection on Sept. 10, 2004 (Bankr. D. Del. Case No. 04-12594). Brendan Linehan Shannon, Esq., and M. Blake Cleary, Esq., at Young Conaway Stargatt & Taylor, LLP represent the Debtors in their restructuring efforts. When the Company and its debtor-affiliates filed for protection from their creditors, they reported $45,681,000 in assets and debts. SCOTT ACQUISITION: Gets Okay to Hire Ordinary Course Professionals ------------------------------------------------------------------ The Honorable Peter J. Walsh of the U.S. Bankruptcy Court for the District of Delaware gave Scott Acquisition Corp., and its debtor- affiliates permission to continue to retain, employ and pay professionals they turn to in the ordinary course of their business without bringing formal employment applications to the Court. In the day-to-day operation of their business, the Debtors regularly call upon various professionals, including attorneys, accountants, brokers, financial advisors, actuaries and consultants. Those ordinary course professionals render services in a variety of areas, including employee benefits and claims matters, litigation, state and local tax matters, and information technology and accounting services. Because of the nature of the Debtors' business, it would be a substantial burden on their part, the Court and the U.S. Trustee to require the Debtors to submit individual retention motions and compensation applications for each of the Ordinary Course Professionals The Debtors assure the Court that: a) no Ordinary Course Professional will be involved in the administration of the Debtors' chapter 11 case; b) each Ordinary Course Professional would submit an invoice to Debtors on a regular basis that details the nature of the services rendered and the corresponding charges and expenses; c) no Ordinary Course Professional will be paid in excess of $24,000 per month; and d) in the event that the requests for compensation and reimbursement of an Ordinary Course Professional exceeds the $24,000 per month limit, that Professional will submit a formal approval application to the Court in accordance with Sections 330 and 331 of the Bankruptcy Code. The Debtors assure the Court that although some of the Ordinary Course Professionals may hold minor amounts of unsecured claims, they believe that none of them have an interest adverse to the Debtors, their creditors, or other parties in interest. Headquartered in Winter Haven, Florida, Scott Acquisition Corp., is a retailer of a wide range of building materials and home improvement products serving the "do-it-yourself" market for individual homeowners, as well as the professional builder and commercial markets. The Debtors filed for protection on Sept. 10, 2004 (Bankr. D. Del. Case No. 04-12594). Brendan Linehan Shannon, Esq., and M. Blake Cleary, Esq., at Young Conaway Stargatt & Taylor, LLP represent the Debtors in their restructuring efforts. When the Company and its debtor-affiliates filed for protection from their creditors, they reported $45,681,000 in assets and debts. SOLA INT'L: Inks Merger Pact with Carl Zeiss & EQT III ------------------------------------------------------ SOLA International Inc. (NYSE:SOL) said a newly formed company, which will consist of the eyeglass business of Carl Zeiss AG (carved-out in a company with limited liability retrospective October 1, 2004) and will be owned by Carl Zeiss AG and EQT III fund, has signed a definitive merger agreement with SOLA whereby the new enterprise will pay $28.00 per share in cash for SOLA's common stock. The total purchase price, including the assumption of approximately $285 million of debt, is approximately $1.1 billion and represents a premium of approximately 30% to the December 3, 2004 closing price of SOLA. The newly formed company will be owned 50:50 by Carl Zeiss AG and EQT. Jeremy C. Bishop, President and Chief Executive Officer of SOLA, said, "This transaction offers significant benefits to shareholders, customers, suppliers and employees of SOLA and Carl Zeiss. The combined company will have revenues of approximately EUR 800 million, employ approximately 9,000 people and position the company as a leading provider of ophthalmic lenses globally. Further, this merger represents an ideal strategic fit for SOLA as it enables the company to strengthen its geographic presence in Europe and Asia Pacific and provide for improved utilization of the company's manufacturing and distribution facilities." Dr. Michael Kaschke, Member of the Executive Board of Carl Zeiss AG, said: "I am excited that we can develop the Carl Zeiss eyeglass business with its technology, innovative products and strong Zeiss brand into a real global company. The merger with SOLA is an excellent opportunity to create a company that is represented in all important markets across the globe." Udo Philipp, Partner at EQT Partners, said, "EQT is excited to act as a catalyst in combining these two great companies. EQT looks for companies with strong market position, excellent management, and potential for growth. Both SOLA and Carl Zeiss fit this profile. Our intent will be to assist management in the company in its efforts to improve the merged company's competitive position and thereby its profit and cash flow." Completion of the transaction, which has been unanimously approved by the boards of directors of the companies, is subject to customary closing conditions, including approval by SOLA shareholders, United States and international anti-trust approvals, completion of the financing for the merger and Carl Zeiss' contribution of its business to the newly formed company. The newly formed company has received a commitment letter for a portion of the financing needed to complete the merger. The commitment letter does not contain any significant conditions other than those set forth in the merger agreement and the completion of definitive documentation. The remainder of the financing will be provided by Zeiss and EQT. The merger is expected to be completed during the first calendar quarter of 2005. UBS Securities LLC served as a financial advisor to SOLA. Cahill Gordon & Reindel LLP and Gardner Carton & Douglas LLP jointly served as SOLA's legal advisors. In connection with the proposed merger, SOLA will file a proxy statement with the Securities and Exchange Commission. INVESTORS AND SECURITY HOLDERS ARE ADVISED TO READ THE PROXY STATEMENT WHEN IT BECOMES AVAILABLE, BECAUSE IT WILL CONTAIN IMPORANT INFORMATION. Investors and security holders may obtain a free copy of the proxy statement (when available) and other documents filed by SOLA with the Commission at the Commission's web site at http://www.sec.gov/ Free copies of the proxy statement, once available, and other filings with the Commission may also be obtained from SOLA. Free copies of Sun filings may be obtained by directing a request to: Jeff Cartwright Investor Relations SOLA International Inc. 10590 West Ocean Air Drive Suite 300 San Diego, California 92130 SOLA and its officers and directors may be deemed to be participants in the solicitation of proxies from their respective shareholders with respect to the transactions contemplated by the proposed merger. A description of the interests of the directors and executive officers of SOLA is set forth in the Company's proxy statement for its 2004 annual meeting, which was filed with the SEC on June 30, 2004 and will be set forth in the proxy statement. About Carl Zeiss Carl Zeiss is a leading international group of companies operating worldwide in the optical and opto-electronic industry. Carl Zeiss AG is headquartered in Oberkochen, Germany. The Carl Zeiss Group is structured as six business groups that operate with sole responsibility. They are generally ranked first or second in the three strategic markets of biosciences and medical technology, system solutions for industry and optical consumer goods. They offer products and services for biomedical research and medical technology, system solutions for the semiconductor, automotive and mechanical engineering industries, as well as high quality consumer goods such as eyeglass lenses, camera lenses and binoculars. The Carl Zeiss Group is directly represented in more than 30 countries and operates production facilities in Europe, America and Asia. In fiscal year 2004 the global workforce of approximately 13,700 employees generated revenue of about EUR 2.1 billion. Further information is available at http://www.zeiss.com/ About EQT EQT is one of Europe's most renowned private equity companies. EQT was founded in 1994 in Sweden by Investor AB, part of the Wallenberg group. EQT's strategy is an active ownership in close co-operation with the management of the companies it acquires, to develop and implement value-enhancing growth strategies. Today EQT is the leading North European group of private equity funds with equity commitments exceeding EUR 5 billion. EQT Partners, acting as the exclusive investment advisor to all EQT funds, has offices in Munich, Stockholm, Copenhagen and Helsinki. EQT private equity funds have invested in more than 30 companies, with combined sales in excess of EUR 7 billion. For additional information, visit the Company's web site at http://www.eqt.se/ About Sola International SOLA designs, manufactures and distributes a broad range of eyeglass lenses, primarily focusing on the faster-growing plastic lens segment of the global lens market, and particularly on higher-margin value-added products. SOLA's strong global presence includes manufacturing and distribution sites in three major regions: North America, Europe and Rest of World (primarily Australia, Asia and South America) and approximately 6,600 employees in 27 countries servicing customers in over 50 markets worldwide. For additional information, visit the Company's web site at http://www.sola.com/ * * * As reported in the Troubled Company Reporter on Dec. 3, 2004, Standard & Poor's Ratings Services revised the outlook of SOLA International, Inc., to negative from stable and affirmed the 'BB-' corporate credit rating on the company. "The outlook revision reflects our heightened concern that SOLA will be unable to comply with Section 404 of the Sarbanes-Oxley Act by March 31, 2005, the company's fiscal year-end," S&P said. Section 404 mandates that a company's auditor identify "any material internal control weakness" in attesting to whether management has sufficient operational command to produce reliable and compliant financial reports. SOLA's external auditors have identified internal control deficiencies. "Although SOLA has taken various steps to improve these internal controls by hiring accounting staff and outside consultants, implementing more rigorous documentation, and creating audit checklists for controllers in its countries of operation, such a comprehensive overhaul of the company's procedures is daunting," said Standard & Poor's credit analyst Cheryl Richer. "Management believes its disclosure controls and procedures are not yet effective." SOUTHEAST AIRLINES: Suspends Operations & Cancels All Flights ------------------------------------------------------------- Southeast Airlines has suspended airline operations and cancelled all flights. "We apologize for the inconvenience this will cause to our customers, vendors and employees," the company says on its Web site, adding that it "sincerely thank[s its] loyal employees, customers and vendors for their dedication, support and efforts." The carrier tells customers they should ask their credit card companies to "charge back" any amount paid for unused tickets or, if the ticket was purchased with cash, check or a debit card, should contact United Bank at 727.898.2265 for a refund. Airtran, Southwest Airlines and US Airways have offered to help stranded passengers. Southeast says it "is making arrangements to have mishandled luggage returned directly to its owners." Because the carrier shut down operations, United Bank, in turn, froze the company's bank accounts, including its payroll account. Employee paychecks bounced. The Bank has advised the United States Department of Labor-Wage and Hour Division that the funds to back those paychecks are on deposit, but hasn't lifted the freeze. Southeast Airlines is based in Largo, Florida. The carrier said "uncontrollably high" fuel costs forced the shutdown. Southeast ran charter flights between Allentown/Bethlehem, Pa.; Gary, Ind.; Columbus, Ohio; Stewart, N.Y., and three Florida destinations, Fort Lauderdale, St. Petersburg/Clearwater and Orlando. As of press time, the U.S. Bankruptcy Clerk for the Middle District of Florida has no record of any bankruptcy petition filed by or against Southeast Airlines. ST. PAUL PORT: S&P's Rating Tumbles to D Following Payment Failure ------------------------------------------------------------------ Standard & Poor's Ratings Services lowered its ratings on St. Paul Port Authority, Minnesota's Resolution 876 bonds, issued for St. Paul Housing and Redevelopment Authority, and industrial revenue bonds, issued for itself, to 'D' from 'CCC', reflecting a failure to pay full and timely principal on Dec. 1, 2004. While 100% of interest was paid, available funds were sufficient to pay only 55% of the $8.6 million in principal coming due. Since the 876-bond fund was established, the authority has issued 876 bonds to finance various industrial, office/warehouse, retail, hotel, and multifamily residential, and parking ramp facilities within the city of St. Paul for use by private-sector parties. The bonds are secured only by available net revenues derived by the authority from the lease, operation, or sale of those properties, as well as by certain reserve funds. Since December 1991, available net revenues have been insufficient to pay debt service on the bonds, and the authority has been required to draw on reserve funds to supplement available net revenues. The authority originally estimated that reserve funds would likely be depleted in 2003. After failing to gain bondholder approval for various restructuring proposals between 1992 and 1996, the authority used $28.1 million in prepaid net revenues to purchase and retire $31.85 million of bonds tendered by bondholders. After receiving direction from the Ramsey County District Court, the authority used another $54 million in prepayments to tender another $70.2 million in bonds by a Dutch Auction in 2002. Tendered bonds ranged in price from 38.5%-92.0% of par, with an average purchase price of 76.9%. Following the tender, the authority announced that it was likely that not all 2004 principal payments would be made in full. In early 2004, the authority tendered another $29.5 million in bonds using $18.2 million in additional prepaid revenues by a Dutch Auction. The purchase price of the bonds tendered ranged from 30%-90% and averaged 84%. Following the tender, $66.6 million in 876 bonds remained outstanding. SUPERIOR PLUS: S&P Revises Outlook on Ratings to Negative --------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on Calgary, Alta.-based Superior Plus, Inc., to negative from stable. At the same time, Standard & Poor's affirmed its 'BB+' long-term corporate credit and its 'BBB-' senior secured debt ratings on the company. "The negative outlook on Superior reflects Standard & Poor's concerns regarding its aggressive financial profile, characterized by an income trust's general financial policies and increased business risk from a below-average business profile," said Standard & Poor's credit analyst Bhavini Patel. Superior is involved in four distinct business lines: propane distribution, pulp chemicals, the distribution of specialty wall and ceiling construction products, and natural gas retailing. Its primary operation, propane distribution, enjoys a large market presence in its industry but does not completely mitigate the business risks the company faces in its pulp chemicals business. The ratings on Superior reflects its lack of financial flexibility arising from its income fund structure, as well as the inherent weather risk and competition from other fuel sources that affect the company's propane distribution business. The pulp chemicals business has a narrow focus and sells to a mature industry with declining credit quality. Superior's business risk profile is strengthened from the dominant market positions the company encompasses in its two primary operating segments and the vertical integration of its pulp chemicals business. Profitable operations and low capital expenditure requirements also mitigate some of these weaknesses. The ratings on Superior reflect a below-average business profile and an aggressive financial profile. Superior is a wholly owned subsidiary of Superior Plus Income Fund, a limited purpose, unincorporated trust. All of the fund's revenues and cash flows are derived through Superior, the operating company, and these cash flows are used to service the fund's convertible debentures and distribution requirements. Although the varied business segments tempers the volatility resulting from seasonal or cyclical changes in any one industry, they also expose Superior to some increased business risk. As a result, a stronger financial profile is needed to offset the heightened business risk. Without an improvement to the capital structure, the financial measures would be notably weak for the ratings. Failure to make progress towards improving credit metrics in the next 12 months will result in the ratings being lowered. TERRA INDUSTRIES: Workman's $10 Mil. Judgment Withstands Appeal --------------------------------------------------------------- Terra Industries Inc. (NYSE:TRA) disclosed that on Nov. 30, 2004, the Arizona Court of Appeals affirmed the January 2003 decision of the trial court that awarded Jerry Workman $10.1 million in damages in a lawsuit against Terra International, Inc., a Terra Industries Inc. subsidiary. Mr. Workman's original lawsuit, brought in the Superior Court of Arizona, Maricopa County, sought damages in connection with Terra's 1997 contract to purchase his business, Workman Ag Consultants, which included a crop production software program developed by Mr. Workman. Mr. Workman alleged against Terra a breach of the implied covenant of good faith and fair dealing, and fraud. Terra recorded the charge for the original verdict in its Dec. 31, 2002, financial statements. Terra has until Jan. 5, 2005, to determine whether to petition for an appeal to the Arizona Supreme Court. Terra Industries Inc., with 2003 revenues of $1.4 billion, is a leading international producer of nitrogen products. * * * As reported in the Troubled Company Reporter on Nov. 9, 2004, Fitch Ratings raised the ratings for Terra Industries' senior secured credit facility and 12.875% senior secured notes to 'BB-' from 'B+'. Fitch has also upgraded the 11.5% senior secured second priority notes to 'B' from 'B-'. Fitch has assigned a rating of 'CCC+' to the convertible preferred shares. Fitch revised the Rating Outlook to Positive from Stable. The upgrade is primarily related to Terra's recent strong financial performance. The ratings incorporate Terra's volatile earnings and cash flow, its strong position in the domestic urea ammonium nitrate -- UAN -- market, and the slight diversity of its product mix. The ratings also include an expected neutral impact from the Mississippi Chemical Corporation purchase, which is projected to close late in 2004 or early in 2005. Terra's revenues, earnings, profitability, and cash flow measures have improved significantly in the first nine months of 2004. The improvement is associated with year-over-year increases in product pricing and the volume of ammonia, UAN, and ammonium nitrate sold. Operating margins have expanded during a sustained high natural gas cost environment. Greater earnings have strengthened credit measures, most notably total debt-to-EBITDA. For the trailing twelve-month period ended September 30, 2004, EBITDA-to-interest incurred improved to 4.1 times (x) from 2.5x at year-end 2003, while total debt-to-EBITDA improved to 1.8x from 3.0x at year-end 2003. In addition, cash from operations increased to $147 million for the trailing twelve-month period ended Sept. 30, 2004 versus $54 million at the end of 2003. Nitrogen fertilizer market conditions are strong and are expected to continue strengthening in 2005. The Positive Outlook reflects: (1) Terra's improving financial performance, (2) strong markets, and (3) the potential for positive synergies from the operation of Miss Chem's assets. TIRO INDUSTRIES: Gets Access to GE's Cash Collateral ---------------------------------------------------- The Honorable Peter J. Walsh of the U.S. Bankruptcy Court for the District of Delaware put his final stamp of approval on a cash collateral agreement among Tiro Industries, Inc., and GE Business Capital Corp., the company's prepetition secured lender. Tiro has Bankruptcy Court approval to continue using up to $2 million of cash collateral securing repayment of a $9.7 million prepetition loan from GE. Tiro will use the money to fund day-to-day working capital expenses as it attempts to orchestrate a sale of its assets under Sec. 363 of the Bankruptcy Code. A budget filed with the Bankruptcy Court in connection with the company's request projects payment of approximately $3 million of retention bonuses to the company's employees. Headquartered in Southport, Connecticut, Tiro Industries, Inc. -- http://www.tiroinc.com/-- develops, manufactures and packages hair care and other products for professional salons. The Company and its debtor-affiliates filed for chapter 11 protection on October 12, 2004 (Bankr. D. Del. Case No. 04-12939). Shawn M. Riley, Esq., McDonald Hopkins Co., LPA, and Laura Davis Jones, Esq., James E. O'Neill, Esq., Rachel Lowy Werkheiser, Esq., Timothy O'Brien, Esq., and Camille Ennis, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub PC, represent the Debtors. When the Debtors filed for chapter 11 protection, they listed more than $10 million in assets and debts. VENTAS INC: Declares $0.325 Per Share Regular Quarterly Dividend ---------------------------------------------------------------- Ventas, Inc.'s (NYSE: VTR) Board of Directors declared a regular quarterly dividend of $0.325 per share, payable in cash on Jan. 13, 2005, to stockholders of record on Jan. 3, 2005. The dividend is the fourth quarterly installment of the Company's $1.30 per share 2004 annual dividend. The Company has approximately 84.4 million shares of common stock outstanding. This fourth quarterly installment of the 2004 dividend will be included in shareholders' 2005 dividend income for income tax purposes. About the Company Ventas, Inc. is a leading healthcare real estate investment trust that owns and invests in healthcare and senior housing assets in 39 states. Its properties include hospitals, skilled nursing facilities and assisted and independent living facilities. More information about Ventas can be found on its website at http://www.ventasreit.com * * * As reported in the Troubled Company Reporter on June 30, 2004, Standard & Poor's Ratings Services raised its corporate credit ratings on Ventas Inc., its operating partnership Ventas Realty L.P., and Ventas Capital Corp. to 'BB' from 'BB-'. In addition, ratings are raised on the company's senior unsecured debt, which totals $366 million. Concurrently, the outlook is revised to stable from positive. "The upgrades acknowledge the company's steady improvement in both its business and financial profiles," said Standard & Poor's credit analyst George Skoufis. "Recent acquisitions have targeted improving Ventas' diversification, foremost its concentration with its primary tenant Kindred Healthcare Inc. Growing cash flow and profits, and lower leverage have contributed to stronger debt protection measures. Credit weaknesses remain, however, including Ventas' continued reliance on un-rated Kindred, the risk of future changes to government reimbursement, and constrained, but improved, financial flexibility." VOUGHT AIRCRAFT: Moody's Rates Planned $650M Sr. Sec. Debt Ba3 -------------------------------------------------------------- Moody's Investor Service has assigned a Ba3 rating to Vought Aircraft Industries, Inc.'s proposed $650 million senior secured credit facility, consisting of a $250 million revolving credit facility due 2010 and a $400 million term loan B due 2011. At the same time, Moody's confirmed all other debt ratings for Vought (senior implied at B1) and changed the rating outlook to negative from stable. The rating outlook change reflects concerns about the prospects for continuing negative free cash flow generation and consequent increasing debt levels at Vought as a result of a prolonged facilities consolidation program that the company has undertaken along with substantial levels of new investment related to the company's participation as a supplier to Boeing's planned 7E7 aircraft platform. While both the facilities consolidation and the 7E7 investment offer potential for longer-term enhancements to the company's financial performance, the interim period of negative free cash flow and rising debt levels will weaken financial metrics and could pose additional risk for debt holders. Moody's has confirmed all existing ratings of the company: * Vought's $270 million senior unsecured notes, due 2011, at B2; * Senior implied rating at B1; and * Senior unsecured issuer rating at B3. The ratings continue to reflect the high leverage under which the company operates, which has been heightened by the increase in debt that will ensue under the proposed expanded bank facilities, as the company pursues a significant period of investment relating to its participation in Boeing's 7E7 aircraft development program as well as future facilities consolidation. The ratings also take into account the substantially negative level of free cash flow experienced in 2004, owing to a larger-than-expected consolidation program commenced in 2004. Ratings also consider the liquidity benefits that are provided by the re-financed bank facilities, which will be important for the company to meet its required investments in working capital and capital expenditures over the next few years, while continuing production and delivery of components for its substantial backlog of existing aircraft platform, both commercial and military. Ratings would be subject to downward revision if component delivery rates were to fall below expectations, or if expenses relating the 7E7 programs were to become more onerous on the company, possibly resulting in leverage (lease-adjusted debt/EBITDAR) in excess of 5.0x or a material deterioration of the company's liquidity position. Conversely, ratings or their outlook could be subject to upward revision if the company were to return to substantially positive free cash flow generation, while reducing debt such that leverage falls below 4x for a sustained period, while prospects for strong and timely 7E7 sales and delivery levels materialize as planned. The purpose of the proposed $650 million credit facility is to repay $296 million of existing senior secured bank debt, and provide additional liquidity for future investments relating to Vought's participation in Boeing's 7E7 program as well as for the company's on-going facility consolidation and modernization program. Although the re-financing will enhance the company's liquidity profile over the next few years, Vought remains highly leveraged and, Moody's believes, will continue to carry heavy debt levels over the next 2-3 years. Upon close of the proposed transaction, Vought anticipates total debt to be $673 million, which represents an 18% increase over $568 million of debt reported as of September 2004. This increases leverage from 3.7x debt-to-LTM September 2004 EBITDA (adjusted for certain non-recurring cash and non-cash items, as allowed for credit facilities' covenant calculation purposes) to pro-forma 4.4x EBITDA (4.8x EBITDAR on an estimated lease-adjusted basis), which is appropriate for this rating category. Moody's notes the significant levels of adjustments to EBITDA calculations to compute this leverage, implying that leverage could be substantially higher if many of the cost adjustments, particularly relating to plant consolidation costs, were to actually be considered recurring in nature, even if only for the next few years. Moreover, due to the company's plans for substantial expenditures over the next few years on additional plant consolidation and for 7E7 development, both in CAPEX as well as increased engineering expenses, Moody's expects that Vought's debt will likely increase further over the next two years to partially fund these investments, while leverage will likely remain approximately at post-closure levels. However, the rating agency notes that cash will increase as a result of this transaction. Vought will have about $225 million of cash on hand (pro forma, basis September 2004 balances), which is intended to be used to fund a substantial amount of the projected investments, moderating the potential future increase in debt that should ensue. Moody's notes that the company's cash flows have deteriorated in 2004, owing largely to relatively heavy facilities consolidation expenses that Vought has incurred over the past year. While sales for the first nine months of 2004 increased slightly to $884 million from $852 million for the same period in 2003, operating income declined from about $5 million in the first three quarters of 2003 to a loss of $51 million through September 2004, largely the consequence of about $65 million in restructuring costs taken in 2004, as well as the company's investments (expensed) in the 7E7 program and lower margins on the C-17 aircraft platform. Vought's operating cash flows, which had been $99 million in 2003, were negative $6 million for the first nine months of 2004, while the company had negative free cash flow of about $50 million in this period. Considering the substantial level of capital expenditures and expensed items relating to further facilities consolidation and investment for Boeing's 7E7, Moody's expects that Vought will continue to be significantly free cash flow negative through 2006. This suggests that, over the near-term, the company will not likely be able to reduce debt or substantially improve its leverage position. However, Moody's notes the positive over-all benefit that the 7E7 should provide to Vought, which, over the long-term, should maintain the company's position as a major structural components supplier on important commercial aircraft platforms. Vought currently enjoys this status in the OEM supplier market by way of its significant content contributions on a wide array of commercial platforms to, among others, Boeing, Airbus, Embraer, and GE. The company also derived substantial revenue from military aircraft sales (38% of 2003 sales), which helped mitigate the effects of recent softness in the commercial aircraft OEM market on the company's recent operating performance, and provides significant revenue visibility over the next few years. Further platform diversification is provided by its business jet operations (18% of 2003 sales), which is showing improvement sector-wide. The Ba3 rating assigned to the senior secured credit facilities, one notch above the senior implied rating, reflects the seniority in claim that this facility has over the $270 million in senior unsecured notes. Also, the senior secured facilities are fully secured by essentially all of the company's assets. The company's total pro forma tangible asset base (after about $613 million of goodwill and other intangibles) of $897 million, which includes $482 million in current assets and $375 million in fixed assets, implies an adequate level of collateral in excess of the total facilities' commitment. However, Moody's notes the variable nature of asset coverage, as current assets (mostly inventory) will change frequently with working capital cycles, and that much of the company's realizable property, plant, and equipment value are related to the level of business in which they are employed, and therefore may be significantly reduced in value in a distressed sale scenario. Vought Aircraft Industries, Inc., headquartered in Dallas, Texas, is a privately held company controlled by The Carlyle Group. The company is the largest independent developer and producer of structural assemblies, which include complete fuselages, wing assemblies, empennages, aircraft doors, nacelles, and control surfaces for commercial, military, and business aircraft. Vought had LTM September 2004 revenues of $1.2 billion. WERNER HOLDING: Liquidity Concerns Prompt S&P to Junk Ratings ------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on Werner Holding Co. Inc. to 'CCC+' from 'B' on concerns that greater-than-anticipated competitive pressures and the impact of cost increases on earnings and cash flows could lead to near- term covenant compliance and liquidity issues. The outlook is negative. The ratings on privately owned Werner reflect its significant customer concentration, limited end-market focus, modest scope of operations in niche and cyclical markets, very aggressive financial profile, and covenant compliance concerns. "Ratings could be lowered again if liquidity declines further than expected or restructuring activities are delayed or not fully successful," said Standard & Poor's credit analyst Cynthia Werneth. Greenville, Pennsylvania-based Werner produces primarily aluminum and fiberglass ladders, as well as scaffolds, platforms, and step stools. The company is the largest U.S. manufacturer of ladders, but early in 2004 lost significant market share as a result of its largest customer, Home Depot, Inc., fully sourcing its ladder needs from China and Mexico. Total sales for 2003 were about $500 million, of which Home Depot accounted for approximately 27%. As a result of losing Home Depot, Werner's share of the approximately $1 billion U.S. ladder market has declined to an estimated 40% from 52%. It also heightens customer concentration risk with Lowe's Cos., Inc., which likely accounts for over one- third of Werner's sales. Werner's competitive environment gives it limited ability to pass along cost increases. High aluminum, steel, freight, and workers' compensation costs are eroding the company's operating margin. As a result of losing Home Depot and rising costs, Werner has been forced to severely restructure its operations. It has been phasing out production at high-cost facilities and replacing it with capacity in Mexico, outsourcing some components from Asia, reducing headcount, and minimizing overhead. WESTPOINT STEVENS: Has Dec. 10 to Reject Myrtle Property Lease -------------------------------------------------------------- WestPoint Stevens, Inc. and its debtor-affiliates lease real property located in outlet malls and shopping centers used as retail stores to sell their products in various locations. Before the Petition Date, the Debtors were party to a lease with R.R. Myrtle Beach, Inc., as predecessor-in- interest to COROC/Myrtle Beach, LLC, dated September 4, 1996, for the lease of real property located in a retail development commonly known as Myrtle Beach Factory Stores. The Debtors lease 9,300 square feet for $7,756 per month. In addition, the Debtors must pay a "Percentage Rent" of about 6% of gross sales above the sales break point of $1,861,300. The Lease is due to expire on October 31, 2005, with no option for renewal. According to John J. Rapisardi, Esq., at Weil, Gotshal & Manges, LLP, in New York, the Myrtle Beach Store is currently not generating any profit, nor adding value to the Debtors' estates. Through October 31, 2004, operations at the Myrtle Beach Store have yielded net losses of $77,000. Thus, the Debtors have decided to close the Myrtle Beach Store. The Debtors have reviewed and analyzed the Lease to determine its economic value and marketability. The Debtors found out that the Lease does not have sufficient value to warrant its continuing administrative costs. The Debtors believe that the costs associated with marketing the Lease, in addition to any cure amounts that would be required to be paid pursuant to Section 365(b)(1)(A) of the Bankruptcy Code, would be significantly greater than any potential value that might be realized by any future sale or sublease. Over the past year, a number of new shopping centers have opened in the area surrounding the Myrtle Beach Store, which resulted in an increase in vacancies in stores in the immediate proximity of the premises governed under the Lease. Thus, the Debtors do not believe that they will be able to extract any value out of the lease by a sale or sublease. Accordingly, the Debtors seek the United States Bankruptcy Court for the Southern District of New York's authority to reject the Lease, effective December 10, 2004. Headquartered in West Point, Georgia, WestPoint Stevens, Inc., -- http://www.westpointstevens.com/-- is the #1 US maker of bed linens and bath towels and also makes comforters, blankets, pillows, table covers, and window trimmings. It makes the Martex, Utica, Stevens, Lady Pepperell, Grand Patrician, and Vellux brands, as well as the Martha Stewart bed and bath lines; other licensed brands include Ralph Lauren, Disney, and Joe Boxer. Department stores, mass retailers, and bed and bath stores are its main customers. (Federated, J.C. Penney, Kmart, Sears, and Target account for more than half of sales.) It also has nearly 60 outlet stores. Chairman and CEO Holcombe Green controls 8% of WestPoint Stevens. The Company filed for chapter 11 protection on June 1, 2003 (Bankr. S.D.N.Y. Case No. 03-13532). John J. Rapisardi, Esq., at Weil, Gotshal & Manges, LLP, represents the Debtors in their restructuring efforts. (WestPoint Bankruptcy News, Issue No. 33; Bankruptcy Creditors' Service, Inc., 215/945-7000) * Number of Bankruptcy Filings Down in Fiscal Year 2004 ------------------------------------------------------- Bankruptcy cases filed in federal courts fell 2.6 percent in fiscal year 2004, according to the Administrative Office of the U.S. Courts. During the 12-month period ending Sept. 30, 2004, 1,618,987 bankruptcies were filed, down from the 1,661,996 bankruptcy cases filed in fiscal year 2003. The federal Judiciary's fiscal year is the 12-month period ending Sept. 30. The bankruptcies reported are for Oct. 1, 2003 to Sept. 30, 2004. Despite the drop in filings, bankruptcies remain at historic highs, well above the 1.5 million record first set in 2002. Bankruptcy filings first broke one million during the 12-month period ending June 30, 1996. Despite the high caseload, no new bankruptcy judgeships have been created since 1992, when bankruptcy filings for the fiscal year totaled 977,478. Business and Non-Business Filings Business bankruptcies fell 3.8 percent to 34,817 in FY 2004, down from 36,183 in FY 2003. Non-business or personal bankruptcies fell 2.6 percent in the same 12-month period, totaling 1,584,170 in FY 2004 and 1,625,813 in FY 2003. Business and Non-Business Filings Years Ended September 30, 1999-2004 FY Business Non-Business TOTAL ---- -------- ------------ ----- 2004 34,817 1,584,170 1,618,987 2003 36,183 1,625,813 1,661,996 2002 39,091 1,508,578 1,547,669 2001 38,490 1,398,864 1,437,354 2000 36,065 1,226,037 1,262,102 Filings Under Chapters 7, 12 and 13 Fall In FY 2004, filings under Chapters 7, 12 and 13 of the Bankruptcy Code fell. Only Chapter 11 filings rose over FY 2003 totals. * Chapter 7 is designed to allow individuals to keep certain exempt property while the remaining property is sold to repay creditors. Chapter 7 filings in FY 2004 totaled 1,153,865, down 2 percent from the FY 2003 total of 1,177,292. * Chapter 12 is designed to meet the needs of financially distressed family farmers. In FY 2004, Chapter 12 filings totaled 238, falling 65.9 percent from the 698 cases filed in FY 03. The low number of filings in FY 2004 was most likely due to the lapse in December 2003 of Chapter 12. * Under Chapter 13 bankruptcy, creditors may be repaid in installments, in full or in part, over a 3- to 5-year period. Filings under Chapters 13 in FY 2004 fell 4.1 percent from 473,763 filings in FY 2003 to 454,412 filings in FY 2004. * Chapter 11 filings totaled 10,368 in FY 2004, up 2.2 percent from the 10,144 Chapter 11 bankruptcies filed in FY 2003. Chapter 11 provides for a business to continue operations while formulating a plan to repay its creditors. Bankruptcy Filings by Chapter of the Bankruptcy Code 12-Month Periods Ending September 30 FY Chapter 7 Chapter 11 Chapter 12 Chapter 13 ---- --------- ---------- ---------- ---------- 2004 1,153,865 10,368 238 454,412 2003 1,177,292 10,144 698 473,763 2002 1,084,336 11,669 322 451,258 2001 1,014,137 10,519 379 412,272 2000 870,805 9,835 551 380,880 Fourth Quarter Filings The three-month period ending September 30, 2004, was the Judiciary's final quarter of FY 2004. Bankruptcy filings in the fourth quarter totaled 396,438. The number of bankruptcy cases filed during the third quarter of the Judiciary's 2004 fiscal year (April 1, 2004 to June 30, 2004) totaled 421,110. The number of bankruptcies filed during the second quarter of fiscal year 2004 (January 1, 2004 to March 31, 2004) was 407,572. Filings for the Judiciary's first quarter of 2004 (October 1, 2003 to December 31, 2003) totaled 393,348. For more information on bankruptcy visit the Judiciary's website at: http://www.uscourts.gov/bankbasic.pdf Local bankruptcy court rules can be found at: http://www.uscourts.gov/rules/bk-localrules.html A breakdown of the latest data on bankruptcy filings is attached and also is available on the Judiciary's website at http://www.uscourts.gov/under Newsroom. Bankruptcy filings over the last 10 years are available at: http://www.uscourts.gov/bnkrpctystats/bankruptcystats.htm The American Bankruptcy Institute reports that the Districts with the highest percentage INCREASE in total filings for the 12-month period ending September 30, 2004 (compared to the identical period in 2003) are: District Increase -------- -------- Southern District of New York 20.6% District of Colorado 10.4% Southern District of West Virginia 8.7% District of Guam 8.2% Middle District of Louisiana 7.9% and the ABI reports that the Districts with the highest percentage DECREASE in total filings for the 12-month period ending September 30, 2004 (compared to the identical period in 2003) are: District Decrease -------- -------- District of the Virgin Islands 28.3% Central District of California 18.5% District of Hawaii 17.2% District of Columbia 16.5% District of Northern Mariana Islands 15.0% The ABI is the largest multi-disciplinary, non-partisan organization dedicated to research and education on matters related to insolvency. The ABI was founded in 1982 to provide Congress and the public with unbiased analysis of bankruptcy issues. The ABI membership includes over 10,300 attorneys, accountants, bankers, judges, professors, lenders, turnaround specialists and other bankruptcy professionals providing a forum for the exchange of ideas and information. For additional information, visit ABI World at http://www.abiworld.org/ * Loan Pricing & Deutsche Bank Team Up to Offer CDO Asset Pricing ----------------------------------------------------------------- Loan Pricing Corporation, a Reuters Company, and the Trust & Securities Services business of Deutsche Bank Trust Company Americas, a leading global provider of trust and securities administration services, have entered into a strategic partnership to facilitate the seamless pricing of global CDO loan assets for TSS clients. Under the agreement, LPC will provide U.S. loan prices via the LSTA/LPC Mark-to-Market Pricing which is the first of its kind loan asset valuation service and provides superior objective pricing to more than 165 institutions, managing 185 portfolios with over $200 billion in bank loan assets. Additionally, loan prices will be sourced from LPC's European operation currently offering daily valuations for over 1100 leveraged and investment grade loans originated in Europe, Middle-East and Africa (EMEA). This partnership delivers benefits for collateral managers, investors, traders and structurers in the market. "The ability of Deutsche Bank's TSS to offer its clients market- leading independent prices on collateral assets through the LPC pricing services is a true benefit to clients and will increase efficiency," said Steven Park, Director and Head of CDOs at Deutsche Bank's TSS. "Collateral managers will benefit from this seamless integration by being able to view and download collateral asset prices, enabling them to react more quickly to market conditions and further enhancing market transparency for everyone. As a leader in the global CDO trustee market, and with LPC's global reach, we look forward to offering this service to clients in the U.S. and worldwide." "LPC has been providing pricing information to the market for over 13 years," said Michele Kelsey, Senior Vice President at Loan Pricing Corporation. "This partnership will yield much needed improvements in data management efficiency for the complex CDO market, and allow Deutsche Bank's TSS and LPC to enhance product value for our mutual clients." The partnership will provide additional benefits to LPC's new CDO Intelligence (CDOi) product. CDOi, launched earlier this year, is a market data and data management solution for participants in the CDO arena. As another component of this strategic relationship, Deutsche Bank's TSS will, with appropriate collateral manager and client consent, provide LPC with detailed data on CDO structures in an electronic format for use within CDOi. This will include information from offering memorandums, SWAP agreements and monthly surveillance reports, which will be combined into the CDOi platform with LPC's detailed terms and market values on CDO collateral assets. About Loan Pricing Corporation Since 1985 Loan Pricing Corporation (LPC) -- http://www.loanpricing.com/-- a Reuters Company, has provided market players around the world with the most complete and accurate news, data and analytics on bank loans. LPC's coverage spans the U.S., Europe, Middle East, Africa, Latin America, and Asia-Pacific via subsidiary Basis Point Publishing Limited. LPC's content is delivered via publications, on-line services and databases. LPC is the premier global provider of loan market information and analysis as a result of its in-depth focus on the loan industry and development of state-of-the-art products and services for bankers, borrowers and loan investors. About Deutsche Bank With roughly Euro 845 billion in assets and approximately 65,400 employees, Deutsche Bank -- http://www.deutsche-bank.com/-- offers unparalleled financial services in 74 countries throughout the world. Deutsche Bank competes to be the leading global provider of financial solutions for demanding clients creating exceptional value for its shareholders and people. Deutsche Bank ranks among the global leaders in corporate banking and securities, transaction banking, asset management, and private wealth management, and has a significant private & business banking franchise in Germany and other selected countries in Continental Europe. Deutsche Bank's Trust & Securities Services is one of the leading global providers of trust and securities administration services. Through a fully integrated network of specialist offices worldwide, the group provides domestic custody in 25 securities markets as well as trustee, agency, registrar, depositary, SPV management and related services for all types of financing including bonds, medium term note and commercial paper programs, asset backed and mortgage backed securities, CDOs, SIVs, project financings, escrows, syndicated loans, American Depositary Receipts and German equities. For more information contact: Loan Pricing Corporation Michele Kelsey Tel. No. (212) 833-9366 mkelsey@loanpricing.com Kevin Elphick Tel. No. (212) 833-9362 kelphick@loanpricing.com -- or -- Deutsche Bank Juanita Guti,rrez Tel. No. (212) 250 4592 Juanita.gutierrez@db.com * Large Companies with Insolvent Balance Sheets ----------------------------------------------- Total Shareholders Total Working Equity Assets Capital Company Ticker ($MM) ($MM) ($MM) ------- ------ ------------ ------- -------- Airgate PCS Inc. CSA (89) 270 9 Akamai Tech. AKAM (144) 189 63 Alaska Comm. Syst. ALSK (12) 650 85 Alliance Imaging AIQ (41) 654 36 Amazon.com AMZN (721) 2,109 642 AMR Corp. AMR (314) 29,261 (1,824) Amylin Pharm. Inc. AMLN (42) 402 325 Atherogenics Inc. AGIX (19) 93 77 Blount International BLT (283) 423 103 CableVision System CVC (1,669) 11,795 223 CCC Information CCCG (131) 80 8 Cell Therapeutic CTIC (52) 174 87 Centennial Comm CYCL (538) 1,532 152 Choice Hotels CHH (175) 271 (16) Cincinnati Bell CBB (600) 1,986 (20) Clean Harbors CLHB (3) 471 31 Compass Minerals CMP (109) 642 99 Conjuchem Inc. CJC (16) 24 19 Cotherix Inc. CTRX (44) 25 20 Cubist Pharmacy CBST (75) 155 (6) Delta Air Lines DAL (3,297) 23,526 (2,614) Deluxe Corp. DLX (214) 1,561 (344) Denny's Corporation DNYY (246) 730 (80) Domino Pizza DPZ (575) 421 (16) Eagle Hospitality EHP (26) 177 N.A. Echostar Comm DISH (1,711) 6,170 (503) Empire Resorts NYNY (13) 61 7 Graftech International GTI (44) 1,036 284 Hawaii Holding HA (160) 236 (60) Hercules Inc. HPC (40) 2,658 362 IMAX Corp. IMAX (49) 222 9 Indevus Pharm. IDEV (34) 205 164 Kinetic Concepts KCI (29) 638 214 Level 3 Comm Inc. LVLT (159) 7,395 157 Lodgenet Entertainment LNET (68) 301 20 Lucent Tech. Inc. LU (2,240) 15,924 2,784 Maxxam Inc. MXM (649) 1,017 72 McDermott Int'l MDR (338) 1,245 (33) McMoran Exploration MMR (85) 156 29 Northwest Airline NWAC (2,166) 14,450 (431) Northwestern Corp. NWEC (603) 2,445 (692) ON Semiconductor ONNN (298) 1,221 270 Owens Corning OWENQ (4,259) 7,373 1,114 Per-se Tech. Inc. PSTI (25) 169 31 Phosphate Res. PLP (439) 316 5 Pinnacle Airline PNCL (18) 147 26 Primedia Inc. PRM (1,163) 1,577 (203) Primus Telecomm PRTL (113) 735 23 Qwest Communication Q (2,477) 24,926 (509) SBA Comm. Corp. SBAC (27) 915 11 Sepracor Inc. SEPR (380) 974 600 St. John Knits Int'l SJKI (57) 206 77 Syntroleum Corp. SYNM (8) 48 11 US Unwired Inc. UNWR (234) 709 (280) Valence Tech. VLNC (48) 16 2 Vector Group Ltd. VGR (48) 528 110 Vertrue Inc. VTRU (44) 445 0 WR Grace & Co. GRA (118) 3,087 774 Young Broadcasting YBTVA (12) 798 85 ********* 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 ***