/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/041213.mbx T R O U B L E D C O M P A N Y R E P O R T E R Monday, December 13, 2004, Vol. 8, No. 274 Headlines ABC GROUP INC: Case Summary & 11 Largest Unsecured Creditors AFM HOSPITALITY: OSC Revokes Temporary Cease Trade Order ALLIANCE IMAGING: Prices New $150 Million 7-1/4% Senior Sub. Notes ALLIANCE IMAGING: Moody's Puts B1 Rating on $480M Sr. Sec. Debts ALLIANCE LAUNDRY: Moody's Revises Outlook on Ratings to Developing AMERICAN SKIING: Posts 6% Increase in First Quarter Revenues ASSET SECURITIZATION: S&P Junks Class B-4 Ratings ASSOCIATED MATERIALS: Moody's Junks $165M Sr. Subordinated Notes ATA HOLDINGS: America West Won't Push Through with Asset Bid ATA AIRLINES: Proposes to File Sec. 1110 Stipulations Under Seal ATLAS AIR: Says October Traffic Down 1.4% Year-Over-Year ATHLETE'S FOOT: Files for Chapter 11 Protection in S.D. New York ATHLETE'S FOOT: Case Summary & 24 Largest Unsecured Creditors BALLY TOTAL: S&P Raised Corporate Credit Ratings to B- From CCC+ BANC OF AMERICA: Fitch Assigns Low-B Ratings on 18 Mortgage Certs. BLOUNT INC: S&P Withdraws B- Senior Secured Rating CAPSTEAD MORTGAGE: Fitch Assigns 'BB' Rating on Class IIIB-5 CATHOLIC CHURCH: Spokane Creditors Meet on Jan. 5 CATHOLIC CHURCH: Tucson Gets Protocol for Filing Claims Under Seal CHURCH & DWIGHT: S&P Puts B+ Rating on $175 Million Sr. Sub. Notes CITATION CAMDEN CASTINGS: Voluntary Chapter 11 Case Summary CITATION CORP: Has Until Jan. 12 to Make Lease-Related Decisions CLARK GROUP: Court Confirms Debtors' Prepackaged Chapter 11 Plan CLARK GROUP: Has Until Jan. 1 to Make Lease-Related Decisions CLEARLY CANADIAN: Placing 1.5 Million Shares in Private Offering CONCERT INDUSTRIES: 97% of Creditors Approve Plan of Arrangement COPPOLA N.Y.C. INC: Case Summary & 18 Largest Unsecured Creditors COX ENTERPRISES: S&P Lowered Senior Debt Rating to BB+ From BBB CYBERCO HOLDINGS: Involuntary Chapter 7 Case Summary DANA CORPORATION: Prices Tender Offer for Three Note Issues DRESSER INC: Amends Registration Statement for IPO DICK'S SPORTING: Soliciting Consents to Amend Sr. Note Indenture DOUGLAS DYNAMICS: Moody's Places Low-B Ratings on New $200M Debts D.R. HORTON: Moody's Puts Ba1 Rating on $300 Million Senior Notes EL-BETHEL MISSIONARY: Voluntary Chapter 11 Case Summary ENRON CORP: Judge Gonzales Approves Bracewell Settlement Agreement EVERGREEN INVESTMENTS: Trustees Approve Fund Merger Transactions FINANCIAL ASSET: Fitch Junks Class B4 of Series 1997-NAMC1 Cert. FOSTER WHEELER: Converts 349 Million Convertible Preferred Shares FUND OF FUNDS: Final Deadline to File Claims is February 14, 2005 GENERAL MEDIA: Seneca Thrilled with Successful Chapter 11 Outcome GITTO GLOBAL: Jager Smith Approved as Committee's Counsel GOLD KIST INC: S&P Raises Corporate Credit Rating to B+ from B HAYNES: Moody's Withdraws Junk Ratings After Bankruptcy Emergence INTERLINE: Moody's Ups Ratings After Balance Sheet Restructuring IWO ESCROW: Moody's Junks Senior Secured & Discount Notes JACUZZI BRANDS: Earns $5.5 Million of Net Income in Fourth Quarter KAISER ALUMINUM: Disclosure Statement Hearing Slated for Dec. 20 KB HOME: Moody's Assigns Ba1 Rating to $300 Million Senior Notes KEY ENERGY: To Seek Additional Waivers for Late SEC Filings KMART CORP: R & F Presses for Payment of $2,000,000 Lease Claim KRONOS INTERNATIONAL: Moody's Affirms Low-B Ratings LEHMAN BROTHERS: S&P Junks Six Mortgage Securitization Classes MARINER HEALTH: Will Modify Injunction for Four ADR Claims METROMEDIA INT'L: Files Quarterly Report & Cures Reporting Default MIRANT CORP: Pepco Demands Payment for Contractual Obligations NAVISTAR INTL: Expects 4th Quarter Profits to Be Highest Ever NORTH ATLANTIC: Moody's Revises Outlook on Ratings to Negative NRG ENERGY: S&P Puts BB Rating on $950 Million Debts OMNI FACILITY: Needs Until Mar. 31 to Make Lease-Related Decisions OXFORD AUTOMOTIVE INC: List of 50 Largest Unsecured Creditors OXFORD AUTOMOTIVE: Moody's Removes Ratings After Bankruptcy Filing PACIFIC BAY: Fitch Affirms $17 Mill. of Preference Shares at 'BB-' PATHMARK STORES: Moody's Junks $350M Senior Subordinated Notes P.H. GLATFELTER: Moody's Pares Debt Rating to Ba1 from Baa2 PITTSBURGH CITY: Moody's Lifts Rating to Ba1 & May Upgrade Further QUIGLEY COMPANY: Wants Exclusive Period Stretched to May 3 RESTORATION REVIVAL: Case Summary & Largest Unsecured Creditor SACRAMENTO-YOLO: Moody's Slices Rating on $10.9 Mil. Bonds to B2 SEQUOIA MORTGAGE: Fitch Puts Low-B Ratings on 12 Mortgage Issues SCIENTIFIC GAMES: Gets Requisite Consents to Amend Indenture SOLA INTERNATIONAL: Moody's Reviewing Low-B Ratings STELCO: 14th Monitor's Report Outlines Creditors' Claims Protocol STELCO: Welcomes SC Decision Denying USWA Locals Leave to Appeal STRUCTURED ASSET: Fitch Upgrades Class B-5 Series 1998-6 to 'BBB+' SWIFT & COMPANY: S&P Affirms BB- Corporate Credit Rating TACTICA INT'L: Closes on $300,000 Financing from Senior Management THERMADYNE HOLDINGS: S&P Affirms B- Subordinated Debt Rating VENOCO INC: Moody's Junks Proposed $150M Senior Unsecured Notes WASHINGTON MUTUAL: Fitch Assigns Low-B Ratings on 25 Certificates WESCO DISTRIBUTION: S&P Puts B+ Corp. Rating on CreditWatch Pos. WESTPOINT STEVENS: Enters Luxury Bed & Bath Market with Charisma XLO GROUP: Resilience Capital Completes Private Acquisition ZAXIS INTERNATIONAL: Trustee Sells Corporate Shell for $35,000 * BOND PRICING: For the week of December 13 - December 17, 2004 ********* ABC GROUP INC: Case Summary & 11 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: ABC Group, Inc. dba Come N' Go 1401 Cooks Lane Fort Worth, Texas 76120-4203 Bankruptcy Case No.: 04-91832 Chapter 11 Petition Date: December 6, 2004 Court: Northern District of Texas (Ft. Worth) Judge: Russell F. Nelms Debtor's Counsel: Larry K. Hercules, Esq. Larry K. Hercules, P.C. 1400 Preston Road, Suite 280 Plano, Texas 75093 Tel: (972) 964-9757 Total Assets: $1,750,100 Total Debts: $1,827,628 Debtor's 11 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Betsy Price, Tax Assessor Trade debt $38,500 PO Box 961018 Fort Worth, Texas 76161-0018 Internal Revenue Service Trade debt $35,000 Attn: Bankruptcy Section 1100 Commerce, MC 5020 DAL Dallas, Texas 75242 First Data Corporation Trade debt $32,000 Integrated Payment Systems 12500 E. Biford Avenue #M13-M Englewood, Colorado 80112 Tetco Trade debt $16,000 Tara Energy Trade debt $9,000 Cash Technologies Trade debt $9,000 Texas Comptroller of Trade debt $8,000 Public Accounts Dr. Ruth E. Haynes, P.C. $2,200 Acuff & Gamboa, LLP $1,055 Internal Revenue Service Trade debt $1,000 Texas Workforce Commission Trade debt $300 AFM HOSPITALITY: OSC Revokes Temporary Cease Trade Order -------------------------------------------------------- AFM Hospitality Corporation (TSX:AFM) reported that the cease trade order in the Province of Ontario has been revoked effective Dec. 7, 2004. AFM is actively working towards having the cease trade orders in other provinces revoked within the next few weeks, if not sooner. Previously, AFM said it did not file its annual 2003 and interim 2004 statements by the appropriate deadlines; and, as a result, the relevant securities commissions imposed Issuer Cease Trade Orders. Lawrence P. Horwitz, Chairman and CEO, commented "We are very pleased that the Ontario Securities Commission has revoked its temporary Cease Trade Order. We have a number of growth initiatives planned that require AFM's ability to issue securities. We are pleased with restructuring actions we implemented in 2003, the focus on our core strengths and businesses as seen in the very positive results to date in 2004, and with the continued commitment of our customers, our employees, our vendors, and our Board to the continued growth of AFM in 2004." About AFM Hospitality Corporation AFM Hospitality Corporation operates or has open and/or executed franchise and management agreements with 300 hotels, restaurants and other nationally franchised service businesses throughout North America. The company's focus is to increase the number of hotels franchised by the respective brands, franchise new brands, build the portfolio of hotel management agreements, provide valuable resources and hospitality experience to help hotel owners grow their business, and to acquire other hospitality and travel businesses. AFM Hospitality Corporation is a publicly traded company listed on the Toronto Stock Exchange (TSX: AFM) and may be reached at http://www.afmcorp.com/ * * * As reported in the Troubled Company Reporter on Nov. 30, 2004, AFM Hospitality Corporation released its consolidated financial statements along with its Management Discussion and Analysis for 2003. Previously, AFM did not file its annual statements by the appropriate deadlines; and, as a result, the relevant securities commissions imposed Issuer Cease Trade Orders. With the release of 2003 financial statements and its interim statements for 2004, AFM Hospitality intends to satisfy the provisions of the securities commissions and cure its default of the financial statement reporting requirement. With the change of CFO's during 2004 and the departure of an interim CFO, AFM's management and its board of directors, believed that it was prudent to invest additional time to review AFM's books, records, and related disclosures in accordance with company guidelines and the new disclosure standards as AFM completed several complex transactions during 2003. While reporting a sizeable loss for 2003, AFM is pleased that it received a clean opinion letter from its outside auditors and it has not been necessary to report any restatement of any periods prior to 2003. Additionally, AFM expects to report a significant turn around for 2004 compared to 2003. ALLIANCE IMAGING: Prices New $150 Million 7-1/4% Senior Sub. Notes ------------------------------------------------------------------ Alliance Imaging, Inc. (NYSE:AIQ), a leading national provider of outsourced diagnostic imaging services, has agreed to sell $150 million in aggregate principal amount of its 7-1/4% Senior Subordinated Notes due 2012 in a private offering. Alliance Imaging intends to use net proceeds of the offering, together with expected proceeds of approximately $410 million from new term loans pursuant to a proposed refinancing of the Tranche C term loans under its credit agreement and cash on hand, to fund: (i) the purchase by Alliance Imaging of all of its outstanding 10-3/8% Senior Subordinated Notes due 2011 pursuant to a tender offer and consent solicitation commenced on Nov. 30, 2004; (ii) the consummation of the refinancing of $256 million of term loans under its credit agreement, and (iii) the payment of the fees and expenses related to the issuance of the new notes, the incurrence of the new term loans, the credit agreement refinancing, and the tender offer and consent solicitation. The closing of the notes offering is conditioned on the concurrent closing of these transactions. The transactions are expected to close on or about Dec. 29, 2004. The new notes have not been registered under the Securities Act of 1933, as amended, or applicable state securities laws, and will be offered only to qualified institutional buyers in reliance on Rule 144A and in offshore transactions pursuant to Regulation S under the Securities Act. Unless so registered, the new notes may not be offered or sold in the United States except pursuant to an exemption from the registration requirements of the Securities Act and applicable state securities laws. About the Company Alliance Imaging, Inc., is a leading nationwide provider of diagnostic imaging and therapeutic systems and related technical support services, as well as management and information services to hospitals and other health care providers. The company is one of the largest provider of magnetic resonance imaging and computer tomography services in the United States. The services are provided both on mobile as well as full-time basis to single customers. During 1998, the company acquired Mobile Technology, Inc., a provider of mobile MRI services, Medical Diagnostics, Inc. and all the outstanding shares of CuraCare, Inc. In May 1999, the company acquired all the outstanding shares of Three Rivers Holding Corp. At Sept. 30, 2004, Alliance Imaging's balance sheet showed a $45,153,000 stockholders' deficit, compared to a $70,798,000 deficit at Dec. 31, 2003. ALLIANCE IMAGING: Moody's Puts B1 Rating on $480M Sr. Sec. Debts ---------------------------------------------------------------- Moody's Investors Service assigned a rating of B1 to Alliance Imaging, Inc.'s $410 million senior secured term loan and $70 million senior secured revolving credit facility. Moody's also assigned a B3 rating to Alliance's $150 million senior subordinated debt offering. The proceeds of the transaction, along with cash, will be used to repay the company's existing $256 million term loan and redeem the company's existing $260 million 10.375% senior subordinated notes. Ratings Assigned: * $410 million senior secured term loan due 2011, rated B1 * $70 million senior secured revolver due 2010, rated B1 * $150 million senior subordinated notes due 2012, rated B3 Ratings Affirmed: * $24.9 million senior secured term loan (amortized from $140 million) due 2006, rated B1 * B1 senior implied rating * B2 senior unsecured issuer rating Ratings Withdrawn (upon completion of the refinancing): * $150 million senior secured revolver due 2006, rated B1 * $150 million senior secured term loan due 2007, rated B1 * $185 million senior secured term loan due 2008, rated B1 * $260 million 10.375% senior subordinated notes due 2011, rated B3 The outlook is stable. The ratings reflect: (1) the company's significant capital expenditures, which pressure free cash flow; (2) the potential for industry price and reimbursement challenges in the face of significantly expanding utilization; (3) the recently enacted reductions in reimbursement for PET procedures, the company's new area of growth; (4) significant industry competition from national imaging companies and local physician groups; and (5) a glut of imaging equipment in the market, potentially limiting asset values. The ratings also reflect: (1) the company's track record of debt reduction, and commitment to further debt reduction; (2) good cash flows characterized by strong margins; (3) improved cash flow as a result of interest savings from debt refinancing; (4) extension of debt maturities from new bank facilities and subordinated notes; (5) good liquidity, with $32.9 million in cash and access to a $70 million revolving credit facility following the transaction; and (6) a stable management team following the change of Chief Executive Officer and Chief Financial Officer. The stable outlook assumes Moody's belief that the company will continue to use its free cash flow, projected by Moody's to be approximately $50 million per year, to reduce debt. The stable outlook assumes slightly declining pricing for MRI services and no further reimbursement reductions for PET procedures in the near term. Further, Moody's assumes the company will complete no acquisitions in the near to intermediate term. Moody's would look to upgrade the ratings if Alliance were to sustain free cash flow coverage of debt in the 10-15% range and the company demonstrated material debt reduction. If pressure on pricing or reimbursement results in cash flow shortages and pressure on cash flow coverage of debt or margins, or if the company engaged in acquisitions in the near to immediate term, Moody's would see downward momentum on the ratings. Pro forma for the refinancing for the twelve-month period ended September 30, 2004, the company would have had cash flow coverage of debt that is moderate to strong for the B1 category. Adjusted cash flow from operations to adjusted debt would have been 23% and adjusted free cash flow to adjusted debt would have been 9%. Interest coverage of debt, defined as EBIT to interest, would have been 2.6 times. Leverage would have been moderate to high at 3.7 times adjusted debt to EBITDAR. Moody's believes that the use of EBITDA and related EBITDA ratios as a single measure of cash flow without consideration of other factors can be misleading. The new senior secured credit facilities are rated at the senior implied level to reflect the fact that the term loans represent approximately 73% of the pro forma debt capital structure. The new senior subordinated bonds are not guaranteed, but the relative weight of the bonds in the debt capital structure (approximately 25%) and the enterprise valuation offset the lack of guarantees from a notching standpoint; therefore, the bonds are rated two notches below the senior implied rating. These ratings are subject to Moody's final review of documentation for the transaction. Alliance Imaging, Inc., is a national provider of diagnostic imaging services primarily to hospitals and other healthcare providers on a shared and full-time service basis, in addition to operating a number of free standing imaging centers. For the nine months ended September 30, 2004, the company reported revenues of $314 million. ALLIANCE LAUNDRY: Moody's Revises Outlook on Ratings to Developing ------------------------------------------------------------------ Moody's Investors Service changed Alliance Laundry Holdings Inc.'s (B2 senior implied rating) outlook to developing. The outlook revision follows Alliance's announcement that it has signed a definitive agreement for its sale to an entity established by Teachers' Private Capital, the private equity arm of the Ontario Teachers' Pension Plan, for $450 million (implying an LTM EBITDA multiple of approximately 7.9 times). Alliance is being sold by Bain Capital and minority shareholders in the company. The transaction is expected to close February 2005. -- Alliance Laundry Holdings Inc. * Senior Implied - B2 * Senior Unsecured Issuer Rating - B3 -- Alliance Laundry Systems LLC: * $110 million senior subordinated notes, due 2008 - B3 * $45 million senior secured revolver, due 2007 - B1 * $136 million senior secured term loan, due 2007 - B1 Ratings withdrawn: * $152 million guaranteed senior subordinated notes, due 2019 - Caa1 * $50 million guaranteed senior secured revolver, due 2009 - B2 * $110 million guaranteed senior secured term loan, due 2009 - B2 Alliance also announced that it withdrew its registration statement for the initial public offering of income deposit securities -- IDS. In response, Moody's withdrew the proposed ratings for the senior subordinated notes portion of the IDS as well as the proposed credit facility, which was supposed to be issued in conjunction with the IDS securities. The ratings outlook will remain developing pending discussions with management and clarification of the new capital structure. In May 2004, Moody's downgraded Alliance's senior implied rating to B2 from B1, reflecting the concern that the issuance of IDS securities would elevate Alliance's risk profile. Therefore, the implementation of a more conservative capital structure could apply positive pressure to the ratings. Alliance Laundry Holdings, Inc., located in Ripon, Wisconsin, designs and produces a full line of commercial laundry equipment in North America and worldwide. The company's revenues for the four quarters ended September 30, 2004, were $274 million. AMERICAN SKIING: Posts 6% Increase in First Quarter Revenues ------------------------------------------------------------ American Skiing Company (OTC: AESK) reported financial results for the first quarter of fiscal 2005 reflecting a 6% increase in total revenues and a $3.5 million reduction in net loss compared to the same period in fiscal 2004. The Company also reported significantly higher season pass sales than at the same time in fiscal 2004. This increase has been driven primarily by the successful introduction of the All For One multi-resort pass in the eastern market. "While it is quite early in the season, we are benefiting from our recent pre-ski season initiatives. The introduction of our All For One pass has contributed to a great start to the season for the Company, locking in early season revenues in the East. In the West, abundant early season snowfall and cool winter temperatures for snowmaking have created fantastic skiing and riding conditions at both The Canyons and Steamboat," said CFO Betsy Wallace. "In addition, the recently completed refinancing of the Company's senior resort credit facility and its senior subordinated debt has provided us with the tools necessary to continue improvements at our resorts to the benefit of our guests. We remain cautiously optimistic about the ski season months to come, given our successes with season pass sales and continuing improvements at the Company." Fiscal 2004 First Quarter Results On a GAAP basis, net loss available to common shareholders for the first quarter of fiscal 2005 was $37.7 million, or $1.19 per basic and diluted common share, compared with a net loss available to common shareholders of $41.3 million, or $1.30 per basic and diluted common share for the first quarter of fiscal 2004. Total consolidated revenue was $19.5 million for the first quarter of fiscal 2005, compared with $18.5 million for the first quarter of fiscal 2004. Revenue from resort operations was $17.8 million for the quarter compared with $16.1 million for the first quarter of fiscal 2004. The increase in resort revenues reflects the improvement in conference business and increased lodging revenues at Steamboat and The Canyons. Revenue from real estate operations was $1.7 million for the quarter versus $2.3 million for the comparable period in fiscal 2004. The decrease in real estate revenue resulted from a reduction of inventory at The Canyons and reduced sales at Steamboat versus the comparable period in fiscal 2004. The loss from resort operations was $37.1 million for the first fiscal quarter of 2005 versus a loss of $35.9 million for the first quarter of fiscal 2004. The wider loss was associated with a $1.5 million increase in resort interest expense, $1.1 million in increased expenses associated with increased lodging volume, and a $0.5 million increase in marketing, general and administrative expenses associated with the All-East pass, offset by increases in resort revenues mentioned earlier and a $0.1 million reduction in restructuring charges. The loss from real estate operations was $0.6 million for the first fiscal quarter of 2005, compared with a loss of $5.4 million for the first quarter of fiscal 2004. The decrease in the loss was largely a result of the restructuring of the real estate credit facility in May 2004. About the Company Headquartered in Park City, Utah, American Skiing Company -- http://www.peaks.com/-- is one of the largest operators of alpine ski, snowboard and golf resorts in the United States. Its resorts include Killington and Mount Snow in Vermont; Sunday River and Sugarloaf/USA in Maine; Attitash Bear Peak in New Hampshire; Steamboat in Colorado; and The Canyons in Utah. * * * As reported in the Troubled Company Reporter on Dec. 07, 2004, 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. ASSET SECURITIZATION: S&P Junks Class B-4 Ratings ------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on classes A-6, A-8, B-1, B-2, and B-3 of Asset Securitization Corporation's commercial mortgage pass-through certificates series 1997-D4. At the same time, all other ratings from this transaction are affirmed. The raised and affirmed ratings reflect credit enhancement levels that provide adequate support through various stress scenarios. As of November 2004, the trust collateral consisted of 107 commercial mortgages with an outstanding balance of $1.085 billion, down 22.7% since issuance. There have been eight realized losses totaling $8.9 million (0.64% of initial pool balance) to date. The master servicer, GMAC Commercial Mortgage Corp. (GMACCM), reported partial or full year 2003 net cash flow (NCF) debt service coverage ratios (DSCR) for 71.7% of the pool. Twelve loans totaling $185.5 million, or 17.1% of the pool, have been defeased. Based on this information and excluding defeasance, Standard & Poor's calculated a pool DSCR of 1.55x, up from 1.42x at issuance. The current weighted average DSCR for the top 10 loans, which comprise 38.4% of the pool, improved to 1.52x from 1.34x at issuance. However, this calculation excludes the 10th largest asset, Prime Retail Portfolio II, which is REO. The largest loan in the pool, the Saracen portfolio, is current but specially serviced. The remaining top 10 assets have flat to improved DSCR performance since issuance. There are eight loans with a current combined balance of $143.7 million, or 13.2% of the pool, that are specially serviced by GMACCM. Two of these loans are current, five are delinquent, and one is REO. Significant loans are discussed below: -- The Saracen portfolio has a current balance of $63.9 million, or 5.9% of the pool. The loan is current. It is secured by six office properties located near Boston, Massachusetts. The loan has been assumed and the new borrowing entity has provided a full guaranty up to $23 million. The loan is expected to be returned to the master servicer by year-end. -- The Prime Retail II loan has a current balance of $23.9 million (1.97%), a total exposure of $26.15 million, and is secured by three factory outlet centers located in Coeur D'Alene, Idaho (61% occupied), Bend, Oregon (76% occupied), and Sedona, Arizona (90% occupied). The loan is REO. The Sedona property has been sold and the proceeds should be reflected in the next remittance report. The remaining two properties are expected to be disposed of in the first quarter of 2005. A loss is expected upon final disposition. -- The Century Square Mall loan has a balance of $19.8 million, is secured by a 415,713 square-foot retail shopping center built in 1991, and is located in West Mifflin, Pennsylvania (about nine miles southeast of Pittsburgh). It is 90-plus days delinquent. Several tenants have gone bankrupt and either left the center or negotiated lower rents. The latest servicer-reported DSCR was 0.68x for the trailing 12 months (TTM) as of March 31, 2004, and occupancy has increased to 91%. A loss is expected upon disposition. -- Three delinquent lodging loans (unrelated). * Holiday Inn - Gretna, $9.7 million (0.90%), is a full- service 308-room hotel near New Orleans, Louisiana. The borrower requested relief and is 90-plus days delinquent. The property is performing at a DSCR of 1.03x as of June 30, 2003 with 55% occupancy. * Radisson Hotel - Columbus, $8.4 million (0.77%), is a full-service 268-room hotel in Columbus, Ohio that is now a Ramada. The hotel is operating at a loss and a recent appraisal valued the property at $6.0 million. A loss is expected upon disposition. * Clarion Suites Inn, $4.2 million (0.39%), is a 104-unit extended-stay lodging property in Manchester, Connecticut, near Hartford. It is 60-plus days delinquent. The servicer's watchlist includes 14 loans totaling $61.7 million (5.7% of the pool). The loans on the watchlist appear due to low occupancies, DSCR, or upcoming lease expirations, and were stressed accordingly by Standard & Poor's. The pool has significant geographic concentrations in: -- California (18.4%), -- Massachusetts (13.1%), -- New York (8.2%), -- New Jersey (7.3%), -- Colorado (5.7%), -- Indiana (5.4%), and -- Florida (5.3%). Significant collateral type concentrations include: -- retail (33.9%), -- office (27.7%), -- multifamily (14%), -- lodging (11%), and -- industrial (5.7%). Standard & Poor's stressed various loans in the mortgage pool, paying closer attention to the specially serviced and watchlisted loans. The expected losses and resultant credit enhancement levels adequately support the raised and affirmed ratings. Ratings Raised Asset Securitization Corporation Commercial mortgage pass-thru certificates series 1997-D4 Rating ------ Class To From Credit Enhancement ----- -- ---- ------------------ A-6 AA+ BBB 17.27% A-8 A BBB- 13.39% B-1 BBB+ BB+ 10.16% B-2 BB+ BB- 6.93% B-3 BB- B+ 5.64% Ratings Affirmed Asset Securitization Corporation Commercial mortgage pass-thru certificates series 1997-D4 Class Rating Credit Enhancement ----- ------ ------------------ A-1D AAA 40.54% B-4 CCC 3.70% ASSOCIATED MATERIALS: Moody's Junks $165M Sr. Subordinated Notes ---------------------------------------------------------------- Moody's has downgraded and assigned these ratings at Associated Materials Incorporated: * $80 million secured revolver (upsized by $10 million) due 2009, assigned at B2; * $175 million secured term loan B (upsized by $42 million) due 2010, assigned at B2; * $165 million senior subordinated notes due 2012, downgraded to Caa1 from B3. Moody's has withdrawn these ratings at Associated Materials Incorporated: * Senior Implied rated B1; * Issuer rating rated B2. Moody's has downgraded and assigned these ratings at AMH Holdings, Inc: * $446 million ($283 million estimated accreted value at year end 2004) senior discount notes due 2014 downgraded to Caa2 from Caa1; * Senior Implied assigned at B2; * Issuer rating assigned at Caa2. The company's decision to take on additional debt primarily to pay a $118 million dividend weakens the company's credit quality and has contributed to a change in the enterprise's senior implied rating to B2 from B1. The operating company, Associated Materials Incorporated, and a holding company, AMH II, Inc., are both taking on new debt to effect the dividend. Moody's notes that this is the second increase in leverage in 2004 that is primarily for non-operational purposes and that the increased leverage taken on in February 2004, had already significantly weakened the rating profile. The rating was maintained at that time because of the expectation that the company would pursue a sustained strategy of deleveraging. The ratings consider the company's demonstrated ability to generate cash flow and consider the debt restrictions placed on it by its covenants. The company's senior secured credit facilities were rated B2 and replace facilities that were previously rated Ba3. The B2 rating on the facilities reflects the diminished asset protection that results from a larger credit facility and resulting debt burden relative to the size of its tangible asset base. The ratings outlook is stable reflecting expectations for continued strong demand for the company's products. Proceeds from the $42 million Term Loan B add-on along with $75 million of mezzanine financing and $150 million of Convertible Preferred will be added to $38 million of cash for total sources of $305 million. These funds are to be applied towards a $118 million dividend to equity shareholders and to finance the purchase of a 50% equity stake by Investcorp International, Inc., in Associated Materials Holdings II, Inc., a holding company that via AMH Holdings, Inc., indirectly owns Associated Materials Incorporated from Harvest Partners, Inc. The funds will also finance various other fees and expenses. The ratings consider operational challenges as the company remains vulnerable to raw material price fluctuations, significant competition, and the cyclicality of the homebuilding and remodeling industries. The ratings are constrained by the company's recent history of leveraging and to less of a degree a history of not de-leveraging as expected. During the leveraging cycle, the company's credit metrics weaken below the B1 level and then improve as the company applies its free cash flow towards debt reduction. In February 2004 Associated Materials distributed a $59 million cash dividend to shareholders, and paid a $15 million special bonus to management. At that time, Moody's expected the company to reduce its debt/EBITDA to the mid 4 times by year-end 2004. Instead, the company's current transaction calls for $118 million dividend of which $22 million is to be paid to management and also includes additional leverage. Given the increased leverage, Moody's currently expects the company's de-leveraging to the mid 4 times level to be postponed by about two years from the just over 5.5 times level currently proforma on a consolidated basis. The substantial increase in leverage as well as the postponement of stated deleveraging targets, are key factors for the company's ratings downgrade. Low total interest coverage also played a factor in the ratings downgrade. EBITDA coverage of total interest is likely to be around 2.1 times on a proforma basis for 2004 and on a cash interest basis improves to 3.9 times. Currently, the company's $446 million senior discount notes have an accreted value that is estimated at almost $283 million for year end 2004 and accrete at a rate of $2 million per month. The $75 million mezzanine notes are 10% cash pay and 3.625% pay-in-kind. Moody's has not rated the proposed $75 million 13.625% million mezzanine financing that resides at AMH Holdings II, Inc. Moody's has also not rated the company's convertible preferred stock. Moody's considers the mezzanine financing to be debt while the convertible preferred stock is viewed to be more equity-like as it does not pay interest and has no stated maturity date. Moody's notes that the new mezzanine notes have restrictive covenants that limit debt issuances to a multiple of 4.75 times EBITDA. Given the company's current debt balance, Moody's does not currently expect additional debt to be issued over the next eighteen to twenty-four months unless the company outperforms current expectations or buys out the mezzanine holders. The mezzanine financing also has an indenture that prohibits dividends to be paid to shareholders. Nevertheless, Moody's considers the current debt levels combined with the company's willingness to releverage, to be reflective of its new rating category. The ratings however, benefit from the company's position as one of the top six providers of vinyl siding, strong demand for the company's products, and the offering of new more ascetically pleasing and higher margin products. The company's market share for its vinyl products is approximately 11%. The company's also benefits from far reaching customer relationships and an expansive distribution network. The ratings also benefit from an additional debt incurrence leverage test under the indenture for the New Mezzanine Notes. The collapse of the notching for the senior credit facility to the same level as the senior implied reflects the size of the facilities when compared to the company's assets. At October 2, 2004, accounts receivable totaled $161 million, inventory totaled $128 million, and property plant and equipment totaled $144 million. These items combined totaled $433 million and compare with the senior credit facility's $255 million size. The reduction in the senior facilities asset coverage level was the primary reason why the notching was tightened. The company's notching had previously been maintained due to the expectation that debt would be paid down. The Company's senior secured credit facility is fully and unconditionally guaranteed, jointly and severally on a senior basis, by its domestic wholly owned subsidiaries. Gentek Building Products Limited, a Canadian company, is a co-borrower on the senior credit facilities. The company's Canadian operations represent approximately 20% of sales. There are various mandatory prepayments under the credit facility including 100% of asset sales proceeds, 100% of debt issuance proceeds and preferred stock, 50% of equity proceeds, 50% of excess cash flow, as well as 100%of casualty and indemnity proceeds. The ratings and or outlook may improve if the company de-leverages faster than is currently anticipated. Specifically, if total consolidated debt/EBITDA was under 4.5 times and re-leveraging was not anticipated. The outlook or ratings could be pressured if business conditions were to significantly weaken, and or if the company's margins were to contract, such that there was a corresponding substantial expected shortfall in free cash flow generation. Headquartered in Akron, Ohio, Associated Materials Incorporated is principally engaged in the manufacture and distribution of exterior residential products, including vinyl siding, windows, decking, fencing, railing, and garage doors. Revenues and EBITDA for 2004 is estimated to be around $1 billion and $125 million, respectively while total debt is estimated at approximately $700 million. ATA HOLDINGS: America West Won't Push Through with Asset Bid ------------------------------------------------------------ America West Holdings Corporation (NYSE: AWA), parent company of America West Airlines, Inc., does not plan to submit a bid to the U.S. Bankruptcy Court to purchase ATA Holdings Corp. (OTC: ATAHQ). America West had previously announced it was considering acquiring ATA through that airline's Chapter 11 restructuring process. America West Chairman and Chief Executive Officer Doug Parker said, "We have stated from the beginning of this process that we would not proceed with any transaction that would put undue risk on America West's employees, customers or stockholders. While we believe there is some value in a combined America West/ATA operation, we do not believe the potential value justifies the anticipated cost. "Our interest in ATA encompassed acquiring the entire company as opposed to only a few select assets, which meant we needed most of the aircraft and employees to stay with the company. During this process we found we were able to attract sufficient capital to support a competitive bid and we are grateful to our partners for their offers of support. We particularly appreciate the support we received from the employees of ATA. We are hopeful that whoever ends up owning ATA will recognize the value of this dedicated and experienced workforce. Unfortunately, we were unable to come to acceptable lease terms on enough aircraft with ATA's existing aircraft lessors. "We feel very good about the decision to refrain from this bidding process. As the nation's second largest low cost carrier we are well positioned for long-term success in a rapidly evolving airline environment. Because our current aircraft orders satisfy our near-term growth plans, we are not compelled to stretch to find places to fly. We feel confident there will be future growth and acquisition opportunities for America West as our industry evolves. While we have chosen to pass on this particular transaction, we look forward to playing a role in the continued consolidation of the airline industry." America West Airlines is the nation's second largest low cost airline and the only carrier formed since deregulation to achieve major airline status. America West's 13,000 employees serve nearly 55,000 customers a day in 96 destinations in the U.S., Canada, Mexico and Costa Rica. Headquartered in Indianapolis, Indiana, ATA Airlines, owned by ATA Holdings Corp. -- http://www.ata.com/-- is the nation's 10th largest passenger carrier (based on revenue passenger miles) and one of the nation's largest low-fare carriers. ATA has one of the youngest, most fuel-efficient fleets among the major carriers, featuring the new Boeing 737-800 and 757-300 aircraft. The airline operates significant scheduled service from Chicago- Midway, Hawaii, Indianapolis, New York and San Francisco to over 40 business and vacation destinations. Stock of parent company, ATA Holdings Corp., is traded on the Nasdaq Stock Exchange. The Company and its debtor-affiliates filed for chapter 11 protection on Oct. 26, 2004 (Bankr. S.D. Ind. Case No. 04-19866, 04-19868 through 04-19874). Terry E. Hall, Esq., at Baker & Daniels, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $745,159,000 in total assets and $940,521,000 in total debts. (ATA Airlines Bankruptcy News, Issue No. 7; Bankruptcy Creditors' Service, Inc., 215/945-7000) ATA AIRLINES: Proposes to File Sec. 1110 Stipulations Under Seal ---------------------------------------------------------------- ATA Airlines, Inc., and Chicago Express Airline, Inc., ask the United States Bankruptcy Court for the Southern District of Indiana for permission to make elections pursuant to Section 1110(a) of the Bankruptcy Code and perform obligations under certain leases and secured financings relating to aircraft and aircraft engines that may be subject to Section 1110. The Debtors also want to make payments and take other actions as are necessary to cure defaults and retain protection of the automatic stay with respect to the Aircraft Equipment in compliance with Section 1110 and the 1110(a) Election. In addition, the Debtors seek to enter into stipulations pursuant to Section 1110(b) with aircraft lessors and financiers extending the time to perform the Section 1110 obligations. James M. Carr, Esq., at Baker & Daniels, in Indianapolis, Indiana, informs the Court that the Debtors currently operate an aircraft fleet consisting of 82 aircraft. A large number of these aircraft are leased pursuant to single investor leases. Others are leased pursuant to enhanced equipment trust certificates. A small number of the aircraft are owned by the Debtors but pledged as security to secured creditors. The bulk of the Debtors' aircraft fleet, along with most if not all of their spare aircraft engines, may constitute "equipment" as that term is defined in Section 1110(a)(3) and is governed by Section 1110. A significant number of the Aircraft Agreements were negotiated with higher payments in early years to reduce total rental costs over the related lease terms. Given the current depressed state in the airline industry, the Debtors' payments under the Aircraft Agreements may be substantially higher than the current market rate for the similar equipment. Because the Debtors are paying prices for their Equipment that may be above-market, Mr. Carr asserts that it is necessary for the Debtors to seek to reduce payments under the Aircraft Agreements to market rates so as to maximize revenue in a difficult financial environment and to best enable them to reorganize successfully. Although the Debtors have initiated negotiations with parties to the Aircraft Agreements, it is unlikely that many final agreements will be reached before the end of the 60-day period contained in Section 1110. Accordingly, it is necessary to seek extension of the 1110 Period. 1110(a) Elections To comply with the requirements of Section 1110(a), the Debtors seek authority to: (a) subject to the Court's approval, perform substantially all obligations under an Aircraft Agreement with respect to the Equipment that become due on or after the Petition Date -- and before the effective date of rejection -- with respect to an equipment; (b) before 11:59 p.m. (EST) on December 24, 2004, cure any default under an Aircraft Agreement with respect to the Equipment that occurred on or before the Petition Date, other than a default of a kind specified in Section 365(b)(2); (c) with respect to any default under an Aircraft Agreement with respect to the Equipment, other than a default of a kind specified in Section 365(b)(2), that occurs: -- after the Petition Date but before 11:59 p.m. (EST) on December 24, cure the default before December 24, or the 30th day after the date on which the default occurs, whichever is later; and -- on or after December 24, cure such default in accordance with the terms of the relevant Aircraft Agreement, if a cure is permitted thereunder. To date, the Debtors have been fully engaged in addressing other issues critical to their reorganization efforts, including working with prospective competing bidders, and analyzing their fleet requirements and the many Aircraft Agreements. Until the Debtors' analysis of their fleet requirements, and each of the Aircraft Agreements, has been completed, they simply will not know what Equipment they will seek to retain. As of the date of the request, the Debtors have not yet entered into any 1110(a) Elections in connection with the Equipment. 1110(b) Stipulations Although the 1110(b) Stipulations will be subject to final approval of the Court, the Debtors request that the 1110 Period for each 1110 Party subject to a 1110(b) Stipulation be extended on a preliminary basis beyond 11:59 p.m. (EST) on December 24, 2004, pending final approval of the 1110(b) Stipulation by the Court. The Airlines believe that entry into the 1110(b) Stipulation will likely be necessary to afford the Debtors and many 1110 Parties sufficient time to pursue negotiations regarding possible amendments to the terms of the Aircraft Agreements without risking the protections afforded by the automatic stay. 1110(b) Stipulations Are Confidential The Debtors propose to file the 1110(b) Stipulations and certain modifications under seal. The 1110(b) Stipulations contain commercially sensitive information that the Debtors' competitors could utilize to the Debtors' disadvantage. The Debtors also believe that 1110 Parties who have not entered into 1110(b) Stipulations or modification of the Aircraft Agreements will use the information contained in any publicly available 1110(b) Stipulations to their advantage in their ongoing negotiations with the Debtors. By filing the 1110(b) Stipulations and Aircraft Agreement modifications under seal, the Debtors will be able to preserve the confidentiality of the terms and commercial information of these contracts and maintain a level playing field among the Debtors' competitors and all of the 1110 Parties. The Debtors intend to provide copies of any modifications to counsel for the Official Committee of Unsecured Creditors, counsel for the ATSB and the U.S. Trustee. Headquartered in Indianapolis, Indiana, ATA Airlines, owned by ATA Holdings Corp. -- http://www.ata.com/-- is the nation's 10th largest passenger carrier (based on revenue passenger miles) and one of the nation's largest low-fare carriers. ATA has one of the youngest, most fuel-efficient fleets among the major carriers, featuring the new Boeing 737-800 and 757-300 aircraft. The airline operates significant scheduled service from Chicago- Midway, Hawaii, Indianapolis, New York and San Francisco to over 40 business and vacation destinations. Stock of parent company, ATA Holdings Corp., is traded on the Nasdaq Stock Exchange. The Company and its debtor-affiliates filed for chapter 11 protection on Oct. 26, 2004 (Bankr. S.D. Ind. Case No. 04-19866, 04-19868 through 04-19874). Terry E. Hall, Esq., at Baker & Daniels, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $745,159,000 in total assets and $940,521,000 in total debts. (ATA Airlines Bankruptcy News, Issue No. 8; Bankruptcy Creditors' Service, Inc., 215/945-7000) ATLAS AIR: Says October Traffic Down 1.4% Year-Over-Year -------------------------------------------------------- Atlas Air Worldwide Holdings, Inc. (AAWW) (OTC: AAWWV.PK), a leading provider of global air cargo services, has reported preliminary system statistics and traffic results for October 2004 and the ten-month period ended October 31, 2004, and for the corresponding periods during the prior year. For the month of October 2004, the average number of aircraft operated by AAWW declined 15.6% compared with October 2003, principally due to the rejection and return of aircraft in conjunction with AAWW's restructuring. Total block-hour activity decreased 6.5% during October 2004 compared with the same period in 2003. Block hours operated in the ACMI segment increased 15.1% year over year, while Commercial Charter hours declined 30.1%, primarily due to a reallocation of available aircraft to other business segments, and Military Charter hours declined 42.9%. Capacity in the Scheduled Service business (as measured by available ton miles "ATM's") decreased 8.5% year over year, and traffic (as measured by revenue ton miles "RTM's") decreased 1.4% year over year, resulting in an increased load factor of 61.9% in October 2004 compared with 57.5% in October 2003. For the ten months ended October 31, 2004, the average number of aircraft operated by AAWW declined 16.7% compared with the ten months ended October 31, 2003. Total block-hour activity during the ten months ended October 31, 2004, declined 3.2% compared with the same period in 2003. Block hours operated in the ACMI segment rose 21.0% during the ten months ended October 31, 2004, compared with the same period in 2003. Commercial Charter hours declined 47.6%, reflecting the reallocation of available aircraft to other business segments, and Military Charter hours declined 42.4%. Capacity in the Scheduled Service business increased 7.6% (in ATM terms) during the ten months ended October 31, 2004, compared with the same period during the prior year, and traffic (in RTM's) increased 17.9% compared with the ten months ended October 31, 2003, resulting in an increased load factor of 62.4% for the 2004 period compared with 56.9% for the 2003 period. The preliminary system statistics and traffic results that follow do not constitute financial statements, were not prepared in accordance with generally accepted accounting principles, and do not contain all of the disclosures required by generally accepted accounting principles or by the Securities Exchange Act of 1934, as amended, or any other prescribed form or format. AAWW cautions readers not to place undue reliance upon the information contained in these statistics and results, which may be adjusted from time to time. These statistics and results, which have not been audited, may not be indicative of AAWW's financial statements in reports that would be required to be filed pursuant to the Securities Exchange Act of 1934, as amended. About Atlas Air Worldwide Holdings, Inc. AAWW is the parent company of Atlas Air, Inc. (Atlas) and Polar Air Cargo, Inc. (Polar), which together operate the world's largest fleet of Boeing 747 freighter aircraft. Atlas is the world's leading provider of ACMI (aircraft, crew, maintenance and insurance) freighter aircraft to major airlines around the globe. Polar is among the world's leading providers of airport-to-airport freight carriage. Polar operates a global, scheduled-service network and serves substantially all major trade lanes of the world. Through both of its principal subsidiaries, AAWW also provides commercial and military charter services. Atlas Air Worldwide Holdings, Inc. -- http://www.atlasair.com/-- is a worldwide all-cargo carriers that operate fleets of Boeing 747 freighters. The Company filed for chapter 11 protection (Bankr. Fla. Case No. 04-10794) on January 30, 2004. The Honorable Robert A. Mark presided over Atlas' restructuring proceeding. Jordi Guso, Esq., at Berger Singerman, represents the debtor. Atlas Air emerged from bankruptcy on July 27, 2004. ATHLETE'S FOOT: Files for Chapter 11 Protection in S.D. New York ---------------------------------------------------------------- The Athlete's Foot Stores, LLC, and its subsidiary -- Delta Pace, LLC -- filed voluntary chapter 11 petitions with the United States Bankruptcy Court for the Southern District of New York to facilitate the liquidation of their assets. The approximately 593 independent franchise stores operating under franchise agreements with Athlete's Foot Brands, Inc., and the trademarks are not included in this action. Also, the bonds issued from a 2003 securitization transaction from an unrelated entity (Athlete's Foot Brands, Inc.) are not related to the Chapter 11 filing. President and CEO Robert J. Corliss said: "We are confident this is the right thing to do. Despite tremendous investments of money and time, many of our corporate stores have not been profitable resulting in a lack of liquidity which led to the company taking this action. We believe this action will allow us to maximize the value of our assets for the benefit of our creditors and other interested parties. We appreciate the loyalty and support of our employees, customers and vendors." The company's lender, GMAC, subject to certain conditions, has agreed to provide debtor-in-possession financing to fund the liquidation process. Headquartered in New York, New York, The Athlete's Foot Stores, LLC -- http://www.theathletesfoot.com/-- operates approximately 125 athletic footwear specialty retail stores in 25 states. The Company and its debtor-affiliate, filed for chapter 11 protection on Dec. 9, 2004 (Bankr. S.D.N.Y. Case No. 04-17779). Bonnie Lynn Pollack, Esq., Jeffrey K. Cymbler, Esq., and John Howard Drucker, Esq., at Angel & Frankel, P.C., represent the Debtors. When the Debtors filed for protection from their creditors, they listed $33,672,000 in total assets and $39,452,000 in total debts. ATHLETE'S FOOT: Case Summary & 24 Largest Unsecured Creditors ------------------------------------------------------------- Lead Debtor: Athlete's Foot Stores, LLC 1568 Broadway New York, New York 10036 Bankruptcy Case No.: 04-17779 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Delta Pace, LLC 04-17780 Type of Business: The Debtor operates approximately 125 athletic footwear specialty retail stores in 25 states. See http://www.theathletesfoot.com/ Chapter 11 Petition Date: December 9, 2004 Court: Southern District of New York (Manhattan) Judge: Stuart M. Bernstein Debtors' Counsel: Bonnie Lynn Pollack, Esq. Jeffrey K. Cymbler, Esq. John Howard Drucker, Esq. Angel & Frankel, P.C. 460 Park Avenue New York, NY 10022 Tel: 212-752-8000 Fax: 212-752-8393 Total Assets: $33,672,000 Total Debts: $39,452,000 Debtor's 24 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ New Balance Athletic Shoe Trade Debt $1,427,391 P.O. Box 31978 Hartford, CT 06150 Attn: Tammy Cooper (800) 343-4648 K Swiss Inc. Trade Debt $1,355,053 31248 Oak Crest Drive Westlake Village, CA 91361 Attn: Bob Carter (818) 706-5492 Timberland Trade Debt $739,013 200 Domain Drive Stratham, NH 03885 Attn: Jeff Martin (800) 258-0855 Ext. 2263 Puma North America Trade Debt $604,568 P.O. Box 5130 Carol Stream, IL 60197 Attn: Leslie O'Malley (800) 782-7862 Reebok International Ltd. Trade Debt $550,040 21626 Network Place Chicago, IL 60673 Attn: Dick Fay (781) 401-7260 Asics Tiger Corporation Trade Debt $459,337 P.O. Box 827483 Philadelphia, PA 19182 Attn: Charlene Swan (800) 333-8404 Ext.7372 Indiana Knitwear Trade Debt $270,466 230 East Osage Street Greenfield, IN 46140 Attn: Sandy Griffin (317) 452-4413 Crescent Hosiery Mills Trade Debt $265,738 P.O. Box 669 Niota, TN 37826 Attn: Ken Prevatt (770) 439-5380 Onfield Apparel Group LLC Trade Debt $258,810 21505 Network Place Chicago, IL 60673 Attn: Brett Fyfe (317) 895-7294 Fila Sports, Inc. Trade Debt $218,274 P.O. Box 8500 (4630) Philadelphia, PA 19178-4630 Attn: Diana Frazier (800) 403-6669 Ext. 5029 Adidas Sales, Inc. Trade Debt $217,128 P.O. Box 100384 Atlanta, GA 30384-0384 Attn: Lanny Rollman (800) 423-4327 Saucony/Hyde Trade Debt $194,176 1607 Solutions Ctr. Chicago, IL 60677-1006 Attn: Dawn Shaw (800) 365-4933 Ext. 26 Mizuno Sports Inc. Trade Debt $182,077 4925 Avalon Ridge Norcross, GA 30071 Attn: Robert Lewis (800) 966-1299 Ext. 7935 New Era Cap Trade Debt $168,322 P.O Box 054 Buffalo, NY 14240 Attn: Kelly Storey (800) 989-0445 Ext. 1198 Implus Corporation Trade Debt $163,900 P.O. Box 601469 Charlotte, NC 28260-1469 Attn: Kurt Wineman (800) 446-7587 Ext. 123 Converse Trade Debt $159,537 P.O. Box 60272 Charlotte, NC 28260 Attn: Dick Delrossi (800) 358-2667 Ext. 3480 Podo Tech. Perimeter Ridge Trade Debt $157,788 750 Hammon Dr. Bldg. 2, Suite 310 Atlanta, GA 30328 Attn: David Pattillo (678) 990-1882 Southern Freight Freight $152,306 P.O. Box 788 Elberton, GA 30635 Attn: __________________ (770) 775-9349 Ernst & Young Services $152,234 600 Peachtree St. Atlanta, GA 30308-2215 Attn: Kris Spain (404) 874-8300 GFX International Marketing $150,000 333 Baron Blvd., Rte. 83 Grayslake, IL 60030 Attn: __________________ (847) 543-4610 Avia/American Trade Debt $117,580 Avia Division PO Box 19367 Irvine, CA 92623 Attn: Debbie Tapia (800) 848-8698 Ext. 4837 Champion Products Trade Debt $105,649 P.O. Box 905218 Charlotte, NC 28290-5218 Attn: Carolyn Smith (336) 519-6731 Bachi Inc. Trade Debt $100,421 P.O. Box 627 Cherry Hill, NJ 08003-0627 Attn: Yoram Mainsof (856) 848-1992 Barrett Distribution LLC Trade Debt $75,888 c/o Margolias Realty Group 6 Concourse Parkway, Ste. 2990 Atlanta, GA 30328 Attn: Solly Margolias (770) 551-0585 BALLY TOTAL: S&P Raised Corporate Credit Ratings to B- From CCC+ ---------------------------------------------------------------- Standard & Poor's Ratings Services raised its corporate credit rating on fitness club operator Bally Total Fitness Holding Corporation to 'B-' from 'CCC+' and removed it from CreditWatch, where it was placed on Aug. 17, 2004. The actions were based on the company obtaining a limited waiver from a majority of noteholders, to avoid possible default. The outlook is now developing. The company's total debt outstanding at Sept. 30, 2004, was $747.7 million. "The ratings reflect Bally's high financial risk from substantial club expansion, a heavy debt and operating lease burden, and minimal positive discretionary cash flow," said Standard & Poor's credit analyst Andy Liu. "These factors are only partially offset by the company's geographic diversity and large club base." Bally obtained a limited waiver relating to its 10.5% senior notes due 2011 and 9.875% senior subordinated notes due 2007. The company now has until July 31, 2005, to file updated financial statements with the SEC and to furnish them to bondholders and the bond trustee. Indenture violations originated from Bally's failure to file with the SEC its financial statements for the quarter ended June 30, 2004, and to deliver the financial statements to the bond trustee. Bally announced on Nov. 15, 2004, that its audit committee had determined that, following the promulgation of FASB Staff Accounting Bulletin No. 101, the company should have changed its revenue recognition policy for recoveries of unpaid dues on inactive member contracts and for membership initiation fees. As a result, Bally is undergoing a multiyear audit and expects the process will be completed in July 2005. The outlook is developing. The company must still complete its re-audit and file its financial statements by July 2005 to cure indenture violations and avoid possible default. On the other hand, based on limited operating data published by Bally, club operations seem to be improving. If the company can file its financial statements before July 31, 2005, and if club operations continue to perform, Standard & Poor's will reassess the ratings, with the potential for an upgrade. Bally is the largest fitness club operator in North America, with more than 400 clubs in the U.S. and Canada and about 4 million members. BANC OF AMERICA: Fitch Assigns Low-B Ratings on 18 Mortgage Certs. ------------------------------------------------------------------ Fitch Ratings has affirmed the following Banc of America Alternative Loan Trust mortgage pass-through certificates: Banc of America Alternative Loan Trust, mortgage pass-through certificates, series 2003-3: -- Class A at 'AAA'; -- Class B1 at 'AA'; -- Class B2 at 'A'; -- Class B3 at 'BBB'; -- Class B4 at 'BB'; -- Class B5 at 'B'; Banc of America Alternative Loan Trust, mortgage pass-through certificates, series 2003-4 Group 1: -- Class IA at 'AAA'; -- Class IB1 at 'AA'; -- Class IB2 at 'A'; -- Class IB3 at 'BBB'; -- Class IB4 at 'BB'; -- Class IB5 at 'B'; Banc of America Alternative Loan Trust, mortgage pass-through certificates, series 2003-4 Group 2: -- Class IIA at 'AAA'; -- Class IIB1 at 'AA'; -- Class IIB2 at 'A'; -- Class IIB3 at 'BBB'; -- Class IIB4 at 'BB'; -- Class IIB5 at 'B'; Banc of America Alternative Loan Trust, mortgage pass-through certificates, series 2003-5 Group 1: -- Classes CB, NC at 'AAA'; -- Class IB1 at 'AA'; -- Class IB2 at 'A'; -- Class IB3 at 'BBB'; -- Class IB4 at 'BB'; -- Class IB5 at 'B'; Banc of America Alternative Loan Trust, mortgage pass-through certificates, series 2003-5 Group 2: -- Class IIA at 'AAA'; -- Class IIB1 at 'AA'; -- Class IIB2 at 'A'; -- Class IIB3 at 'BBB'; -- Class IIB4 at 'BB'; -- Class IIB5 at 'B'; Banc of America Alternative Loan Trust, mortgage pass-through certificates, series 2003-6 Group 1: -- Classes CB, NC at 'AAA'; -- Class IB1 at 'AA'; -- Class IB2 at 'A'; -- Class IB3 at 'BBB'; -- Class IB4 at 'BB'; -- Class IB5 at 'B'; Banc of America Alternative Loan Trust, mortgage pass-through certificates, series 2003-6 Group 2: -- Class IIA at 'AAA'; -- Class IIB1 at 'AA'; -- Class IIB2 at 'A'; -- Class IIB3 at 'BBB'; -- Class IIB4 at 'BB'; -- Class IIB5 at 'B'; Banc of America Alternative Loan Trust, mortgage pass-through certificates, series 2003-7 Group 1: -- Classes IA, CB at 'AAA'; -- Class IB1 at 'AA'; -- Class IB2 at 'A'; -- Class IB3 at 'BBB'; -- Class IB4 at 'BB'; -- Class IB5 at 'B'; Banc of America Alternative Loan Trust, mortgage pass-through certificates, series 2003-7 Group 2: -- Class IIA at 'AAA'; -- Class IIB1 at 'AA'; -- Class IIB2 at 'A'; -- Class IIB3 at 'BBB'; -- Class IIB4 at 'BB'; -- Class IIB5 at 'B'. The affirmations, affecting approximately $1.5 billion, are due to credit enhancement consistent with future loss expectations. The above deals have 15- to 30-year fixed-rate mortgage loans secured by first lien, one- to four-family residential properties. They are 15 to 19 months seasoned, with pool factors (i.e., current mortgage loans outstanding as a percentage of the initial pool) ranging from 69% to 83%. BLOUNT INC: S&P Withdraws B- Senior Secured Rating -------------------------------------------------- Standard & Poor's Ratings Services withdrew its 'B-' senior secured rating and '5' recovery rating on Blount Inc.'s second- lien institutional loan. At the same time, we affirmed our other ratings, including the 'B+' corporate credit rating and positive outlook, on Blount. At Sept. 30, 2004, the Portland, Oregon-based manufacturer had about $630 million of debt outstanding. "The rating actions reflect Blount's recent amendment to its bank credit facility, which essentially reduced the interest rate on components of the facility, increased the term loan B, and eliminated the second-lien loan," said Standard & Poor's credit analyst Joel Levington, adding, "Improved positive free cash flow generation, sustained credit metric improvement, and a prudent acquisition growth strategy could lead to a modest ratings upgrade in the next two years." Blount has three operating segments: outdoor products, industrial and power equipment, and lawnmowers. The near-term industry outlook is positive, given relatively low capital spending by forest products companies in recent years. Liquidity is satisfactory and adequate to support the company's objectives of expanding the business. CAPSTEAD MORTGAGE: Fitch Assigns 'BB' Rating on Class IIIB-5 ------------------------------------------------------------ Fitch Ratings has upgraded three and affirmed 20 classes of Capstead Mortgage Corporation, mortgage pass-through certificates: CMC Securities Corporation III mortgage pass-through certificates, series 1997-2 Pool 1: -- Class IA-1 affirmed at 'AAA'; -- Class IB-2 affirmed at 'AAA'; -- Class IB-3 affirmed at 'AAA'; -- Class IB-4 affirmed at 'AAA'; -- Class IB-5 affirmed at 'AA'; CMC Securities Corporation III mortgage pass-through certificates, series 1997-2 Pool 2: -- Class IIA-1 affirmed at 'AAA'; -- Class IIB-1 affirmed at 'AAA'; -- Class IIB-2 affirmed at 'AAA'; -- Class IIB-3 affirmed at 'AAA'; -- Class IIB-4 affirmed at 'AAA'; -- Class IIB-5 upgraded to 'AAA' from 'AA'; CMC Securities Corporation IV mortgage pass-through certificates, series 1997-NAMC-3: -- Class A affirmed at 'AAA'; -- Class B-1 affirmed at 'AAA'; -- Class B-2 affirmed at 'AAA'; -- Class B-3 affirmed at 'AAA'; -- Class B-4 upgraded to 'AA' from 'BBB-'; -- Class B-5 upgraded to 'BBB' from 'BB-'; CMC Securities Corporation III mortgage pass-through certificates, series 1998-1 Pool 3: -- Class III-A affirmed at 'AAA'; -- Class IIIB-1 affirmed at 'AAA'; -- Class IIIB-2 affirmed at 'AA+'; -- Class IIIB-3 affirmed at 'AA-'; -- Class IIIB-4 affirmed at 'A-'; -- Class IIIB-5 affirmed at 'BB'. The affirmations, representing approximately $16 million of outstanding principal, reflect credit enhancement consistent with future loss expectations. The pools are seasoned from a range of 81 to 87 months. The pool factors (current principal balance as a percentage of original) are all under 5% outstanding. The upgrades affect approximately $1 million in certificate principal. Credit enhancement (provided by subordination) for each of the upgraded classes has grown to at least 10 times the original amount. The underlying collateral for series 1997-2 Pool 1 and Pool 2 and series 1997-NAMC-3 consists of conventional, fully amortizing 30- year fixed-rate mortgage loans secured by first liens on one- to four-family residential properties. The underlying collateral for series 1998-1 Pool 3 consists of relocation program loans. CATHOLIC CHURCH: Spokane Creditors Meet on Jan. 5 ------------------------------------------------- The United States Trustee for Region 18 will convene a meeting of the Catholic Diocese of Spokane's creditors on January 5, 2005, at 1:30 P.M. at the U.S. Post Office Building, 3rd Floor, Historical Courtroom, 904 W. Riverside Ave., in Spokane, Washington. This is the first meeting of creditors required under 11 U.S.C. Sec. 341(a) in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. 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. 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 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, represne 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. (Catholic Church Bankruptcy News, Issue No. 12; Bankruptcy Creditors' Service, Inc., 215/945-7000) CATHOLIC CHURCH: Tucson Gets Protocol for Filing Claims Under Seal ------------------------------------------------------------------ The Diocese of Tucson believes that a protocol is necessary to regarding the handling and access to proofs of claim and other pleadings that may be filed by abuse claimants. Sections 105 and 107 of the Bankruptcy Code and Rule 107 of the Federal Rules of Bankruptcy Procedure provide that a court may issue orders that will protect entities and individuals from potential harm that may result from disclosure of potentially scandalous or defamatory information. At the Diocese's request, Judge Marlar directs that: (a) All pleadings and proofs of claim filed by individuals that allege injuries because of abuse committed by clergy or others associated with Tucson will be placed under seal by the Clerk of the U.S. Bankruptcy for the District of Tucson, unless the claimant specifically requests that the pleading or proof of claim be part of the public record; (b) The Clerk of the Court will provide copies of all sealed pleadings and proofs of claim to Tucson's counsel; (c) The Clerk of the Court will provide copies of all proofs of claim filed by individuals that allege injuries because of abuse committed by clergy or others associated with Tucson, whether or not placed under seal, to the Office of the Pima County Attorney to enable appropriate law enforcement investigations of sexual abuse allegations; and (d) Tucson's counsel and the Office of the Pima County Attorney will keep the proofs of claim and confidential, except to the extent necessary to carry out their duties under applicable law. 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. 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 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, represne 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. (Catholic Church Bankruptcy News, Issue No. 11; Bankruptcy Creditors' Service, Inc., 215/945-7000) CHURCH & DWIGHT: S&P Puts B+ Rating on $175 Million Sr. Sub. Notes ----------------------------------------------------------------- Standard & Poor's Ratings Services assigned a 'B+' debt rating to Church & Dwight Company Inc.'s planned $175 million senior subordinated notes due 2012. The notes will be used to help refinance $225 million of Armkel LLC's senior subordinated notes. Church & Dwight acquired full ownership of Armkel in May 2004. As a result, the 'B+' rating on Armkel's $225 million senior subordinated notes due 2009 was withdrawn. In addition, Standard & Poor's affirmed its ratings on Princeton, New Jersey-based Church & Dwight, including its 'BB' corporate credit rating. Approximately $853 million of pro forma debt is outstanding. "The ratings on Church & Dwight reflect its participation in the highly competitive personal care segment of the consumer products industry, its lack of geographic diversity, and its moderately leveraged balance sheet," said Standard & Poor's credit analyst Patrick Jeffrey. Still, Standard & Poor's Ratings Services believes Church & Dwight will continue to generate free cash flow that will be used primarily to reduce debt. As a result, leverage should decline in the intermediate term. CITATION CAMDEN CASTINGS: Voluntary Chapter 11 Case Summary ----------------------------------------------------------- Debtor: Citation Camden Castings Center, Inc. fka Camden Castings Center, Incorporated fka United Foundries Corporation 245 Foundry Lane Camden, Tennessee 38320 Bankruptcy Case No.: 04-10781 Type of Business: The Company is an affiliate of Citation Corporation. It manufactures ductile iron parts for disc brakes. See http://www.citation.net/ Chapter 11 Petition Date: December 7, 2004 Court: Northern District Of Alabama (Birmingham) Judge: Tamara O Mitchell Debtor's Counsel: Cathleen C Moore, Esq. Michael Leo Hall, Esq. Burr & Forman 420 North 20th Street 3100 SouthTrust Tower Birmingham, Alabama 35203 Tel: (205) 251-3000 Total Assets: $655,575 Total Debts: $324,334,598 The Debtor did not file a list of its 20 Largest Unsecured Creditors. CITATION CORP: Has Until Jan. 12 to Make Lease-Related Decisions ---------------------------------------------------------------- The Honorable Tamara O. Mitchell of the U.S. Bankruptcy Court for the Northern District of Alabama extended, until Jan. 12, 2004, the period within which Citation Corporation and its debtor- affiliates can elect to assume, assume and assign, or reject their unexpired nonresidential real property leases. The Debtors tell the Court that they are parties to 22 unexpired nonresidential leases located in several states. The Debtors based their request on three facts: a) the substantial size, scope and complexity of their businesses and their chapter 11 cases; b) the complexity of their financial affairs; and c) much of the information related to the unexpired leases has only been recently available for analysis because of the numerous business matters incident to the commencement of the Debtors' chapter 11 cases that they had to attend to. The Debtors argued that the extension will give them more time to assemble all the information necessary to thoroughly analyze each of the unexpired leases and determine which are important in their reorganization process. The Debtors assure Judge Mitchell that they continue to pay all their postpetition obligations under the leases and the extension will not prejudice the landlords and counter-parties under the leases. Headquartered in Birmingham, Alabama, Citation Corporation -- http://www.citation.net/-- designs, develops and manufactures cast, forged and machined components for the capital and durable goods industries, including the automotive and industrial markets. Citation uses aluminum, steel, gray iron, and ductile iron as the raw materials in its various manufacturing processes. The Debtors filed for protection on Sept. 18, 2004 (Bankr. N.D. Ala. Case No. 04-08130). Michael Leo Hall, Esq., and Rita H. Dixon, Esq., at Burr & Forman LLP, represent the Debtors. When the Company and its debtor-affiliates filed for protection from their creditors, they estimated more than $100 million in assets and debts. CLARK GROUP: Court Confirms Debtors' Prepackaged Chapter 11 Plan ---------------------------------------------------------------- The Honorable James J. Barta of the U.S. Bankruptcy Court for the Eastern District of Missouri entered an order on November 12, 2004, confirming the adequacy of the Disclosure Statement and approving the Joint Prepackaged Plan of Reorganization of the Clark Group, Inc., and its debtor-affiliates. The Debtors filed their Disclosure Statement and Joint Plan on October 5, 2004, and the Court held a combined Disclosure Statement and Confirmation hearing on November 10, 2004. As reported in the Troubled Company Reporter on November 8, 2004, the Plan provides for: a) the sale of substantially all of the Debtors' respective assets, other than the Excluded Assets, to Sierra Craft, Inc. in exchange for the Purchase Consideration on the Effective Date in accordance with the Asset Purchase Agreement between the Debtors and Sierra Craft, Inc.; b) the substantive consolidation of the Debtors for purposes of classification and treatment of Allowed Claims and distributions to Holders under the Plan; c) the payment in full of all Allowed Secured Claims, other than the Victaulic Company of America, Inc. Secured Claims, on the Effective Date; d) the payment in full of all Allowed Unclassified Claims on the Effective Date and 50% of all Allowed Convenience Claims on the Effective Date; e) the formation of the Liquidation Trust to receive and distribute the remaining Net Proceeds of the Purchase Consideration, and the proceeds from the sale of the Excluded Assets, to Holders of Allowed Class 4A and Class 4B Claims, and, to a limited extent if certain contingencies are satisfied, to the Holder of the Allowed Victaulic Company Secured Claims, on each Quarterly Distribution Date; and f) certain waivers, releases, injunctions and exculpations with respect to the Debtors, Sierra Craft, and various third-parties, including the Debtors' principal Secured creditors. A full text copy of the Plan and Disclosure Statement is available for a fee at: http://www.researcharchives.com/download?id=040812020022 Headquartered in St. Louis, Missouri, Clark Group, Inc. -- http://www.clarksprinkler.com/-- provides a comprehensive line of fire protection products and the highest quality service and expert knowledge on fire protection products. The Company and its debtor-affiliates filed for chapter 11 protection on October 1, 2004 (Bankr. E.D. Mo. Case No. 04-52536). Bonnie L. Clair, Esq., and David A. Sosne, Esq., at Summers, Compton, Wells & Hamburg, PC, represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed estimated assets and debts of $10 million to $50 million. CLARK GROUP: Has Until Jan. 1 to Make Lease-Related Decisions ------------------------------------------------------------- The Honorable James J. Barta of the U.S. Bankruptcy Court for the Eastern District of Missouri extended, until Jan. 1, 2005, the period within which Clark Group, Inc., and its debtor-affiliates can elect to assume, assume and assign, or reject their unexpired nonresidential real property leases and its executory contracts. The Debtors remind the Court it confirmed its Joint Prepackaged Plan of Reorganization on November 12, 2004, but it has yet to declare the Plan effective. The Debtors explain to the Court that they are parties to four unexpired leases that were not included in the Executory Contract Schedule to the Joint Plan. The Debtors and Sierra Craft Inc., who purchased substantially all of their assets as part of the Asset Purchase Agreement included in the Plan have not made any final decision on determining whether to assume, assume and assign, or reject the four remaining leases. The Debtors relate that the extension will give them more time to determine together with Sierra Craft in analyzing each of the four leases in relation to their importance as part of the confirmed Plan and to make a final decision on or before the Effective Date of the Plan. The Debtors assure Judge Barta that the extension will not prejudice the landlords and other parties in interest under the leases and they are current on all postpetition obligations under the leases. Headquartered in St. Louis, Missouri, Clark Group, Inc. -- http://www.clarksprinkler.com/-- provides a comprehensive line of fire protection products and the highest quality service and expert knowledge on fire protection products. The Company and its debtor-affiliates filed for chapter 11 protection on October 1, 2004 (Bankr. E.D. Mo. Case No. 04-52536). Bonnie L. Clair, Esq., and David A. Sosne, Esq., at Summers, Compton, Wells & Hamburg, PC, represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed estimated assets and debts of $10 million to $50 million. CLEARLY CANADIAN: Placing 1.5 Million Shares in Private Offering ---------------------------------------------------------------- Clearly Canadian Beverage Corporation (OTCBB:CCBC) (TSX:CLV) discloses a proposed private placement of up to 1.5 million shares in the capital stock of the Company at a price of $0.25Cdn per common share, for gross proceeds of $375,000Cdn. The Company anticipates that the majority of the private placement shares will be subscribed for by Directors and Officers of Clearly Canadian. The private placement shares will be subject to a required four month hold period. No discounts or warrants will be offered or issued in connection with the private placement. Proceeds of the proposed private placement will be used primarily to fund the Company's current inventory production requirements. About Clearly Canadian Based in Vancouver, B.C., Clearly Canadian -- http://www.clearly.ca/-- markets premium alternative beverages, including Clearly Canadian(R) sparkling flavoured water, Clearly Canadian O+2(R) oxygen enhanced water beverage and Tre Limone(R) which are distributed in the United States, Canada and various other countries. At September 30, 2004, Clearly Canadian's balance sheet showed a $681,000 stockholders' deficit, compared to $1,125,000 in positive equity at December 31, 2003. CONCERT INDUSTRIES: 97% of Creditors Approve Plan of Arrangement ---------------------------------------------------------------- Concert Industries Ltd. (TSX:CNG) reported that creditors of its Canadian operating subsidiaries have voted in favor of its final plan of compromise and arrangement pursuant to the Companies' Creditors Arrangement Act. The Plan received the overwhelming support of 97.5% in number and 99.9% in value of the creditors voting. The Plan relates only to Concert Fabrication Ltee, Concert Airlaid Ltee and Advanced Airlaid Technologies Inc., the Canadian operating subsidiaries, and their creditors. The Concert operating subsidiaries will seek Court approval of its restructuring plan on Wednesday, Dec. 15, 2004 before the Quebec Superior Court. Subject to Court approval, the Canadian operating subsidiaries intend to complete the implementation of its restructuring plan and emerge from protection under the Companies Creditors Arrangement Act on or prior to Dec. 31, 2004. The successful completion of its restructuring will enable the Concert operating subsidiaries to return to their position as a strong market leader within the industry. About the Company Concert Industries Ltd. is a company specializing in the manufacture of cellulose fiber-based non-woven fabrics using airlaid manufacturing technology. Concert's products have superior absorbency capability and are key components in a wide range of personal care consumer products, including feminine hygiene and adult incontinence products. Other applications include pre-moistened baby wipes, disposable medical and filtration applications and tabletop products. The Company has manufacturing facilities in Canada, in Gatineau and Thurso, Quebec, and in Germany, in Falkenhagen, Falkenhagen-Prignitz. On August 5, 2003, the Company and certain of its North American subsidiaries obtained an order from the Quebec Superior Court of Justice providing creditor protection under CCAA Proceedings. The Company's European operations are excluded from the CCAA Proceedings. PricewaterhouseCoopers Inc., was appointed by the Court to act as the Monitor, and this order is currently in effect until December 17, 2004. The entire text of the Court orders and the Monitor's reports are available at http://www.concert.ca/and at http://www.pwc.com/brs-concertgroup/or by calling (613) 755-5981. COPPOLA N.Y.C. INC: Case Summary & 18 Largest Unsecured Creditors ----------------------------------------------------------------- Debtor: Coppola N.Y.C., Inc. dba Peter Coppola Salon 746 Madison Avenue New York, New York 10021 Bankruptcy Case No.: 04-17808 Type of Business: The Company operates a salon. It offers cutting edge styling and services like hair styling and coloring, make-up consultation and design, manicures, and house an outstanding wedding department. See http://www.petercoppola.net/ Chapter 11 Petition Date: December 10, 2004 Court: Southern District of New York (Manhattan) Debtor's Counsel: Jonathan S. Pasternak, Esq. Rattet, Pasternak & Gordon Oliver, LLP 550 Mamaroneck Avenue, Suite 510 Harrison, New York 10528 Tel: (914) 381-7400 Fax: (914) 381-7406 Total Assets: $162,501 Total Debts: $1,302,107 Debtor's 18 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Friedland & Friedland $32,025 L. Friedland & M. Friedland 22 East 65th Street New York, New York 10021 Avaya $10,706 PO Box 93000 Chicago, Illinois 60673-3000 Aetna/US Healthcare $7,859 PO Box 7777-W7480-76 Philadelphia, Pennsylvania 19175-7480 Con Edison $5,315 Utica $2,519 New York Painting Corporation $2,478 Capital Cleaning $1,939 AFLAC $1,210 Verizon $1,170 Con Edison $889 Office Depot $815 Liverpool $599 AT&T $381 D.J.M. Maintenance System, Inc. $372 Guardian $235 H. Weiss Company, Inc. $218 Rentiki $157 Freshway Air $68 COX ENTERPRISES: S&P Lowered Senior Debt Rating to BB+ From BBB --------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on diversified media company Cox Enterprises Inc. -- CEI -- and subsidiaries to 'BBB-' from 'BBB'. The senior unsecured debt rating on CEI was lowered to 'BB+' from 'BBB'. The senior unsecured debt rating on the company's cable TV system unit, Cox Communications Inc. -- CCI, was lowered to 'BBB-' from 'BBB'. The senior unsecured debt rating on Cox Radio Inc. was lowered to 'BBB-' from 'BBB'. The commercial paper ratings on CEI and CCI were lowered to 'A-3' from 'A-2'. All ratings were removed from CreditWatch, where they were placed with negative implications on Aug. 2, 2004, because of the substantial increase in financial risk expected from CEI's plan to purchase the 38% interest in CCI it did not already own. The outlook is stable. At the same time, Standard & Poor's assigned its 'BBB-' rating to CCI's proposed $3 billion multiple tranche senior notes offering. The notes will be issued under Rule 144A with registration rights. CCI expects to use the proceeds to repay its $3 billion 18-month term loan. The downgrades follow CEI's $6.6 billion purchase of minority shares of CCI, which raises CEI's ownership of this subsidiary to roughly 92%, from about 62%. CEI had tendered for all of the outstanding minority shares and expects to receive most of the remaining amount in 60 days. The transaction will total $8.5 billion, including fees and expenses. CEI is financing $1.50 billion of the deal using new unsecured credit facilities at CEI of $2.25 billion. The proposed CCI notes and $7.75 billion in new CCI credit facilities are financing the remainder. The debt-financed purchase of the CCI shares substantially increases consolidated leverage to the 5.5x debt-to-EBITDA area, from the sub 3x ratio at Sept. 30, 2004. Although the resulting leverage exceeds the level appropriate for a 'BBB-' rating on an ongoing basis, the ratings incorporate Standard & Poor's expectations that CEI has the capacity and commitment to reduce consolidated debt to EBITDA within two years to the low-to-mid 4x area. Maintaining a steady trajectory towards the this target will be equally important to retaining an investment-grade rating. The senior unsecured debt rating on CEI is one notch below the corporate credit rating because, in a potential default scenario, CCI debtholder claims and other priority liabilities ahead of CEI debt could create a meaningful disadvantage to CEI's creditors. CCI debtholders would have no claim on the non-cable assets in the event of a bankruptcy. However, the absence of restrictions on CEI's ability to sell or leverage the non-cable assets raises concern that the value of these assets would not be available for CEI creditors. "Ratings on CEI and its subsidiaries reflect the company's well-diversified portfolio of cable TV systems, auto auction, broadcasting, and newspaper publishing businesses, which have good operating margins, solid positions in their respective industries, good free cash flow generating potential, and significant asset value," said Standard & Poor's credit analyst Eric Geil. "The ratings also incorporate Standard & Poor's expectations that the company will refrain from meaningful leveraged transactions until financial risk declines. Tempering factors include elevated leverage from the company's acquisition of minority interests in the cable subsidiary, cable's capital spending requirements, and a historically aggressive acquisition and growth orientation," Mr. Geil added. Standard & Poor's views the credit profile of CEI and its subsidiaries on a consolidated basis, given the economic and strategic importance of the units to the parent. CYBERCO HOLDINGS: Involuntary Chapter 7 Case Summary ---------------------------------------------------- Alleged Debtor: CyberCo Holdings, Inc. aka The CyberNet Group dba CyberNet Engineering dba Stryon dba Stryon Technologies dba CNG Logistics c/o David Roepke 25 South Division Avenue Grand Rapids, Michigan 49503 Involuntary Petition Date: December 9, 2004 Case Number: 04-14905 Chapter: 7 Court: Western District of Michigan (Grand Rapids) Judge: Jeffrey R. Hughes Petitioners' Counsel: Christopher Combest, Esq. Quarles & Brady LLP Citicorp Center 500 West Madison Street, Suite 3700 Chicago, IL 60661 Tel: 312-715-5000 Fax: 312-632-1727 Petitioner Claim Amount ---------- ------------ El Camino Resources, Ltd. $11,000,000 6233 Variel Avenue Woodland Hills, CA 91367 Charter One Bank $3,151,663 53 State Street, Ste. MB-5970A Boston, MA 02109 General Electric Capital Corporation $2,200,000 44 Old Ridgebury Road Danbury, CT 06810 DANA CORPORATION: Prices Tender Offer for Three Note Issues ----------------------------------------------------------- Dana Corporation (NYSE: DCN) disclosed the consideration to be paid in its tender offer for its: -- $250 million of 10-1/8% Notes due 2010; -- EUR 200 million of 9% EUR Notes due 2011; and -- $575 million of 9% USD Notes due 2011. Holders who tendered their Notes by the applicable early tender date will receive the applicable Total Consideration, subject to the terms and conditions set forth in the Offer to Purchase and Consent Solicitation Statement dated Nov. 15, 2004, which includes the applicable Early Tender Payment. Holders who tender their Notes after the applicable early tender date and at or prior to 5:00 p.m., New York City time, on Dec. 22, 2004, will receive the applicable Tender Offer Consideration, subject to the terms and conditions set forth in the Amended Offer to Purchase, but will not receive the Early Tender Payment. Certain materials terms set for the tender offer are: Principal Tender Offer Early Total Title of Outstanding Amount Consider- Tender Consider- Security Amount Tendered ation(1) Payment(1) ation(1) ================================================================== 10-1/8% Notes due 2010 $250,000,000 $169,502,000(2) $1,078.58 $50.00 $1,128.58 9.00% Euro Notes due 2011 E200,000,000 163,658,000(3) 1,219.64 50.00 1,269.64 9.00% Notes due 2011 $575,000,000 $445,430,000(2) $1,180.37 $50.00 $1,230.37 (1) Per $1,000 principal amount, or EUR 1,000 principal amount, as the case may be, of each issue of Notes that is accepted for purchase. (2) As of 5:00 p.m., New York City Time, on November 29, 2004. (3) As of 5:00 p.m., New York City Time, on December 3, 2004. In addition, holders of Notes who delivered valid tenders and whose Notes are accepted for payment will receive accrued and unpaid interest from the last interest payment date to, but not including, the applicable settlement date. Holders who validly tendered their Notes by the applicable early tender date will receive payment on the early settlement date, which is expected to be on or about Dec. 10, 2004. Holders who tender their Notes after the applicable early tender date, but on or prior to the expiration date, and whose Notes are accepted for payment will receive payment on the final settlement date, which is expected to be on or about December 23, 2004. Withdrawal rights with respect to tendered Notes have expired. Accordingly, any Notes previously or hereafter tendered may not be withdrawn. The tender offer is scheduled to expire at 5:00 p.m., New York City time, on December 22, 2004, unless extended or earlier terminated by Dana. Dana has retained Banc of America Securities, Deutsche Bank Securities and J.P. Morgan Securities to act as the joint-lead dealer managers in connection with the tender offer and solicitation agents in connection with the consent solicitation. Banc of America Securities (the coordinator for the offer and consent solicitation) can be contacted at (+1) 888-292-0070 (U.S. toll free), (+1) 212-847-5834 (collect), or (+44) 20-7174-4737. Deutsche Bank Securities can be contacted at (+1) 866-627-0391 (U.S. toll free), (+1) 212-250-2955 (collect), or (+44) 20-7545- 8011. J.P. Morgan Securities can be contacted at (+1) 866-834-4666 (U.S. toll free), (+1) 212-834-3424 (collect) or (+44) 20-7742- 7506. Holders can request documentation from D.F. King & Co., Inc. and D.F. King (Europe) Limited, the information agents for the offer, at (+1) 800-859-8509 (U.S. toll free), (+1) 212-269-5550 (collect), and (+44) 20-7920-9720. About the Company Dana Corporation -- http://www.dana.com/-- is a global leader in the design, engineering, and manufacture of value-added products and systems for automotive, commercial, and off-highway vehicles. Delivering on a century of innovation, Dana employs approximately 45,000 people worldwide dedicated to advancing the science of mobility. Founded in 1904 and based in Toledo, Ohio, Dana operates technology, manufacturing, and customer-service facilities in 30 countries. Sales from continuing operations totaled $7.9 billion in 2003. * * * As reported in the Troubled Company Reporter on Dec. 09, 2004, Fitch Ratings has upgraded Dana Corporation's senior unsecured debt rating to 'BBB-' from 'BB+' and assigns a rating of 'BBB-' to new $450 million 10-year senior unsecured notes. The Positive Rating Watch put in place on Aug. 2, 2004, has now been resolved as the proceeds from a new issuance of senior unsecured notes and the sale of the Automotive Aftermarket Group - - AAG -- will be used to make a voluntary pension fund contribution and to retire outstanding indebtedness in a tender offer currently in progress. Including the completion of the tender offer, approximately $2 billion of Dana's debt is affected by this rating action. Fitch's rating action reflects Dana's enhanced liquidity, sharply improved credit metrics, and improved business profile, as well as Dana's improved operational performance. DRESSER INC: Amends Registration Statement for IPO -------------------------------------------------- Dresser, Inc., has filed an amended registration statement with the Securities and Exchange Commission for a proposed initial public offering of its common stock. The filing amends the initial registration statement filed with the SEC on Sept. 3, 2004. The number of shares to be offered and the price range for the offering have not yet been determined. A portion of the shares will be issued by the Company and a portion will be sold by certain existing shareholders of Dresser. Proceeds from the shares issued by the Company will be used to pay down debt. Morgan Stanley and Credit Suisse First Boston will act as joint book-running managers for the proposed offering, with Banc of America LLC, UBS Investment Bank, Lehman Brothers, Raymond James, and Simmons & Company International as co-managers. A preliminary prospectus, when it becomes available, may be obtained from: Morgan Stanley & Co. Incorporated Prospectus Department 1585 Broadway New York, N.Y. 10036 Tel. No. 212-761-6775 -- or -- Credit Suisse First Boston LLC Prospectus Department One Madison Avenue New York, N.Y. 10010 Tel. No. 212-325-2580 A registration statement relating to these securities has been filed with the SEC but has not yet become effective. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. This press release shall not constitute an offer to sell or a solicitation of an offer to buy, nor shall there be any sale of these securities in any state in which such an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state. Headquartered in Dallas, Dresser, Inc. -- http://www.dresser.com/ -- is a worldwide leader in the design, manufacture and marketing of highly engineered equipment and services sold primarily to customers in the flow control, measurement systems, and compression and power systems segments of the energy industry. Dresser has a widely distributed global presence, with over 8,500 employees and a sales presence in over 100 countries worldwide. At Sept. 30, 2004, Dresser, Inc.'s balance sheet showed a $308.5 million stockholders' deficit, compared to a $312.6 million deficit at Dec. 31, 2003. DICK'S SPORTING: Soliciting Consents to Amend Sr. Note Indenture ---------------------------------------------------------------- Dick's Sporting Goods, Inc. (NYSE: DKS) has commenced a solicitation of consents to an amendment to the indenture related to its 2.375% Senior Convertible Notes due 2024. The indenture for the Notes currently prohibits the Company from paying cash upon a conversion of the Notes if an event of default, as defined in the indenture, has occurred and is continuing at that time. The Company is seeking consents from holders of the Notes to amend the indenture to eliminate this prohibition. The record date for the consent solicitation is 5:00 p.m., New York City time, on December 9, 2004. The consent solicitation will expire at 5:00 p.m., New York City time, on Dec. 22, 2004, unless extended. The Company is offering a consent fee of $1.69 per $1,000 original principal amount at maturity of the Note to each holder of record as of the record date who has delivered (and has not revoked) a valid consent prior to the expiration of the consent solicitation. The Company's obligation to accept consents and pay the consent fee is conditioned, among other things, on the receipt of consents from holders of at least a majority in original principal amount at maturity of the outstanding Notes. For a complete statement of the terms and conditions of the consent solicitation and the amendment to the indenture, holders of the Notes should refer to the Consent Solicitation Statement dated Dec. 9, 2004, which is being sent to all holders of record of the Notes as of the record date. Questions from holders regarding the consent solicitation or requests for additional copies of the Consent Solicitation Statement, the Letter of Consent or other related documents should be directed to Georgeson Shareholder, the Information Agent for the consent solicitation, at (866) 873-6992 (toll free) or the Solicitation Agent for the consent solicitation, Merrill Lynch & Co. at (888) 654-8637. About Dick's Sporting Goods, Inc. Pittsburgh-based Dick's Sporting Goods, Inc. is an authentic full- line sporting goods retailer offering a broad assortment of brand name sporting goods equipment, apparel, and footwear in a specialty store environment. As of October 30, 2004, the Company operated 233 stores in 32 states primarily throughout the Eastern half of the U.S. under the Dick's Sporting Goods and Galyan's names. * * * As reported in the Troubled Company Reporter on Nov. 25, 2004, Standard & Poor's Ratings Services assigned its 'B+' corporate credit rating to Pittsburgh, Pennsylvania-based Dick's Sporting Goods Inc. A 'B' rating was assigned to the company's $172.5 million senior unsecured convertible notes due 2024. The senior notes are rated one notch below the corporate credit rating due to the amount of secured bank debt in the capital structure. The outlook is negative. "The ratings reflect Dick's rapid growth, the integration risk associated with the company's recent acquisition of Galyans Trading Co. Inc., and a leveraged financial profile, though the company has a leading regional market position," said Standard & Poor's credit analyst Kristi Broderick. Dick's has grown organically, from a base of two stores in 1984 to about 180 big- box, full-line sporting goods stores 20 years later. On July 29, 2004, Dick's acquired Galyans for about $362 million, funded by $192 million in cash on hand and $170 million in borrowings from the company's revolving credit facility. The potential integration risk is significant, as Dick's intends to convert Galyans' 47 stores into the Dick's format by the first half of 2005. This reformatting involves changes to merchandise assortment and branding, as well as an adjustment to managing Galyans stores. Nonetheless, the rating assumes a relatively smooth transition, despite the significant challenges. DOUGLAS DYNAMICS: Moody's Places Low-B Ratings on New $200M Debts ----------------------------------------------------------------- Moody's Investors Service has assigned ratings to the new issues of Douglas Dynamics L.L.C. in connection with its refinancing of certain of its acquisition obligations undertaken in March 2004. The ratings reflect a modest increase in the level of Douglas's debt, an essentially unchanged expectation of "normalized" future free cash flow, the high level of financial leverage deployed in its capital structure, and variability resulting from the level and timing of snowfall in a seasonal business. The ratings also incorporate favorable characteristics of Douglas's business model, including leading market shares and brand recognition, the largest national distribution network in its segment, strong margins and the solid level of free cash flow, which has been generated historically over both light and heavy snowfall years. Further, the ratings incorporate the structural impact of a lower amount of secured indebtedness in the proposed capitalization, but also reflect the relaxation of creditor protections in the new facilities' restricted payment provisions and financial covenants going forward. The rating outlook is stable. Douglas was acquired by Aurora Capital Group and Ares Management for $264 million (subsequent to the March closing, GE Pension Trust joined the investor group). Debt facilities rated at the time totaled $225 million and consisted of a $55 million first lien revolver, which will continue, a $120 million first lien term loan, which is being repaid, and a $50 million second lien term loan, which is also being repaid from the proceeds of the new issues. A $52 million distribution to Douglas's immediate parent, Douglas Dynamics Holdings, Inc., and related fees and expenses will also be funded from the proceeds of the new debt and from existing cash and drawings under the continuing revolver, if necessary. The parent will use the proceeds to principally redeem a like amount of its Series A Preferred Stock. Moody's assigned these ratings: * B1 for the $50 million first lien term loan * B3 for the $150 million senior unsecured notes * Douglas's senior implied rating was lowered to B2 from B1 At the same time, Moody's affirmed the B1 rating for the $55 million first lien revolving credit and the Caa1 issuer rating. The ratings for the existing $120 million first lien term loan and the $50 million second lien term loan will be withdrawn upon the closing of the new financing. The new issues total $200 million and will replace approximately $168 million of current term indebtedness, a net increase of $32 million. Existing revolving credit borrowings may be accessed to facilitate settlements at the December closing, but, going forward, will primarily be used to fund seasonal working capital requirements. The refinancing will reduce the maximum level of secured first lien indebtedness by roughly $68 million and provides first lien debt holders improved collateral coverage and recovery expectations in the event of default. The ratings continue to reflect Douglas's ongoing strengths of leading market share, diversified geographic footprint of its distribution network in North America, strong EBITDA margins and modest capex requirements which have facilitated free cash flow generation in both low and high snowfall years. Douglas's business model also benefits through its substantial dealer/distributor network, market share, brand strength, and the limited overall size of the industry, which may make it unattractive for new entrants. The company has also been able to recover the higher cost of steel encountered to date in 2004. However, the ratings also recognize: (1) the incremental higher leverage resulting in the net increase in term debt, which will push total leverage closer to 5 times "normalized" EBITDA when an expectation of average use of the revolver is considered; (2) the unpredictable impact of variation in the level and timing of snowfall across North America; (3) the correlation of demand with new sales of SUVs and light trucks which can be sensitive to fuel costs and interest rates; and (4) inventory risk associated with a seasonal business. Douglas's continuing stable outlook considers these strengths and challenges. But, the ratings and outlook are tempered by the fact that a full year has not lapsed since the original ratings were assigned nor has the expected level of future performance in a typical snow year significantly changed. Further, a widened capacity for dividend payments has been created in the new structure. Should the company experience a string of normal snow fall years and use the resultant cash flow to de-lever, a positive outlook could develop. Use of the revolver to fund a material acquisition or additional distributions or additional term loans under the "greenshoe" option of the first lien term loans resulting in increased leverage, or a material deterioration in operating margins or market share could change the outlook to negative. The new $150 million senior notes will be unsecured and have a seven year maturity with no scheduled amortization or "spill-over" excess cash flow recapture upon the first lien facilities being retired. They will be guaranteed by Douglas's parent, Douglas Dynamics Holdings, Inc., as well as current and future subsidiaries of the issuer. The notes will be issued in accordance with Rule 144A of the Exchange Act, but will not have any registration rights. Douglas Dynamics Finance Company, a new wholly owned subsidiary of Douglas, will be a co-issuer under the senior notes. Douglas Dynamics Finance Company will not have any operations or assets and will not have any revenues. The new $50 million first lien term loan will have a six year maturity (2010), will also have up-streamed and down-streamed guarantees, and will share the first lien position with the continuing revolving credit facility, which has a commitment expiration date in March 2009. Significantly, it will have a lower required amortization rate at 1% annually in its first five years compared to 5% annually in the current first lien term loan. As a result of the lower required amortization percentages and the different principal amounts, Douglas will have lower required amortization from first lien term loans of approximately $5.5 million per annum. Excess cash flow sweeps will apply to the new term loan at defined levels. But, definitional changes could facilitate future distributions to shareholders. The reduction of required amortization provides Douglas with additional flexibility in managing the inherent year-to-year variability in its weather dependent business. The B2 senior implied rating incorporates the above issues. Under the new debt structure, the first lien facilities account for some 30% of total debt. While there are substantial amounts of intangible assets involved, existing hard assets, lower amounts of first lien indebtedness and priority over the enterprise value of the operating company should ensure high recovery rates for first lien debt holders in the event of default. Hence, a B1 rating has been assigned to the first lien revolving credit and term loan, one notch higher than the senior implied rating. The senior unsecured notes have been assigned a B3 rating to reflect their effective subordination to the first lien facilities, their lower priority, and the residual nature of their access to the enterprise value of the firm achieved through the parental guarantee. The unsecured issuer rating has been affirmed at Caa1 and results from the assumed lack of guarantees for prospective debt issued at this level. Douglas Dynamics is headquartered in Milwaukee, Wisconsin, and is the North American leader in the design, manufacture, sale and support of snow and ice control equipment through its Western and Fisher brands. Its workforce includes approximately 500 full time employees at manufacturing facilities in Rockland, Maine, Johnson City, Tennessee, and Milwaukee, Wisconsin. D.R. HORTON: Moody's Puts Ba1 Rating on $300 Million Senior Notes ----------------------------------------------------------------- Moody's Investors Service assigned a Ba1 rating to the $300 million of 5.625% senior notes due January 15, 2016 of D.R. Horton, Inc., proceeds of which will be added to working capital. At the same time, Moody's confirmed all of the company's existing ratings, including the senior implied rating, issuer rating, and the ratings on the company's senior notes at Ba1 and on its senior subordinated debt at Ba2. The ratings outlook is positive. The positive ratings outlook reflects the company's steady and successful execution of its strategy of buying less land, foregoing an active acquisition policy, and using the excess cash flow for debt repayment and share purchases. As a result, debt leverage has improved from the highest in its peer group to one that compares favorably with those within its peer group. Moody's expects this trend to continue. The ratings acknowledge the company's enviable operating performance, success at integrating prior acquisitions, strong equity base, geographic diversity, tight cost controls, and sound liquidity. At the same time, the ratings continue to incorporate Horton's somewhat higher than average business risk profile given its past healthy appetite for acquisitions, which its current strategy does not totally disavow. In addition, capacity under its large bank credit facility ($1.21 billion) gives the company ample dry powder to releverage the balance sheet on short notice. The ratings also consider that the company has a sizable proportion of its earnings coming from California. The ratings confirmed are: * Ba1 senior implied rating * Ba1 senior unsecured issuer rating * Ba1 on $200 million of 10.5% senior notes, due 4/1/05 * Ba1 on $215 million of 7.5% senior notes, due 12/01/07 * Ba1 on $200 million of 5% senior notes, due 1/15/09 * Ba1 on $385 million of 8% senior notes, due 2/1/09 * Ba1 on $235 million of 9.375% senior notes, due 7/15/09 (issued by Schuler Homes and assumed by D.R. Horton in the merger of February 2002) * Ba1 on $250 million of 4.875% senior notes, due 1/15/10 * Ba1 on $200 million of 7.875% senior notes, due 8/15/11 * Ba1 on $250 million of 8.5% senior notes due 4/15/12 * Ba1 on $200 million of 6.875% senior notes due 5/1/13 * Ba1 on $100 million of 5.875% senior notes due 7/1/13 * Ba1 on $200 million of 6.125% senior notes due 1/15/2014 * Ba1 on $250 million of 5.625% senior notes due 9/15/ 2014 * Ba2 on $150 million of 9.75% senior sub notes, due 9/15/10 * Ba2 on $200 million of 9.375% senior sub notes, due 3/15/11 * Ba2 on $145 million of 10.5% senior sub notes, due 7/15/11 (issued by Schuler Homes and assumed by D.R. Horton in the merger of February 2002) * SGL-1 Speculative Grade Liquidity rating All of D.R. Horton's note issues are guaranteed by substantially all of the company's homebuilding subsidiaries. Horton's financial profile has shown substantial improvement since the company adopted in 2002 its current strategy of eschewing most acquisition opportunities, shifting its lot supply mix to one that relies more heavily on options and less on ownership, generating significant free cash flow, and devoting the excess cash flow both to debt repayment and to moderate share repurchases. As a result, Horton has reduced debt leverage from a peer group high of 57.5% (debt/cap) and 3.1x (debt/EBITDA) at fiscal year end 2001 to 43.2% and 1.6x, respectively, at fiscal year-end 2004. Pro forma for the issuance of these new notes and application of proceeds to working capital, total homebuilding debt/capitalization as of the fiscal year that ended September 30, 2004 would have been 45.5% and homebuilding debt/EBITDA would have been 1.8x. These ratios are expected to continue to improve. The company has an exceptionally strong operating track record. It has generated 108 consecutive quarterly year-over-year earnings gains, with no near-term end to this streak in sight. It has seamlessly integrated its numerous acquisitions, including that of its largest, Schuler Homes, which was completed in 2002. It has one of the largest equity bases in the homebuilding industry, $3.96 billion as of September 30, 2004. It has diversified into 63 markets in 21 states across the U.S., and it has one of the leanest corporate overheads among homebuilders, with its SG&A/revenues typically running at or near the lowest in the industry. At the same time, the ratings consider that Horton, while pursuing a new strategy, has not renounced making additional acquisitions, and that its large, essentially untapped bank credit facility gives it substantial borrowing capacity to move quickly on a potentially large acquisition opportunity. Given its history as a very aggressive consolidator within the homebuilding industry and the industry's ongoing trend towards consolidation, there may be opportunities that challenge Horton's recently adopted capital structure discipline. Finally, although the company has diversified geographically into numerous large and attractive markets, the Schuler acquisition, together with the ongoing robustness of the California housing market, has driven up Horton's California concentration levels to approximately 30% with regard to revenues and to a larger proportion of its profits. Going forward, the ratings will depend on Horton's maintaining its fiscal restraint. Moody's would view positively the company's continuing reduction in its debt leverage. Any action or transaction that had a significantly adverse effect on debt leverage would be viewed negatively. Headquartered in Ft. Worth, Texas, D.R. Horton, Inc., is engaged in the construction and sale of homes designed principally for the entry-level and first time move-up markets. The company currently builds and sells homes in 21 states and 63 markets, with a geographic presence in the Midwest, Mid-Atlantic, Southeast, Southwest, and Western regions of the United States. Revenues and net income for the fiscal year that ended September 30, 2004, were $10.7 billion and $975 million, respectively. EL-BETHEL MISSIONARY: Voluntary Chapter 11 Case Summary ------------------------------------------------------- Debtor: El-Bethel Missionary Baptist Church 715 Bellevue Avenue Trenton, New Jersey 08618 Bankruptcy Case No.: 04-48775 Type of Business: The Company operates a church. Chapter 11 Petition Date: December 10, 2004 Court: District of New Jersey (Trenton) Judge: Debtor's Counsel: John E Maziarz, Esq. Wolk and Maziarz, Esqs. 311 Whitehorse Avenue, Suite A Trenton, New Jersey 08610 Tel: (609) 581-0063 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million The Debtor did not file a list of its 20 Largest Unsecured Creditors. ENRON CORP: Judge Gonzales Approves Bracewell Settlement Agreement ------------------------------------------------------------------ Enron Corporation and its debtor-affiliates ask the Court to approve a settlement and compromise of claims with Bracewell & Patterson LLP. Scott E. Ratner, Esq., at Togut Segal & Segal, LLP, in New York, relates that on Oct. 28, 2003, the Debtors made a demand on Bracewell, seeking the avoidance and disgorgement of transfers aggregating $2,515,780, made by Enron to Bracewell within 90 days of the Petition Date. Unable to agree on a resolution of the Demand prior to the second anniversary of the Petition Date, the Debtors and Bracewell entered into an agreement on November 25, 2003, extending and tolling: (i) the statute of limitations under Chapter 5 of the Bankruptcy Code and all other time limitations or time- based defenses in respect of any claim or cause of action against Bracewell, which might be asserted by one or more of the Debtors through Chapter 5 of the Bankruptcy Code; and (ii) any defenses, setoffs and counterclaims to the claims and causes of action, which Bracewell might assert. Bracewell asserted that it has provided the Debtors with more than $415,000 in subsequent new value pursuant to Section 547(c)(4) of the Bankruptcy Code. Bracewell believes that the remaining transfers are not subject to avoidance and disgorgement because they were made in the ordinary course of business pursuant to Section 547(c)(2). After extensive due diligence and arm's-length negotiations, the Debtors and Bracewell agreed to settle and compromise all of the Debtors' claims that are potentially assertable against Bracewell in consideration for: -- Bracewell's payment to the Debtors of $1,500,000 as settlement amount; and -- Bracewell's waiver of all claims it may possess against the Debtors. The pertinent terms of the Settlement are: (a) Bracewell will pay the Settlement Amount to the Debtors in two equal installments of $750,000 each, with the first installment due and payable on or before January 31, 2005, and the second installment on or before January 31, 2006; (b) The Debtors will be deemed to have waived and released all claims that they may have against Bracewell, and its partners, associates, employees and insurers; (c) Bracewell will be deemed to have waived, released and discharged all claims it may have against the Debtors, including claims that have previously been scheduled by the Debtors aggregating $1,673,940; and (d) Bracewell will not file any proofs of claim in the Debtors' cases. If the parties' claims and disputes are not resolved through their proposed settlement, future litigation could result in additional, unnecessary expense for the Debtors and their estates, Mr. Ratner states. Mr. Ratner tells the Court that the Official Committee of Unsecured Creditors does not object to the settlement. Moreover, the Settlement is the product of arm's-length bargaining and negotiations between the parties. * * * Judge Gonzalez approves the Settlement. Headquartered in Houston, Texas, Enron Corporation is in the midst of restructuring various businesses for distribution as ongoing companies to its creditors and liquidating its remaining operations. Before the company agreed to be acquired, controversy over accounting procedures had caused Enron's stock price and credit rating to drop sharply. Enron filed for chapter 11 protection on December 2, 2001 (Bankr. S.D.N.Y. Case No. 01-16033). Judge Gonzalez confirmed the Company's Modified Fifth Amended Plan on July 15, 2004, and numerous appeals followed. Martin J. Bienenstock, Esq., and Brian S. Rosen, Esq., at Weil, Gotshal & Manges, LLP, represent the Debtors in their restructuring efforts. EVERGREEN INVESTMENTS: Trustees Approve Fund Merger Transactions ---------------------------------------------------------------- Evergreen Investments disclosed that the Board of Trustees of the Evergreen Funds has approved these mergers: -- Evergreen Masters Fund (EMFAX) into Evergreen Large Cap Equity Fund (EVSAX) -- Evergreen Foundation Fund (EFOAX) and Evergreen Tax Strategic Foundation Fund (ETSAX) into Evergreen Balanced Fund (EKBAX) -- Evergreen Blue Chip Fund (EKNAX) and Evergreen Fund (EVRAX) into Evergreen Growth and Income Fund (EGIAX) -- Evergreen VA Special Equity Fund into Evergreen VA Growth Fund -- Evergreen VA Fund into Evergreen VA Growth and Income Fund The Trustees have determined that the mergers are in the best interests of shareholders of each of these funds. The funds involved in each merger have similar investment objectives and strategies. It is currently expected that, immediately following the mergers, expenses will be the same or lower for shareholders of each fund being acquired without altering the surviving funds' key investment objectives and strategies. The mergers are subject to approval by shareholders. A shareholder meeting has been scheduled for Friday, April 1, 2005, at 2:00 p.m. at the offices of the Evergreen Funds, 200 Berkeley Street, 26th Floor, Boston Massachusetts 02116. The close of business on January 14, 2005, has been fixed as the record date for the shareholder meeting. Name Changes The Trustees have also approved these name changes to be implemented post-merger: -- Evergreen Growth and Income Fund to be renamed Evergreen Fundamental Large Cap Fund -- Evergreen VA Growth and Income Fund to be renamed Evergreen VA Fundamental Large Cap Fund -- Evergreen VA Foundation Fund to be renamed Evergreen VA Balanced Fund In conjunction with the name changes, objectives for the Evergreen Growth and Income Fund (to be renamed Evergreen Fundamental Large Cap Fund) and the Evergreen VA Growth and Income Fund (to be renamed Evergreen VA Fundamental Large Cap Fund) will change from "capital growth in the value of its shares and current income" to "capital growth with the potential for current income." Although each of these two funds intends to maintain a strategy that calls for considering securities with the possibility of income, this type of investment will be secondary to the objective of capital growth. Surviving Funds -- Evergreen Large Cap Equity Fund The fund seeks to provide maximum capital growth greater than that of the S&P 500 Index by investing primarily in a diversified portfolio of common stocks of U.S. companies expected to experience growth in earnings and price. Assuming completion of the merger, the combined fund will continue to be managed by William E. Zieff and members of the Global Structured Products team. -- Evergreen Balanced Fund The fund seeks to provide long-term total return through capital growth and total income by investing in a combination of domestic stocks and investment grade bonds. Assuming completion of the merger, the combined fund equity portion will be managed by Walter McCormick and the Value Equity Team, and the bond portion of the combined fund will continue to be managed by Tattersall Advisory Group, an affiliated investment advisor to Evergreen Investment Management Co. -- Evergreen Growth and Income Fund, to be renamed Evergreen Fundamental Large Cap Fund Following the merger and objective change, the fund will seek to provide capital growth with the potential for current income by investing primarily in common stocks of large and mid-sized companies whose market capitalizations fall within the Russell 1000 Index. Assuming completion of the merger, the combined fund will continue to be managed by Walter McCormick and members of the Value Equity team. -- Evergreen VA Growth and Income Fund, to be renamed Evergreen VA Fundamental Large Cap Fund Following the merger and objective change, the fund will seek to provide capital growth with the potential for current income by investing primarily in common stocks of large and mid-sized companies whose market capitalizations fall within the Russell 1000 Index. Assuming completion of the merger, the combined fund will continue to be managed by Walter McCormick and members of the Value Equity team. -- Evergreen VA Growth Fund The fund seeks to provide long-term capital growth by investing primarily in common stocks of small to mid-sized companies which the fund's manager believes are demonstrating strong and consistent earnings growth not fully recognized in their stock price. Assuming completion of the merger, the combined fund will continue to be managed by Theodore Price and members of the Small Cap Growth team. Additionally, the Trustees have approved the following liquidations: -- Evergreen Technology Fund (ETCAX) -- Evergreen Mid Cap Value Fund (EMVAX) Effective as of the close of business on November 26, 2004, these two funds were no longer available for purchase by either new or existing shareholders. However, participants in self-directed, employer-sponsored retirement plans who were investing through automatic payroll deductions as of November 30, 2004 will be allowed to continue to invest in the funds by means of automatic payroll deductions through January 31, 2005. Shareholders will be notified about these liquidations on or about January 7, 2005. The liquidations are expected to occur on or about March 7, 2005. Lastly, Trustees approved the closings of three share classes of Evergreen U.S. Government Money Market Fund and the limited closings of two share classes of Evergreen Money Market Fund, as follows: -- Evergreen U.S. Government Money Market Fund -- B shares: EGBXX -- C shares: EGCXX -- I shares: EGGXX -- Evergreen Money Market Fund -- B shares: EMBXX --C shares: EMCXX Effective after the close of business on December 17, 2004, the referenced shares of Evergreen U.S. Government Money Market Fund will no longer be available for purchase by either new or existing shareholders. However, participants in self-directed, employer- sponsored retirement plans who were investing through automatic payroll deductions as of November 30, 2004 will be allowed to continue to invest in the funds by means of automatic payroll deductions through January 31, 2005. Shareholders in Evergreen U.S. Government Money Market Fund will be notified about this liquidation on or about January 7, 2005. The liquidation of these share classes will occur on or about March 7, 2005. The fund's Class A shares will remain open for investment to all investors. Effective January 3, 2005, the referenced shares of Evergreen Money Market Fund will be available for purchase only by existing shareholders as of that date and prospective shareholders making an exchange out of another mutual fund within the Evergreen family of funds. The fund's Class A and I shares will remain open for investment to all investors for whom they are currently available. -- Evergreen U.S. Government Money Market Fund The fund seeks to provide as high a level of current income as is consistent with preserving capital and maintaining liquidity. The fund invests primarily in high quality, short-term securities issued or guaranteed by the U.S. government, its agencies or instrumentalities. The fund is managed by members of the Customized Fixed Income team. -- Evergreen Money Market Fund The fund seeks to provide as high a level of current income as is consistent with preserving capital and providing liquidity by investing primarily in high quality money market instruments. The fund is managed by members of the Customized Fixed Income team. About Evergreen Investments Evergreen Investments -- http://www.evergreeninvestments.com/-- is the brand name under which Wachovia Corporation (NYSE: WB) conducts its investment management business and is a leading asset management firm serving more than four million individual and institutional investors through a broad range of investment products. Led by 350 investment professionals, Evergreen Investments strives to meet client investment objectives through disciplined, team-based asset management. Evergreen Investments manages more than $247 billion in assets (as of September 30, 2004). * * * In a prospectus supplement dated Nov. 23, 2004, Evergreen Investments announced a proposal to liquidate and close the Evergreen Mid Cap Value Fund and Evergreen Technology Fund on or about March 7, 2005. The liquidations are subject to approval by the funds' Board of Trustees who are expected to consider the proposals at a meeting being held Dec. 8 and 9, 2004. Effective after the close of business on Nov. 26, 2004, shares of the funds will no longer be available for purchase by either new or existing shareholders. If the Board approves the liquidations, existing shareholders in the funds will be notified. FINANCIAL ASSET: Fitch Junks Class B4 of Series 1997-NAMC1 Cert. ---------------------------------------------------------------- Fitch Ratings has taken rating actions on Financial Asset Securitization, Inc., residential mortgage-backed securities securitizations: Financial Asset Securitization, Inc., series 1997-NAMC1: -- Class A affirmed at 'AAA'; -- Class B1 affirmed at 'AAA'; -- Class B2 affirmed at 'AAA'; -- Class B3 affirmed at 'AAA'; -- Class B4 affirmed at 'AA-'; -- Class B5 affirmed at 'BBB'; Financial Asset Securitization, Inc., series 1997-NAMC2: -- Class A affirmed at 'AAA'; -- Class B1 affirmed at 'AAA'; -- Class B2 affirmed at 'AAA'; -- Class B3 affirmed at 'A'; -- Class B4 downgraded to 'CCC' from 'B'. The affirmations represent $8.9 million in outstanding principal. Credit enhancement for each of the affirmed classes has grown to at least 7 times the original amount. The downgraded class represents $0.1 million in outstanding principal. Although credit enhancement for the class has grown from its original amount (2.05% from 0.58%), the supporting classes have taken principal write downs. Additionally, over 7% of the current pool (approximately $0.4 million) is more than 90 days delinquent. The underlying collateral for all the transactions consists of conventional, fully amortizing 30-year fixed-rate mortgage loans secured by first liens on one- to four-family residential properties. FOSTER WHEELER: Converts 349 Million Convertible Preferred Shares ----------------------------------------------------------------- Foster Wheeler Ltd. (OTCBB: FWHLF) reported that, as of Dec. 9, 2004, 349,128 of its Series B Convertible Preferred Shares have been converted into 22,693,320 Common Shares. As a result, the total number of the Company's outstanding Common Shares as of Dec. 9, 2004 was 29,146,318. As of Dec. 9, 2004, 250,816 Series B Convertible Preferred Shares remain outstanding. These Preferred Shares are convertible into an additional 16,303,021 Common Shares. As previously announced, the Series B Convertible Preferred Shares ceased to have voting rights immediately following the Company's shareholders meetings on Nov. 29, 2004, except in limited circumstances as required under Bermuda law and the Company's bye- laws. About the Company Foster Wheeler Ltd. -- http://www.fwc.com/-- is a global company offering, through its subsidiaries, a broad range of design, engineering, construction, manufacturing, project development and management, research and plant operation services. Foster Wheeler serves the refining, upstream oil and gas, LNG and gas-to-liquids, petrochemical, chemicals, power, pharmaceuticals, biotechnology and healthcare industries. The corporation is based in Hamilton, Bermuda, and its operational headquarters are in Clinton, New Jersey, USA. At September 24, 2004, Foster Wheeler's balance sheet showed a $441,238,000 stockholders' deficit, compared to an $872,440,000 deficit at December 26, 20 FUND OF FUNDS: Final Deadline to File Claims is February 14, 2005 ----------------------------------------------------------------- SUPERIOR COURT OF JUSTICE IN THE MATTER OF THE FUND OF FUNDS, LIMITED NOTICE TO FUNDHOLDERS OF THE FUND OF FUNDS, LIMITED On August 7, 1970, management of The Fund of Funds, Limited ("FOF"), decided to transfer the natural resources and real estate assets and an amount of cash owned by FOF to Global Natural Resources Properties Limited ("Global") in exchange for shares of Global and declared a dividend of Global Shares to FOF Fundholders. Thus persons who were FOF Fundholders on August 7, 1970, were thereafter entitled to claim shares in Global representing the equivalent number of shares they held in FOF FOF was ordered to be wound-up by an Order of the Ontario Court in Canada on August 1, 1973. The FOF liquidation has been carried on under the supervision of the Ontario Court and the Liquidator is Deloitte & Touche Inc. ("D&T"). By 1981, most FOF Fundholders who were entitled to claim Global Shares had collected their shares and the Ontario legislature authorized a sale of the remaining unclaimed Global Shares pursuant to Court Order. By an Order of the Ontario Court dated June 30, 1982, the remaining unclaimed Global Shares were sold. Thereafter, approved claimants received their rateable portion of the proceeds of sale of the Global Shares. After more than 30 years, a small number of persons have still not filed claims. By Order of the Ontario Court dated the 16th day of June, 2004, the Liquidator was directed to give notice to all FOF Fundholders of a claims bar date with respect to the proceeds of sale of all unclaimed Global shares by publishing [this notice dated Dec. 2, 2004]. It has been further ordered by the Ontario Court that every FOF Fundholder alleging an unpaid claim to a share of the proceeds of the sale of the Global Shares dividended to the FOF Fundholders shall notify the Liquidator of such claim in writing by post or facsimile at: Mr. Michael W. Mackley, C.A. Deloitte & Touche Inc. Liquidator of The Fund of Funds, Limited c/o Auxiliare de Liquidation (Canada) Limited 95 Wellington Street West, Suite 702 (P.O. Box 66) Toronto, Ontario, Canada M53 2P4 Telephone (416) 874-3890 Fax (416) 601-1757 Such notice to the Liquidator must give the claimant's name and address for reply, together with the account holder's FOF account number and date of birth and must be received by the Liquidator on or before the 14th day of February, 2005. For the convenience of the claimants, the Liquidator will send a Proof of Claim form with instructions as to how it is to be completed to each person who shall furnish to the Liquidator such notification in writing of their claim. GENERAL MEDIA: Seneca Thrilled with Successful Chapter 11 Outcome ----------------------------------------------------------------- Seneca Financial Group, Inc., confirmed last week that it has successfully completed its assignment as the restructuring advisor to General Media, Inc., the New York-based publisher of Penthouse with other interests in publishing, video/broadcasting, internet and licensing operations. Following Seneca's nearly year-long role in restructuring the company's operations, preserving and enhancing value of the estate, and assisting in the repositioning of this 35-year-old global brand, General Media successfully reorganized and emerged from Chapter 11 protection as Penthouse Media Group Inc. in early October. Since that date, Seneca stayed on to assist in the Company's day-to-day financial and operational management to ensure a smooth transition to the new management team. "We are thrilled to have been part of such a successful outcome in maximizing value, providing for all creditors to be compensated in full and allowing this renowned brand to flourish," said Jim Harris, president of Seneca Financial Group. James Sullivan, managing director of Seneca Financial Group, who served as chief restructuring officer to General Media added, "We at Seneca are confident that new management will be successful and continue to build upon one of the most widely recognized consumer brands worldwide for years to come." The Fourth Amended Plan of Reorganization became effective on October 5, 2004, through a full payment plan to creditors, with Penthouse Media Group now under the control of PET Capital Partners, LLC, an affiliate of Marc Bell Capital Partners, LLC, of Boca Raton, Florida. In addition to successfully completing its General Media assignment, Seneca Financial Group has recently played key roles on behalf of its clients in a number of high-profile restructuring matters, including Peregrine Systems, Inc. and Seitel Inc. as well as representing the interests of its various clients and providing litigation support in a number of other bankruptcies throughout 2004. Seneca Financial Group, founded in 1993, is a Greenwich, CT-based specialty investment bank which focuses on working with management, creditors and other constituencies in companies experiencing financial distress. More information can be obtained about Seneca at http://www.senecafinancial.com/ General Media, a subsidiary of Penthouse International, Inc., filed for Chapter 11 protection on August 12, 2003 (Bankr. S.D.N.Y. Case No. 03-15078). Robert Joel Feinstein, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub P.C., represented the Debtors in their restructuring efforts. When the Company filed for protection from their creditors, they listed $50 million to $100 million in total assets and more than $50 million in total debts. GITTO GLOBAL: Jager Smith Approved as Committee's Counsel --------------------------------------------------------- The U.S. Bankruptcy Court for the District of Massachusetts gave the Official Committee of Unsecured Creditors of Gitto Global Corporation permission to employ Jager Smith P.C., as its counsel. Jager Smith will: a) provide legal advice to the Committee with respect to its responsibilities, powers and duties; b) assist the Committee with legal advice in its investigation of the acts, conduct, assets, liabilities and financial condition of the Debtor; c) review and represent the Committee with respect to pending motions before the Court; d) provide legal advice to the Committee with respect to the Debtor's proposed plan of reorganization, the prosecution of claims against third parties, and any other matters relevant to the Debtor's chapter 11 case including the formulation of a plan of reorganization; e) prepare on behalf of the Committee the necessary applications, motions, complaints, answers, orders, reports and other legal papers; and f) perform all other legal services for the Committee which are appropriate and necessary. Bruce F. Smith, Esq., Steven C. Reingold, Esq., and Michael J. Fencer, Esq., are the lead attorneys for the Committee. For their professional services, both Mr. Smith and Mr. Reingold will charge at $340 per hour, while Mr. Fencer will charge at $280 per hour. Mr. Smith reports that other attorneys and paralegals of Jager Smith who will perform services to the Committee will charge from $105 per hour to $340 per hour. Jager Smith assures the Court that it does not represent any interest adverse to the Committee, the Debtor or its estate. Headquartered in Lunenburg, Massachusetts, Gitto Global Corporation -- http://www.gitto-global.com/-- manufactures polyvinyl chloride, polyethylene, polypropylene and thermoplastic olefinic compounds. The Company filed for chapter 11 protection on September 24, 2004 (Bankr. D. Mass. Case No. 04-45386). Andrew G. Lizotte, Esq., at Hanify & King P.C., represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed estimated assets of $10 million to $50 million and estimated debts of $50 million to $100 million. GOLD KIST INC: S&P Raises Corporate Credit Rating to B+ from B -------------------------------------------------------------- Standard & Poor's Ratings Services raised its corporate credit rating to 'B+' from 'B' and other ratings on vertically integrated poultry producer Gold Kist Inc. The ratings were also removed from CreditWatch, where they were placed on June 9, 2004. The outlook is stable. Pro forma for the recent debt repayment, total debt on Atlanta, Georgia-based Gold Kist is about $231 million. The rating action follows the completion of the cooperative's conversion to a C corporation, the completion of Gold Kist's initial public offering (IPO, net proceeds of $135.9 million), and the repayment of $70 million in long term debt. "These events give Gold Kist greater financial flexibility and greater access to the capital markets, which are crucial to the company because of the inherent volatility in its poultry operations and the related effect on the company's financial performance," said Standard & Poor's credit analyst Jayne Ross. Following the completion of the IPO, former members of the cooperative own about 73% of the company. The ratings on Gold Kist reflect the inherent cyclical nature and seasonality of the company's commodity-based poultry business, low-margins, fairly high debt levels, some geographic and customer concentration, and moderate discretionary cash flow. HAYNES: Moody's Withdraws Junk Ratings After Bankruptcy Emergence ----------------------------------------------------------------- Moody's Investors Service has withdrawn the ratings of Haynes International, Inc. The company's 11.625% senior unsecured notes were converted into equity in connection with the company's emergence from bankruptcy in August 2004. These ratings have been withdrawn: * Senior Implied, rated Caa2; * Issuer Rating, rated Caa3. Headquartered in Kokomo, Indiana, Haynes International, Inc., develops, manufactures and markets technologically advanced, high performance alloys primarily for use in the aerospace, land-based gas turbine, and chemical processing industries. INTERLINE: Moody's Ups Ratings After Balance Sheet Restructuring ---------------------------------------------------------------- Moody's Investors Service has upgraded the ratings of Interline Brands, Inc., contingent upon the completion of its proposed $200 million initial public offering of its stock and a concurrent refinancing of its bank credit facility. After the upgrade, the rating outlook is stable. Ratings upgraded: * Senior implied rating, to B1 from B2, * Issuer rating, to B2 from B3, * $130 million 11.5% senior subordinated notes due 2011, to B3 from Caa1, * $100 million senior secured revolver, due 2008, to B1 from B2, * $100 million senior secured term loan, due 2010, to B1 from B2 Proceeds of the proposed $200 million IPO will be used to pay down the senior subordinated debt ($78.1 million, including $8.1 million of call premiums) and the senior secured term loan ($32.1 million), redeem preferred stock ($55 million), pay fees and expenses ($16.8 million), terminate interest rate swaps ($5 million), and hold the remainder as cash for general corporate purposes ($13.1 million). Meanwhile, the company is seeking to upsize its senior secured revolver from $65 million to $100 million as part of its bank credit facility refinancing. The rating upgrade reflects the positive impact of the IPO on the company's credit profile, in particular a reduction in debt leverage and interest expenses. Pro forma for the transaction, total debt is projected to be reduced to $234.2 million from $343.3 million as of September 24, 2004. Accordingly, the pro forma debt/EBITDA ratio will decline to approximately 3.0 times from 4.4 times while the pro forma (EBITDA-capex)/interest ratio will improve to 2.4 times from 1.8 times. The upgrade also considered the company's generally good (albeit short) track record in meeting its financial and operational goals since it was first rated by Moody's in May 2003. On the other hand, the ratings are constrained by the company's high working capital investment needs and modest free cash flow generation, and some pressures on its profit margins from its growth initiatives and raw material price increases. In addition, Moody's expressed concerns about potential acquisition risks and noted the increase of the revolving credit line from $65 million to $100 million, with $70 million available for acquisition finance. Moreover, the redemption of $55 million preferred stock has reduced the junior capital cushion available to support senior secured bank loans and senior subordinated debt. The maintaining of the stable rating outlook reflects the company's generally stable revenue base and financial performance, partially offset by potential acquisition risks. The B1 rating on the $200 million senior secured credit facility reflects its seniority in the company's debt structure but weak tangible asset coverage. The facility will be secured by a first priority lien on the capital stock as well as all assets of the company and subsidiaries, and will be guaranteed on a senior secured basis by the company's parent as well as its current and future subsidiaries. The B3 rating on the $130 million senior subordinated notes reflects their unsecured nature, as well as their contractual and effective subordination to senior debt, including outstandings under the senior secured credit facilities. The notes will be guaranteed, on a senior subordinated basis, by Interline's existing and future domestic subsidiaries. Interline Brands, Inc., Jacksonville, Florida, is a distributor of maintenance, repair and operations products in the US, with LTM (September 30, 2004) revenues of approximately $707 million. IWO ESCROW: Moody's Junks Senior Secured & Discount Notes --------------------------------------------------------- Moody's Investors Service assigned a B3 rating to the proposed offering of $150 million Senior Secured Floating Rate Notes due 2012 by IWO Escrow Company, and a Caa2 rating to the $75 million (estimated gross proceeds) Senior Discount Notes due 2015, among other rating actions. The rating outlook is revised to stable from negative. The affected ratings are: -- IWO Holdings, Inc. * Senior implied rating -- Caa1 (affirmed) * Issuer rating -- Caa3 (upgraded from Ca) * 14% Senior Note due 2011-- ratings withdrawn -- IWO Escrow Company * $150 million Senior Secured Floating Rate Notes due 2012 -- assigned B3 * $75 million (proceeds) Senior Discount Notes due 2015 -- assigned Caa2 The Caa1 senior implied rating reflects the very high leverage of the company with approximately $975 of debt per subscriber at September 30, 2004, and total debt/proforma adjusted EBITDA over 7 times. While IWO will benefit from 'simplified pricing' under its revised operating agreements with Sprint PCS, free cash flow is still expected to be below 3% of total debt over the next 12-to-18 months. IWO will be challenged to reduce these leverage statistics due to the rapid accretion of the principal amount of the senior discount notes being issued. The B3 rating on the senior secured floating rate notes reflects Moody's opinion of the value of the collateral and guarantee package available to these creditors, and the lower leverage of the company through these notes. At $150 million, this represents 4.7 times LTM pro forma adjusted EBITDA, and approximately $650 per subscriber. The Caa2 rating on the senior discount notes reflects their more junior position in the capital structure and Moody's opinion of the diminished residual value available to these noteholders in the event of default, after the senior secured noteholders' claims have been satisfied. The rating outlook is stable as Moody's does not expect the ratings to change over the next 12-to-18 months. The ratings would be positively affected should IWO be able to generate over $40 million in annual EBITDA, an amount sufficient to cover estimated annual cash interest expense on the FRNs and a decent level of capital expenditures. The ratings are likely to be negatively affected if IWO fails to continue to grow its subscriber base and cash flows do not grow materially. IWO has been in default under its existing credit agreement since March 2003. The proposed financing is part of a reorganization of the company through a prepackaged bankruptcy filing. Consequently, the new notes will be issued by IWO Escrow Company, which will be merged into IWO Holdings, Inc., upon bankruptcy court approval of the reorganization of IWO Holdings, Inc. Holders of IWO's existing 14% senior notes due 2011 will receive equity in the new IWO for their claims and the secured bank lenders will be fully repaid with proceeds of the proposed financing. However, of all the Sprint PCS affiliates that have reorganized, IWO has the highest amount of bank debt that requires repayment at $215 million. Thus, even though total debt will be reduced in the reorganization, IWO will remain burdened by a higher amount of debt than its reorganized peers. Based in Albany, New York, IWO Holdings is a wireless network partner of Sprint Corp. with franchise area in the northeastern US including 6.3 million people, and LTM revenues of $184 million. JACUZZI BRANDS: Earns $5.5 Million of Net Income in Fourth Quarter ------------------------------------------------------------------ Jacuzzi Brands, Inc. (NYSE: JJZ), a leading global producer of branded bath and plumbing products for the residential, commercial and institutional markets, reported earnings for the fourth quarter ended Oct. 2, 2004. Net sales for the quarter increased 5.0% to $343.7 million compared with net sales of $327.4 million for the fourth quarter of fiscal 2003. Operating income for the quarter increased 78.7% to $22.7 million compared with operating income of $12.7 million for the fourth quarter of fiscal 2003. Net earnings for the quarter improved to $5.5 million from a net loss of $16.3 million in the fourth quarter of fiscal 2003. The increase in fiscal 2004 fourth quarter sales includes a $9.3 million benefit from favorable currency exchange rates, while the increase in fiscal 2004 fourth quarter operating income includes a $1.0 million benefit. Fiscal 2004 fourth quarter operating income includes $13.7 million of restructuring charges, while fiscal 2003 fourth quarter operating income includes $11.6 million of restructuring charges and $2.5 million of charges related to a note write-off. Fiscal 2004 fourth quarter net earnings includes restructuring charges of $8.2 million, net of tax, or $0.11 per share. Fiscal 2003 fourth quarter net earnings includes restructuring charges of $7.1 million, net of tax, or $0.09 per share, a note write-off of $1.5 million, net of tax, or $0.02 per share, and debt restructuring costs of $11.7 million, net of tax, or $0.16 per share. Bath Products Fiscal 2004 fourth quarter sales of $236.3 million increased 3.0% over fiscal 2003 fourth quarter sales, led by higher sales of domestic whirlpool baths, reflecting strong performance in both jetted and non-jetted baths. Sales in the European market were also strong, primarily due to growth in the home center sector. Favorable currency exchange rates contributed $9.3 million to the fourth quarter sales increase. The favorable currency exchange rates benefit was offset by lower sales at Eljer due to the rationalization of its unprofitable product lines and softness in the domestic spa business. Fiscal 2004 fourth quarter operating income increased by $13.3 million to $3.5 million due primarily to strong sales growth in the whirlpool bath business, and margin growth in both the domestic spa and whirlpool bath businesses. Operating income includes restructuring charges of $13.7 million in the fourth quarter of fiscal 2004 and $14.6 million in the fourth quarter of fiscal 2003. Operating income as a percentage of sales increased from 2.1% to 7.3% after adding back the fiscal 2003 and fiscal 2004 fourth quarter restructuring charges. Fiscal 2004 fourth quarter restructuring charges consisted of: -- $10.1 million in asset impairment, pension curtailment and other related charges related to the previously announced decision to close Eljer's Tupelo, Mississippi sanitary ware plant, which is expected to be completed by June 2005; -- $2.1 million related to the downsizing of the Ford City, Pennsylvania plant, which is expected to be substantially completed by the end of December 2004; -- $0.2 million related to the closure of the Salem, Ohio plant, which ceased production in May 2004; and -- $1.3 million related to the continued consolidation of administrative functions into the Dallas, Texas shared services center. The fiscal 2003 restructuring charges primarily related to the closing of the Salem, Ohio plant and the Plant City, Florida spa facility. Fourth quarter operating results also benefited from favorable exchange rates, which increased earnings in the fourth quarter of fiscal 2004 by $1.0 million in comparison with the fourth quarter of fiscal 2003. Plumbing Products Sales in the Plumbing Products segment increased 13.3% in the fourth quarter of fiscal 2004 from the comparable prior year period. Sales growth, on a percentage basis, exceeded that of the industry. Sales increased across all product lines primarily due to a slight rebound in the U.S. commercial and institutional construction market coupled with favorable pricing, product innovations and a continuation of the targeted marketing programs. The PEX and Commercial Brass product lines experienced the strongest sales growth, which was driven by superior sensor technology and the market's continued conversion of copper pipe to PEX tubing in plumbing applications. Operating income for the fourth quarter of fiscal 2004 increased 8.0% to $17.5 million. Strong sales volume and favorable pricing more than offset higher scrap iron and steel costs. The Company implemented initiatives targeting procurement and finished product pricing to offset the increased raw material costs. As a result, operating margins decreased by only 1% from 22% in the fourth quarter of fiscal 2003 to 21% in the fourth quarter of fiscal 2004. Rexair Rexair's sales and operating income for the fourth quarter of fiscal 2004 were essentially flat compared to the same period of the prior year. Rexair completed the rollout of the new e(2) RAINBOW(TM) vacuum cleaner system in the second quarter of fiscal 2004. Corporate Expenses and Other - Corporate expenses increased to $5.5 million in the fourth quarter of fiscal 2004 from $0.9 million in the fourth quarter of fiscal 2003. A favorable adjustment of $3.2 million was recorded in the fourth quarter of fiscal 2003 reversing previously established reserves for vacant leased space now occupied by the shared services center in Dallas, Texas. Corporate expenses in the fourth quarter of fiscal 2004 reflected reduced pension income due to a lower discount rate, increased consulting fees, increased costs associated with Sarbanes-Oxley compliance and amortization associated with the restricted stock issued in conjunction with an option exchange offer. Interest expense in the fourth quarter of fiscal 2004 was down $1.6 million from the fourth quarter a year ago reflecting the Company's reduced debt levels and lower interest rates realized as a result of the July 2003 refinancing and the June 2004 bank amendment. Total debt (notes payable, current maturities of long- term debt and long-term debt) at October 2, 2004, of $471.8 million has been reduced from September 27, 2003, levels of $500.1 million. Net debt (total debt of $471.8 million at October 2, 2004, and $500.1 million at September 27, 2003, less cash and cash equivalents of $39.6 million at October 2, 2004 and $31.2 million at September 27, 2003) decreased from $468.9 million to $432.2 million at October 2, 2004. Free cash flow (cash flow from operating activities of $44.6 million less capital spending, net of asset sales,c of $17.0 million) was $27.6 million for fiscal 2004. The decrease in debt combined with increased earnings continues to move the Company closer towards its goal of achieving investment grade ratios. Other expenses, net, decreased $20.6 million to $2.4 million in the fourth quarter of fiscal 2004 as compared to the fourth quarter of fiscal 2003. The fourth quarter of fiscal 2003 included a charge of $19.2 million related to the Company's July 2003 refinancing and debt restructuring. Fiscal Year Summary Net sales for fiscal 2004 were up 13.0% to $1.35 billion as compared to net sales of $1.19 billion for fiscal 2003. The increase was the result of strong sales in the Bath Products and Plumbing Products segments. The increase in the Bath Products segment resulted from continued growth in the domestic spa and bath businesses, due to an expanded specialty retailer base, as well as growth in the European bath and sink businesses, which was primarily the result of continued higher sales to the home center channel. Fiscal 2004 sales in the Bath Products segment also included a $38.3 million benefit from favorable currency exchange rates. Sales growth in the Bath Products segment was partially offset by an approximate 12% decrease in sales at Eljer, as a result of the rationalization of unprofitable product lines. The increase in Plumbing Products segment sales was the result of continued market penetration, particularly in the PEX and Commercial Brass product lines. Sales in these product lines were driven by superior sensor technology and the market's continued conversion of copper pipe to PEX tubing. Fiscal 2003 sales in the Plumbing Products segment included an $8.6 million sale of a technology license. Fiscal 2004 earnings from continuing operations of $0.38 per share includes restructuring charges of $22.3 million ($13.6 million, net of tax) or $0.18 per share. The Company reported fiscal 2004 earnings before restructuring of $0.56 per share (see attached reconciliation). For the year, the Bath Products segment increased operating margins before restructuring by 260 basis points, from 2.7% to 5.3% of sales, above the Company's goal of 150 - 200 basis points in improvement per year. The Company expects to incur additional restructuring charges of approximately $6.6 million, ($4.4 million, net of tax), or $0.06 per share in fiscal 2005 related to the Tupelo, Ford City, Salem and shared services initiatives. Each of these actions is part of the Company's previously announced ongoing initiatives to improve the operating performance of the Bath Products segment. Outlook David H. Clarke, Chairman and Chief Executive Officer of Jacuzzi Brands, Inc., stated, "We are very pleased with the results at each of our businesses during fiscal 2004. Over the past few months, we have been experiencing a degree of sales softness in some areas particularly in our domestic spa business. Margins have been hurt by commodity price increases but these costs will be offset in future periods by low cost sourcing initiatives and by price increases agreed with our customers. These factors were taken into account in our previously announced fiscal 2005 outlook of $0.67 to $0.71 per diluted share. We remain committed to our growth which will be supported by the introduction of innovative new products and an adherence to the highest standards of quality and customer service." As previously announced, the Company expects to report net earnings for its fiscal year ending September 30, 2005 of between $0.61 to $0.65 per diluted share, which will include restructuring charges of $0.06 per diluted share related to plant closings and other actions initiated during fiscal 2004. Excluding these charges, net earnings for fiscal 2005 are expected to be in a range of $0.67 per diluted share to $0.71 per diluted share. About the Company Jacuzzi Brands, Inc. -- http://www.jacuzzibrands.com/-- through its subsidiaries, is a global manufacturer and distributor of branded bath and plumbing products for the residential, commercial and institutional markets. These include whirlpool baths, spas, showers, sanitary ware and bathtubs, as well as professional grade drainage, water control, commercial faucets and other plumbing products. We also manufacture premium vacuum cleaner systems. Our products are marketed under our portfolio of brand names, including JACUZZI(R), SUNDANCE(R), ELJER(R), ZURN(R), ASTRACAST(R) and RAINBOW(R). * * * As reported in the Troubled Company Reporter on Aug. 6, 2004, Fitch Ratings affirmed its ratings on Jacuzzi Brands, Inc.'s $380 million 9.625% senior secured notes at 'B', $200 million asset based bank credit facility at 'BB' and $65 million term loan at 'BB-'. The Rating Outlook is Stable, Fitch said in August. The ratings consider the company's leading brands in its bath and plumbing segments, increased distribution of its bath products and strong operating margins of its plumbing and Rexair segments. The ratings also consider the high cost structure of the Eljer operations, the level of debt and leverage, the challenging operating environment and negative pressures on operating profit margins, particularly in the bath and plumbing segments, and sensitivity to changes in levels of consumer spending and construction activity. KAISER ALUMINUM: Disclosure Statement Hearing Slated for Dec. 20 ---------------------------------------------------------------- The United States Bankruptcy Court for the District of Delaware will convene a hearing on December 20, 2004, to consider approval of the disclosure statements accompanying the plans of liquidation filed by Alpart Jamaica, Inc., and Kaiser Jamaica Corporation, and Kaiser Alumina Australia Corporation and Kaiser Finance Corporation. Objections or further modifications to the Disclosure Statements are due December 10. At the hearing, the Court will find whether the Disclosure Statements contain adequate information within the meaning of Section 1125 of the Bankruptcy Code to allow a hypothetical creditor of Kaiser Aluminum Corporation and its debtor-affiliates to make an informed decision whether to accept or reject the Plan. Headquartered in Houston, Texas, Kaiser Aluminum Corporation -- http://www.kaiseral.com/-- operates in all principal aspects of the aluminum industry, including mining bauxite; refining bauxite into alumina; production of primary aluminum from alumina; and manufacturing fabricated and semi-fabricated aluminum products. The Company filed for chapter 11 protection on February 12, 2002 (Bankr. Del. Case No. 02-10429). Corinne Ball, Esq., at Jones Day, represent the Debtors in their restructuring efforts. On June 30, 2004, the Debtors listed $1.619 billion in assets and $3.396 billion in debts. (Kaiser Bankruptcy News, Issue No. 55; Bankruptcy Creditors' Service, Inc., 215/945-7000) KB HOME: Moody's Assigns Ba1 Rating to $300 Million Senior Notes ---------------------------------------------------------------- Moody's Investors Service assigned a Ba1 rating to KB Home's $300 million of senior notes due 2015. At the same time, Moody's confirmed all of the company's existing ratings, including the senior implied rating, issuer rating, and the ratings on the company's existing senior notes at Ba1 and on its senior subordinated debt at Ba2. The ratings outlook is positive. The positive ratings outlook reflects KB Home's improving financial results and profile and success at reducing its earnings concentration in California. The ratings incorporate the company's leading share position in many of the markets that it serves, successful track record both in de novo expansions and in integrating acquisitions, and long history through various cycles. However, the ratings also consider the financial and integration risks that accompany an aggressive expansion strategy, the still-sizable concentration of land inventory values and profits in California, the growing proportion of profits coming out of one market-Las Vegas, and the large, ongoing share repurchase program. The rating actions for KB Home are: * Ba1 on $300 million of 5.875% senior notes due 1/15/15 is assigned. * Ba1 senior implied rating is confirmed. * Ba1 senior unsecured issuer rating is confirmed. * Ba1 on $350 million of 6.375% senior notes due 8/15/11 is confirmed. * Ba1 on $250 million of 5.75% senior notes due 2/01/14 is confirmed. * Ba2 on $200 million of 8.625% senior subordinated notes due 12/15/08 is confirmed. * Ba2 on $300 million of 7.75% senior subordinated notes due 2/01/10 is confirmed. * Ba2 on $250 million of 9.5% senior subordinated notes due 2/15/11 is confirmed. All of KB Home's debt is guaranteed by its operating subsidiaries. Proceeds of the new note offering will be used to pay down drawings under the company's revolver, with the balance, if any, to be added to working capital. Pro forma for this $300 million note offering, repayment of $281 million drawn under the revolver, and addition of the balance to working capital as of the company's third fiscal quarter ended August 31, 2004, total homebuilding debt/capitalization would be a seasonally high 54.1%. Moody's expects this ratio to be worked down by fiscal year-end, although it is unlikely that the company will make its target of 45% by that date. Going forward, consideration for further improvement in the company's ratings will depend on the company's continuing to improve key financial metrics while further deleveraging the balance sheet. Factors that could stress the ratings going forward include a sizable share repurchase program, a large impairment charge, and a major acquisition involving large amounts of issued or assumed debt that had a significant effect on debt leverage. Founded in 1957 and headquartered in Los Angeles, California, KB Home is one of America's largest homebuilders, with domestic operating divisions in the following regions and states: * West Coast -- California; * Southwest -- Arizona, Nevada and New Mexico; * Central -- Colorado, Illinois, Indiana and Texas; and * Southeast -- Florida, Georgia, North Carolina and South Carolina. Kaufman & Broad S.A., the company's majority-owned subsidiary, is one of the largest homebuilders in France. KB Home's fiscal 2003 revenues and net income were $5.9 billion and $371 million, respectively. KEY ENERGY: To Seek Additional Waivers for Late SEC Filings ----------------------------------------------------------- Key Energy Services, Inc. (NYSE: KEG) will not be able to deliver audited financial statements for the year ending Dec. 31, 2003, and unaudited financial statements for the first three quarters of 2004 by the Dec. 31, 2004, filing deadline set forth under the terms of the Company's senior credit agreement and consent with the holders of the Company's 6-3/8% senior notes due 2013 and 8-3/8% senior notes due 2008. As a result, the Company will seek additional waivers from the lenders under its senior credit facility and additional consents from its noteholders. As previously disclosed, the Company's restatement process is ongoing. The Company's auditors are conducting their review of the analysis prepared by the Company and presently, management estimates the total amount of the asset write-down will be between $165 and $195 million. The final amount of the write-down won't be known until the Company completes the process of matching physical assets to its accounting records. The independent auditors are reviewing that information, and the company cannot predict at this time when that review will be completed. The Company has begun discussions with its revolving credit facility lenders for an extension of the date by which the Company must deliver audited financial statements for 2003 and unaudited financial statements for the first three quarters of 2004 to March 31, 2005. Based on the discussions to date, the Company believes that the lenders will grant an extension and waiver, but there can be no assurance that an extension or waiver will in fact be obtained or as to the conditions of, or fees and costs associated with, obtaining the waiver. Failure to obtain an extension and waiver under the existing revolving credit facility prior to December 31, 2004, would result in a default under the facility. As of August 31, 2004, the consortium of lenders under the Company's senior credit agreement were: * PNC BANK, NATIONAL ASSOCIATION, individually and as Administrative Agent * WELLS FARGO BANK, NATIONAL ASSOCIATION, successor-by-merger to Wells Fargo Bank Texas, National Association, individually and as Co-Lead Arranger * CALYON NEW YORK BRANCH, individually and as Syndication Agent * BANK ONE, NA, individually and as Co-Documentation Agent * COMERICA BANK, individually and as Co-Documentation Agent * BNP PARIBAS * GENERAL ELECTRIC CAPITAL CORPORATION * HIBERNIA NATIONAL BANK * NATEXIS BANQUES POPULAIRES and * SOUTHWEST BANK OF TEXAS, N.A. Under terms of the existing consents with the Company's noteholders, the Company has until December 31, 2004, to file and make available its annual report on Form 10-K for the year ending December 31, 2003, and its quarterly reports on Form 10-Q for the first three quarters of 2004. In the event that the Company is not able to meet this deadline, the Company has a 60-day cure period from the time it receives a notice of potential default from the Trustee or the holders of 25% of the principal amount of either series of notes. The Company intends to begin the process of seeking consents from the noteholders before the end of 2004. There can be no assurance that consents will be obtained or as to the terms and conditions of such a consent. In addition, the Company intends to advise the lessors of certain equipment leases of the likely delay and request that they grant extensions until March 31, 2005. Failure to obtain these extensions will result in a default under these facilities. The Company's revolving credit agreement and certain of its lease agreements have cross default provisions which would trigger a default under those agreements if the Company defaults under other indebtedness. The trigger amounts for the revolving credit agreement and those equipment leases are $20 million and $5 million, respectively. In addition, the Company's 8-3/8% and 6-3/8% senior notes' indentures contain provisions that would trigger defaults upon a payment default under other indebtedness or an acceleration of other indebtedness that, in either case, must be between $15 million and $25 million, respectively. Accordingly, failure to secure waivers or consents from all of the lenders could result in cross defaults even under debt agreements where waivers or consents have been received. About the Company Key Energy Services, Inc., is the world's largest rig-based well service company. The Company provides oilfield services including well servicing, contract drilling, pressure pumping, fishing and rental tools and other oilfield services. The Company has operations in all major onshore oil and gas producing regions of the continental United States and internationally in Argentina and Egypt. * * * As reported in the Troubled Company Reporter on August 19, 2004, Standard & Poor's Ratings Services' 'B' corporate credit rating on Key Energy Services Inc. remains on CreditWatch with developing implications. Midland, Texas-based Key had about $485 million of total debt outstanding as of June 30, 2004. KMART CORP: R & F Presses for Payment of $2,000,000 Lease Claim --------------------------------------------------------------- R & F Henrietta, LLC, was a landlord to Kmart Corporation under a nonresidential real property lease for premises located in Henrietta, New York. The Premises are located within a "shopping center" as defined by Section 365(b)(3) of the Bankruptcy Code. R & F and Kmart entered into a Termination of Lease Agreement on November 14, 2001, pursuant to which Kmart was required to pay R & F $4,969,922 in two installments: -- $2,969,922 on December 17, 2001, and -- $2,000,000 on February 1, 2002. In addition, Kmart was required to execute and deliver to R & F two promissory notes evidencing Kmart's obligation to pay the Termination Fee. Kmart delivered the promissory notes to R & F but failed to pay the $2,000,000 second installment of the Termination Fee. R & F filed an administrative claim, Claim No. 372 for $2,000,000, for Kmart's failure to pay the outstanding balance under the Promissory Note postpetition. On June 30, 2003, Kmart sought to reclassify the Claim as a general unsecured claim. R & F did not object and does not object to the treatment of the Claim. No order has been entered and the hearing has been continued to December 14, 2004. Micah R. Krohn, Esq., at Neal, Gerber, & Eisenberg, LLP, in Chicago, Illinois, contacted Kmart and requested that the Claim be allowed as a general unsecured claim. However, Kmart refused to do so. Distributions Required by the Confirmed Plan Mr. Krohn asserts that the Plan provides that an allowed general unsecured claim will receive its "Pro Rata share of the Trade Vendor/Lease Rejection Claimholder Share, subject to dilution, with the amount of each Trade Vendor/Lease Rejection Claimholder's Pro Rata share equal to the total number of Trade Vendor/Lease Rejection Claimholder Shares multiplied by a fraction, the numerator of which is equal to the amount of the Trade Vendor/Lease Rejection Claims" and "its Pro Rata share of the Trust Recoveries if any. . . ." The Plan also provides that the distributions "shall be made on a Periodic Distribution Date." Mr. Krohn points out that "Periodic Distribution Date" is defined as the "Distribution Date," which has passed, and "the first Business Day occurring on or immediately after each subsequent October 1st, January 1st, April 1st, and July 1st." In accordance to the terms of the Plan, the next Periodic Distribution Date is January 3, 2005. Accordingly, R & F asks the Court to: (a) allow Claim No. 372 as a general unsecured claim in its entirety pursuant to the Plan; and (b) compel distributions of stock and trust recoveries as required by the confirmed Plan with respect to the allowed Claim by the next Periodic Distribution Date. Headquartered in Troy, Michigan, Kmart Corporation (n/k/a KMART Holding Corporation) -- http://www.bluelight.com/-- is the nation's second largest discount retailer and the third largest merchandise retailer. Kmart Corporation currently operates approximately 2,114 stores, primarily under the Big Kmart or Kmart Supercenter format, in all 50 United States, Puerto Rico, the U.S. Virgin Islands and Guam. The Company filed for chapter 11 protection on January 22, 2002 (Bankr. N.D. Ill. Case No. 02-02474). Kmart emerged from chapter 11 protection on May 6, 2003. John Wm. "Jack" Butler, Jr., Esq., at Skadden, Arps, Slate, Meagher & Flom, LLP, represented the retailer in its restructuring efforts. The Company's balance sheet showed $16,287,000,000 in assets and $10,348,000,000 in debts when it sought chapter 11 protection. (Kmart Bankruptcy News, Issue No. 85; Bankruptcy Creditors' Service, Inc., 215/945-7000) KRONOS INTERNATIONAL: Moody's Affirms Low-B Ratings --------------------------------------------------- Moody's Investors Service affirmed the ratings on Kronos International, Inc.'s 8-7/8% senior secured notes due 2009. The ratings of KII reflect product concentration in titanium dioxide pigments -- TiO2 -- that is a cyclical commodity product affected by economic conditions. Currently, prices of TiO2 have stabilized with evidence of price improvement following price declines in the latter half of 2003 and first half of 2004. Moody's believes that in the intermediate term industry supply is being managed to better match global demand. The ratings of KII further consider moderately high leverage, geographic concentration of its sales and plants in Europe, the company's partial reliance as a holding company on dividends from its European subsidiaries that do not provide guarantees to service its debt, the ability of the company under the indenture governing the proposed notes to make significant distributions or dividends, and our expectation that material dividends will be made. At September 30, 2004, KII had approximately $220 million available for payment of dividends and other restricted payments as these payments are defined in the Senior Secured Notes indenture. Subsequent to the quarter end loans were made to the parent such that this payments basket is now below $20 million. The rating outlook is stable. Ratings affirmed: * Euro 375 million 8-7/8% senior secured notes, due 2009 -- B2 * Senior Implied -- B1 * Issuer Rating -- B2 The ratings of KII also recognize its solid market positions in TiO2, and the favorable long-term global industry fundamentals of TiO2, including a limited number of producers, and substantial barriers to entry with no new plants expected in the intermediate term. The ratings also reflect customer diversity, and the company's track record of strong cash flow through the cycle, good returns on assets, and meaningful improvement in credit metrics since 2002. The B2 rating of the senior secured notes of KII reflects their structural subordination to all of the debt and other liabilities of the company's operating subsidiaries. The ratings also take into account the fact that the non-guarantor subsidiaries are the operating companies with the company's assets, sales and earnings. Therefore, in a distress situation the debt and obligations of the subsidiaries would be paid before the notes, although the notes benefit from a first lien on 65% of the equity of certain operating subsidiaries, and the indenture governing the notes limits additional debt. The ratings are constrained by the support that KII is expected to provide to other companies in the corporate family by payment of dividends or distributions. The stable rating outlook reflects our expectation that the company's credit statistics may be above average for its rating category over time, but that material distributions or dividends are expected. A significant sustained deterioration in the company's earnings or an adverse change in the current improving TiO2 industry fundamentals would put negative rating pressure on the ratings. Factors that could support an upgrade include a sustained improvement in earnings, and improved cash flows. Moody's expects that KII's 2005 earnings will be stronger than the last twelve-month period due primarily to the prospect of higher average prices and improved volumes. Average TiO2 selling prices in the third quarter of 2004 were 2% higher versus the second quarter of 2004. Kronos has announced additional price increases in June and September, which are targeted to be implemented in late 2004 and January 2005 respectively. For the third quarter of 2004 operating income net of other income was $23.5 million compared with interest expense of $8.5 million (EBIT/Interest of 2.8x). Moody's calculates that on a pro forma LTM basis with the add-on notes as of 09/30/04, Debt/EBITDA was moderate at 3.4 times and Debt/Book Capitalization was 60%. KII is a wholly owned subsidiary of Kronos Worldwide, Inc., (NYSE:KRO) and the net proceeds of the offering will be loaned to KRO. At September 30, 2004, NL Industries, Inc., (NYSE:NL) held approximately 49% of KRO outstanding common stock. NL Industries, Inc., was owned approximately 83% by Valhi, Inc., and a wholly owned subsidiary of Valhi. Valhi and the wholly owned subsidiary of Valhi held an additional 45% of KRO's outstanding common stock. Contran Corporation and its subsidiaries held approximately 90% of Valhi's outstanding common stock. Substantially all of Contran's outstanding voting stock is held by trusts established for the benefit of certain children and grandchildren of Harold C. Simmons, of which Mr. Simmons is sole trustee, or is held by Mr. Simmons or persons or other entities related to Mr. Simmons. Mr. Simmons, the Chairman of the Board of Valhi, Contran, NL, Kronos and the Company may be deemed to control each of such companies. KRO, NL, Valhi, and Contran are currently unrated by Moody's. The ratings also take into account the uncertainty regarding pending litigation against NL Industries, Inc., and possible future claims in particular related to potential lead paint liability. Moody's recognizes that with respect to lead paint litigation no adverse judgment or settlement payments have been made and neither KII nor KRO are a party to such litigation. If, however, an adverse judgment were entered against NL Industries, and if NL Industries were forced to divest of its interest in KII in order to raise cash to satisfy such judgment, a change of control could occur with uncertain credit implications and a negative rating action could result. The senior secured notes are secured by 65% of the capital stock of the company's first-tier operating subsidiaries that may be released upon the satisfaction of the sale or disposition conditions of the indenture. The indenture governing the notes limits additional indebtedness to a consolidated fixed charge coverage ratio of 2.5 to 1 times, and permits additional debt of $20 million of the company, $20 million of its restricted subsidiaries, and $15 million for capitalized leases and purchase money indebtedness. The indenture limits restricted payments to consolidated fixed charge coverage of 3.0 to 1 times, 75% of cumulative consolidated net income, and certain other limitations. The indenture also limits liens, merger, consolidation, and asset sales, and provides for repurchase upon change of control. KII is incorporated in Delaware, and is registered in the Commercial Register of the Federal Republic of Germany, and conducts its operations through four principal subsidiaries in the Germany, Denmark, France, and the UK. The company believes that it is the second largest producer of titanium dioxide in Europe with an estimated market share of 18% of European sales and has the largest share of sales volumes in Germany and Scandinavia. It operates four plants (including the Leverkusen chloride process facility in Germany with a capacity of 144,000 metric tons that is world scale, two sulfate process plants in Germany, one chloride process plant in Belgium, and one sulfate process plant in Norway) with a total capacity of 338,000 metric tons of TiO2 per year. It also operates an ilmenite ore mine in Norway that produces a feedstock used in the TiO2 sulfate process. About 65% of KII's production is based upon its chloride process, which Moody's believes represents about 60% of industry capacity and is expected to grow, and the balance utilizes the sulfate process. The sulfate process is subject to more environmental regulation than the chloride process. Kronos International, Inc., is a wholly owned subsidiary of Kronos Worldwide, Inc., headquartered in Dallas, Texas and produces TiO2 pigments in Europe. For the 12 months ended September 30, 2004, the company reported sales of $784 million. LEHMAN BROTHERS: S&P Junks Six Mortgage Securitization Classes -------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on six classes of Lehman Brothers Floating Rate Commercial Mortgage Trust 2000-LLF C7's multiclass pass-through certificates. Concurrently, the rating on class K is raised, and the ratings on six other classes are affirmed from the same transaction. The lowered ratings are the result of operating performance declines in the two remaining loans in the transaction. The raised and affirmed ratings reflect the paydown of the transaction's certificate balance. At Standard & Poor's last review on March 31, 2003, the principal balance of the pool was $761 million, compared with the current balance of $121.1 million, which represents a reduction of 84%. The two loans are both one-month, LIBOR-based adjustable loans, down from the 11 at the last review. The master servicer, Midland Loan Services Inc., provided Dec. 31, 2003, net cash flow -- NCF -- DSC figures for the two loans. Based on this information, Standard & Poor's calculated a weighted average DSC of 1.45x, down from 3.52x at the last review. To date, the trust has experienced no losses, and both loans are current. With only two loans remaining, the property type is concentrated in lodging (66%) and office (34%). The trust collateral is also concentrated geographically across five states with: -- California (64%), -- New York (15%), and -- Ohio (15%), which accounts for more than 10% of the pool balance. The Boykin hotel portfolio loan has an A/B/C note structure with a current in-trust balance of $80.3 million (66%). The A note of 69.1 million is held in the trust while the B note of $11.2 million is raked. The collateral properties are six full- and limited-service hotels with various flags located across five states with a total of 1,631 rooms. At the last review, the portfolio consisted of nine assets and 2,184 rooms. Because of the general lodging market declines and the portfolio's reliance on several airport based assets, the portfolio's performance has declined due to the general decline in corporate travel. The occupancy and revenue per available room -- RevPAR -- at the last review was 69% and $64.28, respectively. For the trailing 12 months ending Aug. 31, 2004, occupancy and RevPAR was 68% and $58.98, respectively. NCF during this period declined to $6.3 million from $11.9 million at the last review. The loan has used both available extensions and will mature July 1, 2005. The Francisco Bay Office loan has an A/B note structure with a current in-trust A note balance of $40.8 million (34%). The collateral property is a 287,895-sq.-ft. office building in the North Beach submarket of San Francisco, California. The occupancy as of Aug. 31, 2004, was 41%, a decline from 60% at the last review. The occupancy has remained at around 40% for the past year. According to REIS, the North Beach submarket has a vacancy rate of approximately 20% and an average lease rate near $25 per sq. ft. Annualized NCF for the eight months ending Aug. 31, 2004, declined to $1.2 million from $4.8 million at the last review. The loan has used one extension, and the final extension is conditionally in place pending documentation. Assuming the final extension is approved, the loan will mature April 30, 2005. Standard & Poor's performed a stabilized analysis in order to revalue both loans. The lowered ratings reflect the resultant value reductions. Ratings Lowered Lehman Brothers Floating Rate Commercial Mortgage Trust 2000-LLF C7 Multiclass pass-thru certificates Rating Credit Enhancement Class To From (pooled interests) ----- -- ---- ------------------ M B+ BB 24.16(%) N B B+ 21.18(%) P B- B 18.20(%) J-BO CCC+ BB- 0.00(%) K-BO CCC B+ 0.00(%) L-BO CCC- B 0.00(%) Rating Raised Lehman Brothers Floating Rate Commercial Mortgage Trust 2000-LLF C7 Multiclass pass-thru certificates Rating Credit Enhancement Class To From (pooled interests) ----- -- ---- ------------------ K AAA BBB 83.72(%) Ratings Affirmed Lehman Brothers Floating Rate Commercial Mortgage Trust 2000-LLF C7 Multiclass pass-thru certificates Credit Enhancement Class Rating (pooled interests) L BBB- 45.00(%) Q CCC+ 16.71(%) S CCC 15.22(%) T CCC 14.03(%) U CCC- 12.84(%) X-2 AAA N/A N/A - Not applicable MARINER HEALTH: Will Modify Injunction for Four ADR Claims ---------------------------------------------------------- Certain claims against MHG remain unresolved and must be liquidated through litigation. Russell C. Silberglied, Esq., at Richards, Layton & Finger, P.A., in Wilmington, Delaware, relates that Litigation of around 1,000 prepetition claims, which allege personal injury, wrongful death, employment discrimination, or other employment misconduct have been stayed during the pendency of the Debtors' Chapter 11 cases by three separate injunctions at various times: * the automatic stay; * the Alternative Dispute Resolution Injunction; and * the Discharge Injunction. Under the ADR Term Sheet, the ADR Claimant whose claim was not resolved through the ADR Procedures could modify the automatic stay to permit liquidation of his or her claim by filing a stipulation with the Court, which the Reorganized Debtors committed to sign provided that the Claimant had fully participated in the ADR Procedure. The claim could then be liquidated in court. Accordingly, at the MHG Debtors' request, Judge Walrath orders that: (a) the automatic stay and discharge injunction is modified for the limited purpose of permitting those claims to be liquidated in a non-bankruptcy forum of appropriate jurisdiction, with respect only to: * Eleanor Bulson -- Claim No. 484, * Marian Cunningham -- Claim No. 50014, * Felicia Diaz -- Claim No. 1542, and * James Hopke - Claim No. 2562; (b) each ADR Claim will remain a "disputed claim" as defined in the Plan; and (c) the time period and deadlines set forth in Section 108(c)(2) of the Bankruptcy Code is deemed to accrue from November 15, 2004. Section 108(c) provides that: "Except as provided in section 524 of this title, if applicable nonbankruptcy law, an order entered in a nonbankruptcy proceeding, or an agreement fixes a period for commencing or continuing a civil action in a court other than a bankruptcy court on a claim against the debtor, or against an individual with respect to which such individual is protected under section 1201 or 1301 of this title, and such period has not expired before the date of the filing of the petition, then such period does not expire until the later of -- (1) the end of such period, including any suspension of such period occurring on or after the commencement of the case; or (2) 30 days after notice of the termination or expiration of the stay under section 362, 922, 1201, or 1301 of this title, as the case may be, with respect to such claim." Mariner Post-Acute Network, Inc., Mariner Health Group, Inc., and scores of debtor-affiliates filed for chapter 11 protection on January 18, 2000 (Bankr. D. Del. Case Nos. 00-113 through 00-301). Mark D. Collins, Esq., at Richards, Layton & Finger, P.A., represents the Reorganized Debtors, which emerged from bankruptcy under the terms of their Second Amended Joint Plan of Reorganization declared effective on May 13, 2002. (Mariner Bankruptcy News, Issue No. 64; Bankruptcy Creditors' Service, Inc., 215/945-7000) METROMEDIA INT'L: Files Quarterly Report & Cures Reporting Default ------------------------------------------------------------------ Metromedia International Group, Inc. (OTCBB: MTRME) (PINK SHEETS: MTRMP), the owner of interests in various communications and media businesses in Russia and the Republic of Georgia, filed with the Securities and Exchange Commission its 2004 Third Quarter Form 10-Q. Simultaneously with the filing of the Current Quarterly Report with the SEC, the Company delivered a copy thereof to the Trustee of its 10-1/2% Senior Discount Notes due 2007 and thereby cured a default condition within the specified cure period provided for under the Indenture governing the Senior Notes. As previously reported, the Trustee had advised the Company on Nov. 19, 2004, that it must provide the Trustee with its Current Quarterly Report by Jan. 18, 2005, or the Trustee would be forced to declare an Event of Default under the Indenture. About Metromedia International Group Through its wholly owned subsidiaries, the Company owns interests in communications businesses in Russia and the Republic of Georgia. Since the first quarter of 2003, the Company has focused its principal attentions on the continued development of its core telephony businesses, and has substantially completed a program of gradual divestiture of its non-core cable television and radio broadcast businesses. The Company's core telephony businesses include PeterStar, the leading competitive local exchange carrier in St. Petersburg, Russia, and Magticom, the leading mobile telephony operator in the Republic of Georgia. At Sept. 30, 2004, Metromedia International's balance sheet showed a $6,497,000 stockholders' deficit, compared to a $13,155,000 deficit at Dec. 31, 2003. MIRANT CORP: Pepco Demands Payment for Contractual Obligations -------------------------------------------------------------- Pepco said it will immediately take legal action to require Mirant Corp. to continue to make monthly payments to Pepco as required by contract. This followed Mirant's Notice, filed Dec. 9 in the United States Bankruptcy Court, stating that it will unilaterally cease payments to Pepco. These payments are required as part of the agreement under which Mirant purchased Pepco's generating assets in December 2000. Pepco is a subsidiary of Pepco Holdings, Inc. (NYSE: POM). Since declaring bankruptcy in July 2003, Mirant has repeatedly and unsuccessfully attempted to obtain legal approval to terminate its contractual obligations to pay Pepco for the cost of electricity which Pepco provides to Mirant. Pepco is seeking immediate relief from this unilateral action and will take whatever additional actions are necessary to ensure Mirant is required to continue to perform under its contractual obligations. "Mirant's action cannot be supported legally," said Kirk J. Emge, Pepco General Counsel. "It is a breach of agreements approved by the Federal Energy Regulatory Commission. Clearly, Mirant is frustrated by its failure to obtain court approval to reject its contractual obligations, and we are outraged that it has now resorted to this desperate and illegal measure. We have a strong legal case to hold Mirant to its contractual obligations. We are taking all appropriate actions to protect our customers and shareholders and will seek full recovery of any losses caused by Mirant's unilateral actions," he added. Contrary to prior representations made before the courts, Mirant is now taking the presumptuous step of acting without proper legal authority, especially in light of the fact that the issue was already pending before the appropriate legal body. About PHI Pepco Holdings, Inc., is a diversified energy company with headquarters in Washington, D.C. Its principal operations consist of Pepco and Conectiv Power Delivery, which deliver 50,000 gigawatt-hours of power to more than 1.8 million customers in Washington, Delaware, Maryland, New Jersey and Virginia. PHI engages in regulated utility operations by delivering electricity and natural gas, and provides competitive energy and energy products and services to residential and commercial customers. Headquartered in Atlanta, Georgia, Mirant Corporation -- http://www.mirant.com/-- together with its direct and indirect subsidiaries, generate, sell and deliver electricity in North America, the Philippines and the Caribbean. Mirant Corporation filed for chapter 11 protection on July 14, 2003 (Bankr. N.D. Tex. 03-46590). Thomas E. Lauria, Esq., at White & Case LLP, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $20,574,000,000 in assets and $11,401,000,000 in debts. NAVISTAR INTL: Expects 4th Quarter Profits to Be Highest Ever ------------------------------------------------------------- Navistar International Corporation (NYSE:NAV), the nation's largest combined commercial truck and mid-range diesel engine producer, reported that fourth quarter earnings should be the highest for any quarter in company history as it returned to full- year profitability for the first time since 2000. Final 2004 results are expected to be available prior to filing of the company's Form 10-K report in the first week of January. Earnings for the fourth quarter are expected to be at least $148 million, equal to $1.88 per diluted common share. At that level, fourth quarter earnings would equal the record $148 million reported in the fourth quarter of 1979. In the fourth quarter a year ago, the company earned $77 million or $1.00 per diluted common share, which included a benefit of $0.28 per diluted common share from adjustment of restructuring charges. Consolidated sales and revenues for the fourth quarter of fiscal 2004 are expected to total $3.0 billion, compared with $2.0 billion a year earlier. Final 2004 financial results are pending the outcome of an anticipated adjustment from the application of certain accounting standards at the company's finance subsidiary. When completed, the adjustments are expected to result in a positive earnings impact. Daniel C. Ustian, Navistar chairman, president and chief executive officer, said that fourth quarter results will reflect improvement in the company's cost structure, including significant reductions in the number of hours per unit required to produce trucks and engines at the company's manufacturing plants. Engine shipments were at record levels and the company's truck and engine parts business recorded its 13th consecutive year of record sales with the highest annual percentage gain in history. "We delivered on our commitments with great products and a more competitive cost structure while laying the groundwork for substantial growth," Mr. Ustian said. Excluding any positive impact from the anticipated adjustment, fourth quarter results are expected to raise earnings for the full year to at least $236 million, or $3.07 per diluted common share, compared with a net loss of $18 million, equal to ($0.27) per diluted common share in fiscal 2003. In August, Navistar said that earnings for fiscal 2004 would be $2.95 or more per diluted common share. Sales and revenues for the year ended October 31, 2004, are expected to total $9.6 billion, up from $7.3 billion a year earlier, marking the first time in the company's history that sales and revenues topped $9 billion. Mr. Ustian will tell security analysts later today that Navistar is on track to "create a new reality" in the next five years and expects to become a consistently and solidly profitable $15 billion company. The goal is to achieve 10 percent pretax margins in all business units and produce $1 billion in annual net income. "We are driving beyond our traditional markets with new ideas that build on our competencies and proactively address major areas of customer needs," Mr. Ustian said. "We plan to take full advantage of our integrated products, our reputation as the engine supplier of choice, our extensive parts and service business and our broad range of finance offerings." Based on the current outlook, Mr. Ustian said that earnings in 2005 should be in the range of at least $4.60 to $5.00 per diluted common share. The 2005 guidance includes the assumption of a $65 million tax rate benefit. Earnings for the three months ending January 31, 2005, will be impacted by the traditional holiday shutdown at the company's manufacturing plants and should be in the area of $0.20 to $0.25 per diluted common share. Mr. Ustian said major accomplishments during fiscal 2004 included: -- The truck group delivered on its commitment to improve its competitive cost structure by reducing production costs by $1,600 per vehicle. The group ended fiscal 2004 with strong momentum as heavy truck market share climbed to 19 percent in October and averaged more than 17 percent market share for the full year, an increase of 3 percentage points over 2003 and the highest level since 1999. Bus body share for the year totaled a record 53 percent, an increase of 11 percentage points over 2003. -- Engine shipments increased to a record 433,000 units, up from 396,000 units a year earlier. The launch of the latest version of the 6-liter V8 engine in Ford heavy-duty pickup trucks was successful and Ford's dieselization rate in heavy-duty pickup trucks is running at nearly 70 percent. The cost to develop emissions compliant engines impacted engine group margins and the group has initiated new cost- reduction programs. Manufacturing gross margins for the year will be in the area of 13.8 percent compared with 12.3 percent a year earlier. Margins were impacted by warranty costs associated with the 6-liter V8 engines produced in early 2003 and the cost of in-the-field corrections to assure truck and engine product quality. "Improved manufacturing quality is a top priority and in 2004 we invested in warranty expense in order to exceed customer requirements and create long-term value," Mr. Ustian said. "While we paid a short-term price, we believe it will pay off in the long run through satisfied and repeat costumers." Navistar is forecasting United States and Canadian total truck industry retail sales volume for Class 6-8 and school buses in fiscal 2005 at 389,500 units, up 13 percent from the 345,000 units sold by the industry in fiscal 2004. Demand for Class 8 trucks is expected to increase 19 percent to 262,000 units from 220,000 units, while demand for Class 6-7 medium trucks is estimated unchanged at 100,000 units. School bus demand is forecast at 27,500 units, up from 26,200 units in 2004. Mr. Ustian said that the company's forecast for 2005 retail commercial truck sales volume is lower than that forecast by some other sources, but noted that the company is historically conservative in its outlook. The company's trucks and buses are sold under the International(R) and IC(R) brands. Worldwide shipments in fiscal 2004 totaled 112,000 trucks and buses, of which 45,500 were medium trucks, primarily Class 6-7; 19,000 were school buses; and 47,500 were heavy and severe service trucks (Class 8). Shipments in 2003 consisted of 84,600 trucks and buses, of which 34,900 were medium trucks, 21,400 were school buses and 28,300 were heavy and severe service trucks. The company's overall combined market share in the United States and Canada in 2004 totaled 28 percent, approximately the same as a year earlier. It is anticipated that the re-interpretation of securitization accounting at Navistar Financial Corporation, the company's finance subsidiary, will cause Navistar Financial to adjust its income for the periods 2002-2004. The company believes that the anticipated, positive adjustment to net income is likely to be immaterial to the parent company's financial statements. The adjustment will change certain aspects of the accounting associated with Navistar Financial's retail note securitization program. Navistar Financial intends to adjust the comparative periods 2002 and 2003 for its income statement, and the 2003 balance sheet in its 2004 Form 10-K. As a result of Navistar Financial's planned adjustment, it is possible that Navistar International Corporation may restate its financial statements. About the Company Navistar International Corporation (NYSE:NAV) -- http://www.nav- international.com/ -- is the parent company of International Truck and Engine Corporation. The company produces International(R) brand commercial trucks, mid-range diesel engines and IC brand school buses and is a private label designer and manufacturer of diesel engines for the pickup truck, van and SUV markets. With the broadest distribution network in North America, the company also provides financing for customers and dealers. Additionally, through a joint venture with Ford Motor Company, the company builds medium commercial trucks and sells truck and diesel engine service parts. * * * As reported in the Troubled Company Reporter's May 17, 2004, edition, Standard & Poor's Ratings Services affirmed its 'BB-' corporate credit rating and its senior unsecured, and subordinated debt ratings on Warrenville, Illinois-based Navistar International Corp. The outlook remains stable. "The affirmation follows announcements from Navistar regarding various financing transactions," said Standard & Poor's credit analyst Eric Ballantine. "We expect Navistar's earnings and cash flow to gradually improve as market conditions rebound. We expect free cash flow in fiscal 2004 to be relatively modest in the $100 million area." NORTH ATLANTIC: Moody's Revises Outlook on Ratings to Negative -------------------------------------------------------------- Moody's Investors Service affirmed the ratings of North Atlantic Trading Corporation and changed the outlook to negative from stable, following indication by the company that it will likely not meet a financial covenant in its credit agreement for the periods ended March 31 and June 30, 2005. Ratings affirmed: * North Atlantic Trading Corporation: -- B2 for senior implied -- B3 for issuer rating -- B2 for $200 million 9 1/4% senior unsecured notes due 2012 * North Atlantic Holding Company: -- Caa1 for $60 million senior discount rates due 2014. In its recently filed 10-Q, North Atlantic has indicated that it might not meet a minimum fixed charge coverage ratio covenant for the periods ended March 31 and June 30, 2005. The required level of this covenant for trailing 12 months will increase from 1.25 to 1.50 in the fiscal quarter ending March 31, 2005. The company must send a compliance certificate to the bank group for the first quarter of 2005 by April 15, 2005. The company indicated that its expected difficulty in meeting the future covenant is due to the lower than anticipated operating performance of its core businesses, increased expenses resulting from the Company's decision to proceed more quickly with developmental activities relating to Zig-Zag premium cigarettes and the Company's decision to proceed more slowly with the integration of the operations of Stoker, the company it acquired in early 2004. The negative outlook reflects the possible deterioration in liquidity due to the company possibly not meeting its covenant, and the current underperformance in its main businesses. North Atlantic and its bank group are engaged in negotiations to waive or amend the financial covenant. Pressure would bear on the ratings if the company did not obtain a waiver or amendment at some early point in the first quarter of 2005, and if expected free cash flow did not become strongly positive in 2005. The outlook would likely be brought back to stable if a waiver or amendment was obtained, the company's liquidity would be satisfactory going forward, and expected 2005 free cash flow became strongly positive. The ratings reflect the company's strong brand name in its make-your-own segment, the traditional ability of North Atlantic to increase prices in its smokeless tobacco segment, and the absence of debt maturity before 2007. The ratings also take into consideration North Atlantic's high leverage driven in part by the acquisition of Stoker, the early cash uses expected from the launch of a new cigarette under the Zig-Zag brand, and declining volumes in the smokeless tobacco segment. While the company runs the risk of not meeting its first quarter 2005 covenant, it retains access to its $50 million revolving credit facility. The amount drawn at the end of the third quarter of 2004 was $34 million. The company also had a $9 million cash position. North Atlantic Trading Company, Inc., is a holding company, which owns National Tobacco Company, L.P., and North Atlantic Operating Company, Inc. -- NAOC. National Tobacco Company is the third largest manufacturer and marketer of loose leaf chewing tobacco in the United States, and the largest importer and distributor in the United States of premium cigarette papers and related products. NRG ENERGY: S&P Puts BB Rating on $950 Million Debts ---------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'B+' corporate credit rating on NRG Energy Inc. (NRG; B+/Stable/--). At the same time, it assigned its 'BB' rating to NRG's proposed $950 million first priority term loan B and revolving credit facility maturing 2007 and 2011, respectively, and lowered its 'B+' rating to 'B' on NRG's second priority bonds maturing in 2013. Standard & Poor's assigned a '1' recovery rating to the term loan B and revolving credit facility, indicating a high expectation of full recovery of principal. The second priority bonds have a '3' recovery rating, indicating that the bondholders can expect to receive meaningful recovery of principal (50%-80%). The outlook is stable. The first lien term loan B and revolving credit facility are notched up twice from the corporate credit rating to reflect their priority position in bankruptcy and that the value of the collateral, in many downside scenarios will be more than adequate for the lenders to recover 100% of their principal. On the other hand, the second lien debt has been notched down once from the corporate credit rating for two reasons: -- First, under Standard & Poor's analysis, the recovery prospects for the second lien bonds will range between 50% and 80%. -- Second, given the priority of the first lien debt, the second lien bondholders have subordinated liens on NRG's collateral. The rating action on the second lien reflects refinements in Standard & Poor's application of rating criteria for all corporate second lien debt and is a change from our application of the criteria in the previous rating. All of NRG's debt issues have the same default rating, because of cross default provisions that are incorporated in the legal documents. Among other risks, the corporate credit rating reflects the risks of exposure to U.S. merchant power markets; regulatory and political uncertainty; and dependence on speculative and uncertain capacity values. Strengths mitigating the risks include, among others, that NRG has reduced liabilities and debt; NRG's 2004 results were good; and NRG has exhibited a stable operating record. OMNI FACILITY: Needs Until Mar. 31 to Make Lease-Related Decisions ------------------------------------------------------------------ Omni Facility Services, Inc., and its debtor-affiliates ask the U.S. Bankruptcy Court for the Southern District of New York to further extend until March 31, 2005, their time to decide whether to assume, assume and assign, or reject their unexpired nonresidential real property leases pursuant to Section 365(d)(4) of the Bankruptcy Code. The Debtors tell the Court that they are currently party to 31 unexpired leases. They need the extension to avoid any premature assumption or rejection of these leases before a plan of reorganization will be formulated, filed and confirmed. The Debtors assure the Court that the extension will not prejudice the lessors. Also, the Debtors are current on their postpetition obligations as they become due. Headquartered in South Plainfield, New Jersey, Omni Facility Services, Inc. -- http://www.omnifacility.com/-- provides architectural, janitorial, landscaping, and electrical services. The Company filed for chapter 11 protection on June 9, 2004 (Bankr. S.D.N.Y. Case No. 04-13972). Frank A. Oswald, Esq., at Togut, Segal & Segal LLP, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $80,334,886 in total assets and $100,285,820 in total debts. OXFORD AUTOMOTIVE INC: List of 50 Largest Unsecured Creditors ------------------------------------------------------------- Oxford Automotive, Inc., released a consolidated list of its 50 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ BNY Midwest Trust Company Indenture Trustee $301,530,000 Corporate Finance for Bondholders 2North LaSalle Street, Suite 1020 Chicago, Illinois 60602 Attn: Roxane J. Ellwanger Assistant Vice President Tel: (312) 827-8574 Fax: (312) 827-8542 Ford Motor Company Trade Debt $6,493,229 American Road, RM E-18 Dearborn, Michigan 48121-1899 Tel: (313) 845-0227 Fax: (313) 390-7241 General Motors - NAO Trade Debt $3,499,980 902 East Leith Street Flint, Michigan 48502 Tel: (810) 236-5711 Fax: (810) 236-6102 Trelleborg, YSH Trade Debt $2,096,789 1395 County Road 1484 North Carmi, Illinois 62821 Tel: (616) 637-2116 Fax: (616) 637-8315 Grede Foundries Trade Debt $1,077,733 9898 West Bluemound Road Milwaukee, Wisconsin 53226-0466 Tel: (414) 257-3600 Fax: (414) 256-9399 ABB Flexible Automation, Inc. Trade Debt $725,275 2487 South Commerce Drive New Berlin, Wisconsin 53151 Tel: (262) 785-3400 Fax: (262) 785-3290 Magna Int., Inc. Trade Debt $596,603 337 Magna Drive Aurora, Ontario, Canada L4G7K1 Oxford Investment Group Trade Debt $583,333 38505 Woodward Avenue, Suite 1000 Bloomfield Hills, Michigan 48304 Tel: (248) 540-0031 Fax: (248) 540-7501 Demshe Products Trade Debt $521,465 1668 Allanport Road Port Robinson, Ontario Canada 60S1K0 Attn: Greg Foley Tel: (905) 384-2155 Fax: (905) 384-2178 Sekely Industries Trade Debt $514,937 250 Pennsylvania Avenue Salem, Ohio 44460 Attn: Carl Sekely Tel: (330) 337-3439 Local 226 Fax: (330) 337-8947 Chrysler Motors Trade Debt $382,357 800 Chrysler Drive East Auburn Hills, Michigan 48326-2757 Tel: (810) 976-8300 AICCO, Inc. Trade Debt $377,547 777 Figueroa Street, Suite 401 Los Angeles, California 90017 Tel: (213) 689-3600 Fax: (213) 689-3620 Sanderson Industries Inc. Trade Debt $357,495 3550 Atlanta Industrial Parkway Atlanta, Georgia 30331 Attn: David Shaw Tel: (404) 699-2022 Fax: (404) 696-3956 Quaker Manufacturing Corp. Trade Debt $248,334 187 Georgetown Road Salem, Ohio 44460-0449 Tel: (216) 332-4631 Fax: (216) 332-1519 Dura Automotive Systems Trade Debt $213,769 2791 Research Drive Rochester, Michigan 48309-3575 Attn: Douglas Brown Tel: (573) 248-8513 Fax: (573) 248-8576 Atlas Tool, Inc. Trade Debt $164,724 29880 Groesbeck Highway Roseville, Michigan 48066 National Tube Form LLC Trade Debt $160,545 Accurate Gauge & Manufacturing Trade Debt $150,736 On Line Die & Engineering Trade Debt $148,940 Goss LLC Trade Debt $145,138 Michigan Arc Products Trade Debt $142,959 MST Steel Corporation Trade Debt $130,034 Brinks Machine Company, Inc. Trade Debt $129,535 International Equipment Trade Debt $125,000 Stelfast Inc. Trade Debt $119,538 E & E Manufacturing Company Trade Debt $118,888 Lee Steel Corporation Trade Debt $116,872 Delphia Corporation Trade Debt $114,716 MCEDA Trade Debt $107,244 Riviera Tool Company Trade Debt $105,177 Clifty Engineering & Tool Trade Debt $90,060 Metokote Corporation Trade Debt $89,502 Resistance Welding Trade Debt $81,678 C & E Sales, Inc. Trade Debt $81,376 Cinergy/PSI Trade Debt $77,156 Product Action Trade Debt $74,861 Tenneco Automotive Trade Debt $73,546 Working Solutions Trade Debt $72,838 Henkel Surface Technologies Trade Debt $71,761 The Su-Dan Company, Inc. Trade Debt $66,400 Mellon U.S. Leasing Trade Debt $65,345 Ken-Mac Metals, Inc. Trade Debt $65,156 Mifast Mechanical & Industrial Trade Debt $64,906 Fasteners CFC Wireforms Trade Debt $63,870 Air Products & Chemicals Trade Debt $63,429 Metalform Industries Inc. Trade Debt $62,728 Magna Chek Trade Debt $62,388 Claude Sintz, Inc. Trade Debt $57,352 Analysts International Trade Debt $57,165 Sequolanet Crestmark Financial Corporation Trade Debt $56,534 Headquartered in Troy, Michigan, Oxford Automotive, Inc. -- http://www.oxauto.com/-- is a Tier 1 supplier of specialized metal-formed systems, modules, assemblies, components and related services for the automotive industry. Oxford's primary products include structural modules and systems, exposed closure panels, suspension systems and vehicle opening systems, many of which are critical to the structural integrity and design of the vehicle. The Company and its debtor-affiliates filed for chapter 11 protection on December 7, 2004 (Bankr. E.D. Mich. Case No. 04- 74377). I. William Cohen, Esq., at Pepper Hamilton LLP represents the debtors in their restructuring efforts. OXFORD AUTOMOTIVE: Moody's Removes Ratings After Bankruptcy Filing ----------------------------------------------------------------- Moody's Investors Service withdrew all ratings for Oxford Automotive, Inc., following the company's filing for Chapter 11 bankruptcy protection on December 7, 2004. Oxford proved unable to cure its event of default for non-payment of the $16.8 million semiannual coupon payment that was due on October 15, 2004. The bankruptcy filing included a pre-packaged restructuring plan. These specific rating actions associated with Oxford were taken: -- Withdrawal of C rating of Oxford's $280 million of 12% guaranteed senior secured second-lien notes due October 2010; -- Withdrawal of Oxford's Ca senior implied rating; -- Withdrawal of Oxford's C senior unsecured issuer rating Oxford indicates that the goal of the latest restructuring plan is to maximize the value realized for its United States operations while enabling Oxford to reorganize around its European structures and mechanisms businesses. The European operations have been profitable over the past few years and have solid books of business. Oxford recently completed the sale of its McCalla, Alabama plant that supports two significant Mercedes platforms (redesigned Mercedes M class and Vision Grand Sports Tourer) to Madrid-based Gestamp Corporation. The consideration received was not disclosed. Pursuant to the consensual restructuring plan, Oxford's secured bondholders will receive the majority of the equity of a new holding company for the European entities. In order to facilitate a consensual and orderly restructuring, the plan will also provide Oxford's unsecured creditors with the opportunity to either share in the equity of the new holding company or receive some cash. No distributions will be made to the current equity holders. Oxford Automotive is headquartered in Troy, Michigan. PACIFIC BAY: Fitch Affirms $17 Mill. of Preference Shares at 'BB-' ------------------------------------------------------------------ Fitch Ratings affirms five classes of rated notes issued by Pacific Bay CDO, Limited. These rating actions are effective immediately: -- $315,000,000 class A-1 first priority senior secured floating rate notes affirmed at 'AAA'; -- $64,000,000 class A-2 second priority senior secured floating rate notes affirmed at 'AAA'; -- $36,000,000 class B third priority senior secured floating rate notes affirmed at 'AA'; -- $12,689,634 class C mezzanine secured floating rate notes affirmed at 'BBB'; -- $17,000,000 preference shares affirmed at 'BB-'. The ratings of the class A-1, A-2 and B notes address the likelihood that investors will receive full and timely payments of interest, as per the governing documents, as well as the stated balance of principal by the legal final maturity date. The rating of the class C notes addresses the likelihood that investors will receive ultimate and compensating interest payments, as per the governing documents, as well as the stated balance of principal by the legal final maturity date. The rating of the preference shares addresses the ultimate payment of a 2% yield per annum on the preference share rated balance as well as the preference share rated balance by the legal final maturity date. Pacific Bay is a collateralized debt obligation -- CDO, which closed in November 2003. The portfolio consists of 66.5% residential mortgage-backed securities -- RMBS, 13.7% commercial mortgage-backed securities -- CMBS, 11.8% asset-backed securities -- ABS, 4.7% corporate securities and 3.3% CDOs. Fitch reviewed the credit quality of the individual assets comprising the portfolio and discussed the transaction's performance with Pacific Investment Management Company LLC, the collateral manager. According to the trustee report dated Oct. 29, 2004, the overcollateralization -- OC -- tests, interest coverage tests, Fitch weighted average rating factor -- WARF -- test, and other performance tests are passing their required levels. Additionally, the portfolio contains no defaulted securities and 1.3% of securities are rated below 'BBB-'. Due to a structural feature which caps interest distributions to the preference shares at 14% per annum and amortizes the class C notes with the excess, the class C notes have paid down by over 25%. This de-leveraging of the class C notes has increased the credit enhancement available to the class C notes. Fitch believes that the credit protection has remained at appropriate levels to maintain the ratings for each of the rated notes. Fitch will continue to monitor and review this transaction for future rating adjustments. Additional deal information and historical data are available on the Fitch Ratings web site at http://www.fitchratings.com. PATHMARK STORES: Moody's Junks $350M Senior Subordinated Notes -------------------------------------------------------------- Moody's Investors Service downgraded the ratings of Pathmark Stores Inc., including the Senior Implied to B2, and assigned a negative outlook. The rating downgrade was prompted by the increasing intensity of grocery retailing competition in the company's limited trade area, by Moody's expectation that improvement in revenues and profit margins will consequently continue to prove challenging and by the increased likelihood of free cash flow deficits over the intermediate term. The negative outlook reflects the possibility, in Moody's view, that sales and profitability could decline further in the near term and that Pathmark's operations may be scaled down and stores closed when the company completes the recently announced examination of the strategic alternatives for its future. Ratings lowered: * Senior Implied Rating to B2 from B1. * Unsecured Issuer Rating to B3 from B2. * $350 million guaranteed 8.75% Senior Subordinated Notes (2012) to Caa1 from B3. The new rating level reflects Moody's concern that sales and profit margins are unlikely to improve in the near term given the intense competition in the company's geographically limited trade area between New York City and Philadelphia. Same store sales fell 0.5% in the recent third quarter due to reduced customer traffic and lower consumer confidence in the mid-Atlantic region, despite the higher markdowns and promotions that hurt Pathmark's gross profit margin. The company has launched a number of cost savings initiatives such as an administrative hiring freeze and the engagement of benefits auditors and expense auditors to evaluate significant expenditures. Longer-term efforts will include the re-negotiation of service vendor contracts. EBITDA (FIFO basis) fell to $102.5 million for the first 39 weeks of fiscal 2004, down from $131 million in the prior year's period. Pathmark expects EBITDA of $140 to $146 million for all of fiscal 2004. Given expected 2004 capital expenditures of $114 million (including property acquired under leases), its annual interest bill, and possible working capital needs, the company will probably not become self-funding in the near future. However, the ratings also acknowledge Pathmark's status as a well-recognized supermarket operator in its trade areas, potential operating efficiencies from high sales per square foot, and the progress made in updating its store base. The company also has liquidity in the $74 million of remaining availability under its new senior secured bank agreements that were signed in October. The negative outlook is based on Moody's view that sales and profit margins could decline further in this highly promotional competitive environment. In addition, the future profile of the company is uncertain now that Pathmark has begun to explore its strategic alternatives including the possible sale of the business. Ratings could be lowered again if the company fails to stem the erosion in same store sales and profitability, if operating cash flow does not improve so as to allow Pathmark to be self-funding in the near term, or working capital becomes a materially higher use of cash. Conversely, the ability to internally finance debt payments and an adequate capital investment program, stability in market share, a credible plan to grow sales and margins following conclusion of the strategic review, and improving debt protection measures (such that lease adjusted debt to EBITDAR stabilizes at 5.5 times and fixed charge coverage approaches 1.5 times) could cause the rating outlook to stabilize. The rating on the $350 million senior subordinated notes reflects the subordination of this debt to significant amounts of more senior obligations. Contractually senior claims include the new $180 million secured revolving credit facility and the new $70 million senior secured Term Loan, both maturing in October 2009, and $197 million of capital lease obligations and mortgages. The senior subordinated notes are also effectively junior to $96.9 million of trade accounts payable. The majority of revenue and assets are located in the issuing entity, and almost all operating subsidiaries guarantee the notes and the company's bank agreements. Pathmark Stores, Inc., with headquarters in Carteret, New Jersey, operates 142 supermarkets around the New York City and Philadelphia metropolitan areas. The company generated revenue of approximately $4.0 billion for the twelve months ended October 31, 2004. P.H. GLATFELTER: Moody's Pares Debt Rating to Ba1 from Baa2 ----------------------------------------------------------- Moody's Investors Service downgraded P.H. Glatfelter Company's debt ratings to Ba1 from Baa2, and assigned a stable outlook. As a matter of routine, Moody's also assigned senior implied and issuer ratings, both of which are equivalent to the Ba1 senior unsecured rating. The action concludes a review initiated on September 10. Ratings Downgraded: * Senior Unsecured: to Ba1 from Baa2 Ratings Assigned: * Outlook: Stable * Senior Implied: Ba1 * Issuer: Ba1 The downgrade results from concerns over profitability levels in the context of the company's modest size and commensurate lack of operational and financial flexibility relative to larger companies. Based on Moody's estimates of average through-the- cycle cash flow, it does not appear that that Glatfelter's future profitability will reflect the levels and margins observed in the past. Prior to the recent trough, Glatfelter had generated Free Cash Flow-to-Total Debt -- FCF/TD -- in the 15% range. While the company has completed an extensive restructuring of its North American asset base that is expected to dramatically reduce costs, it is not clear the benefits can fully off-set the influence of market factors, both in terms of rising input costs and pressures on output prices. These are expected to limit margin expansion, with Moody's expecting average through-the-cycle FCF/TD of approximately 10%. In part, this stems from the fact that Glatfelter's key Printing & Converting Papers and Engineered Products segments (that combine to represent some 68% of sales) are subsets of the uncoated freesheet -- UFS -- market. The recent recession caused many UFS producers to transfer production into products such as envelope stock and book paper where Glatfelter had been focused. With heightened competition, Glatfelter's results suffered. While some of the market share erosion has been reversed, and Glatfelter has a much-improved cost structure and is therefore better able to weather the next trough, there is no conclusive case that can be made to suggest that Glatfelter's position has been fully insulated so as to preclude a repeat of recent performance. With an uncertain supply and demand dynamic confronting North American UFS producers, their mid-to-long term fortunes are particularly uncertain. By extension, so too are those of companies like Glatfelter that operate in UFS-based markets. When combined with the company's relative lack of operational and financial flexibility, expectations of FCF/TD in the 10% range are not consistent with Moody's criteria of an investment grade ratings' profile. Glatfelter competes primarily in specialized niche markets and generally occupies the top one or two market share positions. The company's Long Fiber & Overlay Papers business appears to have strong growth prospects, and Glatfelter appears to be well positioned in this segment, but may be capacity constrained. This suggests that capital expenditures may be required in order to fully exploit market growth. The Printing & Converting Papers and Engineered Products segments compete in relatively mature markets. Growth prospects are not strong. Glatfelter has good liquidity, with a $125 million credit facility that matures in 2006 ($29 million outstanding at September 30th), and an unutilized $50 million accounts receivable facility. During the recent past, Glatfelter has undergone a significant transition. Along with the above noted restructuring activities, management and the board have also been reconfigured, and appear to be engaged and capable. The company retains the ability to monetize its remaining timberlands, and could apply the proceeds to reduce indebtedness. There are however, the off-setting factors noted above. In addition, Glatfelter competes in small markets that are not widely followed, and the company does not report unit sales data. This implies there is very little visibility of market trends, and as well, reduced ability to discern trends from the company's results. Consequently, forecasting future results is far more difficult than would otherwise be the case. There are also uncertainties with respect to input costs such as fiber, energy and chemicals. These costs may prove difficult to pass on as they continue to increase so that even with output pricing increasing somewhat, the full benefits may not be realized in profit margins. In addition, event risk related to environmental matters and potential acquisitions remain as concerns. At the Ba1 rating level, the factors that could influence the rating appear to be in balance. Consequently, Moody's does not anticipate ratings variability and the outlook is stable. Given the background to the downgrade, it is very unlikely that the rating and outlook would be increased over the near-to-medium term. However, unexpected debt financed acquisition activity or a significant deterioration in liquidity arrangements could result in either or both of the rating or the outlook being downgraded. Similarly, developments that would cause Moody's estimates of average through-the-cycle Retained Cash Flow-to-Total Debt -- RCF/TD -- to be significantly less than 20% with FCF significantly less than 10%, would also result in a downgrade. Headquartered in York, Pennsylvania, and with operations in the United States, Germany, France and the Philippines, Glatfelter is a global manufacturer of specialty papers and engineered products. The company's common stock is traded on the New York Stock Exchange under the symbol GLT. PITTSBURGH CITY: Moody's Lifts Rating to Ba1 & May Upgrade Further ------------------------------------------------------------------ Moody's Investors Service has upgraded the City of Pittsburgh's rating to Ba1 from Ba2 and placed the City on Watchlist for possible further upgrade. This action affects $832 million in previously issued debt. The upgrade reflects the approval and adoption of the City's Financial Recovery Plan by the Intergovernmental Cooperation Authority -- ICA, approval of the State legislature for new revenue enhancements integral to reestablishing structural balance to the City's financial operations, and adoption of the plan by Pittsburgh City Council. With the full adoption of the plan, the City projects a balanced budget for fiscal 2005 and expects to rebuild General Fund balance to adequate levels over five years. Moody's has placed the Ba1 rating on Watchlist for further upgrade pending final passage of a balanced fiscal 2005 budget, successful execution of a $40 million line of credit from three area banks, successful implementation of the budget including collections of the new revenue sources and effectuation of budgetary reductions assumed in the fiscal 2005 plan. In October 2004, Moody's placed the Ba2 city's rating on Watchlist for possible downgrade reflecting an impending liquidity crisis, a large $40 million structural imbalance with essentially no reserves, and a lack of a formal plan, approved by the state, to restore financial viability. Given the significant changes that have occurred over the last several months, which will have a material effect on the city's long-term financial prospects, we have revised both the rating and the outlook. Recovery Plan Approved New Revenues Help Balance Fiscal 2005 Budget After significant delays, the ICA has approved the City's financial recovery plan and the State legislature has enacted legislation allowing the City to implement two new revenue enhancements. The City will increase the Occupational Privilege Tax from $10 annually to $52. The City will also implement a new, Payroll Preparation Tax, paid by for-profit local corporations many of whom were exempt from the former Business Privilege Tax. The City will also phase out its Business Privilege Tax and eliminate its Mercantile Tax, as well as levy a new Facility Usage Fee on visiting sports players. The net gain from the legislative action is approximately $17.3 million in fiscal 2005. The City also increased the Deed Transfer Tax by 0.5%, will receive a $3.5 million one-time grant from the State for homeland security, has eliminated its capital spending for the year, and will no longer remit $4 million in Regional Asset District taxes to the Pittsburgh School District (rated A2). Taken together, this represents approximately $32 million in new revenues or forgone expenditures for fiscal 2005. The recovery plan also includes approximately $39 million in additional expenditure cuts, including a two-year wage freeze, employee contributions for health insurance, and reductions in overtime pay. Moody's expects passage of the fiscal 2005 budget in December. Moody's will review final budget figures and continue to assess revenue and expenditure assumptions. Moody's will also monitor ongoing expenditures and collections of new revenues, especially the Payroll Preparation Tax, which, as an entirely new tax, has no collection history and could potentially fall short of projections in the near term. Moody's also expects the City to successfully draw on the $40 million credit line in January, a necessary action given the expected depletion of cash by January 1. As well, given the importance of the expenditure reductions to structural balance in fiscal 2005, Moody's will incorporate first quarter results. Ultimately, our rating and outlook will factor in the success of each of the new revenue items to bolster recurring revenues and the success of the expenditure reductions taken to ensure that recurring revenues are sufficient to offset annual expenditures. QUIGLEY COMPANY: Wants Exclusive Period Stretched to May 3 ---------------------------------------------------------- Quigley Company wants its exclusive periods under 11 U.S.C. Sec. 1121 extended. The company wants to maintain the exclusive right, through May 3, 2005, to propose and file a chapter 11 plan. The company wants to preserve its exclusive right to solicit acceptances of that plan through July 5, 2005. Quigley says it hopes that talks with creditors over the next few months will culminate in a consensual plan of reorganization. The Debtor suggests that plan-related talks over the past couple of months haven't been productive as the parties waged war about whether Judge Beatty should stay or go. Quigley wants to see a plan confirmed that establishes a viable 524(g) trust and frees the company and Pfizer from continued asbestos-related litigation in the tort system. Headquartered in Manhattan, Quigley Company is a subsidiary of Pfizer, Inc., which used to produce and market a broad range of refractories and related products to customers in the iron, steel, glass and other industries. The Company filed for chapter 11 protection on Sept. 3, 2004 (Bankr. S.D.N.Y. Case No. 04-15739) to resolve legacy asbestos-related liability. When the Debtor filed for protection from its creditors, it listed $155,187,000 in total assets and $141,933,000 in total debts. Pfizer has agreed to contribute $405 million to an Asbestos Claims Settlement Trust over 40 years through a note, contribute approximately $100 million in insurance, and forgive a $30 million loan to Quigley. Michael L. Cook, Esq., at Schulte Roth & Zabel LLP, represents the Company in its restructuring efforts. RESTORATION REVIVAL: Case Summary & Largest Unsecured Creditor -------------------------------------------------------------- Debtor: Restoration Revival Temple Church 1574 East Shelby Drive Memphis, Tennessee 38116 Bankruptcy Case No.: 04-38998 Type of Business: The Debtor operates a church. Chapter 11 Petition Date: December 8, 2004 Court: Western District of Tennessee (Memphis) Judge: William Houston Brown Debtor's Counsel: John E. Dunlap, Esq. Waggoner Law Firm 1433 Poplar Avenue Memphis, TN 38104 Tel: 901-276-3334 Total Assets: $2,222,300 Total Debts: $810,646 Debtor's Largest Unsecured Creditor: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Sam's Club Charge account $682 P.O. Box 103036 Roswell, GA 30076 SACRAMENTO-YOLO: Moody's Slices Rating on $10.9 Mil. Bonds to B2 ---------------------------------------------------------------- Moody's downgraded to B2 from Ba3 the Sacramento-Yolo Port District Port Facilities Refunding and Improvement Revenue Bonds, Series 2001 outstanding in the amount of approximately $10.9 million. The outlook on the port's bonds is negative. The bonds are secured by net revenues of the port. The B2 rating and downgrade reflects a sharp decline in operating revenues and debt service coverage in fiscal 2004 and the need for the port to rely on a loan secured by the sale of property to provide sufficient working capital. The negative outlook reflects Moody's expectation that the port will continue to face challenges in generating net revenues sufficient to cover annual debt service and the likelihood of continued reliance on land sales to offset lackluster operations in the medium term. Following two years of net revenues which provided only 1.0 times coverage of annual debt service, fiscal 2004 tonnage and operating revenue declined over the prior year resulting in net revenues which provided debt service coverage of only 0.36 times. The port used net revenues and available cash to make this debt service payment. While management has identified some limited new or expanded operations, which may improve operating ratios in the medium to long term, the port intends to generate additional cash by selling property in the near term. The port's financial position remains narrow and this is factored into the rating. Cash resources have remained quite slim in recent years and net working capital as a percentage of gross revenue declined further in 2004 to a negative 13.8% although total cash resources were $685,000. In June, the port's commissioners approved a loan with the City of West Sacramento, which provided $2 million in cash to the port. Although the transaction between the port and West Sacramento is technically a sale, it is in effect a loan secured with land, approximately 125 acres, as collateral. The port has an option to buy the parcel back within 30 months and could then market the parcel to a private developer. Officials believe that a conservative estimate for the value of the property is between $5 million to $7 million. The port has also received a $750,000 payment from the city for a sewer easement. As such, the port currently maintains at least $2 million in available cash resources. Moody's notes that officials continue to make the required monthly payments (of $117,000) to the bond trustee. Officials are considering the potential sale of other parcels in order to generate additional operating reserves, the construction of revenue generating infrastructure, and the tender of the port's outstanding bonds at par. The bulk of the land identified for sale is either non-maritime or non-revenue generating in nature, but suitable for other uses. The port is actively marketing a 65-acre parcel along the Sacramento River. The parcel is zoned for waterfront mixed use and could potentially be used for marinas, mid-rise and high-rise office buildings, hotels, restaurants, retail, recreational uses, and multifamily residential units oriented to the river. Development of the parcel, however, is dependent upon the U.S. Army Corps of Engineers' removing multiple easements from the land that were established to protect adjacent ship locks which are now decommissioned. In recent months, port officials have received unsolicited offers to purchase a large 290-acre parcel and a 36-acre property on the edge of the port's undeveloped land in West Sacramento, indicating that some interest exists in the purchase and development of port land. Officials are also making efforts to expand operations and are in discussions with a cement manufacturer, as well as other possible tenants, for long-term leases on port property. Negative Trends in Tonnage and Revenues Continue Loss of tonnage, primarily driven by rice exports, which shifted to the Port of Stockton (port revenue bonds rated Baa2), resulted in significantly narrowed debt service coverage beginning in fiscal 2002. While rice tonnage rebounded modestly in 2003, revenues attributable to this commodity continued to slide due to aggressive price competition with Stockton. Figures for 2004 indicate a nearly 14% decline in total tonnage and a 13% decline in rice tonnage, with operating revenues declining by 9.2%. Officials report that rice tonnage has thus far improved over the same period in the prior year. In August, however, the fertilizer company Yara North America, a major importer through the port, announced plans to move its fertilizer bagging operations out of the Port of Sacramento. Yara plans to continue shipping through the port, but the loss of the bagging operations reportedly decreased annual port revenue projections by about $800,000, or 10 percent. Moody's believes that the Port of Sacramento's ability to successfully implement a financial recovery plan and to sustain and diversify its revenue stream, including an expansion of real estate development activities, as well as maritime activities that more closely reflect the expanding economy in the Sacramento region, will be key factors in future rating reviews. Housing, industrial and commercial buildings have been constructed by a variety of developers in the area surrounding the port's property. This area, known as Southport, is planned to meet the majority of West Sacramento's residential needs in coming years, and the population of the area at build out is expected to be 40,000. There has been some growing resistance from some West Sacramento residents in recent years to further industrial expansion on port property. Some of the land mentioned to be offered for sale by the port is in Southport and may need to be rezoned in order to offset development concerns of area residents. Outlook Moody's outlook on the Port of Sacramento's revenue bonds is negative. This outlook reflects Moody's expectation that the port will continue to face challenges in generating net revenues sufficient to cover annual debt service and the likelihood of continued reliance on land sales to offset weak operating and financial performance in the medium term. Key Statistics for Fiscal 2004 (unaudited) Metric revenue tonnage: 736,117 Operating ratio: 99.1% Average annual debt service coverage (1995-2004): 1.67x Annual debt service coverage: 0.36x Net working capital as % of gross revenue: -13.8% (-$1.2 million) Debt ratio: 20.8% Payout of principal (10 years): 100% SEQUOIA MORTGAGE: Fitch Puts Low-B Ratings on 12 Mortgage Issues ---------------------------------------------------------------- Fitch Ratings has taken rating actions on Sequoia Mortgage Funding Corp. (SMFC) home equity issues: Series 2003-1: -- Class 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'. Series 2003-3: -- Class 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'. Series 2003-5: -- Class 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'. Series 2003-6: -- Class 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'. Series 2003-7: -- Class 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'. Series 2003-8: -- Class 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'. The affirmations reflect credit enhancement consistent with future loss expectations and affect $3,965,210,266 of outstanding certificates. As of the November 2004 distribution the above deals are 11 to 21 months seasoned, with pool factors (i.e. current mortgage loans outstanding as a percentage of the initial pool) ranging from 75% to 96%. SCIENTIFIC GAMES: Gets Requisite Consents to Amend Indenture ------------------------------------------------------------ Scientific Games Corporation (Nasdaq: SGMS) disclosed that, in connection with the tender offer and consent solicitation for its outstanding 12-1/2% Senior Subordinated Notes due 2010, it has received sufficient consents from the registered holders of outstanding Notes to amend the indenture governing the Notes. Scientific Games also said it has determined the price to be paid on its tender offer for the outstanding Notes. Scientific Games indicated that it has received requisite consents from the registered holders of outstanding Notes to amend the indenture governing the Notes to eliminate substantially all of the restrictive covenants and certain related event of default provisions and that it is entering into a supplemental indenture containing the proposed amendments. The consent solicitation for the Notes expired at 5:00 p.m., New York City time, on Dec. 8, 2004. At that time, Scientific Games had received consents from registered holders of 88.34% of the outstanding Notes. Scientific Games also indicated that the total consideration, excluding accrued and unpaid interest, for each $1,000 principal amount of Notes validly tendered and not validly withdrawn prior to 5:00 p.m., New York City time, on Dec. 8, 2004, is $1,118.43. The total consideration includes a $20.00 consent payment. The total consideration is equal to the present value on the payment date of $1,062.50 (i.e., the redemption price for the Notes on August 15, 2005, which is the earliest redemption date for the Notes) plus the present value of the interest that would accrue from the payment date until the earliest redemption date, in each case determined based on a fixed spread of 100 basis points over the yield of the 6.5% U.S. Treasury Note due August 15, 2005, at 2:00 p.m., New York City time, on December 8, 2004. The tender offer will expire at 5:00 p.m., New York City time, on Dec. 22, 2004, unless extended or terminated. All conditions to consummation of the tender offer and consent solicitation continue to apply. This press release is neither an offer to purchase nor a solicitation of an offer to sell the Notes. The offer is being made solely by the Offer to Purchase and Solicitation of Consents dated November 24, 2004 and the related Letter of Transmittal and Consent. A more comprehensive description of the tender offer and consent solicitation can be found in the Offer to Purchase and Solicitation of Consents, dated November 24, 2004. Scientific Games has retained J.P. Morgan Securities Inc. and Bear, Stearns & Co. Inc. to serve as Dealer Managers and Solicitation Agents for the tender offer. Requests for documents may be directed to the Information Agent: D.F. King & Co., Inc. 48 Wall Street 22nd Floor New York, New York 10005 Attn: Fran Beckesh Collect: (212) 269-5550 ext. 6831 Questions regarding the tender offer may be directed to Lenny Carey of JPMorgan at (212) 270-9769 (collect) or the Global Liability Management Group of Bear Stearns at (877) 696-2327 (U.S. toll free) and (212) 272-5112 (collect). About Scientific Games Scientific Games Corporation is a leading integrated supplier of instant tickets, systems and services to lotteries, and a leading supplier of wagering systems and services to pari-mutuel operators. It is also a licensed pari-mutuel gaming operator in Connecticut and the Netherlands and is a leading supplier of prepaid phone cards to telephone companies. Scientific Games' customers are in the United States and more than 60 other countries. For more information about Scientific Games, please visit our web site at http://www.scientificgames.com/ * * * As reported in the Troubled Company Reporter on Dec. 09, 2004, Moody's Investors Service raised the existing ratings of Scientific Games Corporation -- SGC. The company's senior implied rating is now at Ba2. Moody's also assigned a B1 rating to the company's new $200 million senior subordinated notes due 2012 and a Ba2 rating to its new senior secured bank facility. The new senior secured bank facility is comprised of a $200 million 5-year revolver and a $100 million 5-year term loan. The rating outlook is stable. SOLA INTERNATIONAL: Moody's Reviewing Low-B Ratings --------------------------------------------------- Moody's Investors Service has placed the ratings of Sola International, Inc.'s on review direction uncertain following the recent announcement that the company has signed an agreement to sell the company to Carl Zeiss TopCo GmbH. These ratings of Sola were placed on review direction uncertain: * Senior implied rating of Ba3; * Senior unsecured issuer rating of B1; * $50 million secured revolving credit facility due 2008 of Ba3; * $175 million senior secured term loan due 2009 of Ba3; * $94.8 million 6.875% notes due 2008 of B1 On December 5, 2004, Sola announced that it has signed a definitive agreement to sell 100% of the company to Carl Zeiss AG, an unrated German-based company which manufactures and distributes eyecare related products, and EQT III Fund. The transaction is valued at approximately $900 million, or 9x LTM September 2004 EBITDA. Sola's board of directors approved the merger, which is expected to close in the first quarter of 2005. Sola ended September 30, 2004, with approximately 2.8x debt-to- EBITDA. The review will focus on the financial and operating profile of Sola as a legal entity within the wider Carl Zeiss group. Key factors in the review will include: (1) the amount and structure of Sola's debt after the transaction closes; (2) whether Carl Zeiss intends to support this debt; (3) how Sola operations are to be integrated into Carl Zeiss's operations and the implications of this integration for the company's cash flow generation, financial flexibility and market position. Ratings could be upgraded if Sola's debt is guaranteed or otherwise supported by Carl Zeiss or if Sola's credit profile is otherwise enhanced given its role in the Carl Zeiss group. Ratings could be downgraded if Sola's credit profile is weaker following the transaction due to a heavier debt burden. Headquartered in San Diego, California, Sola designs, manufacturers and distributes plastic and glass eyeglass lenses. Sales for the twelve-month period ending September 30, 2004, were approximately $670 million. STELCO: 14th Monitor's Report Outlines Creditors' Claims Protocol ----------------------------------------------------------------- Stelco Inc. (TSX:STE) disclosed that the Fourteenth Report of the Monitor in the matter of the Company's Court-supervised restructuring was filed this afternoon. The Report outlines a proposed creditors' claims process and provides an update on the Company's asset sale process. The Report notes that the Monitor, in conjunction with Stelco, has developed a creditors' claims process and will seek the Court's approval of a Claims Procedure Order in that regard at a hearing currently proposed to be held on Dec. 17, 2004. The proposed procedure will govern the submission, review and determination of certain creditors' claims. Starting the process now will aid the development of a Plan by Stelco and will facilitate the holding of meetings of creditors in a timely manner once such a Plan has been developed. The Report notes that, with the exception of certain types of claims that will not be subject to the process at this stage of the proceedings, Stelco proposes that any creditor asserting a claim arising on or before the date of the Claims Procedure Order being sought will be required to file a proof of claim with the Monitor by 5:00 p.m. on January 31, 2005. The Monitor indicates in the Report that it believes it is appropriate to commence a claims process at this time and recommends that the Court approve the proposed claims process. In the matter of the non-core subsidiary sale process, the Report notes that non-binding expressions of interest were received up to and including December 1, 2004. A total of 23 parties are conducting due diligence in Phase II of the process. Some of those parties are doing so with respect to more than one of the subsidiaries. The full text of the Report can be accessed through a link available on Stelco's Web site. Stelco, Inc. -- http://www.stelco.ca/-- which is currently undergoing CCAA restructuring proceedings, is a large, diversified steel producer. Stelco is involved in all major segments of the steel industry through its integrated steel business, mini-mills, and manufactured products businesses. Consolidated net sales in 2003 were $2.7 billion. STELCO: Welcomes SC Decision Denying USWA Locals Leave to Appeal ---------------------------------------------------------------- Stelco Inc. (TSX:STE) has commented on Thursday's decision of the Supreme Court of Canada denying several USWA locals leave to appeal the Initial Order providing the Company with the protection of the Companies' Creditors Arrangement Act in January 2004. Hap Stephen, Stelco Chief Restructuring Officer, said, "We welcome this decision. Stelco initiated its restructuring on the grounds that the Company was insolvent and that its circumstances met the conditions for the granting of Court protection. This decision of the Supreme Court leaves the Initial Order and the views enunciated by Mr. Justice Farley on various occasions in full force and effect. "[Thursday's] decision will enable us to focus our full attention on achieving a successful capital raising process and a successful restructuring." USWA Locals 1005, 5328 and 8782 originally sought to rescind the Initial Order in March 2004. That motion was dismissed by the Superior Court of Justice (Ontario) on March 22, 2004. The Locals then sought leave to appeal that decision to the Court of Appeal for Ontario. That motion was dismissed on May 5, 2004. The Locals then applied to the Supreme Court of Canada for leave to appeal from the judgement of the Court of Appeal. Stelco, Inc. -- http://www.stelco.ca/-- which is currently undergoing CCAA restructuring proceedings, is a large, diversified steel producer. Stelco is involved in all major segments of the steel industry through its integrated steel business, mini-mills, and manufactured products businesses. Consolidated net sales in 2003 were $2.7 billion. STRUCTURED ASSET: Fitch Upgrades Class B-5 Series 1998-6 to 'BBB+' ------------------------------------------------------------------ Fitch Ratings has taken rating actions onStructured Asset Mortgage Investments Inc. issues: Series 1998-6: -- Class A affirmed at 'AAA'; -- Class B-1 affirmed at 'AAA'; -- Class B-2 affirmed at 'AAA' -- Class B-3 affirmed at 'AAA'; -- Class B-4 upgraded to 'AA' from 'A+'; -- Class B-5 upgraded to 'BBB+' from 'BB+'. Series 2003-2: -- Class A affirmed at 'AAA'. All of the mortgage loans in the aforementioned transactions consist of 30-year, first-lien, fixed-rate and adjustable-rate mortgages loans, secured by residential properties. The upgrades reflect a substantial increase in credit enhancement relative to future loss expectations, and affect $1,888,158 of outstanding certificates. The affirmations reflect credit enhancement consistent with future loss expectations and affect $108,416,975 of outstanding certificates. As of the November 2004 distribution date, the pool factor (current mortgage loans outstanding as a percentage of the initial pool) for series 1998-6 is 16%. The current credit enhancement levels for classes B-4 and B-5 have increased by more than 8 times since closing (May 29, 1998), to 3.61% and 2.04%, respectively (originally 0.45% and 0.25%). SWIFT & COMPANY: S&P Affirms BB- Corporate Credit Rating -------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on meat processor, Swift & Company, to stable from negative. At the same time, Standard & Poor's affirmed its 'BB-' corporate credit rating and other ratings on Swift. Greeley, Colorado-based Swift had about $636 million of debt outstanding at Aug. 29, 2004. The outlook revision reflects our expectation that Swift's operating performance and credit protection measures will remain appropriate for the rating despite the challenges related to the limited supply of cattle available for slaughter in the U.S. because of the ban on cattle imported from Canada (although expectations are that this ban will likely be lifted in early 2005.) In addition, results from Swift's pork processing and Swift's Australia (beef) segments have offset the weakness in Swift's U.S. beef operations. It is Standard & Poor's expectation that Swift's U.S. beef margins will be weak over the next several quarters as tight cattle supplies and fairly strong consumer demand continue to constrain margins. "We expect that Swift's positions in beef and pork processing will provide it with the ability to manage through the various protein cycles while maintaining appropriate credit protection measures for the rating," said Standard & Poor's credit analyst Jayne Ross. TACTICA INT'L: Closes on $300,000 Financing from Senior Management ------------------------------------------------------------------ Tactica International, Inc., closed on a $300,000 financing provided by Company senior management. Tactica plans to use the funds for: -- extending its TV infomercial campaign that features the Singer(R) Lazer Storm vacuum cleaner; -- fulfilling orders for its IGIA(R) products placed by retail and catalog customers; and -- operating the business. "We expect to use the financing to build on Tactica's business fundamentals and attract additional financing for Tactica" stated Avi Sivan, Chief Executive Officer. The Company is currently in negotiations for additional interim DIP financing and a permanent borrowing facility. Headquartered in New York, New York, Tactica International, Inc., a wholly owned subsidiary of IGIA, Inc. -- http://www.igia.com/-- designs, develops and markets personal and home care items under the IGIA and Singer brands. Product categories include hair care, dental care, skin care, sports and exercise, household and kitchen. Tactica holds an exclusive license to market a line of floor care products under the Singer name. Tactica also owns rights to the "As Seen On TV" trademark. The Company filed for chapter 11 protection on Oct. 21, 2004 (Bankr. S.D.N.Y. Case No. 04-16805). Timothy W. Walsh, Esq., at Piper Rudnick, LLP, represent the Debtor in its restructuring effort. When the Company filed for protection from its creditors, it reported assets amounting to $10,568,890 and debts amounting to $14,311,824. THERMADYNE HOLDINGS: S&P Affirms B- Subordinated Debt Rating ------------------------------------------------------------ Standard & Poor's Ratings Services revised its outlook on Thermadyne Holdings Corporation to negative from stable while, at the same time, affirming the 'B+' corporate credit and 'B-' subordinated debt ratings on the company. Total debt outstanding at Sept. 30, 2004, was $260 million. "The outlook revision reflects the firm's weakened financial profile resulting from high-volume inefficiencies, causing operating margin and EBITDA to decline and debt to increase, despite double-digit sales gains," said Standard & Poor's credit analyst Daniel DiSenso. "Failure of Thermadyne to make steady progress in improving operating performance and reducing bloated inventories could result in a ratings downgrade." St. Louis, Missouri-based Thermadyne is one of four leading participants in the large, but fragmented, and intensely competitive and cyclical global welding equipment industry. Thermadyne is a designer and manufacturer of gas and arc cutting and welding products, including equipment, accessories and consumables. The near-term operating outlook is favorable. Continuation of solid growth for the industrial sector in North America and other world regions should result in strong bookings for Thermadyne for the next couple of years. Thermadyne should also benefit from high-volume manufacturing efficiencies and cost-cutting actions, and inventories should shrink as safety stock is worked down. Over the next 12 to 18 months, Standard & Poor's expects Thermadyne's credit measures to strengthen to levels reflective of the ratings. VENOCO INC: Moody's Junks Proposed $150M Senior Unsecured Notes --------------------------------------------------------------- Moody's assigned a Caa1 rating to Venoco Inc.'s proposed $150 million of 7-year senior unsecured guaranteed notes, a B3 senior implied rating, and an SGL-3 liquidity rating, with a stable rating outlook. The rating notch between the note and senior implied ratings reflects the notes' substantial potential effective subordination, under multiple secured debt carve-outs in the indenture, as well as important inherent borrowing base redetermination powers of that bank debt. The indenture permits secured debt up to the greater of $80 million (in three baskets) and 25% (in two baskets) of consolidated net tangible assets. Venoco holds 57.9 mmboe of proven reserves, of which 69% is proven developed (PD). Venoco's outlook or ratings could strengthen if it demonstrates sustainable sequential quarter production gains, amply supported (stress tested) production and reserve replacement costs, and avoids material additional leverage. Venoco's year-end 2004 third party reserve report, and its 2004 and 2005 10-K FAS 69 data will also be important milestones. The ratings are restrained by: (1) high leverage; (2) roughly 87% of net proceeds will not be reinvested in oil and gas activity, with 77% directly and indirectly funding outflows to shareholders; (3) Venoco's small size; high unit production and G&A costs and, as a medium gravity sour crude oil producer, price realizations of roughly $5/barrel below benchmark light sweet oil prices; (4) resulting risk in weaker price markets; (5) several years of falling reserves due to reduced investment, sizable negative reserve revisions, and production; (6) very high resulting recent reserve replacement costs (the long-term trend has been competitive); (7) uncertainty concerning how productive increased capital spending will be; (8) material offshore California plugging and abandonment costs; (9) a concentration of production and reserves in the politically sensitive California offshore; and (10) exposure to a pending Beverly Hills law suit, of uncertain merit, by residents claiming alleged exposure to cancer causing agents. While the Beverly Hills suit may be of dubious merit (based on seemingly supportive findings by government agencies), the uncertainties of a jury trial, or the threat of a jury trial, cannot be estimated accurately now. On the other hand, one partial mitigating point to a high proportion of proceeds not reinvested in the business is that $72 million was spent to purchase mandatory convertible preferred stock from an Enron subsidiary to enable Venoco's return to a more normal business footing. However, one more business uncertainty resides in the fact that, after a period of internal difficulty, Venoco comes to market with engineering dating from January 1, 2004, though this was conducted by respected Ryder Scott Company. The ratings are supported by: (1) the cash flow benefit of the current roll-off of under market hedges and imminent full exposure to still strong oil and gas prices; (2) encouraging third and fourth quarter production responses to increased workover and capital spending; (3) a long 9.8 year PD reserve life; (4) its long experience operating in California basins, California offshore conditions, and California political, environmental, and legal sensitivities; (5) a likelihood that the return of seasoned leadership (including Venoco's founder) and capital spending will result in renewed exploitation activity, capital productivity, and volume growth; and (6) deferral of a substantial portion of Venoco's share of plugging and abandonment costs for a number of years due to expected continued commercial production from those platforms. A high 87% of expected note proceeds (roughly $145 million) will not be invested in reserve replacement activity. Instead: -- $35 million will fund a dividend to Venoco's chief executive officer, largely to cover his costs incurred in Venoco's ownership restructuring; -- $5 million will fund the buyout of Venoco's minority shareholders; -- $14.2 will fund the purchase of a corporate office building this quarter; and -- approximately $71 million will repay bank debt under the existing bank facility that recently funded a $72 million repurchase of all of Venoco's preferred stock from an Enron investment subsidiary. The remaining $20 million will then be used to acquire Marquez Energy (holding a high proportion of proven undeveloped -- PUD -- reserves), largely owned by Venoco's chief executive officer. The SGL-3 liquidity rating reflects: (1) adequate liquidity due to an expected supportive 2005 price environment; (2) resulting sound pre-capital spending cash flow; (3) a degree of flexibility (due to a 9.8 year PD reserve life) to reduce budgeted 2005 capital spending to fit available cash flow; (4) adequate-to-good undrawn back-up liquidity (with $40 million to $50 million available and undrawn under a $40 million to $50 million bank revolver); and (5) weak alternative liquidity since monetization of secured assets requires bank approval, with proceeds retiring bank debt. Cash flow and cash balance coverage of budgeted interest expense, capital spending, and budgeted oil and gas reserve and headquarters acquisitions is adequate. Pro-forma unit production, G&A, and interest expense is in the range of a high pro-forma $20/boe to $20.50/boe on third quarter 2004 production. Adding unit reserve replacement costs to those costs yields total full-cycle costs, though reserve replacement costs have been infinite during Venoco's hiatus from normal capital allocation. A more normal unit full-cycle cost test begin to be possible with 2004 FAS 69 data, and certainly with full 2005 operating and FAS 69 data. Pro-forma leverage on PD reserves of approximately $3.63/PD boe is not as conservative as it may appear since heavier California reserves receive generate lower margins and receive lower asset market price realizations than do light sweet reserve benchmarks. Including all future required development and plugging and abandonment capital spending for existing proven reserves, effective leverage on total proven reserves is a yet higher $4.17/boe. Venoco, Inc., is headquartered in Carpinteria, California. WASHINGTON MUTUAL: Fitch Assigns Low-B Ratings on 25 Certificates ----------------------------------------------------------------- Fitch Ratings has taken rating actions on Washington Mutual residential mortgage-backed certificates: Washington Mutual -- WAMU -- mortgage pass-through certificates: Series 2002-S1 -- Groups 1 and 2 classes IA and IIA affirmed at 'AAA'; -- Group 3 class IIIA affirmed at 'AAA'. Series 2002-S3 -- Group 1 class IA affirmed at 'AAA'; -- Group 2 class IIA affirmed at 'AAA'. Series 2002-S8 -- Group 1 class IA affirmed at 'AAA'; -- Group 2 class IIA affirmed at 'AAA'; Series 2003-S1 -- Class A affirmed at 'AAA'. Series 2003-S2 -- Class A affirmed at 'AAA'; -- Class B3 affirmed at 'BBB-'; -- Class B4 affirmed at 'BB-'; -- Class B5 affirmed at 'B'. Series 2003-S3 -- Class A affirmed at 'AAA'; -- Class CB1 affirmed at 'AA-'; -- Class CB2 affirmed at 'A-'; -- Class CB3 affirmed at 'BBB-'; -- Class CB4 affirmed at 'BB'. Series 2003-S4 -- Classes IA, IIA, IIIA, and IVA affirmed at 'AAA'. Series 2003-S5 -- Groups 1 and 3 classes IA and IIIA affirmed at 'AAA'. -- Group 2 class IIA affirmed at 'AAA'; -- Group 2 class IIB2 affirmed at 'A-'; -- Group 2 class IIB5 affirmed at 'B'. Series 2003-S6 -- Classes IA and IIA affirmed at 'AAA'. Series 2003-S7 -- Class A affirmed at 'AAA'; -- Class B2 affirmed at 'A-'. Series 2003-S8 -- Class A affirmed at 'AAA'; -- Class B1 affirmed at 'AA'; -- Class B2 affirmed at 'A'; -- Class B3 affirmed at 'BBB'; -- Class B4 affirmed at 'BB'; -- Class B5 affirmed at 'B'. Series 2003-S9 -- Class A affirmed at 'AAA'. Series 2003-S10 -- Class A affirmed at 'AAA'. Series 2003-S11 -- Classes IA, IIA, and IIIA affirmed at 'AAA'. Series 2003-S12 -- Classes IA, IIA, and IIIA affirmed at 'AAA'. Series 2003-AR1 -- Class A affirmed at 'AAA'; -- Class B1 upgraded to 'AAA' from 'AA'; -- Class B2 upgraded to 'AA' from 'A'; -- Class B3 upgraded to 'A' from 'BBB'; -- Class B4 upgraded to 'BBB' from 'BB'; -- Class B5 upgraded to 'BB' from 'B'. Series 2003-AR2 -- Class A affirmed at 'AAA'; -- Class M upgraded to 'AAA' from 'AA+'; -- Class B1 upgraded to 'AAA' from 'AA'; -- Class B2 upgraded to 'AA' from 'A'; -- Class B3 upgraded to 'A' from 'BBB'. Series 2003-AR3 -- Class A affirmed at 'AAA'; -- Class B1 upgraded to 'AAA' from 'AA'; -- Class B2 upgraded to 'AA-' from 'A'; -- Class B3 upgraded to 'A' from 'BBB'; -- Class B4 upgraded to 'BBB' from 'BB'; -- Class B5 upgraded to 'BB' from 'B'. Series 2003-AR4 -- Class A affirmed at 'AAA'; -- Class B1 upgraded to 'AAA' from 'AA'; -- Class B2 upgraded to 'AA' from 'A'; -- Class B3 upgraded to 'A' from 'BBB'; -- Class B4 upgraded to 'BBB-' from 'BB'; -- Class B5 upgraded to 'B+' from 'B'; Series 2003-AR5 -- Class A affirmed at 'AAA'; -- Class B1 upgraded to 'AA+' from 'AA'; -- Class B2 upgraded to 'A+' from 'A'; -- Class B3 upgraded to 'BBB+' from 'BBB'; -- Class B4 affirmed at 'BB'; -- Class B5 affirmed at 'B'. Series 2003-AR6 -- Class A affirmed at 'AAA'; -- Class B1 upgraded to 'AA+' from 'AA'; -- Class B2 upgraded to 'A+' from 'A'; -- Class B3 upgraded to 'BBB+' from 'BBB'; -- Class B4 upgraded to 'BB+' from 'BB'; -- Class B5 upgraded to 'B+' from 'B'. Series 2003-AR7 -- Class A affirmed at 'AAA'; -- Class B1 affirmed at 'AA'; -- Class B2 affirmed at 'A'; -- Class B3 affirmed at 'BBB'; -- Class B4 affirmed at 'BB'; -- Class B5 affirmed at 'B'. Series 2003-AR8 -- Class A affirmed at 'AAA'; -- Class B1 affirmed at 'AA'; -- Class B2 affirmed at 'A'; -- Class B3 affirmed at 'BBB'; -- Class B4 affirmed at 'BB'; -- Class B5 affirmed at 'B'. Series 2003-AR9 group 1 -- Class IA affirmed at 'AAA'; -- Class IB1 affirmed at 'AA'; -- Class IB2 affirmed at 'A'; -- Class IB3 affirmed at 'BBB'; -- Class IB4 affirmed at 'BB'. Series 2003-AR9 group 2 -- Class IIA affirmed at 'AAA'; -- Class IIB1 affirmed at 'AA'; -- Class IIB2 affirmed at 'A'; -- Class IIB3 affirmed at 'BBB'; -- Class IIB4 affirmed at 'BB'. Series 2003-AR10 -- Class A affirmed at 'AAA'; -- Class B1 affirmed at 'AA'; -- Class B2 affirmed at 'A'; -- Class B3 affirmed at 'BBB'; -- Class B4 affirmed at 'BB'; -- Class B5 affirmed at 'B'. Series 2003-AR11 -- Class A affirmed at 'AAA'; -- Class B1 affirmed at 'AA'; -- Class B2 affirmed at 'A'; -- Class B3 affirmed at 'BBB'; -- Class B4 affirmed at 'BB'; -- Class B5 affirmed at 'B'. Series 2003-AR12 -- Class A affirmed at 'AAA'; -- Class B1 affirmed at 'AA'; -- Class B2 affirmed at 'A'; -- Class B3 affirmed at 'BBB'; -- Class B4 affirmed at 'BB'; -- Class B5 affirmed at 'B'. Washington Mutual mortgage pass-through certificates -- WAMMS: -- Series 2003-MS4 classes IA, IIA, and IIIA affirmed at 'AAA'. Washington Mutual mortgage pass-through certificates: -- Series 2003-MS9 classes IA and IIA affirmed at 'AAA'. The affirmations, affecting approximately $15 billion of the outstanding balances, are due to credit enhancement consistent with future loss expectations. The upgrades, affecting approximately $196 million of the outstanding balances, are being taken as a result of low delinquencies and losses, as well as increased credit support levels. The credit enhancement for the upgraded classes as of Nov. 25, 2004, distribution increased as much as 2.6 times the original credit enhancement percentage, which is a significant jump for 2003 vintage deals. With the exception of WAMU 2003-S11 (which had a loss of $64,346 as of Oct. 25, 2004, distribution date), none of the above deals have suffered losses. The collateral of the above WAMU and WAMMS deals primarily consists of 15- to 30-year fixed-rate mortgages secured by first liens on one- to four-family residential properties. The 'AR' deals have collateral which consists of 15- to 30-year adjustable- rate mortgages, also secured by first liens on one- to four-family residential properties. The pool factors (i.e. current mortgage loans outstanding as a percentage of the initial pool) for these deals range from 6% (WAMU 2002-S1) to 89% (WAMU 2003-S9). Further information regarding current delinquency, loss, and credit enhancement statistics is available on the Fitch Ratings web site at http://www.fitchratings.com/ WESCO DISTRIBUTION: S&P Puts B+ Corp. Rating on CreditWatch Pos. ---------------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings, including its 'B+' corporate credit rating, on WESCO Distribution Inc. on CreditWatch with positive implications. At Sept. 30, 2004, WESCO, a leading industrial distributor, had approximately $790 million in total debt outstanding, including account receivable securitizations and the present value of operating leases. "The CreditWatch listing reflects improving operating and financial performance, the expectation of continued solid end- market demand, and the company's announcement that it intends to sell approximately $108 million of common equity, with the proceeds expected to be used to reduce debt usage," said Standard & Poor's credit analyst Joel Levington. "The combination of improving financial performance--such as earnings increasing 81% year-over-year through Sept. 30, 2004, and additional debt reduction from both the potential equity offering and from cash generation that typically occurs in the fourth quarter, could lead to a credit profile that is stronger than expected at the current rating level. We hope to complete the review within the next 90 days," Mr. Levington added. Key considerations before taking a further rating action include: management's long-term financial policies; structural operating activities affecting the cost; and the company's strategic external growth initiatives. WESTPOINT STEVENS: Enters Luxury Bed & Bath Market with Charisma ---------------------------------------------------------------- WestPoint Stevens Inc. (OTC Bulletin Board: WSPT) has gained what is perhaps the ultimate luxury brand for bed and bath in a licensing agreement to market the famed Charisma(R) line. Under WestPoint Stevens, Charisma's placement will be marked by exclusivity, with limited distribution to select department stores and upscale catalogs. "Over time, Charisma has become the absolute standard of luxury for bed and bath products in the home furnishings industry, with well-established brand recognition by consumers. Few brands have had the luxury-market impact that Charisma has shown," said President - Bed and Bath Robert B. (Bob) Dale. "It's a brand so key that we're launching an entire new division -- Charisma Home - - to optimize the opportunities it offers. "In taking Charisma forward, we will stay true to the brand's unique concept of properties while enhancing its position as the aspirational brand for discriminating consumers whose lifestyle embraces real luxury," Mr. Dale added. Basic Bedding Division President Arthur (Art) Birkins sees Charisma as a significant boost to the luxury level of that business. "Over the past few years, there's been a surge in higher-end products in basic bedding. There's a solid trend toward building a better bed that starts with pads and pillows, and consumers look for higher thread counts and upscale fabrics and constructions. Charisma offers a great opportunity to meet these demands." At WestPoint Stevens, Charisma Home will encompass fashion bedding and decorative pillows, bath and bath accessories and a range of basic bedding that includes blankets, throws and down and down- alternative products. The anticipated Charisma shipping date is fourth quarter 2005. "As we continue to see the whole bedding and bath market trading up in constructions and design, Charisma is ideal to be positioned as a 'best in class' line, with super-premium product and price points," said Judi Alexander, who will head up the new division as Vice President - Charisma Home." Ms. Alexander has been with the Company for eight years, most recently as Vice President - Marketing for the Basic Bedding Division. "She brings impressive marketing and product development experience to lead the Charisma Home Division, with a solid background in the luxury market from her work with utility products in our Ralph Lauren Home(R) license, another valuable luxury line," noted Mr. Dale. "Of special value to Charisma Home is her expertise in market research and targeting specific consumers, such as those who seek the luxury of Charisma. Before joining WestPoint Stevens, she was part of the original launch team for the introduction of Calvin Klein Home in 1995. Jeff Cohen, Co-Chairman of Earthbound LLC, which chose WestPoint Stevens to market Charisma, emphasized that WestPoint's reputation for quality product and established success with other well-known licenses were key factors in leading Earthbound to place the prestigious Charisma license with the home fashions giant. "WestPoint's own flagship Martex(R) brand is an institution in this business -- a quality product carefully built and marketed over many years -- and the Company's success with licenses such as Ralph Lauren Home and Disney Home(R) shows its expertise in recognizing and maximizing brand potential. We are confident that WestPoint Stevens will create a whole new level of consumer demand for Charisma." The Charisma trademark is owned by Official Pillowtex LLC. 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. XLO GROUP: Resilience Capital Completes Private Acquisition ----------------------------------------------------------- Resilience Capital Partners LLC and The Dan T. Moore Company completed the acquisition of The XLO Group of Companies and its subsidiaries Excello Specialty Company and XLO Jacksonville last week. The new company will be known as Excello Engineered Systems LLC. Terms of the transaction were not disclosed. Founded in 1934, XLO is a leading Tier 1 manufacturer of die cut and molded film and foam laminated water shields for the automotive industry. XLO has achieved leading market share for its principal products through its long- standing relationships with its customers and vendors. The company is headquartered in Cleveland, Ohio and has manufacturing facilities in Macedonia, Ohio and Jacksonville, Florida. "We are excited about the opportunity to acquire this very unique niche oriented automotive supplier. We look forward to continuing the tradition XLO has established by serving its customers for over 50 years with its dedicated and skilled workforce," said Steven Rosen, Managing Partner of Resilience Capital Partners. "Like many Tier 1 automotive suppliers, XLO has faced a challenging environment over the past few years. We are confident in our ability to grow this business, in partnership with its customers, vendors and employees, to continue to provide innovation and world-class quality to its customers," added Bassem Mansour, Managing Partner of Resilience Capital Partners. The XLO transaction is the third acquisition this year and the sixth overall for Resilience. About Resilience Capital Partners LLC Resilience Capital Partners -- http://www.resiliencecapital.com/ -- is a private equity firm based in Cleveland, Ohio focused on investing in underperforming and turnaround situations. Resilience's investment strategy is to acquire lower middle market companies that have solid fundamental business prospects, but have suffered from a cyclical industry downturn, are under-capitalized, or have less than adequate management resources. Resilience typically acquires companies with revenues of $10 million to $100 million. SSG Capital Played a Key Role SSG Capital was retained by XLO as it was in the midst of executing a financial and operational turnaround and the resolution of its senior secured debt obligations. SSG's job was to explore strategic alternatives. "Working under a demanding timeline, SSG assisted the Company in completing a transaction that involved the sale of its business to private investors," SSG said in a written statement last week while refusing to provide any other information about the transaction. The SSG professionals involved in this transaction were Geoffrey Frankel, Michael Goodman and Matthew Sobieralski of SSG Capital Advisors, L.P., Shaun Donnellan and Torben von Staden of Glass & Associates, Inc. and Shawn Riley, Jean Robertson and David Watson of McDonald Hopkins Co., LPA. As a boutique investment banking firm, SSG Capital Advisors, L.P. -- http://www.ssgca.com/-- specializes in advising businesses and investors in special situations. Armed with a strong team and a broad base of relevant experience, the firm assists companies throughout the world facing these challenging situations. In the past five years, SSG has completed over 100 investment banking assignments on behalf of its clients. ZAXIS INTERNATIONAL: Trustee Sells Corporate Shell for $35,000 -------------------------------------------------------------- Kathryn A. Belfance, the Chapter 7 Trustee overseeing the liquidation of Zaxis International, Inc., sought and obtained permission from the Honorable Marilyn Shea-Stonum of the U.S. Bankruptcy Court for the Northern District of Ohio, Eastern Division, to sell the Debtor's corporate shell for $35,000, in cash, to Park Avenue Group, Inc. The Bankruptcy Court found that, "based upon the fact that no objection was filed in response to the Trustee's Notice, Park Avenue's purchase of the Shell is in good faith and Park Avenue is a good faith purchaser entitled to protections of 11 U.S.C. Section 363(m)." There is no indication that the Securities and Exchange Commission received notice of the proposed sale. The SEC typically takes a dim view of trafficking in public shells. The Bankruptcy Court additionally authorized the Purchaser to take seven additional actions following the sale: (1) Appoint a new board of directors of Zaxis; (2) The new board of directors shall be authorized to Amend Zaxis' articles of incorporation to increase the authorized number of shares of common stock of Zaxis to 100,000,000 shares of common stock; (3) The new board of directors shall be authorized to amend Zaxis' articles of incorporation to change the par value of Zaxis' common stock and preferred stock, if any, to $.0001; (4) Issue up to 30,000,000 shares of common stock par value $.0001 to the purchaser and new management of Zaxis, which management shall be appointed by the newly-constituted board of directors; (5) Authorize the newly-constituted board of directors to implement a reverse split of issued and outstanding common stock in a ratio to be determined the newly-constituted board of directors; (6) Cancel and extinguish, if any, all common share conversion rights of any kind, including, but not limited to, warrants, options, convertible bonds, other convertible debt instruments, and convertible preferred stock; and (7) Cancel and extinguish, if any, all preferred shares of every series and accompanying conversion rights of any kind. Following these transactions, Zaxis' new shareholders are: Individual Equity Stake ---------- ------------ Ivo Heiden (serving as President and Director) 115 East 57th Street, Suite 1122 New York, NY 10022 50.25% Richard Rubin 115 East 57th Street, Suite 1122 New York, NY 10022 18.27% Thomas J. Craft, Jr. 11000 Prosperity Farms Road Palm Beach Gardens, FL 33401 18.27% Juergen Heiden Dorfstrasse 21 18314 Luedershagen, Germany 13.71% Zaxis International Inc., a Delaware corporation, filed a chapter 7 petition on November 6, 2002 (Bankr. N.D. Ohio Case No. 02-55160). Prior to filing for bankruptcy, Zaxis manufactured and sold products used in electrophoresis, an electrochemical process used to analyze genetic material and its components such as proteins and DNA. When Zaxis filed for bankruptcy, it reported $181,000 in assets and $1.3 million in liabilities. Robert B. Trattner, Esq., in Akron, Ohio, serves as counsel to the chapter 7 trustee. * BOND PRICING: For the week of December 13 - December 17, 2004 -------------------------------------------------------------- Issuer Coupon Maturity Price ------ ------ -------- ----- Adelphia Comm. 3.250% 05/01/21 15 Adelphia Comm. 6.000% 02/15/06 17 AMR Corp. 9.000% 09/15/16 72 Applied Extrusion 10.750% 07/01/11 59 Armstrong World 6.350% 08/15/03 70 Bank New England 8.750% 04/01/99 16 Burlington Northern 3.200% 01/01/45 58 Calpine Corp. 7.750% 04/15/09 69 Calpine Corp. 7.785% 04/01/08 72 Calpine Corp. 8.500% 02/15/11 69 Calpine Corp. 8.625% 08/15/10 72 Comcast Corp. 2.000% 10/15/29 44 Delta Air Lines 7.900% 12/15/09 60 Delta Air Lines 8.000% 06/03/23 65 Delta Air Lines 8.300% 12/15/29 46 Delta Air Lines 9.000% 05/15/16 48 Delta Air Lines 9.250% 03/15/22 46 Delta Air Lines 9.750% 05/15/21 44 Delta Air Lines 10.000% 08/15/08 72 Delta Air Lines 10.125% 05/15/10 59 Delta Air Lines 10.375% 02/01/11 53 Dobson Comm. Corp. 8.875% 10/01/13 72 Evergreen Int'l Avi. 12.000% 05/15/10 73 Falcon Products 11.375% 06/15/09 45 Federal-Mogul Co. 7.500% 01/15/09 33 Finova Group 7.500% 11/15/09 49 Iridium LLC/CAP 14.000% 07/15/05 13 Inland Fiber 9.625% 11/15/07 41 Kaiser Aluminum & Chem. 12.750% 02/01/03 18 Lehmann Bros. Hldg. 6.000% 05/26/05 64 Level 3 Comm. Inc. 2.875% 07/15/10 72 Level 3 Comm. Inc. 6.000% 09/15/09 61 Level 3 Comm. Inc. 6.000% 03/15/10 58 Liberty Media 3.750% 02/15/30 69 Loral Cyberstar 10.000% 07/15/06 73 Mirant Corp. 2.500% 06/15/21 70 Mirant Corp. 5.750% 07/15/07 73 Mississippi Chem. 7.250% 11/15/17 69 Northern Pacific Railway 3.000% 01/01/47 57 Nutritional Src. 10.125% 08/01/09 67 Oglebay Norton 10.000% 02/01/09 74 O'Sullivan Ind. 13.375% 10/15/09 45 Pegasus Satellite 12.375% 08/01/06 64 Pegasus Satellite 13.500% 03/01/07 1 Pen Holdings Inc. 9.875% 06/15/08 54 RCN Corp. 10.000% 10/15/07 55 RCN Corp. 10.125% 01/15/10 60 RCN Corp. 11.125% 10/15/07 59 Reliance Group Holdings 9.000% 11/15/00 26 Syratech Corp. 11.000% 04/15/07 48 Trico Marine Service 8.875% 05/15/12 63 Tower Automotive 5.750% 05/15/24 61 United Air Lines 9.125% 01/15/12 6 United Air Lines 10.670% 05/01/04 6 Univ. Health Services 0.426% 06/23/20 59 Westpoint Stevens 7.875% 06/15/08 0 Zurich Reinsurance 7.125% 10/15/23 62 ********* 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 ***