/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/041217.mbx T R O U B L E D C O M P A N Y R E P O R T E R Friday, December 17, 2004, Vol. 8, No. 278 Headlines ABS CAPITAL: Moody's Junks Classes B-1 & B-2 2nd Priority Notes ACTUANT CORP: Key Components Acquisition Clears HSR Waiting Period ADELPHIA COMMS: Asks Court to Set Security Sale Bidding Protocol AIR CANADA: Montie R. Brewer Takes On President & CEO Roles ALLEGHENY ENERGY: Completes Sale of Lincoln Generating Facility ALLIANCE IMAGING: Prices 10-3/8% Sr. Sub. Debt Tender Offer AMES DEPT: Liquidating Trust to be Created Under Chapter 11 Plan ASSET BACKED: Moody's Places Ba3 Rating on Class M-9 Certificates ATA HOLDINGS: Selects Southwest Airlines' $117 Million Bid ATA AIRLINES: U.S. Trustee Balks at Akin Gump's Hourly Rates BANC OF AMERICA: Moody's Puts Low-B Ratings on Four Cert. Classes BANKAMERICA MANUFACTURED: Fitch Junks 13 Debt Classes BASIC ENERGY: Moody's Revises Outlook on Ratings to Positive BEARINGPOINT: Moody's Rates $350M Convertible Sub. Debt at Ba3 BEARINGPOINT: S&P Puts BB- Rating on $325M Convertible Sub. Notes CARGO ACQUISITION: Moody's Places Ba1 Rating on Subordinate Bonds CARROLS CORP: Inks Amended & Restated Sr. Secured Credit Facility CHARTER COMMS: Closes $550 Million Sr. Floating Rate Debt Offering COMMUNITY HEALTH: Appoints Julia North to Board of Directors CONCERT INDUSTRIES: Superior Court Sanctions Plan of Arrangement CSK AUTO: Redeems $14.9 Million Remaining Balance of 12% Sr. Notes DATATEC SYSTEMS: Wants to Retain Lowenstein Sandler as Counsel DATATEC SYSTEMS: Look for Bankruptcy Schedules by January 19 DIAMOND TRIUMPH: S&P Cuts Ratings to B- & Says Outlook is Negative DII/KBR: Takes Step Closer to Emergence from Bankruptcy DP 8 LLC: Court Extends Exclusive Filing Period Until January 25 DRS TECH: Moody's Rates Proposed $200M Senior Sub. Notes at B2 ELIZABETH ARDEN: Moody's Ups Ratings, Citing Improved Cash Flow ENRON: ENA Wants Court Nod to Sell De Minimis Shares & Interests FALCON PRODUCTS: Using 30-Day Grace Period to Pay Bond Interest FALCON PRODUCTS: S&P's Corporate Credit Rating Tumbles to D FRANK'S NURSERY: Has Exclusive Right to File Plan Until April 6 FRANK'S NURSERY: Committee Hires Mesirow as Financial Advisors G.L. MANUEL CONOCO: Case Summary & 20 Largest Unsecured Creditors GENERAL ELECTRIC: Fitch Puts BB Rating on $18.6M Class D Certs. GENERAL NUTRITION: Moody's Junks $215M Senior Subordinated Notes GLOBAL CROSSING: Final Settlement Restores $79 Mil. for Retirees GREAT PLAINS ENERGY: Inks $550 Million 5-Year Credit Facility GRUPO TMM: S&P Places Junk Ratings on CreditWatch Positive HAYES LEMMERZ: Establishes $75M Receivable Securitization Program HERBALIFE LTD: Prices Initial Public Offering at $14 Per Share HIGH VOLTAGE: Philip Martineau to Replace Russ Shade as CEO HIGH VOLTAGE: Delays Filing Quarterly Financial Reports HUDSON'S BAY: Renews $200 Million Securitization Program IDI CONSTRUCTION: Case Summary & 20 Largest Unsecured Creditors INERGY LP: S&P Assigns B- Ratings to $400M Senior Unsecured Notes INN OF THE MOUNTAIN: S&P Revises Outlook on B Ratings to Stable INTEGRATED HEALTH: Ready to Send Payments to Premiere Creditors INTERLINE BRANDS: Prices 12.5 Mil. Shares in IPO at $15 Each INTERSTATE GENERAL: Receives Delisting Notice from AMEX KAISER ALUMINUM: Committee Wants to Examine James McAulliffe KANSAS CITY SOUTHERN: Moody's Affirms Low-B Ratings KANSAS CITY SOUTHERN: S&P Places Ratings on CreditWatch Negative LANDRY'S RESTAURANTS: S&P Rates Planned $450 Sr. Sec. Loan at BB- LEHMAN ABS: S&P Junks Class B-1 Issue & Rates Class M-2 at BB LEHMAN MANUFACTURED: Moody's Rates Classes II-A1 & II-A2 at B3 LEVI STRAUSS: Launching $375M Sr. Debt Offer via Private Placement LEVI STRAUSS: Commencing Cash Tender Offer for Sr. Notes Due 2006 MARINER HEALTH: S&P Withdraws Low-B Ratings After Acquisition METRON TECH: Changes Name to Nortem & Begins Liquidating Process MORTGAGE CAPITAL: S&P Pares Ratings on Classes H & J to Single-B NEXTEL COMMS: Moody's Reviewing Low-B Ratings & May Upgrade OMEGA HEALTHCARE: Sells 4 Million Shares in Public Offering PARMALAT USA: Who Gets What Under the Plans of Reorganization PEGASUS SATELLITE: Secured Lenders Ask Court for Summary Judgment PIXIUS COMMUNICATIONS: Case Summary & Largest Unsecured Creditors RELIANCE GROUP: Judge Gonzalez Sets Jan. 7 as Plan Voting Deadline RENAISSANCE CAPITAL: S&P Lifts Counterparty Credit Rating to B ROPER INDUSTRIES: S&P Affirms BB+ Corporate Credit Rating SEQUOIA MORTGAGE: Moody's Puts Low-B Ratings on Classes B-4 & B-5 SURGICARE INC: Completes Restructuring Deals & Adopts New Name STANADYNE HOLDINGS: Moody's Junks Planned $100M Sr. Discount Notes STEEL CITY: Checks Being Returned for Insufficient Funds TARRANT COUNTY: Moody's Junks $5.4 Million Revenue Bonds TFM S.A. DE C.V.: S&P Places B Rating on CreditWatch Positive TROPICAL SPORTSWEAR: Files Chapter 11 Petition in M.D. Florida TROPICAL SPORTSWEAR: Case Summary & 23 Largest Unsecured Creditors UAL CORP: Wants Court to Approve United Express Pact with TSA US AIRWAYS: Bankruptcy Court Approves GE Settlement Agreement US AIRWAYS: Inks Tentative Cost Savings Pact with AFA US AIRWAYS: Wants to Transfer ATSB Loan Tranche A to Govco W.R. GRACE: Debtors Propose New Case Management Order WACHOVIA BANK: Fitch Puts Low-B Ratings on Six Mortgage Certs. WAY TO PLAY INC: Case Summary & 7 Largest Unsecured Creditors WCI STEEL: Court Says Reorganization Plans Need Legal Compliance WMC MORTGAGE: Fitch Junks Class B Series 1997-1 Certificates YUKOS OIL: Begs U.S. Bankruptcy Court for Order Halting Auction * BOOK REVIEW: Macy's For Sale ********* ABS CAPITAL: Moody's Junks Classes B-1 & B-2 2nd Priority Notes --------------------------------------------------------------- Moody's Investors Service downgraded its rating of the following Class of Notes issued by ABS Capital Funding, Ltd.: (1) $15,000,000 Class B-1 Second Priority Floating Rate Term Notes Due 2033 from B1 on watch for downgrade to Caa2 no longer on watch for downgrade. (2) $13,000,000 Class B-2 Second Priority Fixed Rate Term Notes Due 2033 from B1 on watch for downgrade to Caa2 no longer on watch for downgrade. Moody's noted that the transaction, which closed in December 2000, is currently failing the Moody's Maximum Rating Distribution Test. The rating action reflects deterioration in the credit quality of the underlying collateral pool, which consists primarily of asset-backed securities. Moody's also removed these Classes of Notes issued by ABS Capital Funding, Ltd. from the Moody's Watchlist for possible downgrade and has confirmed the current ratings: (1) $131,000,000 Class A-1 Senior Secured Floating Rate Term Notes due 2033 rating confirmed at Aaa. (2) $131,000,000 Class A-2 Senior Secured Floating Rate Revolving Notes due 2033 rating confirmed at Aaa. ACTUANT CORP: Key Components Acquisition Clears HSR Waiting Period ------------------------------------------------------------------ Actuant Corporation (NYSE:ATU) reported that the Federal Trade Commission Pre-merger Notification Office has granted early termination of the waiting period imposed by the Hart-Scott-Rodino Antitrust Improvements Act, effective December 14, 2005. Actuant submitted its filing to the Federal Trade Commission and Department of Justice on November 30, 2004, in conjunction with the previously announced pending acquisition of Key Components, Inc. Actuant, headquartered in Milwaukee, Wisconsin, is a diversified industrial company with operations in over 20 countries. The Actuant businesses are market leaders in highly engineered position and motion control systems and branded hydraulic and electrical tools. Products are offered under such established brand names as A.W. Sperry, Dresco, Enerpac, Gardner Bender, Kopp, Kwikee, Milwaukee Cylinder, Nielsen Sessions, Power-Packer, Power Gear and Yvel. For further information on Actuant and its business units, visit the Company's website at http://www.actuant.com. * * * As reported in the Troubled Company Reporter on Nov. 12, 2004, Standard & Poor's Ratings Services revised its outlook on Actuant Corp. to positive from stable. At the same time, S&P affirmed its rating on the Milwaukee, Wisconsin-based company. As reported in the Troubled Company Reporter on May 5, 2004, Standard & Poor's Ratings Services assigned its 'BB' rating to the $250 million senior revolving credit facility of Actuant Corp. (BB). ADELPHIA COMMS: Asks Court to Set Security Sale Bidding Protocol ---------------------------------------------------------------- To obtain the maximum value for substantially all the assets of these Adelphia Communications Corporation debtor-affiliates: -- Starpoint Limited Partnership, -- Cable Sentry Corp., -- Coral Security, Inc., and -- Westview Security, Inc. the ACOM Debtors propose to hold an auction and implement certain bidding procedures. The ACOM Debtors' Stalking Horse Agreement with Innova Security Solutions, LLC, will serve as a basis for all future bids. The salient terms of the proposed Bidding Procedures are: A. Potential Purchasers Each potential purchaser, who is interested in participating in the Auction and requests information about the Security Business, will complete and execute a confidentiality agreement and provide the Security Business Debtors with: (i) evidence of its financial ability to purchase the Security Business; and (ii) other information the Security Business Debtors reasonably request to demonstrate the potential purchaser's ability to purchase the Security Business and timely consummate its bid. B. Qualified Bidders No later than two business days before the Auction, the Debtors will notify potential purchasers who have returned an executed confidentiality agreement, who have satisfactory financial qualifications and whom the Security Business Debtors have selected as qualified bidders. Any person who wishes to participate in the Bidding Process with respect to the Security Business must be a Qualified Bidder. C. Stalking Horse Agreement Markups The Debtors will send to each prospective bidder a copy of the Stalking Horse Agreement. Each bidder submitting a bid will produce a markup of the Stalking Horse Agreement containing the terms of its bid, including the amount and any other terms of consideration offered for the Security Business. D. Minimum Initial Overbid Each Stalking Horse Agreement Markup will propose at least a $40,100,000 value and be accompanied by a good faith deposit equal to 10% of the total proposed purchase price. E. Deadline for Submission of Competing Bids All Stalking Horse Agreement Markups and related adequate assurance packages must be submitted no later than January 17, 2005, at 4:00 p.m., prevailing New York Time. F. Irrevocability of Bids By submitting a signed Stalking Horse Agreement Markup with a Good Faith Deposit, a Qualified Bidder irrevocably offers for a period of 60 days after entry of the Sale Order to purchase the Security Business, pursuant to the terms of the Qualified Bidder's Stalking Horse Agreement Markup if the agreement is accepted by the Debtors. G. Auction If Qualified Bids with respect to the Security Business have been received from at least one Qualified Bidder other than Innova, the Debtors may conduct an auction for the Security Business on January 21, 2005, at 1:00 p.m., prevailing Eastern Time. H. Credit Bidding Innova may include the Breakup Fee and Expense Reimbursement in the amount of any subsequent bid that Innova makes in the Auction and, in the event Innova is the Successful Bidder as a result of a subsequent bid made at the Auction, Innova will be entitled to credit the amount of the Breakup Fee and Expense Reimbursement against the purchase price of that subsequent bid payable at Closing. I. Minimum Bidding Increments Each bid submitted after the Initial Competitive Overbid will be in increments of not less than $200,000. The ACOM Debtors believe that the Bidding Procedures provide a fair and appropriate framework for selling the Security Business and will enable them, with assistance from their financial advisor, to review, analyze and compare all bids received to determine which bids are in the best interests of the Debtors' estates and creditors. The Debtors ask Judge Gerber to approve the Bidding Procedures. The Debtors believe that an auction of the Security Business conducted in accordance with the Bidding Procedures will maximize the value of the Security Business. Headquartered in Coudersport, Pennsylvania, Adelphia Communications Corporation (OTC: ADELQ) is the fifth-largest cable television company in the country. Adelphia serves customers in 30 states and Puerto Rico, and offers analog and digital video services, high-speed Internet access and other advanced services over its broadband networks. The Company and its more than 200 affiliates filed for Chapter 11 protection in the Southern District of New York on June 25, 2002. Those cases are jointly administered under case number 02-41729. Willkie Farr & Gallagher represents the ACOM Debtors. (Adelphia Bankruptcy News, Issue No. 75; Bankruptcy Creditors' Service, Inc., 215/945-7000) AIR CANADA: Montie R. Brewer Takes On President & CEO Roles ----------------------------------------------------------- Montie R. Brewer is appointed President and CEO of ACE Aviation Holdings Inc.'s mainline carrier, operating as Air Canada. Mr. Milton will remain Chairman of Air Canada in addition to his responsibilities at ACE. Mr. Brewer joined Air Canada in April 2002 as Executive Vice President, Commercial. In that role he was responsible for all commercial aspects of Air Canada including Air Canada Jazz, Air Canada Jetz, Air Canada Vacations, new businesses and the strategic direction of network planning, marketing and scheduling. An industry veteran, Mr. Brewer was previously Senior Vice President -- Planning for United Airlines with previous airline experience gained at Northwest Airlines, Republic Airlines, Braniff and Trans World Airlines. He has planned and developed over twenty hub operations worldwide, managed low cost airline operations as President of United Shuttle and successfully restructured the route networks of three carriers. "Montie is a true industry visionary who joined Air Canada primarily because he wanted to be part of an airline willing to change," said Robert Milton. "His accomplishments during his time at Air Canada are impressive; in particular, he was chief architect and led the implementation of Air Canada's new business model including the airline's successful simplified fare structure. Montie was a critical contributor to Air Canada's transformation from legacy carrier to a profitable, growing, competitive company and I'm confident his innovative skills, strategic vision and passion for the industry will serve Air Canada's employees, customers and shareholders well," said Mr. Milton. Jon Turner, formerly General Manager, Air Canada Maintenance and Aircraft Programs, is appointed Vice President, Maintenance, Air Canada. Since joining Air Canada's Engineering Department in 1980, Mr. Turner held a number of senior management positions including Director of Quality, Director of Fleet Management, and General Manager of Aircraft Programs. He was appointed General Manager, Air Canada Maintenance and Aircraft Programs in August 2003. The Air Canada Maintenance organization is responsible for Air Canada's core engineering, fleet management, airworthiness, vendor management, maintenance operation control as well as line and cabin maintenance. Duncan Dee, previously Senior Vice President, Corporate Affairs, Air Canada, is appointed Senior Vice President, Corporate Affairs and Chief Administrative Officer, ACE. Since joining Air Canada in 1997, Mr. Dee held various positions in the Corporate Affairs and Government Relations branch and the Office of the President and CEO. He was appointed Senior Vice President, Corporate Affairs in April 2004 with responsibilities for Corporate Communications, Government Relations, Community Investments, Corporate Security, Safety and Environment, and the Office of the President and CEO. In addition, he provided reporting oversight over the Corporation's IT, Alliance and Regulatory Affairs functions as well as Air Canada's sales, customer service and operations outside Canada and the United States. Bradley Moore, formerly Vice President Customer Experience - Airports, Air Canada, is appointed President and CEO, Air Canada Ground Handling Services, a separate limited partnership of ACE formed upon completion of Air Canada's restructuring. Mr. Moore held various senior management positions at Air New Zealand and Emirates prior to joining Air Canada in 2000 to lead and manage the airline's People and Performance Strategy. In October 2003 he was appointed Vice President, Customer Service, responsible for In-Flight, Call Centers and Customers Solutions. He became Vice President, Customer Experience - Airports in August 2004. Claude Morin, previously Vice President, Cargo, Air Canada, is appointed President and CEO, Air Canada Cargo, a separate limited partnership of ACE formed upon completion of Air Canada's restructuring. Mr. Morin has held a number of senior management positions since joining Air Canada in 1985. He became Managing Director, Cargo, in 1997 and was promoted to Vice President, Cargo in March 2000 with responsibility for all aspects of the airline's cargo activities. Carlton Donaway Appointed to Board of Directors Carlton Donaway was appointed a member of the Board of Directors filling the seat vacated by Mr. George Hamilton. Mr. Donaway was executive chairman of DHL Holdings USA, chairman, president, and chief executive officer of Airborne Inc., and president and chief executive officer of ABX Air Inc. "I have known Carl for many years and am pleased to welcome him to the ACE Board of Directors," said Mr. Milton. "Carl's extensive experience in the aviation industry will complement the broad range of experience of the Board of Directors." Air Canada filed for CCAA protection on April 1, 2003 (Ontario Superior Court of Justice, Case No. 03-4932) and filed a Section 304 petition in the U.S. Bankruptcy Court for the Southern District of New York (Case No. 03-11971). Mr. Justice Farley sanctioned Air Canada's CCAA restructuring plan on Aug. 23, 2004. Sean F. Dunphy, Esq., and Ashley John Taylor, Esq., at Stikeman Elliott LLP, in Toronto, serve as Canadian Counsel to the carrier. Matthew A. Feldman, Esq., and Elizabeth Crispino, Esq., at Willkie Farr & Gallagher serve as the Debtors' U.S. Counsel. When the Debtors filed for protection from its creditors, they listed C$7,816,000,000 in assets and C$9,704,000,000 in liabilities. On September 30, 2004, Air Canada successfully completed its restructuring process and implemented its Plan of Arrangement. The airline exited from CCAA protection raising $1.1 billion of new equity capital and, as of September 30, has approximately $1.9 billion of cash on hand. ALLEGHENY ENERGY: Completes Sale of Lincoln Generating Facility --------------------------------------------------------------- Allegheny Energy, Inc. (NYSE:AYE) reported that its subsidiary, Allegheny Energy Supply Company, LLC, has completed the sale of the Lincoln generating facility and a related tolling agreement. Allegheny Energy Supply sold the facility and tolling agreement to affiliates of ArcLight Capital Partners, LLC and Tyr Capital, LLC. Proceeds from the sale total $175.1 million and will be used to reduce debt. "Completing this sale is another milestone in our efforts to restore Allegheny's financial strength," said Paul J. Evanson, Chairman, President and Chief Executive Officer of Allegheny Energy. "We are moving steadily toward our goal of reducing debt by $1.5 billion by the end of 2005." Located in Manhattan, Illinois, Lincoln (672 megawatts) is one of three gas-fired Midwest peaking facilities acquired by Allegheny Energy Supply in 2001. Efforts are under way to sell the other two facilities, located in Wheatland, Indiana (512 megawatts) and Gleason, Tennessee (526 megawatts). ArcLight Capital Partners, LLC, is one of the world's leading energy infrastructure investing firms. ArcLight invests throughout the energy industry value chain in hard assets that produce current income as well as capital appreciation. Tyr Capital, LLC, invests in minority positions in merchant and contracted energy assets. Headquartered in Greensburg, Pennsylvania, Allegheny Energy is an energy company consisting of two major businesses: Allegheny Energy Supply, which owns and operates electric generating facilities, and Allegheny Power, which delivers low-cost, reliable electric service to customers in Pennsylvania, West Virginia, Maryland, Virginia and Ohio. More information about Allegheny Energy is available at http://www.alleghenyenergy.com. * * * As reported in the Troubled Company Reporter on Sept. 14, 2004, Fitch Ratings revised the Rating Outlook of Monongahela Power Company to Stable from Negative and affirmed existing ratings of Allegheny Energy, Inc., and its subsidiaries. Fitch rates many layers of Allegheny debt obligations and preferred stock issues in the double-B and single-B range. ALLIANCE IMAGING: Prices 10-3/8% Sr. Sub. Debt Tender Offer ----------------------------------------------------------- Alliance Imaging, Inc. (NYSE:AIQ), determined the price of its previously announced offer to purchase its outstanding 10-3/8% Senior Subordinated Notes due 2011. Holders who validly tender and do not properly withdraw their notes and validly deliver and do not properly withdraw their consents on or prior to the Expiration Date will be entitled to receive $1,128.56 for each $1,000 principal amount of notes, based on an assumed settlement date of Dec. 29, 2004, (plus accrued and unpaid interest to, but not including, the settlement date). The price is equal to: (i) the present value on the settlement date of $1,051.88 (the amount payable on the earliest redemption date of the notes), plus the present value of the interest that would be payable on, or accrue from, the most recent interest payment date on $1,000 principal amount of notes until the Earliest Redemption Date, in each case, determined on the basis of a yield to the Earliest Redemption Date equal to the sum of: (x) the bid-side yield on the 1-1/2% U.S. Treasury Note due March 31, 2006, as calculated as of 2:00 p.m., New York City time, on Dec. 14, 2004, plus (y) 50 basis points, minus (z) accrued and unpaid interest from the last payment date to, but not including, the settlement date, minus (ii) $10.00 per $1,000 principal amount of notes, which is equal to the Consent Payment referred to below. Holders who validly tendered their notes and validly delivered their consents on or prior to 5:00 p.m., New York City time, on Monday, Dec. 13, 2004, are also entitled to receive for each $1,000 principal amount of notes held by the holder, in addition to the Tender Offer Consideration, an amount in cash equal to $10.00. Holders tendering after the Consent Date will only be eligible to receive the Tender Offer Consideration and not the Consent Payment. Alliance Imaging had received tenders and consents on or prior to the Consent Date representing approximately 97.3% of the $260 million aggregate principal amount of outstanding notes. Alliance Imaging has received the requisite consents from holders of the notes to amend the notes and the indenture governing the notes, and has entered into a supplemental indenture eliminating substantially all of the restrictive covenants and certain events of default contained in the notes and the indenture. Consents received prior to the Consent Date are now irrevocable. The amendments will become operative following the Expiration Date when Alliance Imaging accepts for purchase the notes that are tendered and not withdrawn. The tender offer will expire at midnight, New York City time, on Tuesday, Dec. 28, 2004, unless extended or terminated. Alliance Imaging has retained Deutsche Bank Securities, Inc., to act as the exclusive Dealer Manager and Solicitation Agent in connection with the tender offer and consent solicitation. Questions regarding the tender offer and consent solicitation and requests for documents may be directed to Deutsche Bank Securities Inc. at 212-250-6008 (collect) or Global Bondholder Services Corporation, the Information Agent in connection with the tender offer and consent solicitation, at 866-873-7700 (toll free). About the Company Alliance Imaging is a leading national provider of diagnostic imaging services. Alliance provides imaging services primarily to hospitals and other healthcare providers on a shared and full-time service basis, in addition to operating a growing number of fixed-site imaging centers. The Company had 481 diagnostic imaging systems, including 362 MRI systems and 53 PET or PET/CT systems, and over 1,000 clients in 43 states at September 30, 2004. 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. * * * As reported in the Troubled Company Reporter on Dec. 15, 2004, Standard & Poor's Ratings Services assigned a 'B+' debt rating and '3' recovery rating to Alliance Imaging Inc.'s $410 million term loan C due 2011. The debt rating is the same as the company's 'B+' corporate credit rating; this, and the '3' recovery rating indicate that investors should expect meaningful recovery of principal (50%-80%) in the event of a bankruptcy. AMES DEPT: Liquidating Trust to be Created Under Chapter 11 Plan ---------------------------------------------------------------- In the event the Plan Implementation Party -- whether the Debtors, the plan administrator or the trustee as the case may be -- elects to establish a Liquidating Trust, a Liquidating Trust Agreement, in a form reasonably acceptable to the Official Committee of Unsecured Creditors, will be executed, and all necessary steps will be taken to establish the Liquidating Trust and the beneficial interests, which will be for the benefit of the holders of Allowed General Unsecured Claims. Liquidating Trust Assets Rolando de Aguiar, President and Chief Wind Down Officer of Ames Department Stores, Inc., relates that the Liquidating Trust will consist of the Liquidating Trust Assets. Any Cash or other property received from third parties from the prosecution, settlement, or compromise of the Avoidance Actions will constitute Liquidating Trust Assets for purposes of distributions under the Liquidating Trust. On the Transfer Date, the Plan Implementation Party will transfer all the Liquidating Trust Assets to the Liquidating Trust free and clear of all liens, claims, and encumbrances; provided, however, that all the assets will be transferred to the Liquidating Trust subject to certain Claims, expenses and post-Transfer Date obligations. In addition, all bank accounts established by the Plan Implementation Party to fund all Claims receiving Cash payments will be held by the Trustee in the name of the Liquidating Trust subject to the provisions of the Plan, and the Liquidating Trust will have no greater rights to the bank accounts than the rights of the Plan Implementation Party. Governance of Liquidating Trust The Liquidating Trust will be governed by a trustee. In the event the Plan Implementation Party elects to establish a Liquidating Trust, Rolando de Aguiar will be designated as the Trustee on or before the Transfer Date by the Committee with the Debtors' consent. The designation of the Trustee will be effective on the Transfer Date without the need for a further Court order. The Trustee will have the power and authority to: (a) hold, manage, sell, and distribute the Liquidating Trust Assets to the holders of Allowed General Unsecured Claims; (b) hold, manage, sell, and distribute Cash or non-Cash Liquidating Trust Assets obtained through the exercise of its power and authority; (c) prosecute and resolve, in the names of the Debtors or the name of the Trustee, the Avoidance Actions; (d) prosecute and resolve objections to Disputed General Unsecured Claims; (e) perform other functions as are provided in the Plan; and (f) administer the closure of the Chapter 11 Cases. The Trustee will also hold the Liquidating Trust Assets for the benefit of the holders of Allowed General Unsecured Claims. The Trustee will be responsible for all decisions and duties with respect to the Liquidating Trust and the Liquidating Trust Assets. In all circumstances, the Trustee will act in the best interests of all beneficiaries of the Liquidating Trust and in furtherance of the purpose of the Liquidating Trust. After the certificates of cancellation, dissolution, or merger for all the Debtors have been filed, the Trustee will be authorized to exercise all powers regarding the Debtors' tax matters, including filing tax returns, to the same extent as if the Trustee were the debtor-in-possession. The Trustee will be entitled to reasonable compensation in an amount consistent with that of similar functionaries in similar types of bankruptcy cases. Dissolution The Trustee and the Liquidating Trust will be discharged or dissolved, as the case may be, at that time as: (a) all Disputed General Unsecured Claims have been resolved; (b) all Liquidating Trust Assets have been liquidated; and (c) all distributions required to be made by the Trustee under the Plan have been made, but in no event will the Liquidating Trust be dissolved later than three years from the Transfer Date unless the Bankruptcy Court, upon motion within the six-month period prior to the third anniversary of the Transfer Date, determines that a fixed period extension, not to exceed two years, is necessary to facilitate or complete the recovery and liquidation of the Liquidating Trust Assets or the dissolution of the Debtors. Ames Department Stores filed for chapter 11 protection on August 20, 2001 (Bankr. S.D.N.Y. Case No. 01-42217). Albert Togut, Esq., Frank A. Oswald, Esq. at Togut, Segal & Segal LLP and Martin J. Bienenstock, Esq., and Warren T. Buhle, Esq., at Weil, Gotshal & Manges LLP represent the Debtors in their restructuring efforts. When the Company filed for protection from their creditors, they listed $1,901,573,000 in assets and $1,558,410,000 in liabilities. (AMES Bankruptcy News, Issue No. 61; Bankruptcy Creditors' Service, Inc., 215/945-7000) ASSET BACKED: Moody's Places Ba3 Rating on Class M-9 Certificates ----------------------------------------------------------------- Moody's Investors Service has assigned a rating of Ba3 to the Class M-9 certificates issued in by Asset Backed Securities Corporation Home Equity Loan Trust, Series 2004-HE7. At deal's closing, Moody's has also issued ratings of Aaa to the senior classes issued in the transaction and ratings ranging from Aa1 to Baa3 to the subordinate classes in the deal. The securitization is backed by New Century Mortgage Corp. and WMC Mortgage Corp. originated adjustable-rate (71.81%) and fixed-rate (28.19%) sub-prime mortgage loans. The ratings are based primarily on the credit quality of the loans, past performance of collateral from these originators, and on the protection from subordination, overcollateralization -- OC, and excess spread. The credit enhancement requirements reflect some benefit for due diligence performed on the collateral. Saxon Mortgage Services, Inc., will service the loans. Moody's has assigned its above average servicer quality rating -- SQ2 -- to Saxon for primary servicing of sub-prime loans. ATA HOLDINGS: Selects Southwest Airlines' $117 Million Bid ---------------------------------------------------------- ATA Holdings Corp. (ATAHQ), the nation's 10th largest passenger carrier, selected the bid of Southwest Airlines for acquisition of certain of ATA's Midway Airport lease rights, subject to approvals by the U.S. Bankruptcy Court for the Southern District of Indiana and the City of Chicago. The bid of Southwest Airlines was selected by ATA upon conclusion of an auction, which took place this week pursuant to authorization of the U.S. Bankruptcy Court, in which ATA's Chapter 11 reorganization case is pending. Bidding at the auction was Southwest Airlines and AirTran Airways, Inc., at the offices of ATA's law firm Baker & Daniels. ATA's Official Committee of Unsecured Creditors concurred with the selection. A hearing to approve the bid of Southwest Airlines as the highest and best bid, and to authorize the transactions called for in the bid, is scheduled before Judge Basil Lorch III on Dec. 21. "We began the reorganization by saying that we would seek the best solution for our people and our customers. We appreciate the efforts of AirTran Airways, but the Southwest transactions are the best possible outcome for ATA, our employees, customers, the City of Chicago and our stakeholders," said George Mikelsons, Chairman, President and CEO of ATA. Mr. Mikelsons added: "I'm especially pleased that, thanks to Southwest Airlines, ATA will maintain a substantial operation in Midway, in addition to expanding ATA's operations in Indiana. I consider Southwest to be the premier low cost carrier in the world. It will be a distinct privilege to undertake the first significant code-share alliance arrangement for both airlines." The final bid presented by Southwest Airlines includes a total of $117 million in commitments to ATA, with the transfer to Southwest Airlines of lease rights to six gates and a maintenance hangar at Chicago Midway Airport for $40 million, $47 million in financing and an investment of $30 million into ATA once it emerges from bankruptcy, representing 27.5% of equity in a reorganized ATA. Upon ATA's emergence from bankruptcy, Southwest has committed to convert the debtor-in-possession financing to a term loan, payable over five years. Also, Southwest has committed to purchase $30 million of convertible preferred stock, in cash, for 27.5 percent of the new ATA. The stock is nonvoting, and it is Southwest's intent to liquidate that position in an orderly manner over time. Southwest and ATA are working on a code share agreement to exchange passengers, initially at Chicago's Midway Airport. Southwest estimates the code share could add $25 to $50 million per year to each airline's annual revenues. "This new financing from Southwest, along with commitments already made by Indianapolis and the State of Indiana, will allow us to reorganize and emerge as a healthier airline," said Gil Viets, ATA's Chief Restructuring Officer. "We couldn't be happier knowing that we are entering into this code-sharing alliance with Southwest Airlines, one of the most innovative, successful and people-oriented airlines in the business." Mr. Viets added, "We're especially proud and appreciative to have been able to accomplish a critical cornerstone of ATA's reorganization after less than eight weeks since ATA's bankruptcy filing. We are even more proud of the thousands of ATA people who continue to provide exceptional customer service through difficult times." ATA Holdings Corp. filed for protection under Chapter 11 of the U.S. Bankruptcy on Oct. 26. The proposed transactions also mark the first significant code- share for both airlines. "We're looking forward to code sharing with the airline that carries more domestic U.S. passengers than any other carrier," said Mr. Viets. The code share agreement is expected to launch in early February on Chicago Midway flights and over the following six months at up to five other airports. Code sharing will allow each airline to transfer passengers to the other airline on a single ticket. As ATA begins the transfer of its lease rights for six gates to Southwest Airlines, ATA emphasized that it continues business as usual. The airline intends to stand by its customer commitments, honoring tickets, upholding its full flight schedule, in-flight services and frequent flyer reward programs, as it has continued to do during its reorganization. ATA expects to reduce its fleet by about 20 percent as it scales back in Chicago. However, with the terms of the code share agreement with Southwest Airlines and the retention by ATA of eight gates in Chicago Midway, ATA remains a larger airline than it would have been under the AirTran Airways Inc. competing bid. ATA plans to continue its expansion in the Indianapolis market, continue to serve the west coast to Hawaii market, as well as operate military and commercial flights. Southwest Airlines has also committed to priority interviews for ATA employees affected by the carrier's downsizing. "We expect to share many more details of our exciting code share agreement with Southwest Airlines and the full breadth of our reorganization plans in the near future, said Mr. Mikelsons. 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: U.S. Trustee Balks at Akin Gump's Hourly Rates ------------------------------------------------------------ As previously reported, The Official Committee of Unsecured Creditors appointed in ATA Airlines' chapter 11 cases asks the United States Bankruptcy Court for the Southern District of Indiana for permission to retain the services of Akin Gump Strauss Hauer & Feld, LLP, as bankruptcy counsel. According to Lee P. Crockett, a representative of John Hancock Funds, the Creditors Committee selected Akin Gump because of the Firm's extensive knowledge and expertise in the areas of law relevant to the ATA Airlines and its debtor-affiliates' cases. Moreover, Akin Gump has had considerable experience in representing unsecured creditors' committees in significant Chapter 11 reorganization cases. U.S. Trustee Objects Nancy J. Gargula, United States Trustee, informs the Court that she could not determine whether Akin Gump's hourly rates are ordinary and customary within its representation of similar bankruptcy-related clients, or all corporate clients, or if discounted rates are available to large corporate clients. Accordingly, the U.S. Trustee wants Akin Gump to submit an affidavit detailing the range of hourly rates charged to all corporate clients within the past year, as well as the range of any discounts given to their corporate clients. The U.S. Trustee also discovered that the Debtors seek to employ an associate who is not yet admitted to a State Bar at $275 an hour. The U.S. Trustee is "uncomfortable with such a fee when other Associates, who already are members of a state bar, have hourly rates beginning at $185 an hour." Furthermore, the U.S. Trustee expects Akin Gump to comply with the provisions of Rule B-2016-1 of the Local Bankruptcy Rules of the U.S. Bankruptcy Court for the Southern District of Indiana, which recognizes U.S. Trustee National Fee Guidelines as well as Region 10 Fee Guidelines, including its supplements. 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) BANC OF AMERICA: Moody's Puts Low-B Ratings on Four Cert. Classes ----------------------------------------------------------------- Moody's Investors Service placed the ratings of nine classes of Banc of America Large Loan, Inc., Commercial Mortgage Pass-Through Certificates, Series 2001-7WTC on review for possible downgrade as follows: * Class A, $211,225,000, Floating, currently rated A2 * Class X-2, Notional, currently rated A2 * Class B, $19,337,000, Floating, currently rated Baa1 * Class C, $26,775,000, Floating, currently rated Baa2 * Class D, $14,875,000, Floating, currently rated Baa3 * Class E, $34,213,000, Floating, currently rated Ba2 * Class F, $17,850,000, Floating, currently rated Ba3 * Class G, $31,325,000, Floating, currently rated B2 * Class H, $27,400,000, Floating, currently rated B3 The rated Certificates are secured by three classes of certificates totaling $428.2 million from an underlying structured transaction which, in turn, is secured by a first leasehold mortgage loan on 7 World Trade Center -- 7WTC. The Class A office building, which collapsed on September 11, 2001, contained approximately 2.0 million square feet. The mortgage loan borrower is controlled by Mr. Larry Silverstein. The 7 WTC land is leased under long-term ground lease from The Port Authority of New York and New Jersey. Since Moody's last rating action in February 2004, re-construction of the building has progressed on budget and on schedule with substantial completion expected in November 2005. The debt matures on January 24, 2006, leaving only a short time period to complete the necessary steps for timely retirement of the debt. While construction is proceeding as planned, progress relating to leasing and financing has fallen short of expectations. The slow progress on these critical items highlights the challenges present in resolving this complex transaction. There have been no executed leases to date at the property and the Borrower has retained CB Richard Ellis to market the building for lease. With respect to financing, the Borrower is in the process of increasing the amount of Liberty Bond financing sought, from $440.0 million to $475.0 million. No definitive agreement has been reached with IRI, the building's insurance carrier to resolve claims related to the destruction on September 11, 2001, although significant progress has been made. The amount of the settlement is crucial to the adequacy of funds available to complete construction of the building. Moody's will continue to review any progress made on the critical issues of leasing, financing, and insurance. BANKAMERICA MANUFACTURED: Fitch Junks 13 Debt Classes ----------------------------------------------------- Fitch Ratings performed a review of the BankAmerica Manufactured Housing -- MH -- Transactions. Based on the review, these rating actions have been taken: Series 1995-BA1: -- Class A-3 is affirmed at 'AAA'; -- Class A-4 is affirmed at 'AA-'; -- Class B-1 is downgraded to 'CCC' from 'B'; -- Class B-2 remains at 'C' Series 1996-1: -- Classes A-5 - A-6 are affirmed at 'AAA'; -- Class A-7 is affirmed at 'AA-'; -- Class B-1 is remains at 'C'; -- Class B-2 is remains at 'C'; Series 1997-1: -- Classes A-8 and A-9 are affirmed at 'AAA'; -- Class M downgraded to 'C' from 'CCC'; -- Class B-1 remains at 'C'; -- Class B-2 remains at 'C'; Series 1997-2: -- Classes A-8 and A-9 are affirmed at 'AAA'; -- Class M downgraded to 'C' from 'CCC'; -- Class B-1 remains at 'C'; -- Class B-2 remains at 'C'; Series 1998-1: -- Class A-1 is affirmed at 'AAA'; -- Class M is affirmed at 'BBB'; -- Class B-1 is affirmed at 'B'; -- Class B-2 remains at 'C'; Series 1998-2: -- Class A-7 is affirmed at 'AAA'; -- Class M is affirmed at 'B'; -- Class B-1 is downgraded to 'C' from 'CCC'; -- Class B-2 remains at 'C'. The affirmations represent approximately $572.9 million in outstanding principal, while the downgrades affect $112.80 million. The pool factors of the transactions (current principal balance as percentage of original balance) range from 24% to 40%. The transactions reviewed pay principal due to senior bonds prior to paying interest due to subordinate bonds. As is consistent with the performance of the manufactured housing industry, higher than expected losses have caused significant interest shortfalls to various subordinate bonds in all of the transactions. The structures allow for interest to accrue on the shortfall amount and to be recovered in the future if there is sufficient available cash flow. Fitch's rating actions reflect the likelihood of future repayment of accrued interest shortfalls. Classes rated 'CCC' and 'C' are unlikely to recover past interest due and ultimate principal in the future. Class A-7 of series 1996-1 is affirmed based on a Letter of Credit issued by BankAmerica Corporation, currently rated 'AA-' as of April 1, 2004, by Fitch. Further information regarding current delinquency, loss, and credit enhancement statistics is available on the Fitch web site at http://www.fitchratings.com/ BASIC ENERGY: Moody's Revises Outlook on Ratings to Positive ------------------------------------------------------------ Moody's affirmed Basic Energy Services, L.P.'s B1 senior implied rating, its B1 rating on its amended/increased senior secured credit facilities, its B2 issuer rating, and moved the rating outlook up from stable to positive. This reflects: (1) progress in increasing operational scale; (2) continued diversification into production related oil and gas activities with over a dozen acquisitions completed over the past 18 months; (3) leverage reduction after after two large leveraged acquisitions in 2003; (4) a building of earnings and cash flow to levels that appear able to cover interest capex and scheduled debt repayments (for 2005) in trough conditions; and (6) supportive near-term trends in the North American oilfield services sector that could help reduce leverage during 2005 or internally fund a degree of acquisition activity. The positive outlook also assumes that management will continue its disciplined approach to growth while maintaining leverage (debt/EBITDA) under 3.5x given the relative small size of the company. A ratings upgrade over the next 12 to 18 months would depend on the scale, pace and funding of a continued aggressive acquisition strategy that Basic and its shareholders expect will drive the firm to a desirable scale and performance leading a potential IPO (depending on market conditions) or other exit strategies on terms acceptable the shareholders. In addition to potential IPO proceeds, an upgrade may require a material acquisition, amply funded with equity and cash flow, that would add significantly more scale and diversification to Basic's portfolio and more durability to its baseline earnings and cash flows. In the meantime, forward progress could be maintained if debt reduction at least follows the bank amortization schedule and leverage is reduced and sustainable under 3.0x. Factors that would put downward pressure on the outlook include: (1) whether the company alters its conservative financial policies and pursues material leveraged acquisitions; (2) leverage (debt/EBITDA) does not decrease from its pro forma level of rising to above 3.5x; (3) if the bank covenants are relaxed and no longer require de-leveraging through amortization; or (4) if higher dividends and stock buybacks above the current $2.0 million per annum limit is allowed under the credit agreement. Basic's ratings are restrained by: (1) its singular exposure to the mature declining oil and gas prospect base of the onshore U.S.; (2) the increase in leverage pro forma for the term loan increase; (3) the company's relative small size compared to its much larger peers which limits its pricing power; (4) its vulnerability of cash flows to sector downturns; (5) the company's ongoing aggressive acquisition strategy; (6) some regional concentration of earnings and cash flows; and (7) the inherent sector volatility and cyclicality. The ratings are supported by: (1) management's long sector experience; (2) the company's use of internal cash flows and equity to increase its scale within the last 18 months; (3) currently favorable momentum within the North American oilfield services sector that could carry well into 2005; (4) strong equity sponsorship; (5) Basic's established position within its markets; (6) a focus on the more durable production related services of exploration and production -- E&P -- activity; and (7) discipline and control of the business owing to the bank loan covenant package, which mandates reduced debt through amortization and gradual tightening of the leverage covenant. Moody's ratings for Basic Energy Services, L.P. are: * Affirmed a B1 -- Basic's amended $220 million senior secured credit facilities. * Affirmed a B1- senior implied rating. * Affirmed a B2 -- senior unsecured issuer rating. The new credit facility amendment will increase the facilities size from $160 million to $220 million. The revolver will increase from $30 million to $50 million, and the term loan B is increasing from $140 million to $170 million. The facilities are secured by essentially all of Basic's assets and are guaranteed by all present and future subsidiaries. The proceeds of the increased term loan facility will be used to repay about $7.5 million of revolver borrowings with the remainder intended for acquisitions. The ratings for the credit facilities are not notched up from the senior implied rating due to bank facilities constituting almost the entire debt in the capital structure and amount of debt relative to the collateral of the company, which is representative of the enterprise value of Basic. Inherent sector volatility could produce wide swings in Basic's earnings and cash flows. Moody's believes that despite strong commodity prices, E&P companies remain disciplined and will likely scale back capital spending if oilfield services costs affect their internal rates of returns, despite strong commodity prices. This risk is amplified by the mature and declining onshore U.S. markets where many new basins and plays are price sensitive and are only economical in strong price environments. In addition, approximately one-third of Basic's earnings and cash flows are generated from the mature Permian Basin in West Texas. Though the addition of the Rocky Mountain businesses from its acquisitions offers regional diversity, these businesses are more drilling related (and thus more cyclical) and is in a region that is more price sensitive and thus need the support of high commodity prices to make many of them economical. Basic's ratings are restrained by its size relative to the larger competitors. The two largest players in the U.S. onshore well services sector hold approximately 63% of the domestic onshore well services rig fleet, are considerably larger capitalized companies than Basic, and most importantly, possess significant pricing leverage. Though Basic is established within its markets, a change in pricing strategy by the two larger players could result in sector pricing pressure, thus potentially placing Basic's earnings and cash flows under pressure. Ratings also reflect Basic's acquisitive nature and its willingness to fund acquisitions with debt, which is rising above its currently highest historical level. Though Global Energy Partners -- GEP -- has invested $81 million in Basic, the company has and will continue to use debt to fund a significant portion of acquisitions, potentially causing a strain on leverage. The ratings gain support from Basic's focus on well services for already producing oil and gas wells, which is less tied to the drilling cycle and is vital to the support and enhancement of oil and gas. Production enhancement activities tend to be less volatile through the cycles as E&P companies always maintain a focus on the preservation and improvement of existing production especially and continually look for ways to improve oil and gas volumes. Current trends in the oilfield services are favorable with strong prices and declining E&P production driving the land rig in the U.S. near capacity levels. As a result, demand for oilfield services has gained positive momentum as has resulted in many services firms (including Basic) to finally push through price increases. Though partly offset by higher services costs such as raw materials and a stretched labor pool, oilfield services price increases are gaining traction within the sector. As E&P's are setting their capital budgets for next year, many are starting to build in services costs increases, which provides continued visibility for improved earnings and cash flows for the services sector, and Basic, into 2005. The ratings also continue to reflect Basic's very seasoned management team with long experience in the sector. Members of the management team have no less than 22 years of experience in well services and have spent significant amounts of time at the larger players in the sector. Basic has received some strong backing of equity sponsors that have made significant investments in the energy industry and to Basic. GEP, an affiliate of Credit Suisse First Boston, has to date, invested over $80 million in Basic. In another sign of GEP's support of Basic, GEP converted about $16 million of preferred stock holdings into common equity in October 2003. The ratings are also supported by sector consolidation and Basic's position as the third largest well services provider in the U.S. Basic has participated in over 35 transactions since 2001 for a total of almost $190 million. This well managed consolidation has more than tripled the company's asset base and pushed it's EBITDA to about $57 million pro forma LTM 9/30/04, from about $26 million in 2001. In addition, these earnings and cash flows have some added durability as the company believes its trough EBITDA is in the $42 million range, which would be sufficient to cover interest (approximately $10 million), maintenance capex of about $15 million and scheduled debt amortization (about $15 million for 2005) The company's pro forma leverage for the credit facility amendment and 2004 acquisitions, measured as debt/EBITDA, annualized for Q3'04, was 3.3x. while book leverage (debt/capitalization) was 60.0%. Pro forma interest coverage (EBITDA/interest) is solid at 5.9x. The amended facilities will also enhance the company's back-up liquidity as the revolver will increase from $30 million to $50 million and is expected to be undrawn at closing. In addition, the company will have about $20 million of pro forma cash. Moody's anticipates Basic's EBITDA to range between $60 and $70 million in 2005, versus planned capex of about $55 million (which includes about $15 million of sustaining capex and rig refurbishments), interest expense of about $10 million and working capital of about $5 million. Basic Energy, headquartered in Midland, Texas, provides well servicing, well site construction, and related services to the oil and gas industry. BEARINGPOINT: Moody's Rates $350M Convertible Sub. Debt at Ba3 -------------------------------------------------------------- Moody's Investors Service downgraded the issuer rating for BearingPoint, Inc., to Ba2 from Baa3, reflecting deterioration in the credit quality of the company and the effective subordination of the senior unsecured creditors to the newly established secured bank credit facility. Concurrent with the rating action, Moody's assigned a senior implied debt rating of Ba1 to BearingPoint. Moody's also assigned a Baa3 rating to the company's recently announced $400 million interim senior secured credit facility and a subordinated debt rating of Ba3 to the company's recently announced $350 million offering of Series A and Series B convertible subordinated debentures due December 2024. The rating action concludes a review initiated in November 2004. The rating outlook is stable. Proceeds from the convertible debentures offering will be used to redeem the existing private placement and outstandings under the company's existing credit facility, which will be replaced by the new $400 million interim 150-day credit facility following closing of the transaction. The company may be required to receive waivers of its financial leverage covenants under its existing $220 million private placement of senior notes and existing $250 million senior unsecured revolving credit facility. Ratings downgraded include: * Issuer rating to Ba2 from Baa3 * $250 million revolving senior unsecured credit facility maturing May 2005 to Ba2 from Baa3, and will be withdrawn following finalization of the $400 million interim senior secured credit facility * Shelf registration for senior unsecured, subordinated, and preferred stock to (P)Ba2, (P)Ba3 and (P)B1 from (P)Baa3, (P)Ba1 and (P)Ba2, respectively Ratings assigned include: * Senior implied rating at Ba1 * $400 million interim senior secured credit facility at Baa3 * $350 million Series A and Series B convertible subordinated debentures at Ba3 The downgrade reflects BearingPoint's weak operating performance resulting from the slow pace of integrating its global business practices and a cost structure that has grown significantly faster than revenue. The company continues to face challenges with respect to: (1) slower than expected improvement in margins and very limited cash flow generation, (2) ongoing issues involving internal controls and financial reporting, (3) increasing amounts of leverage, and (4) continued execution uncertainty following the recent departures of the chief executive officer and the chief finance officer. Factors that may negatively influence the rating outlook include: (a) a sustained drop in utilization rates and continued declines in billing rates, (b) fall off in new contract pipeline and backlog, (c) inability to reduce direct contract costs, operating expenses or working capital investment, or (d) further deterioration in profitability and cash flow generation. Conversely, demonstration of improved cost controls, billing rates and working capital management that leads to sustained improvement in profitability and cash flow generation may have positive impact on ratings. The stable rating outlook considers the company's strong contract backlog and revenue growth that has exceeded expectations. However, billing rates continue to face downward pressure and margins have contracted due to other direct contract costs that have accelerated faster than revenue growth. The company has been constrained in its ability to reduce higher cost subcontractor expenses from its cost structure, particularly on longer-term Public Services contracts. Moody's expects the company to show modest improvement in profitability and cash flow generation in the near term as it continues to focus on operating cost and working capital reductions. The company would likely recognize special charges associated with any future restructuring activities. In the first quarter of 2005, the company expects to pay approximately $20 to $30 million for the transfer of capital assets related to the expiration of a transition services agreement with its former parent KPMG LLP. Improvement in workforce utilization rates has helped moderate the negative margin impact from continuing contract-pricing pressure. To date though, the company has experienced limited cost savings from its build out of offshore labor capabilities and the migration of IT and overhead costs away from the transition services agreement. Increased selling expenses from higher-than- expected new contract awards and Sarbanes-Oxley compliance costs have also contributed to inflated selling, general and administrative costs. While demonstrating some recent recovery from declining levels, operating margins excluding recurring special charges have steadily declined each year, from 9.8% in the fiscal year ended June 2001 to 3.8% in the latest twelve months. Outstanding receivables and unbilled revenue have reached elevated levels, as weak collection practices and a conversion of its internal billing systems have expanded working capital requirements. The company's current ratio has fallen from 2.3 times in fiscal 2002 to 1.4 times in the latest twelve months. Leverage has been rising as a result of declines in EBITDA and free cash flow (cash flow from operations less capital expenditures) concurrent with increases in the use of the company's revolving credit facility. As of September 30, 2004, LTM debt to EBITDA had risen to 1.7 times from 1.0 times in the prior year period. Lower operating income has constrained the company's ability to draw fully under existing covenants for its existing $250 million bank credit facility. Free cash flow fell to negative $65 million for the latest twelve months, down from positive $61 million in the prior year period. The company had $345 million of debt outstanding as of September 30, 2004. Post-transaction, the company is expected to have approximately $440 million of debt outstanding (net of the expected redemption of $220 million private senior notes). BearingPoint, Inc., headquartered in McLean, Virginia, is a global business consulting, systems integration and managed services firm serving government and commercial clients with revenue of $3.2 billion in 2003. BEARINGPOINT: S&P Puts BB- Rating on $325M Convertible Sub. Notes ----------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit and senior unsecured ratings on McLean, Virginia-based BearingPoint, Inc., to `BB+' from `BBB-'. At the same time, Standard & Poor's assigned a 'BB-' rating to the company's $325 million in Series A and Series B convertible subordinated notes due Dec. 14, 2024. "The downgrade reflects currently weak profitability and cash flow measures in a very competitive operating environment," said Standard & Poor's credit analyst Philip Schrank. The ratings reflect a currently high-cost structure, improving but low margins in relation to historical levels, and weakened cash flow protection measures. Offsetting these factors, the company maintains a good competitive position specifically in the Public Services sector (representing more than half of revenues), strong client relationships, and increased global scale. The negative outlook reflects the temporary nature of the bridge bank loan facility. Upon a successful longer-term refinancing of the facility, the outlook is expected to be revised to stable, reflecting Standard & Poor's expectation that BearingPoint will gradually improve profitability measures as the company executes its business and financial strategies. CARGO ACQUISITION: Moody's Places Ba1 Rating on Subordinate Bonds ----------------------------------------------------------------- Moody's affirms the Baa3 rating assigned to Cargo Acquisition Companies Obligated Group's Senior Bonds and affirms the Ba1 rating assigned to the Obligated Group's Subordinate Bonds. The ratings, which carry a stable outlook, are based on the pledge of the net revenues generated from a diverse group of air cargo facilities located at 14 airports. The ratings further reflect the diversity of the tenants of the cargo properties, the adequate legal structure and good debt service coverage that provides a cushion against tenant re-let risk. The pooled nature of the financing helps to offset revenue volatility that may be associated with risks inherent to the air cargo industry and the short and medium term nature of the tenant leases. Affirmation of the ratings reflects Moody's review of financial and operating performance through September 30, 2004, which remains consistent with forecasted levels. Financial Results Consistent with Forecasted Levels The financial forecast completed in conjunction with the 2003 bond issuance anticipated that senior and subordinate bond debt service coverage would equal at least 1.9x and 1.35x, respectively. The forecast was built on an average occupancy rate of 84.5% at the 14 cargo facilities, based on existing demand for the facilities and their favorable pricing and strategic location. Preliminary financial results are slightly more favorable than forecast. Unaudited results for the 12 months ending September 30, 2004, indicate that revenues available for debt service of $12.27 million provided 2.07x coverage of senior debt service and 1.48x coverage of subordinate debt service. Unaudited results for the first nine months of 2004 indicate that rental revenue for the cargo facilities of $14.022 million were slightly higher than budget, and operating expenses of $5.8 million, were slightly below budget. Earnings before interest, depreciation and amortization during the same period equaled $8.1 million. Building space was 80.8% occupied, and ramp space was 65.1% occupied. These occupancy rates are below the level forecasted at the 2003 bond financing, however, they remain comfortably above the breakeven rate. The pool of pledged properties can withstand a rigorous stress test: The average occupancy rate could drop to 60% at current rental rates and the bonds would continue to be paid. The project sponsors are obligated to use commercially reasonable efforts to maintain 1.20 times coverage for all debt. The bonds also are secured by a debt service reserve of average annual debt service ($11.7 million as of June 30, 2004). Excess revenue distributions are allowed under the master indenture if net revenues provide 1.4 times coverage for Senior bonds, and 1.2 times coverage for all debt. The project will also fund a maintenance reserve from cash that will equal $300,000 by 2007. Diverse Pool of Facilities with Staggered Lease Terms The pledged cargo properties are geographically dispersed, with four in Florida, two in Texas, one in Oregon, and the remainder in the Midwest, south, mid-Atlantic and northeast states. The tenants are diverse, and include roughly 75 cargo and related companies. FedEx (senior unsecured rated Baa2) is the largest single payer, with aggregate rentals providing 22.8% of the sublease payments. These payments are derived from leases for ramp, warehouse and office space at six facilities. Other large tenants include Airborne Freight Corporation (8%), BAX Global (8%) and Aaa-rated United Parcel Service (7%). US Airways accounts for 5% of total tenant revenues and since filing for bankruptcy protection has affirmed all of its leases. A key credit risk is the short and medium term nature of the subleases, which range from one to twelve remaining years, and very few tenants lease on a month-to-month basis. While most of the ground leases match the maturity of the bonds, the subleases are of shorter duration. This risk is mitigated by the rolling nature of the sublease expirations, with no concentration of revenue subject to renewal in a given year. In addition, Moody's expects these properties will experience minimal on-airport competition given the scarcity of land for further air cargo development at most of the airport locations. Outlook The stable outlook reflects the bond structure that provides revenues from diverse properties and subtenants. Moody's expects that demand for air cargo service will continue to show stable, steady growth, and that the pooled properties will continue to enjoy a competitive advantage based on strategic on-airport locations. CARROLS CORP: Inks Amended & Restated Sr. Secured Credit Facility ----------------------------------------------------------------- Carrols Corporation has completed the sale of $180 million of 9% Senior Subordinated Notes due 2013, and that it has entered into an amended and restated senior secured credit facility with a new syndicate of lenders led by JPMorgan Chase Bank, N.A., which provides for a $50 million five-year revolving credit facility and $220 million of term loan B borrowings (which mature in six years). Carrols has also completed the previously announced cash tender offer for its $170 million of outstanding 9-1/2% Senior Subordinated Notes due 2008, Series B. An aggregate of $148,747,000 of the 9-1/2% Notes were tendered pursuant to the tender offer and have been accepted for payment by Carrols. Carrols has used the net proceeds from the sale of its 9% Senior Subordinated Notes and the $220 million of term loan borrowings under the amended and restated senior secured credit facility to: -- repay all outstanding borrowings to the lenders under its old senior secured credit facility, -- purchase the 9-1/2% Notes tendered in the tender offer, and -- irrevocably call for redemption the $21,253,000 remaining outstanding 9-1/2% Notes that were not tendered in the tender offer by irrevocably depositing with the Trustee an amount of funds sufficient to redeem such notes, including all accrued and unpaid interest to the date of redemption. Also, Carrols will use approximately $137.1 million of the net proceeds from the financings to make a distribution to its sole stockholder, Carrols Holdings Corporation (which will, in turn, make a distribution in the same amount to its stockholders) and to its employee and director optionholders. The new 9% Senior Subordinated Notes were offered and sold in the United States to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933 and outside the United States pursuant to Regulation S under the Securities Act. The 9% Senior Subordinated Notes have not been registered under the Securities Act, or the securities laws of any state or other jurisdiction, and may not be reoffered, sold, assigned, transferred, pledged, encumbered or otherwise disposed of in the United States without registration or an applicable exemption from the registration requirements. This announcement is neither an offer to sell nor a solicitation of an offer to buy the new 9% Senior Subordinated Notes. About the Company Carrols Corporation is one of the largest restaurant companies in the U.S. currently operating 538 restaurants in 17 states. Carrols is the largest franchisee of Burger King restaurants with 350 Burger Kings located in 13 Northeastern, Midwestern and Southeastern states. It also operates two regional Hispanic restaurant chains that operate or franchise more than 200 restaurants. Carrols owns and operates 126 Taco Cabana restaurants located in Texas, Oklahoma and New Mexico, and franchises eight Taco Cabana restaurants. Carrols also owns and operates 62 Pollo Tropical restaurants in south and central Florida and franchises 24 Pollo Tropical restaurants in Puerto Rico (20 units), Ecuador (3 units) and South Florida. * * * As reported in the Troubled Company Reporter on Nov. 23, 2004, Moody's Investors Service assigned ratings of B1 and B3, respectively, to the proposed new bank loan and senior subordinated notes of Carrols Corporation. Net proceeds from the new debt will pay a $141 million dividend to the equity owners and refinance existing long-term debts. Negatively impacting the company's ratings are the company's high financial leverage and the challenges in permanently stabilizing operations at Burger King. However, in spite of increasing debt to pay the sizable dividend, the good performance and development potential of the Pollo Tropical and Taco Cabana concepts benefit Moody's opinion of the company. The rating outlook is stable. CHARTER COMMS: Closes $550 Million Sr. Floating Rate Debt Offering ------------------------------------------------------------------ Charter Communications, Inc.'s (Nasdaq: CHTR) indirect subsidiaries, CCO Holdings, LLC, and CCO Holdings Capital Corp., have closed on the issuance of $550 million Senior Floating Rate Notes due 2010. The Notes have an annual interest rate of LIBOR plus 4.125%, payable quarterly. The intent to offer $500 million principal amount of Notes was initially announced in a press release on Dec. 1, 2004. The increase to $550 million was announced on Dec. 2, 2004, after the Notes were priced. Charter plans to use the net proceeds from the sale of the Notes to pay down debt and for general corporate purposes. The Notes were sold to qualified institutional buyers in reliance on Rule 144A and outside the United States to non-U.S. persons in reliance on Regulation S. The Notes have not been registered under the Securities Act of 1933, as amended, and, unless so registered, may not be offered or sold except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state securities laws. About the Company Charter Communications, Inc., a broadband communications company, provides a full range of advanced broadband services to the home, including cable television on an advanced digital video programming platform via Charter Digital(TM) and Charter High- Speed(TM) Internet service. Charter also provides business-to- business video, data and Internet protocol (IP) solutions through Charter Business(TM). Advertising sales and production services are sold under the Charter Media(R) brand. More information about Charter can be found at http://www.charter.com/ * * * As reported in the Troubled Company Reporter on Nov. 18, 2004, Fitch Ratings assigned a 'CCC+' rating to a proposed offering of $750 million of convertible senior notes due 2009 issued by Charter Communications, Inc. CHTR expects to use the proceeds from the offering to prefund a portion of interest payments on the new notes and to refinance CHTR's 5.75% convertible senior notes due October 2005, of which approximately $588 million remain outstanding. The Rating Outlook is Stable. COMMUNITY HEALTH: Appoints Julia North to Board of Directors ------------------------------------------------------------ Community Health Systems, Inc., (NYSE:CYH) appointed Julia B. North to its Board of Directors. Ms. North will also be joining the Board of Directors' Compensation and Governance and Nominating Committees. Over the course of her career, Ms. North has served in many senior executive positions, including her service as president of consumer services for BellSouth Telecommunications from 1994-1997, where she was responsible for BellSouth's largest business unit, serving 15 million customers in a nine-state region. She also held various marketing and customer service positions with Southern Bell. Ms. North presently serves on the Board of Directors of Winn Dixie, Inc., Acuity Brands, Inc., MAPICS, Inc., and Simtrol, Inc. She has a Bachelor of Arts degree from Baylor University and a Masters Degree from Massachusetts Institute of Technology. "Judi North brings a unique and important perspective to Community Health Systems' Board," said Wayne T. Smith, chairman, president, and chief executive officer of Community Health Systems, Inc. "She has a wealth of experience in marketing, strategic planning and product development, and her presence on the Board will continue to ensure the strong, independent governance of our organization. We look forward to working together to execute Community Health Systems' strategy to deliver value to our shareholders and to the communities we serve." As of December 14, 2004, the Company's board members are: -- W. Larry Cash, -- John A. Clerico, -- Dale F. Frey, -- John A. Fry, -- Harvey Klein, M.D., -- Julia B. North, -- Wayne T. Smith, Chairman, and -- H. Mitchell Watson, Jr. About the Company Located in the Nashville, Tennessee suburb of Brentwood, Community Health Systems operates general acute care hospitals in non-urban communities throughout the country. Through its subsidiaries, Community Health Systems currently owns, leases or operates 71 hospitals in 22 states. Its hospitals offer a broad range of inpatient medical and surgical services, outpatient treatment and skilled nursing care. Shares in Community Health Systems are traded on the New York Stock Exchange under the symbol "CYH." * * * As reported in the Troubled Company Reporter on Dec. 8, 2004, Moody's Investors Service assigned a B3 rating to Community Health Systems' new $250 million senior subordinated notes due 2012, issued at the parent holding company by Community Health Systems, Inc. The debt issue will be used to pay down the $240 million balance on its revolving credit facility that the company drew down following a repurchase and retirement of approximately half of the 23.1 million shares sold by affiliates of Forstmann Little & Co. on September 21, 2004. Forstmann Little, which had been Community Health's principal stockholders since 1996, sold all of its beneficial ownership in the company at that time. Ratings assigned: -- Community Health Systems, Inc. (Parent Holding Co) * $250 million Senior Subordinated Notes due 2012 -- rated B3 Ratings Affirmed: -- CHS/Community Health Systems, Inc. (Intermediate Holding Co) * $1.2 Billion Senior Secured Term Loan B due 2011 -- rated Ba3 * $425 Million Senior Secured Revolver due 2009 -- rated Ba3 -- Community Health Systems, Inc. (Parent Holding Co) * $287.5 Million 4.25% Convertible Subordinated Notes due 2008, rated B3 * Senior Implied Rating -- Ba3 * Senior Unsecured Issuer Rating -- B2 * Outlook -- stable CONCERT INDUSTRIES: Superior Court Sanctions Plan of Arrangement ---------------------------------------------------------------- The Quebec Superior Court approved the final plan of compromise and arrangement of Concert Industries Ltd. (TSX:CNG) pursuant to the Companies' Creditors Arrangement Act of its Canadian operating subsidiaries. The Plan received overwhelming creditor approval on Dec. 10, 2004. The Plan relates only to Concert Fabrication Ltee, Concert Airlaid Ltee and Advanced Airlaid Technologies Inc., the Canadian operating subsidiaries, and their creditors. The Canadian operating subsidiaries intend to complete the implementation of their restructuring plan and emerge from protection under the Companies Creditors Arrangement Act on Dec. 31, 2004. The successful completion of the restructuring will enable the Concert operating subsidiaries to return to their position as a strong market leader within the industry. Pursuant to the Plan approved by its creditors and sanctioned by the Court, shareholders of Concert Industries Ltd. will receive no recovery and following implementation of the Plan, Tricap Management Limited. will become the sole shareholder of the Concert Canadian operating subsidiaries as described in more detail in the Plan and related documents. Accordingly, it is expected that the public shares of Concert Industries Ltd. will be delisted in the very short term. 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. CSK AUTO: Redeems $14.9 Million Remaining Balance of 12% Sr. Notes ------------------------------------------------------------------ CSK Auto Corp. (NYSE: CAO) has completed the redemption of the remaining $14,910,000 in aggregate principal amount of CSK Auto Inc.'s 12% Senior Notes due 2006. The redemption was funded with existing cash on hand, and will result in a reduction in annual interest expense of approximately $1,800,000. In addition to the payment of the principal amount, the company paid $1,789,200, which represents $894,600 for an early redemption premium of 6% of the principal amount outstanding and $894,600 for accrued and unpaid interest through the date of redemption. The company had repurchased approximately 94% of the $280,000,000 initial outstanding principal amount of such notes in January 2004 pursuant to a cash tender offer. CSK Auto Corp. is the parent company of CSK Auto Inc., a specialty retailer in the automotive aftermarket. As of Oct. 31, 2004, the company operated 1,129 stores in 19 states under the brand names Checker Auto Parts, Schuck's Auto Supply and Kragen Auto Parts. * * * As reported in the Troubled Company Reporter on Sept. 28, 2004, Standard & Poor's Ratings Services revised the outlook on CSK Auto, Inc., to stable from positive due to weaker-than-anticipated second quarter comparable sales results and expectations that sales will continue to be soft. At the same time, Standard & Poor's affirmed its ratings on the Phoenix, Arizona-based automotive parts and accessories retailer, including its 'B+' corporate credit rating. DATATEC SYSTEMS: Wants to Retain Lowenstein Sandler as Counsel -------------------------------------------------------------- Datatec Systems, Inc., and its debtor-affiliate, Datatec Industries, Inc., ask the U.S. Bankruptcy Court for the District of Delaware for permission to retain Lowenstein Sandler PC as their general bankruptcy lead counsel. The Debtors tell the Court that they've employed Lowenstein Sandler since July 2004 to advise and assist them with bankruptcy- related services prior to their chapter 11 petition. Lowenstein Sandler is expected to: a) provide the Debtors with advice and prepare all necessary documents regarding debt restructuring, bankruptcy and asset dispositions; b) take all necessary actions to protect and preserve the Debtors' estates during the pendency of their chapter 11 cases, including the prosecution of actions by the Debtors, the defense of actions commenced against the Debtors, negotiations concerning litigation in which the Debtors are involved and objecting to claims filed against the Debtors' estates; c) counsel the Debtors with regard to their rights and obligations as debtors-in-possession and appear in Court to protect their interests; and d) perform all other legal services for the Debtors which maybe necessary and proper in their chapter 11 proceedings. Bruce Buechler, Esq., a Director at Lowenstein Sandler, is the lead attorney for the Debtors' restructuring. Mr. Buechler discloses that the Firm received a $200,000 retainer prepetition. Mr. Buechler reports Lowenstein Sandler's professionals bill: Designation Hourly Rate ----------- ----------- Members $285 - 535 Senior Counsel 250 - 395 Counsel 240 - 325 Associates 150 - 260 Legal Assistants 75 - 140 Lowenstein Sandler assures the Court that it does not represent any interest adverse to the Debtors or their estates. Headquartered in Alpharetta, Georgia, Datatec Systems, Inc., -- http://www.datatec.com/-- specializes in the rapid, large-scale market absorption of networking technologies. The Company and its debtor-affiliate filed for chapter 11 protection on Dec. 14, 2004 (Bankr. D. Del. Case No. 04-13536). When the Company filed for protection from its creditors, it listed total assets of $26,400,000 and total debts of $47,700,000. DATATEC SYSTEMS: Look for Bankruptcy Schedules by January 19 ------------------------------------------------------------ Datatec Systems, Inc., and its debtor-affiliate, Datatec Industries, Inc., ask the U.S. Bankruptcy Court for the District of Delaware for an extension, through and including Jan. 19, 2005, to file their schedules of assets and liabilities, statement of financial affairs, and schedule of executory contracts and leases. The Debtors tell the Court that a substantial amount of their time and resources have been devoted to marketing efforts related to the sale of their business as a going concern. The Debtors add that their remaining employees' efforts must be focused on attending to stabilizing their businesses and preserving their assets in order to maximize their value for an orderly sale of their assets. Consequently, the Debtors must gather extensive information from their various books and records that require substantial time and effort on their part in order to accurately prepare and complete the Schedules and Statements. The Debtors assure the Court that the requested extension will not prejudice their creditors and other parties in interest. The Court will convene a hearing at 11:30 a.m., on Jan. 5, 2005, to consider approval of the Debtors' motion. Headquartered in Alpharetta, Georgia, Datatec Systems, Inc., -- http://www.datatec.com/-- specializes in the rapid, large-scale market absorption of networking technologies. The Company and its debtor-affiliate filed for chapter 11 protection on December 14, 2004 (Bankr. D. Del. Case No. 04-13536). Bruce Buechler, Esq., at Lowenstein Sandler PC and John Henry Knight, Esq., at Richards, Layton & Finger, P.A., represent the Debtors' restructuring. When the Company filed for protection from its creditors, it listed total assets of $26,400,000 and total debts of $47,700,000. DIAMOND TRIUMPH: S&P Cuts Ratings to B- & Says Outlook is Negative ------------------------------------------------------------------ Standard & Poor's Ratings Services lowered its corporate credit and senior unsecured debt ratings for Diamond Triumph Auto Glass Inc. to 'B-' from 'B'. At the same time, Standard & Poor's removed the ratings from CreditWatch, where they had been placed on Sept. 3, 2004. Kingston, Pennsylvania-based Diamond Triumph, one of the largest providers of automotive glass replacement and repair in North America, had balance sheet debt totaling $80 million at Sept. 30, 2004. The outlook is negative. "The downgrade reflects weakening financial performance resulting from a combination of pricing pressures and poor market demand," said Standard & Poor's credit analyst Nancy Messer. "The ratings could be lowered if the company is unable to improve operating performance and generate sufficient free cash flow to service its debt and comply with its credit facility covenant." Diamond Triumph operates about 257 owned service centers, 1,100 mobile installation vehicles, and six distribution centers in 45 states. The company's current focus is on improving the financial performance of its underperforming service centers and reducing the number of redundant facilities. Standard & Poor's is concerned that without a near-term improvement in sales and a supportive benchmark rebalancing by National Auto Glass Specification -- NAGS -- in February 2005, Diamond Triumph will be unable to comply with its covenant in 2005, risking the loss of access to its revolving credit facility. The facility currently depends on the willingness of lenders to waive the EBITDA covenant violation. Inability to access the credit facility would seriously constrain Diamond's financial flexibility over the intermediate term, since a decline in cash flow from current levels will jeopardize the company's ability to service its debt. DII/KBR: Takes Step Closer to Emergence from Bankruptcy ------------------------------------------------------- The Honorable Judith K. Fitzgerald of the U.S. Bankruptcy Court for the Western District of Pennsylvania stated that she would sign four orders approving what Halliburton expects will be the final motions filed by DII Industries, Kellogg Brown & Root and other affected Halliburton subsidiaries in their chapter 11 proceedings. One of the orders was for the approval of another insurance settlement while the other three orders set out processes and procedures for: -- funding the asbestos and silica trusts, -- paying claimants, and -- the smooth operation of the trusts. Halliburton expects the Bankruptcy Court's confirmation order and the District Court's affirmation order will become final on Dec. 31, 2004, resolving the company's asbestos liability and leading to the conclusion of the chapter 11 proceedings. Headquartered in Houston, Texas, DII Industries, LLC, is the direct or indirect parent of BPM Minerals, LLC, Kellogg Brown & Root, Inc., Mid-Valley, Inc., KBR Technical Services, Inc., Kellogg Brown & Root Engineering Corporation, Kellogg Brown & Root International, Inc., (Delaware), and Kellogg Brown & Root International, Inc., (Panama). KBR and its subsidiaries provide a wide range of services to energy and industrial customers and government entities in over 100 countries. DII has no business operations. DII and its debtor-affiliates filed a prepackaged chapter 11 petition on December 16, 2003 (Bankr. W.D. Pa. Case No. 02-12152). Jeffrey N. Rich, Esq., Michael G. Zanic, Esq., and Eric T. Moser, Esq., at Kirkpatrick & Lockhart LLP, represent the Debtors in their restructuring efforts. On June 30, 2004, the Debtors listed $6.255 billion in total assets and $5.295 billion in total liabilities. DP 8 LLC: Court Extends Exclusive Filing Period Until January 25 ---------------------------------------------------------------- The Honorable George B. Nielsen of the U.S. Bankruptcy Court for the District of Arizona gave DP 8, L.L.C., an extension, through and including January 25, 2005, within which it has the exclusive right to file a chapter 11 plan. The Debtor filed a written motion asking the Court to extend its exclusive period to file a chapter 11 plan until January 28, 2005, and to extend the company's solicitation period through March 28, 2005. Judge Nielsen will convene a hearing at 11:45 a.m., on January 25, 2005 to consider the Debtor's motion. The Debtor gives the Court four reasons militating in favor for the extension of its exclusive periods: a) the Debtor is anticipating it will have a potential buyer for the various parcels of real properties where its has an ownership interest and the sale proceeds from those real properties can provide funding for a full payment plan of reorganization; b) the Debtor still has issues to resolve with the co-owners of some of the real properties and with other entities that now hold title to certain real property subject to options in favor of the Debtor; c) the Debtor is continuing to operate its business and pay its bills as they become due; and d) the extension will not prejudice the creditors and other parties in interest of the Debtor. Headquartered in Mesa, Arizona, DP 8 L.L.C., a real estate developer, filed for chapter 11 protection on July 30, 2004 (Bankr. Ariz. Case No. 04-13428). Dale C. Schian, Esq., at Schian Walker PLC represents the Debtor in its restructuring efforts. When the Debtor filed for protection, it listed $13,626,000 in total assets and $3,663,678 in total debts. DRS TECH: Moody's Rates Proposed $200M Senior Sub. Notes at B2 -------------------------------------------------------------- Moody's Investors Service assigned a B2 rating to DRS Technologies' proposed $200 million senior subordinated notes, due 2013, which will be issued as an add-on to the company's existing 6-7/8 % senior subordinated notes due 2013. The Company's senior implied rating is Ba3, with a negative rating outlook. Proceeds from the notes issued will be used to fund the acquisition of NVEC for approximately $43 million, as well as for general corporate purposes, including future acquisitions. The ratings continue to reflect the company's strong operating performance following the acquisition of IDT in 2003 and an ongoing strong defense and civilian security business environment. Ratings also recognize the company's ability to prepay debt over the past year, while generating substantial levels of free cash flow. Pursuant to the acquisition of NVEC and the issuance of additional senior subordinated notes, the company will maintain its strong liquidity position including both significant cash and capacity under the existing revolving credit facility. Moody's projects the company to continue to generate cash flow well in excess of interest and CAPEX over the next twelve months, augmented by accretive earnings from recent acquisitions. The ratings recognize the potential for the company to pursue smaller acquisitions and the likely ability of the company to fund any future acquisitions with cash, avoiding further debt increases. The company does not have any significant near term debt maturities. The negative ratings outlook reflects the substantial increase in leverage of $200 million, with relatively little contribution of earnings and cash flow from the NVEC acquisition over the near term. While the transaction increases total indebtedness, Moody's anticipates that DRS' continued earnings growth will allow the company to operate at a sustained level of leverage below 4.5x lease-adjusted debt/EBITDAR. The ratings outlook may be adjusted upwards if the company is able to demonstrate the ability to maintain robust cash flow generation while successfully integrating contemplated acquisitions, such that lease-adjusted debt were to fall below 3.5x EBITDAR, EBIT/interest coverage were to exceed 4.5x, and free cash flow were to exceed 10% of total debt on a sustained basis. Ratings or their outlook could be revised downward if earnings or cash flows from acquired businesses fail to contribute significantly to the company's results, or if margins and growth of existing businesses fall, possibly resulting in leverage (lease-adjusted debt/EBITDAR) of over 4.5x for a sustained period, or EBIT/interest below 2.5x. The Ba3 rating affirmed for the senior secured credit facilities, the same as the senior implied rating, reflects the large amount and priority of the secured debt over all other debt in the capital structure. The senior secured credit facilities are split between a $175 million revolver maturing 2008 and $236 million term loan maturing 2010. The B2 rating of the combined $500 million in senior subordinated notes, two notches below the senior implied rating, reflects the notes' junior status in claim behind all current senior commitments, as well as potential additional senior debt, secured and unsecured. Proceeds from the $200 million increase in the senior subordinated notes maturing 2013, will be used to fund the $42.5 million acquisition of NVEC, a company specializing in night vision technology and thermal imaging, as well as for general corporate purposes. In Moody's opinion, the acquisition of NVEC is strategically logical and poses only modest integration risk to DRS, as it will provide the company with access to smaller Homeland Security markets, and will likely be accretive to DRS. The $200 million additional 6-7/8% notes offered will be fungible to the existing $350 million Senior Subordinated notes, increasing leverage to over 4.5x lease-adjusted debt/EBITDAR, and total debt from $550 million at the end of September to about $750 million, a 36% increase in total debt, following the transaction. The increase in debt results in a similar degree of leverage reached concurrent with the IDT acquisition in November 2003. However, over the past year the company has demonstrated the ability to use excess free cash flow to prepay $42 million of term loan debt from a level of $236 million as of December 2003 to $194 million as of September 2004. The company remains strongly free cash flow positive with $99 million of free cash flow generated during the LTM ended September attributed to effectively flat working capital for the first six months of fiscal year 2005 and only modest capital expenditure requirements of $30 million. Moody's expects the company to remain free cash flow positive and have ample liquidity following the NVEC acquisition. The company's revolving credit facility remains undrawn with $136 million available after considering $39 million in L/C usage at the end of September. The company's cash balance will increase from $72 million at the end of September to approximately $232 million pro forma the transaction. EBIT/Interest coverage remains strong at close to four times. Moody's believes the cash flow profile of the company will be augmented as the operating cash flows of recent acquisitions materialize providing the company with the ability to continue reducing leverage. In addition to continued debt repayment, Moody's believes the company will use excess cash generated from current acquisitions and the increased notes offering to pursue additional smaller, strategic acquisitions that contribute to the company's portfolio of smaller high margin businesses within strategic business units. NVEC, Night Vision Equipment Company, headquartered in Allentown, Pennsylvania, is a leading manufacturer of night vision and thermal imaging technology primarily sourcing to the government for use in combat operations. NVEC had approximately $50 million in LTM September 2004 revenue. DRS Technologies, Inc., headquartered in Parsippany, New Jersey is a significant second-tier supplier of defense electronics systems to the U.S. military and intelligence agencies, major aerospace and defense contractors, and international military forces. DRS operates through two major groups: C4I (Command, Control, Communications, Computers and Intelligence Group), and SR Group (Surveillance and Reconnaissance Group). The company had LTM September 2004 revenues of $1.26 billion. ELIZABETH ARDEN: Moody's Ups Ratings, Citing Improved Cash Flow --------------------------------------------------------------- Moody's Investors Service raised the long-term debt ratings of Elizabeth Arden by one notch (senior implied rating to Ba3 from B1) and affirmed the company's SGL-2 speculative grade liquidity rating. The ratings upgrade reflects Moody's assessment that the company's improved cash flow and credit metrics are now at a level that provides sufficient cushion relative to the potential earnings volatility inherent in its business. The company's enhanced cash flow profile had been a key consideration in raising Elizabeth Arden's SGL rating and placing the long-term ratings under review in October 2004. Support for the rating action stems from Elizabeth Arden's portfolio of long-lived classic brands, and the expectation that management will appropriately support these brands while taking a measured approach to new acquisition and licensing opportunities. The outlook is stable. These ratings were affected: * Senior implied rating, to Ba3 from B1; * $225 million 7.75% senior subordinated notes due 2014, to B2 from B3; * Senior unsecured issuer rating, to B1 from B2; * Speculative grade liquidity rating, affirmed at SGL-2. Elizabeth Arden's new long-term rating levels and stable outlook are prompted by the company's improved cash flow profile and debt protection measures. Elizabeth Arden: (a) has achieved strong year-over-year sales gains in the current calendar year through September 2004, on the strength of its new products, mass retail business, and recovery in the travel-related channels; (b) has aggressively managed its working capital; and (c) has maintained profit levels despite significant investments in new product launches. In addition, cash benefits from facility consolidation efforts (estimated $4-6 million annually) are beginning to be realized. These achievements follow RDEN's refinancing at much lower interest rates earlier in the year and significant debt reduction during its prior fiscal year (ended January 2004) from internal cash generation and equity issuance proceeds. As such, Elizabeth Arden is expected to have materially reduced annual interest expense going forward. For the LTM period ended Sept. 30, 2004, Moody's estimates RDEN's debt-to-EBITDA at approximately 4.0x (including seasonal borrowings), EBITDA less capex to interest at approximately 2.9x, and funds from operations less capex to debt at approximately 14%, which are likely to improve into fiscal 2005 (ending June 2005). Continued support for the ratings derives from Elizabeth Arden's portfolio of owned and distributed brands and its historical focus on innovation and customer service, which provide the company with critical mass in a highly fragmented industry and strengthen its relationships with retailers. The ratings also benefit from Elizabeth Arden's geographic and customer diversity, with only one customer, Wal-Mart, representing over 10% of sales. In addition, the company's historical focus on managing classic brands somewhat reduces its exposure to the fashion and faddish characteristics of the fragrance industry. Management's attention to cost controls and asset efficiency also benefit the ratings, as evidenced by the consolidation of its U.S. distribution centers. The ratings are restrained by Elizabeth Arden's high seasonality, economic and travel-related sensitivity, fierce competition and significant brand support needs, and reliance on a few key brands and spokespersons. As a result, earnings and cash flow have the potential to be volatile, a factor that restrains Elizabeth Arden's ratings. Moderate business disruption risks are present in Elizabeth Arden's reliance going forward on one U.S. distribution center. Although unexpected, negative rating pressures could arise from a sustained erosion in profit levels (potentially due to difficulties in continuing growth of the Elizabeth Arden brand or failed new product launches), or from a deviation from management's disciplined financial, strategic, and operational initiatives. In particular, Moody's could become uncomfortable with the current rating levels if leverage trends into the 3.5-4.0x range (excluding seasonal borrowings) or if free cash flow-to-debt drops materially below 10%. Similarly, Moody's views further rating upgrades as unlikely over the coming year-to-eighteen month period, as such actions would require additional product and brand diversification, the establishment of a longer-term track record of brand support and new product launches, leverage below 2.0x, operating margins greater than 10%, and fixed-charge coverage over 3.0x. The affirmation of the SGL-2 speculative grade liquidity rating recognizes that strong positive annual cash flow, existing cash balances and a $200 million senior secured revolving credit facility provide good liquidity to fund the company's typical seasonal operating needs over the coming twelve-month period. Key restraints to the rating are Elizabeth Arden's heavy reliance on the revolver and its limited readily available sources of capital in the event of unexpected shocks to its business. The company's revolver contains only one, easily achievable financial covenant and provides the appropriate size, flexibility and borrowing base advance rates to meet Elizabeth Arden's highly seasonal working capital needs. This seasonality results in Elizabeth Arden's significant usage of the credit facility to fund operating losses and inventory build for the holiday period, prior to collection from customers upon sell-through. Given the material upfront promotion and advertising that support the company's brands and its sensitivity to economic conditions and uncertain consumer receptivity, unexpectedly weak sales over the holiday period could result in reduced earnings and cash flows at the same time that the collateral and borrowing base percentages are reducing. Although the company does have unpledged trademark assets their value is not consistently reappraised and could deteriorate substantially in a distress scenario. The company entered into an amendment to its credit facility effective September 30, 2004 that solidified its good liquidity profile by extending the maturity to June 2009 from January 2006, lowering availability thresholds that trigger covenant testing, reducing borrowing costs, and improving borrowing access (higher advance rates under borrowing base calculations and removal of minimum availability requirements). As of September 2004, Elizabeth Arden had revolver borrowings outstanding of approximately $152 million, cash balances of approximately $20.5 million, and undrawn availability remaining under the revolver was approximately $48 million, all in line with typical seasonal patterns. Moody's expects positive free cash flow for the coming year (which could be supplemented by the sale of its Miami Lakes property in excess of its mortgage balance), and takes some comfort from Elizabeth Arden's historical success in managing cash flow during difficult operating environments (such as the post 9-11 period). Further, Moody's anticipates that Elizabeth Arden will exceed its only financial covenant, a fixed charge covenant requirement of 1.1x, even under reasonably stressed scenarios. The fixed charge covenant only applies if average borrowing availability declines to less than $25 million ($40 million from November 16 through May 15). Based on Moody's projections and excluding acquisition or capital transactions, the availability threshold is not anticipated to be crossed over the coming year. Elizabeth Arden, Inc., headquartered in Miami Lakes, Florida, is a global prestige fragrance and beauty products company. The company sells its products and distributes other brands through prestige and mid-tier department stores, and through mass merchandisers. Elizabeth Arden's owned brand portfolio includes several Elizabeth Arden brands, and it has an exclusive license for the Elizabeth Taylor brands. Sales for the trailing twelve-month period ended September 30, 2004 were approximately $845.2 million. ENRON: ENA Wants Court Nod to Sell De Minimis Shares & Interests ---------------------------------------------------------------- Pursuant to the procedures governing the sale of de minimis assets, Enron North America Corp. informs the U.S. Bankruptcy Court for the Southern District of New York that it intends to sell certain shares and interests: 1) 10,911,382 publicly traded common shares of Nakornthai Strip Mill Public Company Ltd. Seller: ENA Buyer: Unknown market buyer Price: Based on its current market value, which is expected to be around $543,654, less a 25% liquidity or foreign exchange discount. ENA will sell the Assets over the Thai stock exchange through a third-party broker, AdviCorp PLC, that will charge a standard fee of about 2% of the proceeds, which ENA believes is the best way to obtain fair market value for the Assets. 2) 14,983 publicly traded common shares of Wheeling-Pittsburgh Steel Corp. Seller: ENA Buyer: Unknown market buyer Price: Based on current market value of the Assets, which is expected to be around $470,000 ENA will sell the Assets over NASDAQ through a third-party Broker. 3) 50% limited partnership interest in Matagorda Terminal LP Seller: ENA Buyer: Kirby Corp. Price: $175,000 ENA marketed the Asset to over 50 potential bidders. Four bidders advanced to the second round of due diligence. Only one bid for $175,000 was received. Kirby, however, has elected to exercise its right of first refusal and desires to purchase the Asset. The value of ENA's interest in Matagorda is based on: (i) its level of control; and (ii) the cash distribution history. ENA has no control over the operations of Matagorda or its management, so long as Kirby operates within the dictates of the partnership agreement. Cash distributions have steadily declined since May 2001. Current valuations for pipeline and terminal assets of this size are three to four times Matagorda's cash flow. Based on Matagorda's latest quarterly distribution of $9,000 and the latest twelve-month distributions of $40,000, the Asset is valued between $100,000 and $160,000. ENA believes that the Price reflects fair market value of the Asset. 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. FALCON PRODUCTS: Using 30-Day Grace Period to Pay Bond Interest --------------------------------------------------------------- Falcon Products, Inc. (Pink Sheets: FCPR), will utilize the 30-day grace period relating to the payment of interest under its outstanding $100 million 11-3/8% Senior Subordinated Notes due 2009. The non-payment of the interest due December 15, 2004, does not constitute an event of default under the Note indenture unless such non-payment continues following the expiration of the 30-day grace period on January 14, 2005. No determination has been made as to whether the Company will make the interest payment prior to the expiration of the grace period and there can be no assurance that the Company will be able to make such payment. The Company plans to utilize the grace period to continue the initiatives it has undertaken to improve its liquidity position. The decision to utilize the grace period is not expected to affect the Company's ability to serve its customers and pay its employees and vendors in the ordinary course. All of the Company's facilities are continuing to operate and to fulfill orders for customers. The Company also announced that it is currently not in compliance with one of its covenants under its senior credit facilities. The Company is seeking a waiver for this covenant violation as well as a modification of the covenant, and a waiver of any default under the senior credit facilities that may result from the utilization of the grace period for interest on the Notes. The Company has retained Imperial Capital LLC to serve as its financial advisor and assist with its liquidity improvement initiatives. Falcon Products, Inc., is the leader in the commercial furniture markets it serves, with well-known brands, the largest manufacturing base and the largest sales force. Falcon and its subsidiaries design, manufacture and market products for the hospitality and lodging, food service, office, healthcare and education segments of the commercial furniture market. Falcon, headquartered in St. Louis, Missouri, currently operates 8 manufacturing facilities throughout the world and has approximately 2,100 employees. FALCON PRODUCTS: S&P's Corporate Credit Rating Tumbles to D ----------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on Falcon Products, Inc., to 'D' from 'CCC'. At the same time, the rating on the subordinated debt was lowered to 'D' from 'CC'. "These actions reflect the announcement by St. Louis, Missouri- based Falcon that it will not make its interest payment due Dec. 15, 2005, on its senior subordinated notes that mature in 2009," said credit analyst Martin S. Kounitz. Falcon is a vertically integrated furniture manufacturer serving the hotel, office, and food service sectors. Its products include hospitality seating, training and classroom furniture, and food service products such as tables, bases, and millwork. FRANK'S NURSERY: Has Exclusive Right to File Plan Until April 6 --------------------------------------------------------------- The Honorable Prudence Carter Beatty of the U.S. Bankruptcy Court for the Southern District of New York gave Frank's Nursery & Crafts, Inc., an extension, through and including April 6, 2005, within which the Company -- and no other party-in-interest -- may file a chapter 11 plan. Until June 6, 2005, the Company has the exclusive right to solicit acceptances for that plan from their creditors. The Debtor gave Judge Beatty five reasons warranting an extension: a) the Debtor's chapter 11 case is large and complex because it has thousands of creditors, a party to numerous executory contracts and unexpired leases, employs approximately 2,800 employees and it has prepetition secured and unsecured debt obligations exceeding $130 million; b) the Debtor has made substantial progress in resolving the myriad issues facing its estates, including establishing procedures for the orderly disposition of its assets; c) the extension will not harm or prejudice the Debtor's creditors because the Creditors Committee and Kimco Capital Corp., the Debtor's primary lender, have continued to be involved in all aspects of the reorganization process; d) the extension will give the Debtor more time to finish its going our of business sales transactions by January and February 2005 and evaluate its interests in real property in order to accurately assess the value of its estate; and e) the Debtor is paying its ongoing expenses as they become due. Frank's Nursery and its parent company, FNC Holdings, Inc., each filed a voluntary chapter 11 petition in the U.S. Bankruptcy Court for the District of Maryland on February 19, 2001. The companies emerged under a confirmed chapter 11 plan in May 2002. Frank's Nursery filed another chapter 11 petition on September 8, 2004 (Bankr. S.D.N.Y. Case No. 04-15826). Allan B. Hyman, Esq., at Proskauer Rose LLP represents the Debtor. In the Company's second bankruptcy filing, it listed $123,829,000 in total assets and $140,460,000 in total debts. FRANK'S NURSERY: Committee Hires Mesirow as Financial Advisors -------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York gave the Official Committee of Unsecured Creditors of Frank's Nursery & Crafts, Inc., permission to employ Mesirow Financial Consulting as its financial advisors. Mesirow Financial will: a) assist the Committee in the review of reports or filings including schedules of assets and liabilities, statements of financial affairs and monthly operating reports; b) review the Debtor's financial information, including analyses of cash receipts and disbursements, financial statement items and proposed transactions for which Court approval is required; c) review and analyze the reports regarding cash collateral and any debtor-in-possession financing arrangements and budgets; d) evaluate potential employee retention and severance plans; e) assist in identifying and implementing potential cost containment opportunities and asset redeployment opportunities; f) analyze assumption and rejection issues regarding executory contracts and leases and assist in preparing documents necessary for confirmation of a proposed plan of reorganization; g) advise and assist the Committee in negotiations and meeting with the Debtor and its lenders; h) assist the Committee with claims resolution procedures, including analyses of creditor claims by type and entity; i) litigation consulting services and expert witness testimony regarding confirmation issues, avoidance actions and other related matters; and j) assist the Committee in other functions and services that it requires for the Debtor's chapter 11 case. Lisa Ashe, a Managing Director at Mesirow Financial, is the lead professional performing services to the Committee. Ms. Ashe reports Mesirow Financial's professionals bill: Designation Hourly Rate ----------- ----------- Senior Managing Director $590 - 650 and Managing Director Senior Vice President 480 - 570 Vice-President 390 - 450 Senior Associate 300 - 360 Associate 190 - 270 Paraprofessional 140 Mesirow Financial assures the Court that it does not represent any interest adverse to the Debtor or its estate. Frank's Nursery and its parent company, FNC Holdings, Inc., each filed a voluntary chapter 11 petition in the U.S. Bankruptcy Court for the District of Maryland on February 19, 2001. The companies emerged under a confirmed chapter 11 plan in May 2002. Frank's Nursery filed another chapter 11 petition on September 8, 2004 (Bankr. S.D.N.Y. Case No. 04-15826). Allan B. Hyman, Esq., at Proskauer Rose LLP represents the Debtor. In the Company's second bankruptcy filing, it listed $123,829,000 in total assets and $140,460,000 in total debts. G.L. MANUEL CONOCO: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------------- Debtor: G. L. Manuel Conoco Oil Co., Inc. P. O. Box 470 Crowley, Louisiana 70527 Bankruptcy Case No.: 04-53038 Type of Business: The Debtor is a wholesaler of petroleum oils. Chapter 11 Petition Date: December 15, 2004 Court: Western District of Louisiana (Opelousas) Judge: Gerald H. Schiff Debtor's Counsel: Gerald J. Casey, Esq. 1709 West Prien Lake Road #A Lake Charles, LA 70601 Tel: 337-474-5005 Estimated Assets: $0 to $50,000 Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Conoco Open account $551,237 P.O. Box 2148 Ponca City, OK 74602 Vallero Petroleum Open account $167,940 PO Box 500 San Antonio, TX 78292 Broussard, Poche, Lewis Services rendered $29,223 P.O. Box 61400 Crowley, LA 70526 H&H Metal Contractors, Inc. Judgment $28,910 Calcasieu Refinery Company Open account $23,425 Great American Insurance Co. Suit on Open $19,176 Account R.L. Hall Open account $10,609 NES Rental-Sulphur Open account $9,973 LWCC Workman's Comp. $7,595 Insurance Andrew's Transport, Inc. Open account $4,884 Petron Open account $3,884 Nextel Partners Open account $3,461 American Express Credit card $1,574 Cingular Wireless Open account $623 Phoenix Pump Open account $421 Jack Olsta Co. Open account $286 Stine Lumber Co. Open account $283 Mike Guidry Services Open account $225 A-1 Professional Answer Svc. Open account $60 Kentwood Water Open account $58 GENERAL ELECTRIC: Fitch Puts BB Rating on $18.6M Class D Certs. --------------------------------------------------------------- Fitch rates GE Business Loan Trust -- GEBLT -- 2004-2: -- $657,000,000 (notional amount) class IO certificates 'AAA'; -- $655,745,277 class A certificates 'AAA'; -- $52,161,556 class B certificates 'A'; -- $18,629,127 class C certificates 'BBB'; -- $18,629,127 class D certificates 'BB'. The class IO and A ratings reflect credit enhancement provided by: * the subordination of the class B certificates (7%), * the class C certificates (2.50%), * the class D certificates (2.50%), * the spread account, and * expected excess spread. The class B rating reflects credit enhancement provided by: * the subordination of the class C certificates, * class D certificates, * the spread account, and * expected excess spread. The class C rating reflects credit enhancement provided by: * the subordination of the class D certificates, * the spread account, and * expected excess spread. The class D rating reflects credit enhancement provided by the spread account and expected excess spread. The ratings address the payment of interest and principal in accordance with the terms of the legal documents. The certificates are backed primarily by a pool of conventional business loans and Small Business Administration Section 504 Program (SBA 504) loans made to small businesses. The loans are secured by first liens on owner-occupied or single-tenant retail, office, industrial, or other commercial real estate. None of the underlying business loans are insured or guaranteed by any governmental agency. The loans were originated by GE Commercial Finance Business Property Corporation -- GECF -- and the Small Business Finance -- SBF -- lending division of General Electric Capital Corporation -- GECC. This transaction represents the fourth term securitization of loans originated by the GECF and SBF business units. The trust assets consist primarily of 337 business loans made to 306 borrowers. The $745 million underlying collateral pool consists of approximately $535 million (71.8%) of conventional business loans originated by GECF and approximately $210 million (28.2%) of SBA 504 loans originated by SBF. The loans are secured by first liens on owner-occupied or single tenant retail, office, industrial, or other commercial real estate. The pool is diversified geographically, with loans from 41 states. The largest state concentrations are in: * California (19.3%), * Texas (9.3%), * Florida (8.8%), * Washington (5.7%) and * New Jersey (4.7%). Fitch took into consideration both quantitative and qualitative factors in evaluating GEBLT's credit enhancement structure. After reviewing historical default and recovery data on both an annual and static pool basis to develop an expected loss rate, Fitch analyzed cash flows reflecting stressed default rates, recovery rates, and recovery timing lags under several default timing scenarios. Fitch also assessed borrower and balloon payment concentrations over the life of the transaction. This review included a quarterly comparison of top borrower concentrations with expected credit enhancement. Fitch's ratings also took into consideration: (1) the historical delinquency and loss performance of GECF and SBF; (2) the origination, underwriting, and servicing experience of GECF and SBF; (3) the role of GECC as master servicer; and (4) the sound legal and payment structure. The IO certificates will receive fixed-rate interest payments. The class A, B, C and D certificates will pay floating-rate interest based on a spread over one-month London Interbank Offered Rate -- LIBOR, and principal will be paid to the class A, B, C and D certificates on a pro rata basis. The interest rate swap counterparty is General Electric Capital Services, Inc., a subsidiary of General Electric Company. The class IO, A, B, C, and D certificates were privately placed pursuant to Rule 144A. GENERAL NUTRITION: Moody's Junks $215M Senior Subordinated Notes ---------------------------------------------------------------- Moody's Investors Service downgraded all ratings of General Nutrition Centers, Inc., including the Bank Loan to B2 from B1 and the 8.5% senior subordinated notes (2010) to Caa1 from B3. Moody's expectation that sales and debt protection measure trends will remain poor over the medium-term, the uncertainty regarding long-term strategy, and the need for continuous product development prompted the downgrade. Providing credit support are the belief that the company will obtain the announced bank loan amendment, Moody's opinion that free cash flow will not fall below break-even in spite of continued weak sales, and potential advantages from GNC's position as the leading retailer of vitamin, mineral, & nutritional supplement -- VMS -- products. The rating outlook is stable. Ratings lowered are: * $358 million secured Bank Facility to B2 from B1, * $215 million of 8.5% senior subordinated notes (2010) to Caa1 from B3, * Senior implied rating to B2 from B1, and the * Long-term unsecured issuer rating to B3 from B2. Moody's does not rate the 12.0% redeemable preferred stock. Constraining the ratings are the poor sales results over the previous two quarters as low-carbohydrate food products have become more widely available, the challenges in achieving sales initiatives and operating efficiency gains over the next year, and uncertainty regarding the long-term strategy during a period of transition in senior management. The need for continuous innovation given the short life cycle of many new VMS products, the intense competition within the fragmented VMS retailing industry, and the practice of providing financial support to the majority of new domestic franchisee stores (while acknowledging that over the medium-term most new store development will be outside the U.S. and Canada) also adversely impact the ratings. Over the longer term, failure to resolve the rapidly accreting redeemable preferred stock at the holding company level also will become a concern. However, credit strengths are Moody's expectation that free cash flow will remain modestly positive, the positive contribution to corporate overhead from most company-operated stores, and potential scale advantages in purchasing and marketing as the leading VMS retailer. The revenue diversity from operations across many geographies, several revenue categories, and a large franchisee base and the purchase frequency from the large base of loyalty card customers also reduce the potential risks to the company's business plan. The stable rating outlook reflects our expectation that: (1) the company will succeed in negotiating a bank amendment that is appropriate for likely performance, (2) free cash flow will not become negative while total revenue and average unit volume recover, and (3) GNC will drive incremental traffic with a steady pipeline of new products. Continued declines in retail margin from further deterioration in store performance, permanent usage of the revolving credit facility, or substantial incremental investment in working capital would place downward pressure on the ratings. Financial difficulties at a significant proportion of franchisees also would negatively impact the ratings, given exposure to franchisees derived from $240 million of royalty payments and wholesale revenue, $23 million of direct loans, and approximately 1,321 subleased store locations. Over the longer term, ratings could rise as fixed charge coverage comfortably exceeds 2 times, lease adjusted leverage falls toward 5 times, and the system expands both from new store development (particularly in international markets) and existing store performance. The B2 rating on the bank loan (comprised of a $75 million Revolving Credit Facility and a $283 million Term Loan B) considers that this debt is secured by substantially all of the company's tangible and intangible assets. The bank loan is rated at the same level as the senior implied rating because of: (1) the high proportion of the bank loan in the company's debt structure, and (2) the uncertainty of collateral coverage given that intangible assets such as trade names, leasehold improvements, and other intangibles make up about 33% of total assets. Moody's expects that the revolving credit facility will provide adequate liquidity for seasonal working capital needs and occasional cash flow timing differences, but will not become permanent capital. The Caa1 rating on the senior subordinated notes considers that this debt is guaranteed by the company's wholly owned domestic operating subsidiaries. As of September 2004, this subordinated class of debt is contractually subordinated to significant amounts of more senior obligations including the secured bank loan, approximately $14 million of mortgages, and about $80 million of trade accounts payable. In a hypothetical default scenario with the revolving credit facility fully utilized, Moody's believes that recovery for this subordinated class of debt would partially rely on residual enterprise value. Lease adjusted leverage equaled 6.0 times (based on gross rent without netting out subrental income) and fixed charge coverage was 1.8 times for the twelve months ending September 30, 2004. Comparable store sales declined by 3.2% and 10.7% in the second and third quarters of 2004, respectively, principally due to substantial declines in the diet category as low-carbohydrate products have become widely available at many retailers. Revenue and margins had been pressured for the previous several years because of the lack of exciting new products to drive incremental sales and the abrupt declines of ephedra sales in 2002 and low-carbohydrate sales in 2004. Moody's anticipates that franchisees will open most new stores over the next several years and that a portion of cash flow after interest expense and maintenance capital expenditures will be available for discretionary purposes. General Nutrition Centers, Inc., with headquarters in Pittsburgh, Pennsylvania, retails vitamin, mineral, and nutritional supplement products domestically and internationally through about 5700 company-operated and franchised stores. Revenue for the twelve months ending September 2004 was about $1.4 billion. GLOBAL CROSSING: Final Settlement Restores $79 Mil. for Retirees ---------------------------------------------------------------- A federal district court in New York City has approved a final settlement of $79 million for the benefit of workers and retirees of the Global Crossing retirement plan. "Plan fiduciaries have a responsibility to protect the long-term pension security of their workers," said U.S. Secretary of Labor Elaine L. Chao. "The court's approval of this settlement restoring millions to pay retirement benefits is a victory for workers, retirees and their families who are covered by the Global Crossing 401(k) plan. This year, the Administration achieved monetary results totaling $3.1 billion for retirement, 401(k), health and other programs." In addition to the restitution that was recovered in the private litigation, the settlement prohibits the company's executives from acting as fiduciaries to ERISA-covered benefit plans for five years unless the Department of Labor gives prior approval. The settlement covers the two former inside directors of Global Crossing, Thomas Casey (former Chief Executive Officer) and Gary Winnick (former Chairman of the Board), as well as the three former members of the Employee Benefits Committee, Dan J. Cohrs, Joseph Perrone, and John Comparin. The Secretary entered into settlement with Global Crossing's former officers and directors in connection with the private class action lawsuit filed on behalf of the plan participants. The 401(k) plan lost tens of millions of dollars when its extensive stock holdings in Global Crossing stock became virtually worthless after the company filed for bankruptcy in 2002. The settlement resolves the Labor Department's investigation of the Global Crossing Retirement Savings Plan. The department's EBSA regional office in Los Angeles and the Office of the Solicitor conducted a comprehensive investigation of Global Crossing's ERISA plans. The investigation was coordinated through President Bush's Corporate Fraud Task Force. Headquartered in Florham Park, New Jersey, Global Crossing Ltd. -- http://www.globalcrossing.com/-- provides telecommunications solutions over the world's first integrated global IP-based network, which reaches 27 countries and more than 200 major cities around the globe. Global Crossing serves many of the world's largest corporations, providing a full range of managed data and voice products and services. The Company filed for chapter 11 protection on January 28, 2002 (Bankr. S.D.N.Y. Case No. 02-40188). When the Debtors filed for protection from their creditors, they listed $25,511,000,000 in total assets and $15,467,000,000 in total debts. Global Crossing emerged from chapter 11 on December 9, 2003. (Global Crossing Bankruptcy News, Issue No. 71; Bankruptcy Creditors' Service, Inc., 215/945-7000) GREAT PLAINS ENERGY: Inks $550 Million 5-Year Credit Facility ------------------------------------------------------------- Great Plains Energy Incorporated (NYSE: GXP) disclosed the successful syndication of a $550 million, 5-year credit facility. The new Great Plains Energy credit line replaces a $150 million, 364-day line that matures in March 2005 and a $150 million, 3-year facility that matures in March 2007. Concurrently with this closing, the Company's regulated electric utility subsidiary, Kansas City Power & Light Company -- KCP&L, completed syndication of a $250 million facility, also with a 5-year term. This facility replaces $155 million in 364-day bilateral credit lines KCP&L had in place with seven individual banks. The facilities were syndicated on a combined basis and were oversubscribed at $905 million. Allocations were made among the 16 participating institutions to reach the final combined total of $800 million, which represented a $100 million increase over the original target of $700 million. JP Morgan and Bank of America co-led the transaction. "We are pleased to have completed these transactions," commented Andrea Bielsker, Chief Financial Officer. "Both Great Plains Energy and Kansas City Power & Light were able to obtain an increased level of committed liquidity for a 5-year period, with more attractive pricing and covenants than our previous lines. This successful transaction is evidence that our bank group supports our Company's operations and strategic direction. These lines give us significant additional flexibility to meet liquidity requirements as we execute our strategy in the years ahead." The Company also announced that 2005 earnings guidance will be released in February 2005. This timing will allow KCP&L to gain additional regulatory clarity with regard to potential generation and environmental initiatives. Great Plains Energy Incorporated (NYSE:GXP) -- http://www.greatplainsenergy.com/-- headquartered in Kansas City, MO, is the holding company for Kansas City Power & Light Company, a leading regulated provider of electricity in the Midwest; and Strategic Energy LLC, a competitive electricity supplier. * * * As reported in the Troubled Company Reporter on June 8, 2004, Standard & Poor's Ratings Services assigned its preliminary rating of 'BBB-' to Great Plains Energy Inc.'s senior and subordinated unsecured debt securities, and 'BB+' to the trust-preferred securities filed by the energy holding company under a $648.2 million shelf registration filed with the SEC on April 15, 2004. At the same time, Standard & Poor's affirmed the company's ratings, including the 'BBB' corporate credit rating. The affirmation incorporates the expectation that a significant portion of any debt issuance under the shelf will be used for debt refinancing or repayment. The outlook is stable. GRUPO TMM: S&P Places Junk Ratings on CreditWatch Positive ---------------------------------------------------------- Standard & Poor's Ratings Services placed its 'CCC' corporate credit and other ratings on Grupo TMM S.A. on CreditWatch with positive implications. The CreditWatch placement followed Kansas City Southern's announcement that it has reach an agreement with TMM to take control of TFM S.A. de C.V. The CreditWatch Positive listing for TMM means that the ratings could be raised or affirmed based on the possibility that its financial profile could improve if the merger with KCS is completed. The ratings on TMM could be affirmed if no transaction is consummated and its business and credit profiles remain unchanged. "We will monitor developments and resolve the CreditWatch placement after both TMM and KCS shareholders approve the transaction, and financing plans have been announced," said Standard & Poor's credit analyst Juan P. Becerra. The rating on the company reflects its still-weak financial profile, higher concentration in the railroad industry, low liquidity, and minor cash-flow generation. Headquartered in Mexico City, TMM provides a combination of ocean and land transportation services. TMM currently holds 41.2% of TFM, while KCS holds 38.8%. Although both together hold 80% of TFM, they represent 100% of the voting stake (51.8% TFM and 48.5% KCS). HAYES LEMMERZ: Establishes $75M Receivable Securitization Program ----------------------------------------------------------------- Hayes Lemmerz International, Inc., (NASDAQ: HAYZ) established an accounts receivable securitization facility with Citigroup which will provide up to $75M in funding from a commercial paper conduit administered by Citicorp North America, Inc. Liquidity provided by the facility is expected to be used to replace early payment programs discontinued by the domestic automakers and for general corporate purposes. Funding made under the facility will have an initial all-in cost of approximately Libor plus 1.25% and the facility termination date is December 3, 2007. "The securitization facility provides an additional source of liquidity for the Company and will provide savings compared to the cost of the early payment programs discontinued by the domestic automakers," said James Yost, Hayes Lemmerz' Chief Financial Official. Hayes Lemmerz International, Inc., is a world leading global supplier of automotive and commercial highway wheels, brakes, powertrain, suspension, structural and other lightweight components. The Company filed for chapter 11 protection on December 5, 2001 (Bankr. D. Dela. Case No. 01-11490). Eric Ivester, Esq. at Skadden, Arps, Slate, Meager & Flom and Mark S. Chehi, Esq. at Skadden, Arps, Slate, Meager & Flom represent the Debtors' in their restructuring efforts. (Hayes Lemmerz Bankruptcy News, Issue No. 58; Bankruptcy Creditors' Service, Inc., 215/945-7000) HERBALIFE LTD: Prices Initial Public Offering at $14 Per Share -------------------------------------------------------------- Herbalife Ltd., formerly known as WH Holdings (Cayman Islands) Ltd. (NYSE:HLF), reported the initial public offering of 14,500,000 common shares, 13,500,000 of which are being sold by Herbalife and 1,000,000 of which are being sold by certain shareholders of Herbalife, at a price of $14 per share. Herbalife has granted the underwriters a 30-day option to purchase an additional 2,175,000 shares at the initial offering price to cover over-allotments, if any. The shares will be listed and commence trading tomorrow, Dec. 16, on the New York Stock Exchange under the symbol HLF. The offering was made through an underwriting syndicate led by Merrill Lynch, Pierce, Fenner & Smith Incorporated and Morgan Stanley & Co. Incorporated, who acted as joint book-running managers. Banc of America Securities LLC, Credit Suisse First Boston LLC, and Citigroup Global Markets Inc. acted as co-managers. A copy of the prospectus relating to these securities may be obtained from: Merrill Lynch & Co. 4 World Financial Center New York, New York 10080 Tel. No. 212-449-1000 -- or -- Morgan Stanley Attn: Prospectus Department 1585 Broadway New York, New York 10036 Tel. No. 212-761-4000 About the Company Herbalife is a global network marketing company offering a range of science-based weight management products, nutritional supplements and personal care products intended to support weight loss and a healthy lifestyle. * * * As reported in the Troubled Company Reporter on Nov. 11, 2004, Standard & Poor's Ratings Services assigned its 'BB-' bank loan rating to Herbalife International Inc.'s proposed $225 million credit facility. A recovery rating of '2' was also assigned to the loan, indicating an expectation for a substantial (80%-100%) recovery of principal in the event of a default. Subsequently, all ratings on Herbalife and parent WH Holdings Ltd., including the 'BB-' corporate credit rating, were placed on CreditWatch with positive implications. The CreditWatch placement is based on Herbalife's proposed recapitalization, which is expected to result in a strengthened financial profile. Upon completion of the proposed recap transactions, Standard & Poor's expects to raise the company's corporate credit rating by one notch to 'BB' with a stable outlook. HIGH VOLTAGE: Philip Martineau to Replace Russ Shade as CEO ----------------------------------------------------------- High Voltage Engineering Corporation hired Philip M. Martineau to be its Chief Executive Officer as of Dec. 15, 2004. Mr. Martineau, who will also join the company's board of directors, will replace Mr. Russ Shade, who has resigned as CEO and retired from the board effective immediately. Mr. Martineau, 56, served most recently as Executive Vice President and Group President for HNI Corporation (NYSE: HNI). Mr. Martineau has a unique career emphasis in electrical/power products, including generator sets and controls, uninterruptible power system products -- UPS, and industrial and automotive batteries. Also, his background includes extensive international business experience, including residency in Asia for five years as well as direct responsibility for manufacturing and sales organizations in Europe, North America, and Asia. His career includes senior executive roles at "best of the best" global manufacturing companies such as Emerson Electric/Liebert, Illinois Tool Works/Miller Electric, Pacific Dunlop Australia/GNB, and Cummins Engine/Onan Corporation. Mr. Martineau is a degreed Electrical Engineer (BSEE at A.S.U.), and completed his Masters degree (MIM) at the American Graduate School of International Management. "I am very pleased to accept this position with High Voltage," stated Mr. Martineau. "I look forward to working with the people of High Voltage Engineering, whose dedication, tenacity and hard work led to the company's recent and successful restructuring. With the Chapter 11 proceedings behind us, we are now able to concentrate our energies on strengthening our relationships with our customers and vendors and creating value for our shareholders." Mr. Shade, who will continue to work with the company as a consultant, stated: "It has been my great pleasure serving as High Voltage's CEO and President. The company is well positioned to expand its global presence in the marketplace, aided in large part by its recent emergence from Chapter 11 bankruptcy proceedings. With Phil coming aboard, and the Chapter 11 proceedings complete, it is time for me to pursue new opportunities. I look forward to working with Phil and the full board over the next few months to ensure a smooth transition." Finally, Mr. Eugene Davis, Chairman of the High Voltage Engineering's board of directors, stated: "On behalf of the board, I'd like to thank Russ Shade for his hard work and dedication to the company. We wish him every success in his future endeavors." Headquartered in Wakefield, Massachusetts, High Voltage Engineering Corp., designs and manufactures technology-based products in three segments: power conversion technology and automation, advanced surface analysis instruments and services, and monitoring instrumentation and control systems for heavy machinery and vehicles. The Company filed for chapter 11 protection on March 1, 2004 (Bankr. Mass. Case No. 04-11586). The Company was represented by Fried, Frank, Harris, Shriver, & Jacobson LLP, Goulston & Storrs, P.C., and Evercore Restructuring L.P. When the Company filed for protection from its creditors, it listed estimated debts and assets of more than $100 million. The Company's Third Amended Joint Chapter 11 Plan of Reorganization was confirmed by the U.S. Bankruptcy Court for the District of Massachusetts on July 21, 2004, allowing the Company to emerge only 163 days after it commenced its chapter 11 case. HIGH VOLTAGE: Delays Filing Quarterly Financial Reports ------------------------------------------------------- High Voltage Engineering Corporation disclosed that certain unaudited quarterly financial information for the period ended Oct. 30, 2004, which is to be delivered to the company's shareholders on or prior to Dec. 14, 2004, pursuant to its Shareholders Agreement dated as of Aug. 10, 2004, will not be distributed on such date. The delay in preparation and delivery of this information is primarily related to the implementation of fresh start accounting under "Statement of Position (SOP) 90-7 Concerning Financial Reporting by Entities in Reorganization under the Bankruptcy Code. The company expects to deliver this information to its shareholders on or before Dec. 29, 2004. Headquartered in Wakefield, Massachusetts, High Voltage Engineering Corp., designs and manufactures technology-based products in three segments: power conversion technology and automation, advanced surface analysis instruments and services, and monitoring instrumentation and control systems for heavy machinery and vehicles. The Company filed for chapter 11 protection on March 1, 2004 (Bankr. Mass. Case No. 04-11586). The Company was represented by Fried, Frank, Harris, Shriver, & Jacobson LLP, Goulston & Storrs, P.C., and Evercore Restructuring L.P. When the Company filed for protection from its creditors, it listed estimated debts and assets of more than $100 million. The Company's Third Amended Joint Chapter 11 Plan of Reorganization was confirmed by the U.S. Bankruptcy Court for the District of Massachusetts on July 21, 2004, allowing the Company to emerge only 163 days after it commenced its chapter 11 case. HUDSON'S BAY: Renews $200 Million Securitization Program -------------------------------------------------------- Hudson's Bay Company has renewed $200 million of its $900 million credit card receivables securitization program, which had been scheduled for liquidation and payment beginning Jan. 31, 2005. Hbc has agreed with its existing counterparty, a highly rated, independent trust, to extend such date to Jan. 31, 2007, or later in certain circumstances. Hbc's securitization program was originally established in 1997 and the $200 million transaction subject to extension was originally completed in 1998. Under the Program, Hbc sells undivided co-ownership interests in pools of its credit card receivables to independent trusts. The aggregate outstanding amount of the securitized receivables varies depending on the volume of credit card transactions and payments. The undivided co-ownership interests in excess of those of the trusts' are retained by and belong to Hbc. The retained interest must be maintained at a minimum level between 17% and 21% of the aggregate amount of the trusts' invested amounts under the Program. The level represents an increase of between 2% and 3%, which increase was agreed to in connection with the extension. The extension is not expected to have any other material financial or accounting implications for Hbc. Hudson's Bay Company (S&P, BB+ Long-Term Corporate Credit and Senior Unsecured Debt Ratings, Negative Outlook), established in 1670, is Canada's largest department store retailer and oldest corporation. The Company provides Canadians with the widest selection of goods and services available through retail channels including more than 500 stores led by the Bay, Zellers and Home Outfitters chains. Hudson's Bay Company is one of Canada's largest employers with 70,000 associates and has operations in every province in Canada. Hudson's Bay Company's common shares trade on The Toronto Stock Exchange under the symbol "HBC". IDI CONSTRUCTION: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: IDI Construction Company, Inc. P.O Box 746 New York, New York 10018 Bankruptcy Case No.: 04-17881 Type of Business: The Debtor is engaged in the construction industry. Chapter 11 Petition Date: December 15, 2004 Court: Southern District of New York (Manhattan) Judge: Prudence Carter Beatty Debtor's Counsel: Marilyn Simon, Esq. Marilyn Simon & Associates 280 Madison Avenue, 5th Floor New York, NY 10016 Tel: 212-751-7600 Fax: 212-686-1544 Total Assets: $5,645,400 Total Debts: $18,550,000 Debtor's 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Seele, L.P. $2,342,938 337 Fifth Avenue, 6th Floor Attn: Allen Tarek, Esq. New York, NY 10016 On Par Contracting Trade $2,313,338 230 South 5th Avenue Mount Vernon, NY 10550 Prestige Decorate & Trade $737,576 Wallcover 27 William Street New York, NY 10005 Sage Electrical Contracting $661,880 651 Willowbrook Road, Ste. 201 Staten Island, NY 10314 United Airconditioning Corp. Trade $606,138 52-16 34th Street Long Island City, NY 11101 Pace Plumbing Corp. Trade $536,104 41 Box Street Brooklyn, NY 11222 King Freeze Mechanical Corp. $467,018 130 W. 29th Street New York, NY 10001 S&G Woodworking Inc. Trade $406,093 1155 Manhattan Avenue Brooklyn, NY 11222 Mason Tenders DC Trust Funds $387,871 520 Eighth Avenue New York, NY 10018 Matros Autom Elec Const Corp Trade $363,801 214 West 29th Street New York, NY 10001 The Invironmentalists $346,907 95 Madison Avenue New York, NY 10016 Precision Int Construction Unknown 20 Railroad Street Huntington Station, NY 11746 Precision Interior Const. Trade $290,546 20 Railroad Street Huntington Station, NY 11746 Conserve Electric Inc. Trade $284,603 2100-04 Artic Avenue Bohemia, NY 11716 S&J Mechanical Corp. $264,117 2221-6 Fifth Avenue Ronkonkoma, NY 11779 Coordinated Metals, Inc. $244,178 US Food Service Contract Des $238,785 NJS Architectual Wood Work $203,584 Newtown Corporation $199,443 A.D. Winston Corp. Trade $198,064 INERGY LP: S&P Assigns B- Ratings to $400M Senior Unsecured Notes ----------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B' corporate credit rating to propane distributor Inergy L.P. At the same time, Standard & Poor's assigned its 'B-' rating to Inergy's $400 million senior unsecured notes. The outlook is stable. Pro forma for the note offering and the public common unit offering of about $130 million, Kansas City, Missouri-based Inergy will have about $460 million of debt. Ratings are based on these concerns: (1) The challenge of managing and integrating the acquisition of Star Gas Propane L.P., which more than doubles sales and may be more difficult than the company envisions; (2) The master limited partnership structure, especially with higher distribution levels, does not favor credit quality; and (3) Exposure to external factors such as weather and commodity prices that can result in somewhat volatile financial performance. "Inergy's $400 million issuance of senior unsecured notes will be used primarily to fund the Star Gas Propane acquisition," noted Standard & Poor's credit analyst Andrew Watt. "The issuance will also help to reduce the company's secured credit facility borrowings," he continued. Inergy is also planning a private equity offering of between $90 million and $115 million, which is expected to occur at the close of the acquisition. The stable outlook assumes a successful equity offering to partially finance the Star Gas Propane acquisition. Ratings stability is also contingent on successful future acquisitions that are reasonably priced and financed with a balanced mix of debt and equity consistent with the company's current financial profile. INN OF THE MOUNTAIN: S&P Revises Outlook on B Ratings to Stable --------------------------------------------------------------- Standard & Poor's Rating Services revised its outlook on the Inn of the Mountain Gods Resort and Casino to stable from negative due to improved operating performance, a modest improvement to credit measures, and the expectation that steady performance will continue as the expansion project nears completion. In addition, Standard & Poor's affirmed its 'B' corporate credit and 'B' senior unsecured debt ratings. Total debt outstanding at Oct. 31, 2004, was approximately $202 million. The ratings on Mescalero, New Mexico-based Inn of the Mountain Gods, the entity formed to own and operate the casino and resort operations for the Mescalero Apache Tribe, reflect the enterprise's narrow business focus by operating in a single market, and risks associated with operating a larger resort facility once the expansion is complete. Consolidated EBITDA during each of the past three fiscal years has exceeded $23 million. In addition, EBITDA margins have exceeded 35%, which is good relative to commercial gaming companies, as a result of a low-cost structure and favorable current compact agreement with the state of New Mexico. In an effort to expand and modernize its existing casino and hotel operations, and to capitalize on excess demand, Inn of the Mountain Gods has undertaken a two-phased expansion project. The first phase, the Travel Center casino, was completed in May 2003 at a cost of $16 million (which was funded by the Tribe). The second phase will be the new Inn of the Mountain Gods Resort and Casino. Inn of the Mountain Gods entered into a fixed price contract for the Phase II construction costs and the total cost of the project is expected to be $171 million. The facility will be located on the site of the old hotel and is expected to resolve some of the capacity constraints currently experienced at the Casino Apache. It is the intent of management to cross-market the new property with the Travel Center in an effort to expand its customer base and promote the property as a destination resort. 93% of the hard costs have been expended through Oct. 31, 2004, and the new facility is expected to open on time in April 2005. INTEGRATED HEALTH: Ready to Send Payments to Premiere Creditors --------------------------------------------------------------- Judge Walrath authorizes IHS Liquidating, LLC, to make an initial distribution to the holders of Allowed Premiere Unsecured Claims as provided in the Chapter 11 Plan of Integrated Health Services, Inc., and its debtor-affiliates. IHS Liquidating will maintain in the Disputed Premiere Unsecured Claims Account cash equal to the difference between the total amounts distributed to holders of Allowed Premiere Unsecured Claims and $1,770,000. Moreover, IHS Liquidating will hold the Disputed Premiere Unsecured Claims Reserve exclusively for the benefit of the disputed claimholders. Judge Walrath prohibits IHS Liquidating in using the Reserve funds to pay other claimholders, except as ordered by the Court with notice to the Angell Creditors and a hearing. Integrated Health Services, Inc. -- http://www.ihs-inc.com/-- operated local and regional networks that provide post-acute care from 1,500 locations in 47 states. The Company and its 437 debtor-affiliates filed for chapter 11 protection on Feb. 2, 2000 (Bankr. Del. Case No. 00-00389). Rotech Medical Corporation and its direct and indirect debtor-subsidiaries broke away from IHS and emerged under their own plan of reorganization on March 26, 2002. Abe Briarwood Corp. bought substantially all of IHS' assets in 2003. The Court confirmed IHS' Chapter 11 Plan on May 12, 2003, and that plan took effect September 9, 2003. Michael J. Crames, Esq., Arthur Steinberg, Esq., and Mark D. Rosenberg, Esq., at Kaye, Scholer, Fierman, Hays & Handler, LLP, represent the HIS Debtors. On September 30, 1999, the Debtors listed $3,595,614,000 in consolidated assets and $4,123,876,000 in consolidated debts. (Integrated Health Bankruptcy News, Issue No. 86; Bankruptcy Creditors' Service, Inc., 215/945-7000) INTERLINE BRANDS: Prices 12.5 Mil. Shares in IPO at $15 Each ------------------------------------------------------------ Interline Brands, Inc., disclosed the pricing of its initial public offering of 12,500,000 shares of its common stock at $15.00 per share, all of which were offered by Interline Brands, Inc. The shares have been approved to trade on The New York Stock Exchange under the symbol "IBI". Interline Brands will use the net proceeds of the offering to: -- repay a portion of Interline Brands' indebtedness, -- make cash payments in respect of Interline Brands' preferred stock, and -- terminate the interest rate swap agreements of Interline Brands. Any remaining proceeds will be available for general corporate purposes. The underwriters have been granted an option to purchase up to an additional 167,000 shares of common stock from the Company and up to an additional 1,708,000 shares of common stock from certain stockholders of the Company to cover over- allotments, if any. The Company will receive no proceeds from sales of common stock by stockholders. Credit Suisse First Boston LLC and Lehman Brothers Inc. are joint bookrunning managers of the offering. The registration statement relating to the initial public offering of shares of common stock has been declared effective by the Securities and Exchange Commission. The offering of these securities will be made only by means of a prospectus, copies of which may be obtained from: Credit Suisse First Boston Prospectus Department One Madison Avenue, Level 1B New York, N.Y. 10010 Tel: 212-325-2580 -- or -- Lehman Brothers Inc. c/o ADP Financial Services Integrated Distribution Services 1155 Long Island Avenue Edgewood, N.Y. 11717 Tel: 631-254-7106 About the Company Interline Brands, Inc., is a direct marketing and specialty distribution company with headquarters in Jacksonville, Florida. Interline provides maintenance, repair and operations products to professional contractors, facilities maintenance professionals, hardware stores, and other customers across North America and Central America. * * * As reported in the Troubled Company Reporter on Dec. 13, 2004, 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. INTERSTATE GENERAL: Receives Delisting Notice from AMEX ------------------------------------------------------- Interstate General Company L.P. (Amex: IGC; PCX) received notice from the American Stock Exchange (AMEX) that it is not in compliance with requirements for continued listing of the Company's units on AMEX. The deficiencies cited by the AMEX are: -- the Company's unit holders' equity is less than $6 million, and -- the Company has had losses from continuing operations in each of its five most recent fiscal years. The Company previously disclosed in its most recent Form 10-QSB that, "The Company may not at present or at the end of this fiscal year meet certain of the standards for continued listing of its units on the American Stock Exchange relating to its financial condition and operating results, and the exchange may therefore at any time delist the Company's units." Further, pursuant to the AMEX's letter, for the Company to maintain the AMEX listing, it must submit a plan by Jan. 10, 2005, advising the AMEX of action it has taken and will take that will bring it into compliance with the continued listing standards within a maximum of 12 months of receipt of the AMEX's notice. The Company's management had several discussions with AMEX officials prior to receipt of the AMEX's letter formally advising it of its failure to meet the continued listing standard. In those conversations management informed the AMEX staff that the Company does not have available resources to bring the Company into compliance within 12 months, and accordingly does not anticipate that it will submit a plan. The Company therefore expects that the AMEX will notify the Company shortly of the involuntary delisting of its units. The Company's board of directors, at a meeting on Dec. 6, considered alternatives available to the Company in the event that its units were delisted including the transfer of the Company's real estate assets in St. Charles, Maryland to a liquidating trust for the benefit of its unit holders. If this action is taken it is expected, subject to the advice of counsel, that the stock of Interstate Waste Technologies, Inc., and Caribe Waste Technologies, Inc. will continue to be held by the IWT/CWT Trust in which the unit holders of IGC have an 87 percent beneficial interest. It is not expected that the beneficial interests in the IGC liquidating trust or the IWT/CWT Trust will be publicly traded. The purpose of the IGC liquidating trust will be to sell, as expeditiously as prudently possible, IGC's remaining real estate assets and distribute the net proceeds to the trust's beneficiaries. There are no agreements in place for the future funding of IWT and CWT. Possible funding sources being explored are bringing in new investors in an offering in Puerto Rico pursuant to a private placement memorandum, finding a strategic partner for CWT's Puerto Rico project and/or the Company and possibly obtaining funding from IGC's affiliate, Interstate Business Corporation. Management will continue to consider all available alternatives to enable the board of directors to reach a decision on the Company's future direction, if possible, prior to the end of December. About the Company Interstate General Company L.P.'s principal activities are to develop and sell residential and commercial land and to find innovative solutions for disposal of municipal waste. The real estate activities include community development, development and ownership of rental apartments and real estate management services. The Group also pursues waste disposal contracts with municipalities and government entities as well as industrial and commercial waste generators. Financial Position Mr. Wilson's January 20, 2004, letter to unitholders summarized IGC's current financial position. In short, with the exception of Puerto Rico, IGC is not able to fund waste project development efforts, pending outside project-by-project investor funding. IGC's first priority is to obtain an equity investor(s) for its Puerto Rico project. On the real estate side, IGC's two priorities are: (a) obtain an equity investor in its Brandywine project, and (b) complete land permitting for its Towne Center South apartment project and refinance the underlying 30-acre parcel. The Company received a "going concern" qualification in the opinion of its independent auditors for its 2002 financial statements. The Company has received a similar qualification in its independent auditor's opinion for its 2003 financial statements. The Company expects to incur further losses in 2004 and to be severely constrained financially unless and until an equity investor is obtained for its Brandywine project and development equity is obtained for its Puerto Rico waste project. In its Form 10-QSB for the quarterly period ended Sept. 30, 2004, filed with the Securities and Exchange Commission, Interstate General posts a $1,504,000 net loss in Sept. 2004 compared to a $696,000 net loss from the previous year. KAISER ALUMINUM: Committee Wants to Examine James McAulliffe ------------------------------------------------------------ The Official Committee of Retired Salaried Employees appointed in the chapter 11 cases of Kaiser Aluminum Corporation and its debtor-affiliates asks the United States Bankruptcy Court for the District of Delaware's permission to conduct examination of James E. McAuliffe, Jr., Kaiser Aluminum Corporation and its debtor- affiliates' Vice-President, Human Resources. As previously reported, the Debtors sought and obtained the Court's authorization under Section 1114 of the Bankruptcy Code to modify or terminate the retiree benefits of the Debtors' retired salaried employees and their covered spouses and dependents. The Debtors and the Retirees Committee reached a settlement providing for compensation, including permitting the Retirees to elect "COBRA coverage under the KACC Employees Group Insurance Program for Active Employees," in exchange for the termination of benefits. Frederick B. Rosner, Esq., at Jaspan Schlesinger Hoffman, LLP, in Wilmington, Delaware, states that the Settlement provided that "[m]onthly premiums for COBRA coverage shall be determined by an actuary selected by the Company based on a reasonable estimate of the cost of providing COBRA coverage for similarly situated beneficiaries." The Debtors selected Hewitt Associates as the actuary that would determine the 2005 monthly premiums for COBRA coverage for the Retirees. The Retirees Committee believes that the increase in premiums from 2004 to 2005 is unusually high. The Retirees Committee seeks to investigate the determination of the 2005 premiums by the Debtors and Hewitt. Mr. Rosner relates that the Debtors declined a request by the Retirees Committee for data the Debtors had provided to Hewitt in connection with the determination of the 2005 premium. According to the Debtors, they had no obligation under ERISA to provide that data. The Retirees Committee asserts that it has the right, power and duty to review the data to investigate the determination of the 2005 premiums. Section 1114(b)(2) of the Bankruptcy Code provides that "[c]ommittees of retired employees appointed by the court pursuant to this Section shall have the same rights, powers, and duties as committees appointed under Sections 1102 and 1103 . . . for the purpose of carrying out the purposes of Sections 1114 and 1129(a)(3) and, as permitted by the court, shall have the power to enforce the rights of persons . . . as they relate to retiree benefits." Moreover, under Section 1103(c)(2), "[a] committee appointed under Section 1102 [of the Bankruptcy Code] may . . . investigate the acts, conduct, assets, liabilities, and financial conditions of the debtor, the operation of the debtor's business and the desirability of the continuance of such business, and any other matter relevant to the case or to the formulation of a plan. . . ." Mr. Rosner notes that since the Debtors have refused, and continues to refuse, voluntarily to provide the Retirees Committee with information requested by the Retirees Committee in connection with its investigation of the determination of the 2005 monthly premiums for COBRA coverage for the Retirees under the Settlement, it is necessary that the Retirees Committee promptly examine Mr. McAuliffe as to the acts or conduct of the Debtors and other relevant matters in connection with the determination. On November 29, 2004, the Retiree Committee's counsel left a voicemail message for the Debtors' counsel in an attempt to arrange a mutually agreeable date, time, place, and scope of an examination of Mr. McAuliffe. The Debtors' counsel did not return the call. Consequently, no agreement could be reached. 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) KANSAS CITY SOUTHERN: Moody's Affirms Low-B Ratings --------------------------------------------------- Moody's Investors Service affirmed the debt ratings of The Kansas City Southern Railway Company -- KCR -- and its holding company parent, Kansas City Southern -- KSU -- senior implied at B1, senior secured bank loans at Ba3, senior unsecured notes at B2. The rating outlook remains negative. This affirmation follows the announcement that KSU will acquire the 51% voting interest in Grupo Transportacion Ferroviaria Mexicana, S.A. de C.V. ('Grupo TFM', senior unsecured at B2, negative) currently held by Grupo TMM, SA. If the transaction is completed, KSU will own approximately 76% of TFM, Mexico's northeastern railroad, with the Government of Mexico holding the remaining interest. The transaction is subject to a number of conditions, including review by the Department of Justice and approval by KSU's shareholders for the new shares to be issued. KCRs ratings already considered the potential for this transaction, and the proposed terms are similar to the previous second quarter, 2003 agreement between KSU and Grupo TMM. The affirmation recognizes that KCR will increase its debt by approximately $79 million to fund the cash portion of the deal, as well as issue a $47 million PIK note to certain Grupo TMM shareholders payable by KSU if certain conditions are satisfied. The rating affirmation also takes into account the operating performance of the domestic railroad, which has improved on a year over year basis, as well as the favorable near term prospects for KCR's business. The negative outlook reflects that the long-standing issues of the Value Added Tax claim and the potential for a put of the TFM shares held by the Mexican Government remain unresolved. Should both the VAT and potential put be resolved on terms that are economically neutral, and provided the operations of KCR remain fluid, the rating outlook could be changed to stable. The VAT claim and the put are separate matters that involve different agencies within Mexico. Moody's are particularly concerned about the put which, if exercised by the Government, would ultimately become a liability of KSU in an amount which the company may not be able to fund without further negative rating pressure unless additional equity were issued. Moody's points out, however, that technical aspects of the put mechanism are being reviewed by a lower court in Mexico and the ability of the Government to exercise the put has been stayed by the court since October 2003. Moody's do not expect that KCR will directly support the Grupo TFM debt nor will Grupo TFM guaranty the KCR obligations, although KSU will consolidate Grupo TFM for financial reporting purposes. In addition, there are some impediments to upstreaming cash from Grupo TFM to KSU, including specific restrictions in the TFM debt instruments as well as tax matters. Consequently, Moody's will continue to view KCR and Grupo TFM separately. KCR's debt ratings will be based on the debt protection characteristics of KCR's domestic operations and the value of its investment in Mexico, the value of which would improve with control of Grupo TFM. KCR's railroad operations have improved and the business outlook is favorable. Nonetheless, because of the railroad's high operating cost structure and limited pricing power because of its size, along with the interest burden resulting from a leveraged capital structure, financial results are comparatively weak. Moody's anticipates breakeven free cash flow for the current year, and potentially negative free cash flow over the near term depending on the level of KCR's locomotive purchases. Moody's also notes that a substantial portion of KCR's debt can be attributed to its investment in the Mexican railroad. KCR has yet to receive a cash return for this investment, and the investment produces financial leverage that is high considering the long-term cash generating capacity of its domestic railroad. The bank Term Loan B (due 2008) will be upsized to $250 million from the current amount of $150 million. The Term Loan B, and the bank Revolver (maturing 2007) will continue to be secured by substantially all of KCR's domestic assets and will be guaranteed by KCR's domestic operating subsidiaries and KSU. Asset protection for debt holders is substantial -- under a liquidation scenario asset coverage is a multiple of the secured debt. Because of the security, the secured debt is notched up one notch from the senior implied rating. Also, because the senior unsecured notes are effectively subordinated to the secured bank debt, the senior unsecured debt is notched down one notch from the senior implied rating. Ratings affirmed: * The Kansas City Southern Railway Company: -- senior implied at B1; senior secured at Ba3; -- senior unsecured at B2. * Kansas City Southern -- issuer rating at B3; -- Convertible Perpetual Preferred at Caa1 Kansas City Southern, based in Kansas City Missouri, operates a Class I railway and has interests in Mexico and Panama KANSAS CITY SOUTHERN: S&P Places Ratings on CreditWatch Negative ---------------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings on Kansas City Southern and unit Kansas City Southern Railway Co., including its 'BB-' corporate credit ratings on both entities, on CreditWatch with negative implications. This follows the rail company's announcement that it has reached an agreement with Grupo TMM S.A. (TMM; CCC/Stable/--) to take control of Grupo Transportacion Ferroviaria Mexicana S.A. de C.V. -- TFM, the main privatized freight railroad in Mexico. "Based on preliminary information, Standard & Poor's believes that the planned acquisition of TFM, as currently proposed, would likely result in an affirmation of Kansas City Southern ratings or a one notch downgrade," said Standard & Poor's credit analyst Lisa Jenkins. A similar deal was proposed in April 2003. However, the prospects of the deal became uncertain in August 2003 when TMM shareholders voted against the deal, despite the fact that the controlling shareholder of TMM is also the chairman and chief executive of TMM. The two companies have now entered into an amended agreement, which has been approved by the boards of both companies. Standard & Poor's also assigned its 'BB+' rating and a recovery rating of '1', indicating high expectation of full recovery of principal in the event of default, to Kansas City Southern Railway Co.'s term loan bank facility, which is being increased to $249.25 million from $149.25 million. Ratings on the bank debt, which is guaranteed by parent Kansas City Southern and certain subsidiaries, were also placed on CreditWatch with negative implications as a result of the TFM announcement. To resolve the CreditWatch listing, Standard & Poor's will meet with management to discuss the financial and strategic implications of the deal and will assess the operating prospects for both Kansas City Southern and TFM. While the proposed deal should enhance the company's business profile, increased financial risk following the completion of the transaction will make the company more vulnerable to cyclical pressures. Kansas City Southern is a Class 1 (major) railroad, but it is significantly smaller and less diversified than its peers. Its core rail operations cover a 10-state region that includes Missouri, Kansas, Arkansas, Oklahoma, Mississippi, Alabama, Tennessee, Louisiana, Texas, and Illinois. Since the late 1990s, Kansas City Southern has maintained an ownership interest in TFM. TFM's economic ownership interest is currently split as follows: * Kansas City Southern, 37.3%; * Grupo TMM S.A., 38.8%; and * the Mexican government, 23.9%. LANDRY'S RESTAURANTS: S&P Rates Planned $450 Sr. Sec. Loan at BB- ----------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BB-' rating to casual dining restaurant operator Landry's Restaurants Inc.'s proposed $450 million senior secured bank loan, comprising a $150 million term loan and a $300 million revolving credit facility. In addition, a '2' recovery rating was assigned to the loan, indicating the expectation for substantial (80%-100%) recovery of principal in the event of a default. Also, a 'B' rating was assigned to the company's proposed $400 million senior unsecured note offering. The notes will be issued under Rule 144A with registration rights. In addition, Standard & Poor's assigned its 'BB-' corporate credit rating to the company. The outlook is negative. The senior unsecured note offering is rated two notches below the corporate credit rating because of the significant amount of priority debt ahead of these notes in the capital structure. Proceeds from the offering will be used to repay existing debt and to finance an investment in an unrestricted subsidiary. The unrestricted subsidiary could use the proceeds to make acquisitions, investments in new lines of business in the hospitality and entertainment business (including gaming operations), stock repurchases, or a combination of the above. "The ratings reflect Landry's participation in the highly competitive casual dining sector of the restaurant industry, its growth-through-acquisition strategy, the inherent difficulties in operating multiple concepts, a very aggressive financial policy, and the high leverage that results from the recapitalization," said Standard & Poor's credit analyst Robert Lichtenstein. "These risks are only partially offset by the company's established presence in the causal seafood dining sector of the restaurant industry, good locations for its restaurants, and adequate financial flexibility." LEHMAN ABS: S&P Junks Class B-1 Issue & Rates Class M-2 at BB ------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on nine classes from Lehman ABS Manufactured Housing Contract Trust Series 2001-B and removed them from CreditWatch with negative implications, where they were placed Dec. 6, 2004. The 'AAA' rating on class A-7 from this transaction is not affected, as it benefits from an insurance policy issued by Ambac Assurance Corp. (AAA/Stable/--). The lowered ratings reflect the worse-than-expected performance trends displayed by the underlying pool of manufactured housing contracts, which were originated by CIT Group/Sales Financing, Inc., and the resulting deterioration of credit support available to cover losses on the affected classes. The performance trends associated with the pool of manufacturing housing contracts, which support the rated certificates, have continued to deteriorate since Standard & Poor's last rating actions in April 2004. With a pool factor of approximately 67%, the trust has experienced cumulative net losses of 5.83% after 37 months of performance. In addition, repossession inventory (as a percentage of the current pool balance) is significant at 4.41%. Furthermore, the percentage of the collateral pool that comprises receivables that are 30 or more days delinquent (excluding accounts already in repossession inventory) is 11.60%; of this amount, more than 50% are loans that are 90-plus days delinquent. The recovery rate on liquidated collateral has been relatively flat, at an average rate of approximately 30% for the past 12 months. The cumulative recovery rate for this transaction is about 28%. However, the high level of monthly losses and insufficient excess spread has caused overcollateralization to decrease substantially over the course of the past 24 months, declining from its highest level of 2.77% (of the initial collateral balance) in November 2002 to its current level of 0.79% of the original collateral balance. On April 6, 2004, Standard & Poor's lowered its ratings on classes M-1, M-2, and B-1 from this transaction and removed them from CreditWatch negative, where they were placed Jan. 26, 2004. At the same, the 'AAA' ratings on the class A certificates were affirmed. Ratings Lowered and Removed from CreditWatch Negative Lehman ABS Manufactured Housing Contract Trust Series 2001-B Rating Class To From ----- -- ---- A-1 AA+ AAA/Watch Neg A-2 AA+ AAA/Watch Neg A-3 AA+ AAA/Watch Neg A-4 AA+ AAA/Watch Neg A-5 AA+ AAA/Watch Neg A-6 AA+ AAA/Watch Neg M-1 A- AA-/Watch Neg M-2 BB BBB+/Watch Neg B-1 CCC BB/Watch Neg LEHMAN MANUFACTURED: Moody's Rates Classes II-A1 & II-A2 at B3 -------------------------------------------------------------- Moody's Investors Service has downgraded the ratings of the certificate classes of the Lehman Manufactured Housing Asset-Backed Trust, 1998-1 resecuritization. The rating action concludes Moody's rating review, which began on August 26, 2004. The transaction was a resecuritization of 15 classes of certificates from 11 Green Tree manufactured housing securitizations, which were issued during the period of 1995 through 1997. The ratings on these underlying securities, which are the only source of payment for the Lehman 1998-1 certificates, were either Aaa or Aa3 at the time the deal was issued. The ratings on the Lehman 1998-1 certificates are based primarily on the ratings on the underlying classes of certificates, which have subsequently been downgraded. The complete rating actions are: Issuer: Lehman Manufactured Housing Asset-Backed Trust, 1998-1 * Interest-Only Class I-IO certificates, rated Aaa, downgraded to Aa3 * 6.635% Class I-A1 certificates, rated Aaa, downgraded to A1 * Interest-Only Class II-IO certificates, rated Aa3, downgraded to B2 * 6.545% Class II-A1 certificates, rated Aa3, downgraded to B3 * 7.033% Class II-A2 certificates, rated Aa3, downgraded to B3 The loans are currently being serviced by Green Tree Servicing LLC, which acquired the servicing portfolio of GreenPoint's manufactured housing loans and related assets in November 2004. LEVI STRAUSS: Launching $375M Sr. Debt Offer via Private Placement ------------------------------------------------------------------ Levi Strauss & Co. is commencing a private placement of an expected $375 million of Senior Notes due 2015. The Senior Notes will rank equally with all of the company's other unsecured unsubordinated indebtedness. The company intends to use the gross proceeds of the proposed offering to refinance (whether through a tender offer, payment at maturity, repurchase, defeasance or otherwise) $375 million principal amount of the $450 million aggregate principal amount of the company's 7.00% notes due Nov. 1, 2006. The securities offered will not be registered under the Securities Act of 1933, as amended, or any state securities laws, and unless so registered, may not be offered or sold in the United States, except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state securities laws. Levi Strauss & Co. is one of the world's leading branded apparel companies, marketing its products in more than 110 countries worldwide. The company designs and markets apparel for men, women and children under the Levi's(R), Dockers(R) and Levi Strauss Signature(TM) brands. Bankruptcy Risk While any company with debt obligations could make the same statement, Levi Strauss said in a Form 8-K filed with the SEC yesterday: If we are unable to service our indebtedness or repay or refinance our indebtedness as it becomes due, we may be forced to sell assets or we may go into default, which could cause other indebtedness to become due, result in bankruptcy or an out-of-court debt restructuring, preclude full payment of the notes and adversely affect the trading value of the notes. The statement was included in a list of updated risk factors in connection with the private placement transaction. A full-text copy of the regulatory filing containing this disclosure is available at no charge at: http://www.sec.gov/Archives/edgar/data/94845/000119312504214234/d8k.htm * * * As reported in the Troubled Company Reporter on Oct. 21, 2004, Fitch Ratings does not anticipate any rating implications from Levi Strauss & Co.'s announcement that it will retain the Dockers business. Fitch rates Levi's: * $1.7 billion senior unsecured debt 'CCC+', * $650 million asset-based loan, ABL, 'B+', and * $500 million term loan 'B'. The Rating Outlook is Negative. LEVI STRAUSS: Commencing Cash Tender Offer for Sr. Notes Due 2006 ----------------------------------------------------------------- Levi Strauss & Co. has commenced a cash tender offer for up to $375,000,000 aggregate principal amount of its $450,000,000 7.00% Notes due 2006. The tender offer will expire at 12:00 midnight, New York City time, on Wednesday, Jan. 12, 2005, unless extended or earlier terminated by the Company. Under the terms of the offer, the Company is offering to purchase a portion of the outstanding Notes for a total consideration based on the yield to maturity of the 2.50% U.S. Treasury Note due Oct. 31, 2006, plus a fixed spread of 75 basis points, in addition to paying accrued and unpaid interest for the period up to but excluding the settlement date of the offer. Holders who tender at or prior to 5:00 p.m., New York City time, on Wednesday, Dec. 29, 2004, will receive the total consideration, which includes an early tender premium of $20.00 per $1,000 principal amount. If the aggregate principal amount of Notes validly tendered and not properly withdrawn exceeds $375,000,000, the Company will accept Notes for purchase on a pro rata basis based on the principal amount of Notes tendered. Payment for tendered Notes will be made in same day funds on the first business day after the expiration of the offer, or as soon as practicable thereafter. The Company currently intends to enter into a secured or other financing in 2005 that will provide proceeds sufficient to enable it to repurchase or otherwise refinance the remaining approximately $75 million principal amount of 2006 notes. The tender offer is conditioned upon the satisfaction of certain conditions, including the consummation by the Company before the expiration of the tender offer of an offering of notes in a capital markets transaction with gross proceeds of at least $375,000,000. If any of the conditions are not satisfied, the Company is not obligated to accept for payment or pay for, and may delay the acceptance for payment of, any tendered Notes, and may even terminate the tender offer. Full details of the terms and conditions of the tender offer are included in the Company's Offer to Purchase dated Dec. 15, 2004. Citigroup Global Markets, Inc., will act as the Dealer Manager for the tender offer. Requests for documents may be directed to Georgeson Shareholder Communications Inc., the Information Agent, at (212) 440-9800 or (877) 868-4958. Levi Strauss & Co. is one of the world's leading branded apparel companies, marketing its products in more than 110 countries worldwide. The company designs and markets apparel for men, women and children under the Levi's(R), Dockers(R) and Levi Strauss Signature(TM) brands. Bankruptcy Risk While any company could make the same statement, Levi Strauss said in a Form 8-K filed with the SEC yesterday * * * As reported in the Troubled Company Reporter on Oct. 21, 2004, Fitch Ratings does not anticipate any rating implications from Levi Strauss & Co.'s announcement that it will retain the Dockers business. Fitch rates Levi's: * $1.7 billion senior unsecured debt 'CCC+', * $650 million asset-based loan, ABL, 'B+', and * $500 million term loan 'B'. The Rating Outlook is Negative. MARINER HEALTH: S&P Withdraws Low-B Ratings After Acquisition ------------------------------------------------------------- Standard & Poor's Ratings Services withdrew its ratings on Mariner Health Care, Inc. A private company, National Senior Care, has completed its acquisition of Mariner, whose debt has been repaid. As reported in the Troubled Company Reporter on Jul. 2, 2004, Standard & Poor's Ratings Services placed its 'B+' corporate credit, 'BB-' secured debt, and 'B-' subordinated debt ratings on Atlanta, Georgia-based Mariner Health Care, Inc., on CreditWatch with negative implications. "The CreditWatch placement follows the company's announcement of its pending acquisition by National Senior Care, Inc., for $1 billion, including the assumption of Mariner's outstanding long-term debt," said Standard & Poor's credit analyst David P. Peknay. As of March 31, 2004, Mariner's long-term debt totaled $385 million. METRON TECH: Changes Name to Nortem & Begins Liquidating Process ---------------------------------------------------------------- Metron Technology N.V. (n/k/a Nortem N.V. [Nasdaq:MTCH]) disclosed that Applied Materials, Inc., has acquired the worldwide operating subsidiaries and businesses of Metron, as approved by Nortem's shareholders at its 2004 annual general meeting of shareholders. In connection with the consummation of the asset sale to Applied Materials, Metron Technology N.V. changed its name to "Nortem N.V." and began the liquidation process. Under the terms of the asset sale, Applied Materials: -- acquired the outstanding shares of Nortem's worldwide operating subsidiaries and substantially all of the other assets of Nortem, including, but not limited to, Nortem's intellectual property and technology and all cash and cash equivalents, other than an amount equal to $2,000,000 plus cash received prior to closing upon exercise of warrants and options; and -- assumed certain liabilities of Nortem, paid to Nortem $84,567,158 in cash and agreed to reimburse Nortem for amounts related to certain Netherlands surtax liabilities and withholding obligations and certain other costs and expenses. As described in the company's Definitive Proxy Statement filed with the U.S. Securities and Exchange Commission on Nov. 12, 2004, shareholders of Nortem will receive two or more liquidating distributions. The initial distribution is currently expected to be made in the first two months of 2005, and the final cash distribution would be made when all liabilities of the company have been satisfied, which is currently expected to be within six months following the closing. The amount and timing of the described distributions are dependent upon a variety of factors, including the timing of winding up Nortem's business and dissolving, and the costs, expenses and time involved in satisfying Nortem's current liabilities and obligations and those incurred by Nortem following the closing of the asset sale. Immediately following the consummation of the asset sale, Peter Verloop and Charles Roffey were appointed as Nortem's liquidators, having been previously approved as liquidators by Nortem's shareholders at Nortem's 2004 annual general meeting of shareholders. Also, Mr. Roffey was appointed as the principal executive officer and principal financial officer of Nortem. Effective as of the consummation of the asset sale, each of the managing directors and officers of Nortem resigned as managing directors and officers of Nortem, and Edward D. Segal, Nortem's former Chief Executive Officer and Managing Director; Dennis R. Riccio, Nortem's former President, Chief Operating Officer and Managing Director; Gregory S. Geskovich, Nortem's former Vice President Fab Solutions Group and Managing Director; and Peter Postiglione, Nortem's former Vice President Equipment Solutions Group, have each entered into employment agreements with Applied Materials. In addition, effective as of the consummation of the asset sale, Robert Anderson and William George resigned as supervisory directors of Nortem. About the Company Metron Technology N.V. provides outsource solutions to the semiconductor industry. Metron is focused on delivering outsourcing alternatives to semiconductor device manufacturers, original equipment manufacturers -- OEM's -- and suppliers of production materials. The Company provides semiconductor device manufacturers with an alternative for outsourcing non-core, critical functions of the wafer fabrication facility -- fab. MORTGAGE CAPITAL: S&P Pares Ratings on Classes H & J to Single-B ---------------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on six classes of Mortgage Capital Funding Inc.'s multifamily/commercial mortgage pass-through certificates series 1996-MC1. Concurrently, ratings are affirmed on three other classes from the same transaction. The raised and affirmed ratings reflect credit enhancement levels that provide adequate support through various stress scenarios. As of the Dec. 15, 2004, remittance report, the collateral pool consisted of 92 loans with an aggregate principal balance of $220.618 million, down from 162 loans totaling $482.4 million at issuance. The master and special servicer, GMAC Commercial Mortgage Corp. -- GMACCM, provided year-end 2003 debt service coverage -- DSC -- figures for 98% of the pool. Based on this information, Standard & Poor's calculated a weighted average DSC of the outstanding loans at 1.52x, up from 1.45x at issuance. To date, the pool has experienced realized losses on two loans totaling $1.7 million dollars (0.4% of pool balance). All of the loans in the pool are current. The top 10 loans have an aggregate outstanding balance of $87.8 million (39.8% of the pool balance). The weighted average DSC for the top 10 loans is 1.49x, up slightly from 1.41x at issuance. Standard & Poor's reviewed property inspection reports provided by the master servicer for all of the assets underlying the top 10 loans. Eight of the 10 assets were characterized as "good", while one was characterized as "excellent" and one as "fair". One of the loans appears on the watchlist. GMACCM's watchlist consists of nine loans with an aggregate outstanding balance of $20.8 million (8.9%). The two largest loans on the watchlist are secured by a retail and health care property. The retail property, The Harnett Crossing Shopping Center loan (10th largest loan), is a 247,928-sq.-ft. retail center in Dunn, North Carolina. The property is encumbered by a $5.6 million mortgage. Wal-Mart ('AA') has physically vacated the space, which has caused other tenants to forego renewing their leases. Wal- Mart's lease expires August 2008. As of Dec. 31, 2003, the property reported a DSC of 1.13x and occupancy of 58%. The health care facility, Regency Park-El Molino, is a 108-unit property in Pasadena, California. The property is encumbered by a $4.6 million mortgage, which appears on the watchlist due to a decrease in cash flow as well as occupancy. As of Dec. 31, 2003, the property reported a DSC of 1.01x and occupancy of 58%. The trust collateral is located across 26 states, with only New York (15.3%), North Carolina (11.1%), and California (10.6%) accounting for exposures in excess of 10% of the pool balance. Property concentrations greater than 10% of the pool balance are found in multifamily (40.2%) and retail (38.5%) properties. Ratings Raised Mortgage Capital Funding, Inc. Multifamily/Commercial Mtg Pass-Thru Certs Series 1996-MC1 Rating Class To From Credit Enhancement (%) ----- -- ---- ---------------------- D AAA AA+ 40.74 E AAA A+ 33.09 F AA+ A 29.81 G A- BBB- 15.05 H BB+ B 6.86 J B+ B- 5.22 Ratings Affirmed Mortgage Capital Funding, Inc. Multifamily/Commercial Mtg Pass-Thru Certs Series 1996-MC1 Class Rating Credit Enhancement (%) ----- ------ ---------------------- A2B AAA 70.26 B AAA 63.70 C AAA 49.49 NEXTEL COMMS: Moody's Reviewing Low-B Ratings & May Upgrade ----------------------------------------------------------- Moody's Investors Service placed the ratings of Nextel Communications, Inc., and Nextel Finance Company on review for possible upgrade. Moody's also changed the rating outlook for Sprint Corporation and its subsidiaries to developing from positive. This rating action is based on the announcement that the two companies have entered into a definitive agreement to combine in a stock-for-stock merger of equals. Moody's believes the combination of these two smaller carriers will create a more effective competitor against the two largest wireless operators, Verizon Wireless (A3 positive outlook) and Cingular (Baa2 stable). The combination of Sprint's 17.3 million direct subscribers and Nextel Communications' 14.5 million subscribers (excluding Boost Mobile) brings their pro forma combined direct subscriber base to 31.8 million, behind Cingular's 47.2 million and Verizon Wireless's 42.1 million. Importantly, the merger unites the carriers with the industry's highest ARPU, making the combined entity's wireless service revenue the second highest in the industry, behind Cingular and ahead of Verizon Wireless. As a merger of equals, with each company utilizing a separate technology and targeting different market segments, Moody's expects cost synergies to be more limited and to take longer to realize than those available to Cingular in its acquisition of AT&T Wireless. Nonetheless, future capital expenditures should be lower for the combined company than if each remained independent, which will improve future free cash flow generation. The merger will accelerate Nextel's transition from an independent operator with a unique technology and spectrum position, to one utilizing perhaps the most spectrally efficient, standard wireless technology -- CDMA -- with a strong spectrum position in the standard PCS band. Assuming Nextel does not become distracted by the merger, and can continue to post industry leading subscriber metrics (ARPU and churn) and good subscriber growth, Moody's expects the ratings could improve by more than one notch. Moody's notes that the companies intend to spin off Sprint Corporation's Local Telecommunications Division -- LTD. This is the strongest line of business in the Sprint family, as Moody's estimates LTD generated $1.6 billion of the consolidated total free cash flow of $2.6 billion (last 12 months ended Sept-04 cash from operations less capital expenditures). The loss of this highly free cash flow generative business weakens the Sprint credit. The resolution of the developing outlook will depend on the size and timing of the merger-related financial benefits and other mechanisms to improve the combined company's financial flexibility to offset the expected loss of the free cash flow generated from LTD, which currently has relatively low leverage. Moody's notes that the proposed merger will take some time before consummation, as there are many regulatory and shareholder approvals required, and the companies target closing the transaction in the second half of 2005. After this, additional uncertainty derives from the affiliate relationships of both Nextel and Sprint, and how the merged entity will address the likely remedies that will be sought by their wireless affiliates. The resolution of whether the affiliate arrangements will be restructured or in some cases acquired outright will take time. During that time, the financial profile of the merged entity will presumably improve, making their potential acquisition at a later date more tolerable from a ratings perspective. Nonetheless, the amount of capital that could require refinancing is quite large. Nextel Partners currently has an equity market capitalization of roughly $5 billion, which net of Nextel Communications' 32% ownership position yields $3.4 billion of equity potentially requiring repurchase in addition to $1.6 billion of debt. The situation with the affiliates of Sprint PCS is more uncertain, and resolution here may involve restructuring the affiliation agreements rather than acquisition of the affiliates. Regardless, the seven rated Sprint PCS affiliates have a combined equity market cap of over $3 billion plus $2.5 billion of debt outstanding. The use of debt to consolidate any of these financially weaker entities would put negative pressure on the ratings. The ratings on review for possible upgrade are: * Nextel Communications, Inc. -- Ba2 Senior implied rating -- Ba3 Issuer rating -- Ba3 Senior Unsecured Debt -- B2 Preferred Stock * Nextel Finance Company -- Ba1 Senior Secured Credit Facilities The ratings whose outlook is developing are: * Sprint Corporation -- senior unsecured long term at Baa3 * Sprint Capital Corporation -- senior unsecured long-term at Baa3 * United Telephone Co. of Florida -- first mortgage bonds at A3 * United Telephone Co. of Ohio -- first mortgage bonds at A3 * United Telephone Co. of Pennsylvania -- first mortgage bonds at A3 * Carolina Telephone & Telegraph Company -- senior unsecured long-term at Baa1 * Centel Capital Corporation -- senior unsecured long-term at Baa2 * Central Telephone Co. -- senior secured long-term at A3 Nextel Communications is based in Reston, Virginia with LTM revenues of $12.7 million. Sprint Corporation is based in Overland Park, Kansas with LTM revenues of $27.2 million. OMEGA HEALTHCARE: Sells 4 Million Shares in Public Offering ----------------------------------------------------------- Omega Healthcare Investors, Inc., (NYSE:OHI) closed the underwritten public offering of 4,025,000 shares of Omega common stock at $11.96 per share, less underwriting discounts. Wednesday's sale included 525,000 shares sold in connection with the exercise of an over-allotment option granted to the underwriters. Omega received approximately $45.7 million in net proceeds from the sale of the shares, after deducting underwriting discounts and before estimated offering expenses. Omega intends to use the net proceeds of the offering of the shares to repay indebtedness under its senior revolving credit facility and for working capital and general corporate purposes. UBS Investment Bank acted as sole book-running manager for the offering. Banc of America Securities LLC, Deutsche Bank Securities and Legg Mason Wood Walker, Incorporated acted as co- managers for the offering. A prospectus supplement relating to these securities has been filed with the Securities and Exchange Commission. The prospectus supplement and related prospectus may be obtained from: UBS Investment Bank ECMG Syndicate 299 Park Avenue New York, NY 10171 About the Company Omega is a Real Estate Investment Trust investing in and providing financing to the long-term care industry. At September 30, 2004, the Company owned or held mortgages on 205 skilled nursing and assisted living facilities with approximately 21,900 beds located in 29 states and operated by 39 third-party healthcare operating companies. * * * As reported in the Troubled Company Reporter on Nov. 2, 2004, Fitch Ratings has published a credit analysis report on Omega Healthcare Investors, Inc. providing insight into Fitch's rationale for its ratings of: -- $300 million of outstanding senior unsecured notes 'BB'; -- $168 million of preferred stock 'B'. The Rating Outlook is Stable. PARMALAT USA: Who Gets What Under the Plans of Reorganization ------------------------------------------------------------- The Chapter 11 plans of Parmalat USA Corporation and its debtor- affiliates govern the treatment of claims against and interests in each of Parmalat USA Corp., Farmland Dairies, LLC, and Farmland Stremicks Sub, L.L.C. -- formerly known as Milk Products of Alabama, L.L.C. The Plans group claims and equity interests into 14 classes. The classification of claims takes into account the different nature and priority of the claims and equity interests and indicates the classes that are entitled to vote on the Plan based on the rules set forth in the Bankruptcy Code, as well as the estimated recovery for each class. The recoveries represent the Debtors' best estimates of those values given the information available. Unless otherwise specified, the information is based on calculations as of November 16, 2004. The estimated recoveries are based on the face value of distributions and do not include a discount factor to reflect the fact that some payments will not be made immediately. Parmalat USA Corp. ------------------ Class Description Treatment ----- ----------- --------- N/A Administrative Claims Paid in full, in cash. N/A Priority Tax Claims Paid in full, in cash. PUSA 1 Priority Non-Tax On the Effective Date of the Claims Plan, each Priority Non-Tax Claimholder will be paid an amount in cash equal to the allowed amount of the Claim. Not entitled to vote. Estimated recovery: 100% Estimated Amount of Allowed Administrative Expense Claims, Priority Tax Claims and Priority Non-Tax Claims: $2,713,175 PUSA 2 Secured Claims On the Effective Date, each Secured Claimholder will be reinstated or rendered unimpaired in accordance with Section 1124 of the Bankruptcy Code. All Secured Claims that are not due and payable on or before the Effective Date will, at PUSA's option, be paid: (a) in the ordinary course of business in accordance with the course of practice between PUSA and the Claimholder with respect to the Claim; or (b) by transfer of the collateral to the Claimholder. Not entitled to vote. Estimated recovery: 100% Estimated Amount of Allowed Secured Claims: $0 PUSA 3 General Unsecured On the Effective Date, each Claims holder will receive its Pro Rata share of available PUSA cash. Entitled to vote. Estimated recovery: 29% Estimated Amount of Allowed General Unsecured Claims: $27,732,047 PUSA 4 Equity Interests After the full payment of all allowed claims against PUSA, including all interest, and subject to reserving sufficient cash to pay holders of disputed claims against PUSA the amount which these holders would be entitled to receive if the disputed claims were allowed claims, each holder of an Equity Interest in PUSA will receive its Pro Rata share of the remaining available PUSA cash. Entitled to vote. Estimated recovery: 0% Farmland Dairies, LLC --------------------- Class Description Treatment ----- ----------- --------- N/A Administrative Claims Paid in full, in cash. N/A Priority Tax Claims Paid in full, in cash. Farmland Priority Non-Tax On the Effective Date, each 1 Claims holder of an allowed Priority Non-Tax Claim will be paid an amount in cash equal to the allowed amount of the Priority Non-Tax Claim. Not entitled to vote. Estimated recovery: 100% Estimated Amount of Allowed Administrative Expense Claims, Priority Tax Claims and Priority Non-Tax Claims: $8,998,200 Farmland Secured Claims On the Effective Date, each 2 Secured Claim will be reinstated or rendered unimpaired in accordance with Section 1124 of the Bankruptcy Code. All Secured Claims that are not due and payable on or before the Effective Date will, at Farmland's option, be paid: (a) in the ordinary course of business in accordance with the course of practice between Farmland and the Claimholder with respect to the Claim; or (b) by transfer of the collateral to the Claimholder. Not entitled to vote. Estimated recovery: 100% Estimated Amount of Allowed Secured Claims: $40,485 Farmland General Unsecured On the Effective Date, each 3a Claims holder of a General Unsecured Claim will receive its Pro Rata share of the beneficial interests in the Unsecured Creditors' Trust, which will receive on behalf of holders of allowed of General Unsecured Claims: (a) approximately $3 million in cash; (b) a note for $7 million issued by Farmland for the benefit of general unsecured creditors; (c) a share of any proceeds on account of Farmland litigation claims collected prior to the Effective Date; (d) a share of any proceeds in account of litigation claims against Dean Foods Company; and (e) a beneficial interest in the trust established to hold Farmland litigation claims. Entitled to vote. Estimated recovery: 56% Estimated Amount of Allowed General Unsecured Claims: $29,184,780 Farmland Master Lease On the Effective Date, the 3b Claim Lessor will receive on account of the allowed Master Lease Claim: (a) 80% of the Common Membership Interests on a fully diluted basis; (b) a share of any proceeds on account of farmland litigation claims collected prior to the Effective Date; (c) a beneficial interest in the trust to hold Farmland litigation claims; and (d) all preference actions that may be pursued by Reorganized Farmland, unless otherwise waived in the Plan. Entitled to vote. Estimated recovery: N/A Farmland Convenience Claims On the Effective Date, each 3c holder of an allowed Convenience Claim against Farmland will receive cash in an amount equal to 40% of the holder's convenience claim, unless the holder elects on its timely filed ballot to be treated for voting and distribution purposes as a holder of a General Unsecured Claim. Entitled to vote. Estimated recovery: 40% Estimated Amount of Allowed Convenience Claims: $564,765 Farmland Equity Interests On the Effective date, all 4 instruments evidencing Equity Interests in farmland will be canceled without further action under any applicable agreement, law, regulation, or rule, and the equity interests in Farmland evidenced will be extinguished and holders of Equity Interests will not receive nor retain any property under the Plan. Not entitled to vote. Estimated recovery: 0% Milk Products of Alabama, LLC ----------------------------- Class Description Treatment ----- ----------- --------- N/A Administrative Claims Paid in full, in cash. N/A Priority Tax Claims Paid in full, in cash. MPA 1 Priority Non-Tax On the Effective Date, each Claims holder of an allowed Priority Non-Tax Claim will be paid an amount in cash equal to the allowed amount of the Priority Non-Tax Claim. Not entitled to vote. Estimated recovery: 100% Estimated Amount of Allowed Administrative Expense Claims, Priority Tax Claims and Priority Non-Tax Claims: $3,030,140 MPA 2a Secured Claims On the Effective Date, each Secured Claim will be reinstated or rendered unimpaired in accordance with Section 1124 of the Bankruptcy Code. All Secured Claims that are not due and payable on or before the Effective date will, at MPA's option, be paid: (a) in the ordinary course of business in accordance with the course of practice between MPA and the Claimholder with respect to the Claim; or (b) by transfer of the collateral to the Claimholder. Not entitled to vote. Estimated recovery: 100% Estimated Amount of Allowed Secured Claims: $0 MPA 3 General Unsecured On the Effective Date, each Claims holder of a General Unsecured Claim will receive its Pro Rata share of available MPA cash up to the allowed amount of the Claim, including interest. Entitled to vote. Estimated recovery: 100% Estimated Amount of Allowed General Unsecured Claims: $6,236,683 MPA 4 Equity Interests After the full payment of all allowed claims against MPA, including all interest to which the claimholders are entitled under the Plan, and subject to reserving sufficient cash to pay holders of disputed claims the amount which these holders would be entitled to receive if the disputed claims were allowed claims, each holder of an Equity Interest in MPA will receive its Pro Rata share of remaining available MPA cash. Headquartered in Wallington, New Jersey, Parmalat USA Corporation -- http://www.parmalatusa.com/-- generates more than 7 billion euros in annual revenue. The Parmalat Group's 40-some brand product line includes milk, yogurt, cheese, butter, cakes and cookies, breads, pizza, snack foods and vegetable sauces, soups and juices and employs over 36,000 workers in 139 plants located in 31 countries on six continents. The Company filed for chapter 11 protection on February 24, 2004 (Bankr. S.D.N.Y. Case No. 04-11139). Gary Holtzer, Esq., and Marcia L. Goldstein, Esq., a Weil Gotshal & Manges LLP represent the Debtors in their restructuring efforts. On June 30, 2003, the Debtors listed EUR2,001,818,912 in assets and EUR1,061,786,417 in debts. (Parmalat Bankruptcy News, Issue No. 38; Bankruptcy Creditors' Service, Inc., 215/945-7000) PEGASUS SATELLITE: Secured Lenders Ask Court for Summary Judgment ----------------------------------------------------------------- As previously reported, the Official Committee of Unsecured Creditors appointed in the chapter 11 cases of Pegasus Satellite Communications, Inc., and its debtor-affiliates objected to the Secured Lenders' and Junior Lenders' requests to collect Default Interest and Prepayments. The Committee argued that: (1) there was no serious risk to the Junior Lenders' recovery throughout the Pegasus Satellite Communications, Inc. and its debtor-affiliates' Chapter 11 cases; and (2) the sale of the Debtors' assets pursuant to the Global Settlement was coerced. Representing the Junior Lenders, Gayle H. Allen, Esq., at Verrill & Dana, LLP, in Portland, Maine, contends that the Committee's arguments are pure nonsense, and it directly contradicts countless representations the Committee made in open court and in filed pleadings. Thus, the United States Bankruptcy Court for the District of Maine should grant the Junior Lenders partial summary judgment on these two points and avoid the waste of the Estates' assets that will otherwise result if Wilmington Trust Company is compelled to pursue discovery to prove two points that are plainly evident to anyone who has participated in these proceedings thus far. Wilmington Trust is the administrative agent under the Amended and Restated Term Loan Agreement, dated as of August 1, 2003, among Pegasus Satellite Communications, Inc., and the lenders from time to time party thereto. According to Ms. Allen, no one who has followed the Debtors' cases would believe that the Junior Lenders never faced a risk of nonpayment, when the Committee itself stated on the record that "[t]he Global Settlement . . . enabl[es] substantial value for the benefit of creditors to be obtained for the Debtors' primary assets which, for all practical purposes, may be substantially worthless less than two weeks from today." Furthermore, no one who has witnessed the events of the Debtors' passage through Chapter 11 could believe that the Junior and Senior Secured Lenders coerced an asset sale that the Committee and "all other major constituencies strongly support[ed]." The Committee's new position -- that there was no risk of loss and that the Global Settlement was coerced -- contradicts everything the Committee has said throughout the Chapter 11 cases so far. "It is so far-fetched that it is frankly laughable," Ms. Allen says. Ms. Allen adds that the Committee's new position will also require a tremendous waste of the Estates' dwindling assets as the Junior Lenders are forced to take countless depositions and review and produce numerous documents, all to prove two points that are clear and evident from the documentary record already before the Court. Judicial Estoppel According to Ms. Allen, the Committee has frequently and with great force espoused positions in complete conflict with the stance they now take in their Objection. "Because these conflicting positions cannot be reconciled, the doctrine of judicial estoppel applies." Judicial estoppel applies when the party to be estopped "succeeded previously with a position directly inconsistent with the one [it] currently espouses." Wilmington Trust cites quotations from docketed pleadings and transcripts of court hearings that demonstrate conclusively that there are no material issues of fact concerning: (1) the Secured Lenders faced a very real risk of loss; and (2) the Global Settlement was not "coerced" and was reached, albeit without participation by the Junior and Senior Secured Lenders, after hard-fought, good faith and arm's- length negotiations. Law of the Case Furthermore, Ms. Allen continues, the Committee's current position in the Objection violates the settled law of the case, as determined by the Court when it resolved the Sale Motion. "Law of the case precludes relitigation of legal issues presented in successive stages of a single case once those issues have been decided." The policy behind the law of the case is to insure consistency within a single case, and to "[avoid] the wastefulness, delay, and overall wheel-spinning that attend piecemeal consideration of matters which might have been previously adjudicated." Ms. Allen points out that this perfectly describes the Committee's apparent goals in bringing the Objection. "Nothing but waste, delay and wheel-spinning will be accomplished by the prolonged and expensive discovery that will result from litigating the issues of risk of loss and voluntariness which have been previously decided by the Court." Ms. Allen asserts that the law of the case is that the Global Settlement was fair and in the best interests of the estate, that there was no evidence in the record to impugn its integrity, and that it resulted from arm's-length negotiations. "The Committee's Objection contravenes the law of the case on these points and is therefore frivolous and should be denied." Common Sense "Simple common sense requires that summary judgment be granted on the issues of risk of loss and voluntariness," Ms. Allen says. The fact of the Debtors' impending "extinction as an ongoing business," on August 31st has been a repeated refrain throughout their chapter 11 cases. No one even peripherally involved in the case could seriously deny that all creditors faced a very real risk of loss in the face of a non-negotiable deadline. Similarly, Ms. Allen notes, the contention that the Global Settlement was coerced is simply not borne out by the reality of the case. Even without considering a single one of the countless statements by the Committee in support of the Sale Motion, even forgetting that the Committee has repeatedly taken credit for the Global Settlement as its own handiwork, the Court held that the Global Settlement was fair, equitable, in the best interests of the Debtors' estates, and was "negotiated, proposed and entered into by the parties without collusion, in good faith, and from arm's-length bargaining positions. . . ." The Committee's Objection is nothing more than a contrived attempt by the Committee to obfuscate the real issues contained in the Junior Lenders' Prepayment Motion, and it must be dismissed. The full litigation of the Committee's Objection will cause nothing but pointless expense and delay, almost all of which can be avoided by granting summary judgment. Accordingly, the Junior Lenders ask the Court to find that: (a) there was a very real risk of loss faced by Wilmington Trust prior to the Debtors' sale of their subscriber base on August 27, 2004; and (b) the Global Settlement was entirely voluntary in nature. Senior Lenders Join Request for Summary Judgment The steering committee of pre-petition secured lenders under each of: (i) that certain Fourth Amendment and Restatement of Credit Agreement, dated as of October 22, 2003, by and among Pegasus Media & Communications, Inc., as borrower, Deutsche Bank Trust Company Americas, as Resigning Agent, Bank of America, N.A. as Administrative and Successor Agent and the lenders from time to time party thereto; and (ii) the Revolving Credit Agreement, dated as of December 19, 2003, by and among Pegasus Media & Communications, Inc., as borrower, Madeleine L.L.C., as administrative agent, and the lenders from time to time party thereto, joins in the motion filed by Wilmington Trust for partial summary judgment on the issues of: (a) the existence of the risk of loss faced by the Senior Lenders prior to the DIRECTV Sale, and (b) the voluntary nature of the Global Settlement. Committee Objects Jacob A. Manheimer, Esq., at Pierce Atwood, in Portland, Maine, relates that throughout the course of the Debtors' Chapter 11 cases, the Secured Lenders have been the only parties in the enviable position of knowing that, under any circumstances, they would be paid in full. Simultaneous with DIRECTV, Inc.'s notification to the National Rural Telecommunications Cooperative that it intended to terminate the Member Agreement effective August 31, 2004, DIRECTV conveyed an offer to the Debtors that would guarantee payment in full of all outstanding amounts to the Secured Lenders. DIRECTV's offer was never revoked and remained open the entire time that the parties were negotiating the settlement agreement pursuant to which the Debtors ultimately sold the majority of their assets to DIRECTV. Capitalizing on that position of strength, the Secured Lenders made it abundantly clear during the course of negotiations that if the parties did not reach a resolution that fully protected their position in a timely fashion, they would move the Court to force a sale of the Debtors' assets on terms that would ensure their full recovery. Mr. Manheimer contends that the Secured Lenders are seeking to benefit further from their insulated position. The request for summary judgment is a transparent effort to avoid the fact- intensive inquiry that a Court is required to make with respect to prepayment penalties and default interest, and an attempt to preclude the Committee from conducting discovery and proving that the prepayment penalties and default interest sought by the Secured Lenders are inappropriate. Mr. Manheimer asserts that the Secured Lenders' Request -- which relies primarily on irrelevant statements made by the Debtors and the Committee and seeks to misapply the legal doctrines of judicial estoppel and law of the case -- fails as a matter of law and fact for five reasons: (a) The Junior Lenders entirely misstate the exacting standards for the application of judicial estoppel. The doctrine is extremely rigorous and its application is only appropriate in those rare instances where a party is essentially attempting to defraud a court. The Junior Lenders have not and cannot come close to meeting that standard in the case; (b) The Junior Lenders cannot satisfy the burden of proving that judicial estoppel is appropriate with respect to the alleged risk of loss they faced. The Junior Lenders' Request is largely devoted to reciting a litany of statements made by various parties to show that the Debtors faced serious risks if they did not enter into the Global Settlement Agreement. However, the Request ignores the fact that while the Debtors and the unsecured creditors did face substantial risk, the Secured Lenders did not. No other party in the Debtors' bankruptcy had a safety net that guaranteed that if the parties could not broker the highest and best offer from DIRECTV, they would nevertheless receive a full recovery of amounts due. Accordingly, statements made by the parties with respect to the risks face by the Debtors cannot be used to preclude the Committee from showing that the Secured Lenders did not face a significant risk of loss; (c) The Junior Lenders' attempt to apply the doctrine of judicial estoppel to the issue of voluntariness fails. The Junior Lenders argue that the sale of the Debtors' assets was voluntary despite specific facts that, during the negotiations related to the Global Settlement, the Secured Lenders took affirmative steps to pressure the parties into an immediate asset sale; (d) The doctrine of "law of the case" simply does not apply. There are no prior Court rulings with respect to issues of risk of loss or voluntariness of the sale that would establish a law of the case appropriate for summary judgment; and (e) The Junior Lenders' argument based on "common sense" is neither legally cognizable nor sustainable in light of the ample disputed facts among the parties. Common sense mandates that the Request be denied. Headquartered in Bala Cynwyd, Pennsylvania, Pegasus Satellite Communications, Inc. -- http://www.pgtv.com/-- is a leading independent provider of direct broadcast satellite (DBS) television. The Company, along with its affiliates, filed for chapter 11 protection (Bankr. D. Me. Case No. 04-20889) on June 2, 2004. Larry J. Nyhan, Esq., James F. Conlan, Esq., and Paul S. Caruso, Esq., at Sidley Austin Brown & Wood, LLP, and Leonard M. Gulino, Esq., and Robert J. Keach, Esq., at Bernstein, Shur, Sawyer & Nelson, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $1,762,883,000 in assets and $1,878,195,000 in liabilities. (Pegasus Bankruptcy News, Issue No. 15; Bankruptcy Creditors' Service, Inc., 215/945-7000) PIXIUS COMMUNICATIONS: Case Summary & Largest Unsecured Creditors ----------------------------------------------------------------- Debtor: Pixius Communications, LLC 1634 East Central Wichita, Kansas 67214 Bankruptcy Case No.: 04-16825 Type of Business: The Debtor provides high-speed wireless broadband internet service at speeds from 364 Kbps to 45 Mbps. See http://www.pixiuscorp.com/ Chapter 11 Petition Date: December 14, 2004 Court: District of Kansas (Wichita) Judge: Robert E. Nugent Debtor's Counsel: William B. Sorensen, Jr., Esq. Morris Laing Evans Brock & Kennedy Old Town Square 300 North Mead Suite 200 Wichita, KS 67202 Tel: 316-262-2671 Estimated Assets: $100,000 to $500,000 Estimated Debts: $10 Million to $50 Million Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ U.S. Dept. of Agriculture-Rural $6,333,242 1400 Independence Ave. SW 5 Bldg. Rm. 2812 Washington, DC 20250 Infinetivity, Inc. $2,857,607 &/or Ellis R. Davis 10400 Viking Drive, Ste. 500 Eden Prairie, MN 55344 Conway Bank $786,234 Downtown Wichita Branch 121 E. Kellogg Wichita, KS 67202 Southwestern Bell Internet Ser. $259,968 Internet 20-Manhattan P.O. Box 911361 Dallas, TX 75391 Sprint PCS $141,432 Time Warner Telecom $97,666 Telcove-WCHT $46,358 Faegre & Benson LLP $34,124 Sequence Wireless $25,000 IBM International Business Machines $24,264 Corporation Alvarion $22,828 Burnsville Commercial Property $16,856 Savvis $14,674 KMC Telecom $13,535 Commerce Bank $13,518 Jan Kennedy, CPA, Treasurer $13,472 Qwest $13,305 Grant Thornton LLP $13,000 Electrical System Inc. $11,236 United Towers Inc. $10,510 RELIANCE GROUP: Judge Gonzalez Sets Jan. 7 as Plan Voting Deadline ------------------------------------------------------------------ The U.S. Bankruptcy Court for the Southern District of New York notes that the proposed Solicitation and Tabulation Procedures provide an adequate opportunity for all parties entitled to vote on the Official Committee of Unsecured Creditors' First Amended Reorganization Plan for Reliance Financial Services Corporation and comply with the requirements of Rules 3017, 3018, 3020 and 9006 of the Federal Rules of Bankruptcy Procedure. The Creditors' Committee will, on or before Dec. 13, 2004, distribute or cause to be distributed the appropriate Solicitation Materials or Non-Voting Notices, as applicable, to (a) the United States Trustee (excluding ballots) and (b) the known Holders of Claims against, and Equity Interests in, the Debtor. The Court approves the proposed Solicitation and Tabulation Procedures. Judge Gonzalez sets Jan. 7, 2005, as the Voting Deadline. Ballots must be executed, received and delivered to counsel for the Creditors' Committee -- Orrick, Herrington & Sutcliffe, by 4:00 p.m. at: Orrick, Herrington & Sutcliffe 666 Fifth Avenue New York, NY 10103 Attn: Arnold Gulkowitz, Esq. If any claimant seeks to challenge the allowance of its claim for voting purposes, that claimant must serve on counsel to the Creditors' Committee, and file with the Court, on or before Jan. 3, 2005, a motion for an order pursuant to Rule 3018(a) of the Federal Rules of Bankruptcy Procedure temporarily allowing that claim for purposes of voting to accept or reject the Plan. Headquartered in New York, New York, Reliance Group Holdings, Inc. -- http://www.rgh.com/-- is a holding company that owns 100% of Reliance Financial Services Corporation. Reliance Financial, in turn, owns 100% of Reliance Insurance Company. The holding and intermediate finance companies filed for chapter 11 protection on June 12, 2001 (Bankr. S.D.N.Y. Case No. 01-13403) listing $12,598,054,000 in assets and $12,877,472,000 in debts. The insurance unit is being liquidated by the Insurance Commissioner of the Commonwealth of Pennsylvania. (Reliance Bankruptcy News, Issue No. 65; Bankruptcy Creditors' Service, Inc., 215/945-7000) RENAISSANCE CAPITAL: S&P Lifts Counterparty Credit Rating to B -------------------------------------------------------------- Standard & Poor's Ratings Services raised its long-term counterparty credit rating on the Russian securities firm Renaissance Capital Holdings Ltd. -- RCHL -- to 'B' from 'B-'. At the same time, the 'C' short-term rating on RCHL was affirmed. The outlook is stable. "The rating upgrade is based on the company's improved financial profile, benefiting from increased revenue flows and diversification, which have helped strengthen capitalization," said Standard & Poor's credit analyst Irina Penkina. The ratings are also supported by the Renaissance Capital group's -- RenCap -- good commercial prospects, stemming from its leading position in equity and fixed-income brokerage and investment advisory services, together with the impact of a buoyant Russian economy on the country's financial markets. "These positive factors are mitigated, however, by RenCap's vulnerability to the high economic and industry risks that prevail in the Russian financial markets, including a volatile local capital market, and high single-name concentrations in the securities markets," added Ms. Penkina. RCHL is the ultimate holding company of RenCap, a leading Russian equity and fixed-income brokerage and advisory house. RenCap is tailored to serve international and domestic investors, and comprises a number of legal entities located in Russia and abroad. "The stable outlook reflects expectations that RenCap's improving financial profile will be sustained over the medium term and that a stronger capital base will enable it to absorb potential shocks to its business from the significant volatility that affects the Russian capital markets," said Ms. Penkina. "The ratings on RenCap will continue to be sensitive to the future development and risks of the Russian securities markets, and the company's ability to generate recurrent revenue flow in an unpredictable environment," she added. ROPER INDUSTRIES: S&P Affirms BB+ Corporate Credit Rating --------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'BB+' corporate credit and other ratings on Roper Industries, Inc., and removed all ratings from CreditWatch, where they were placed Oct. 7, 2004. This action follows the news that the diversified industrial company has closed on the acquisition of TransCore Holdings, Inc., from an investor group led by KRG Capital Partners LLC for approximately $600 million. As expected, the company completed an equity offering with gross proceeds of $300 million, which was used to fund the transaction together with a new credit facility. The outlook is positive. "The ratings on Duluth, Georgia-based Roper Industries, Inc., reflect its leading position in profitable niche markets and its broad product, end-market, and geographic diversity, which help stabilize cash flow generation," said Standard & Poor's credit analyst John R. Sico. "These factors are partly offset by Roper's aggressive acquisition policy, though this may now moderate somewhat following the acquisitions of TransCore and Neptune Technology Group Holdings, Inc., in 2003." Roper is a diversified industrial company providing engineered products and solutions for global niche markets, with pro forma sales of about $1.3 billion. It benefits from technological leadership, high profit margins, and low capital expenditures because of its light asset base. TransCore will allow Roper an additional platform to generate good cash flow and high margins and to access technology. TransCore provides technologies and services in areas such as radio frequency identification -- RFID, satellite-based communication, mobile asset tracking, security applications and comprehensive toll systems, and processing services. Although Roper debt-financed its acquisitions in the past, it has recently moved to a mix of equity and debt financing for acquisitions. The TransCore purchase was funded with cash on hand plus borrowings, in addition to the recent equity offering of $300 million. SEQUOIA MORTGAGE: Moody's Puts Low-B Ratings on Classes B-4 & B-5 ----------------------------------------------------------------- Moody's Investors Service has assigned a Aaa rating to the senior certificates issued by Sequoia Mortgage Trust 2004-9, and ratings ranging from Aa2 to B2 to the subordinate certificates of the deal. The securitization is backed by two pools of mortgage loans having, in the aggregate, 2,265 conventional, adjustable-rate Jumbo mortgage loans secured by first liens on one-to-four family residential properties. All mortgage loans have original terms to maturity of either 25 or 30 years, and all loans have an initial "interest only" period of 5 or 10 years. The ratings are based primarily on the credit quality of the loans, and on the protection from subordination. The credit quality of this loan pool is similar to the credit quality of other recent Sequoia Mortgage Trust offerings, with a FICO of 734 for the current deal versus a FICO score of 735 for the last securitization. Wells Fargo Bank, N.A., will act as master servicer. Moody's has assigned Wells Fargo its highest service quality rating of SQ1. The complete rating actions are: * Class A-1, $453,364,000, rated Aaa * Class A-2, $296,310,000, rated Aaa * Class X-A, Interest Only, rated Aaa * Class X-B, Interest Only, rated Aaa * Class A-R, $100, rated Aaa * Class B-1, $14,915,000, rated Aa2 * Class B-2, $8,242,000, rated A2 * Class B-3, $4,318,000, rated Baa2 * Class B-4, $2,355,000, rated Ba2 * Class B-5, $1,962,000, rated B2 The Class B-4 and Class B-5 certificates are being offered in privately negotiated transactions without registration under the 1933 Act. The issuance was designed to permit resale under Rule 144A. SURGICARE INC: Completes Restructuring Deals & Adopts New Name -------------------------------------------------------------- Surgicare, Inc. (n/k/a Orion HealthCorp Inc.) (AMEX:ONH) completed its previously announced restructuring transactions, which included: -- issuances of new equity securities for cash and contribution of outstanding debt, -- the acquisition of three new businesses, and -- the restructuring of its debt facilities. The Company had also completed a one-for-ten reverse stock split, created three new classes of common stock and changed its name. Effective Dec. 15, 2004, Orion will begin trading on the American Stock Exchange under the symbol "ONH." Trading in ONH stock was halted on the Exchange during the day on Dec. 15, 2004, pending receipt of final notification that completed opinions of counsel had been received. SurgiCare common stock has been converted to Orion Class A common stock. The Company also created Class B and Class C common stock, which was issued in connection with the equity investments and acquisitions. SurgiCare shareholders of record will be notified regarding exchanging their SurgiCare stock certificates for those of Orion. These transactions, as well as other related matters, were previously described in SurgiCare's proxy statement dated Sept. 10, 2004. Highlights of the transactions include: A. Enhanced Terms for Equity Financing Orion issued approximately 11.5 million shares of its Class B common stock to various investors. These investors purchased the shares of Class B common stock for cash equal to approximately $13.3 million. The $13.3 million of cash proceeds represents an increase of approximately $3.2 million over the aggregate sale price previously announced in the Proxy Statement for the same number of shares of Class B common stock, and therefore represents additional cash proceeds to the Company. B. Acquisition of Integrated Physician Solutions Inc. In connection with the acquisition by Orion of Integrated Physician Solutions, Inc., IPS equityholders and certain IPS debtholders received an aggregate of approximately 4.5 million shares of Orion Class A common stock. This number approximately equals the total number of shares of Orion Class A common stock outstanding on a fully-diluted basis prior to closing the IPS acquisition and the other transactions closed Wednesday. This acquisition was consummated on substantially the terms described in the Proxy Statement. C. Acquisition of Dennis Cain Physician Solutions Inc., and Medical Billing Services Inc. Orion acquired Dennis Cain Physician Solutions Inc., and Medical Billing Services, Inc. These acquisitions occurred on substantially the terms described in the Proxy Statement, except that some of the sellers took promissory notes in lieu of some cash which was otherwise payable at the closing. Equityholders of DCPS and MBS received an aggregate of $3 million in cash, $1 million principal amount of Orion promissory notes and approximately 1.6 million shares of Orion Class C common stock. The various components of the purchase price are subject to retroactive adjustment based on the financial results of Orion's new subsidiary, which combines the operations of MBS and DCPS. D. New Line of Credit Orion entered into a new secured two-year revolving credit facility, pursuant to which up to $4 million of loans may be made available to Orion, subject to a borrowing base. Orion borrowed $1.6 million under this facility concurrently with the closing of the various transactions. In connection with entering into this new facility, Orion also restructured its previously existing debt facilities. Surgicare, Inc. (n/k/a Orion HealthCorp Inc.) develops, acquires and operates ambulatory surgery centers. The company provides surgical procedures that include podiatry, orthopedics, ain management, gynecology and general surgery. At Sept. 30, 2004, Surgicare, Inc.'s balance sheet showed a $2,243,279 stockholders' deficit, compared to $4,688,994 of positive equity at December 31, 2003. STANADYNE HOLDINGS: Moody's Junks Planned $100M Sr. Discount Notes ------------------------------------------------------------------ Moody's Investors Service assigned a Caa2 rating for the proposed unguaranteed senior discount notes of Stanadyne Holdings, Inc. The approximately $58.15 million in proceeds to be realized from these notes upon closing is expected to be utilized by the company to pay an approximately $56 million dividend to its shareholders (primarily private merchant banking firm Kohlberg & Company, LLC which acquired the company in August 2004) and to cover transaction fees and expenses. These proposed notes will be issued at a substantial discount from the estimated $100 million principal amount that will be due upon maturity following accretion of payment-in-kind interest from the closing date through August 2009. Stanadyne Holdings, which was renamed from KSTA Holdings, Inc., in December 2004, is the ultimate parent company of the existing issuer Stanadyne Corporation. Stanadyne Holdings' only assets are 100% of the shares of common stock of Stanadyne Automotive Holding Corp., which is the holder of 100% of the shares of Stanadyne. In conjunction with the issuance of rated debt at the Holdco level of the company's legal structure, Moody's corporate-level ratings will be reassigned at Stanadyne Holdings and withdrawn at Stanadyne. While the senior implied rating and speculative grade liquidity rating will be unaffected by this transition, the issuer rating is negatively affected due to the presumed absence of subsidiary guarantees (as mirrored by the proposed terms of the Stanadyne Holdings senior discount notes). The long-term debt ratings of the existing facilities at the operating company level were all affirmed, and the rating outlooks for both Stanadyne Holdings and Stanadyne are stable. These specific rating actions for Stanadyne Holdings and Stanadyne were effected: * assignment of Caa2 rating for Stanadyne Holdings' proposed 12% unguaranteed senior discount notes due 2015 with an estimated principal due at maturity approximating $100 million, to be issued under Rule 144A with registration rights; * assignment of B2 senior implied rating at Stanadyne Holdings; * withdrawal of B2 senior implied rating at Stanadyne; * assignment of Caa2 senior unsecured issuer rating at Stanadyne Holdings; * withdrawal of B3 senior unsecured issuer rating at Stanadyne; * assignment of SGL-2 speculative grade liquidity rating at Stanadyne Holdings; * withdrawal of SGL-2 speculative grade liquidity rating at Stanadyne; * affirmation of Caa1 rating for Stanadyne's $160 million of guaranteed senior subordinated notes due 2014, issued under Rule 144A and in the process of being exchanged for registered securities with identical terms; * affirmation of B1 rating for Stanadyne's $35 million asset- based guaranteed senior secured revolving credit facility due 2009; * supported by first liens on accounts receivable and inventory, and second liens on all other assets; * affirmation of B2 rating for Stanadyne's $65 million guaranteed senior secured term loan due 2010; * supported by first liens on all assets except accounts receivable and inventory, and second liens on accounts receivable and inventory. The proposed transaction represents a significant leveraging event for Stanadyne that is transpiring only four months subsequent to company's most recent leveraged buyout by Kohlberg & Company, LLC. From Moody's perspective the proposed Holdco notes are the full equivalent of debt given the expiration of the PIK interest period during 2009, the relatively short proposed tenor with final maturity following only six months after the maturity of Opco's subordinated notes, and the incorporation of standard high yield covenants. While Moody's did not downgrade Stanadyne's senior implied or Opco long-term debt ratings, the rating agency now considers the company's credit protection measures to be on the low end of the range for its current rating category. This is particularly the case given the cyclical nature of Stanadyne's end markets and the clear need to achieve debt reduction while market conditions are favorable, the company's small absolute size, and the fact that Stanadyne's new equity sponsorship will have significantly reduced its net investment in the company and risk of loss following only one quarter of financial reporting post-acquisition. Moody's additionally believes that there is a probability that Stanadyne will pursue strategic acquisitions over the near-to-intermediate term, which will most likely now require incremental equity infusions in order for Stanadyne to maintain its ratings. Moody's estimates Stanadyne's pro forma LTM September 30, 2004 total debt/EBITDAR leverage through the Holdco upon closing the proposed transaction at approximately 5.5x. This incorporates approximately $20 million of off-balance-sheet obligations (for letters of credit and the present value of operating leases) as debt, and correspondingly adds back operating lease rent to EBITDAR. Pro forma EBIT interest coverage for the same period is approximately 1.5x. Stanadyne Holdings' proposed senior discount notes will most likely be considered "applicable high yield discount obligations," which will preclude Stanadyne from being permitted by the IRS from taking tax deductions approximating $2.5 million per year for interest associated with the Holdco notes until the point that the interest is actually paid in cash. This will not likely occur before the PIK accretion period expires in 2009. Voluntary redemption of principal (including accreted interest) is permitted under the proposed Holdco notes, but precluded by all of Stanadyne's Opco debt agreements. Stanadyne Holdings will have no recourse to Stanadyne or its subsidiaries upon an event of default, except to the extent that any rights accrue by virtue of ownership of Opco's stock. However, Stanadyne's guaranteed senior secured lenders already hold first- and second-priority liens on this stock. None of Stanadyne Holdings' subsidiaries will guarantee the proposed senior discount notes and no security will be pledged. On that basis, the proposed Holdco notes will be structurally and effectively subordinated to Opco's obligations. Opco and its subsidiaries will therefore have no obligation, contingent or otherwise, to pay any amount due under the Holdco notes by dividend, distribution, loan, or any other means. Interest on the Holdco notes will accrue and compound semiannually in arrears. The Holdco notes indenture will contain provisions for up to a 35% equity clawback prior to February 2008 at a redemption price equal to a percentage of accreted value to be established prior to closing. Stanadyne Holdings' B2 senior implied rating, affirmation of Stanadyne's existing long-term debt ratings, and the stable rating outlooks more favorably reflect that the company's operating performance is strengthening due to favorable cyclical conditions within each of its end markets, positive off-highway trends additionally attributable to the farm and highway bills currently in effect and increasing emissions regulation, development of an annuity-like aftermarket business, and a series of new product introductions that are broadening Stanadyne's coverage. While Stanadyne has significant customer concentrations, each of the company's major customers are industry leaders. Given Stanadyne's negligible exposure to the light vehicle automotive market, management has been relatively successful at both minimizing customer price-downs and also passing on the majority of increased commodity materials costs with just a slight lag. However, the company does face several strong competitors within the engine components segment that are larger than Stanadyne and have greater financial and other resources available to them. Stanadyne's operating margins did notably fall short of plan during its most recent quarter due to shortened lead times and increased flexibility being requested by customers to meet current end market demand. The impact of the additional cost was partially offset by the margin on incremental revenues and by improved fixed cost absorption associated with the higher volumes. Stanadyne does not face any material scheduled maturities of debt principal until 2009 following the company's August 2004 recapitalization. Moody's additionally notes that Stanadyne has a long-standing senior management team in place, which has successfully de-levered the company following two prior leveraged buyouts of the company in 1989 (by Metromedia) and in 1997 (by AIP). Stanadyne Holdings' SGL-2 speculative grade liquidity rating indicates Moody's belief that the company's near-term liquidity on a consolidated basis is good and that the proposed transaction will have a negligible impact on cash flows. Stanadyne Holding's good liquidity rating reflects Moody's expectation that the consolidated company will generate modest positive free cash flow through the end of 2005, maintain nominal cash on its balance sheet, and keep its $35 million asset-based revolver due 2009 at about $25 million undrawn and available on average. The company is likely to experience brief intra-period swings due to the timing of semi-annual senior subordinated note coupon payments and growth-driven working capital and capital expenditures peaks. Stanadyne's revenues grew over the last twelve months at more than a 20% year-over-year rate, primarily attributable to strong end market demand, a broadened product line, and increased emphasis upon improving aftermarket sales. Revolver usage as of the end of the third quarter consisted of $2.8 million of direct loans and $6.8 million of letters of credit. The company indicates that seasonal changes in working capital are nominal. Management estimates the base cash level necessary for Stanadyne to maintain core operations at less than $1 million. Stanadyne's ability to use its revolving credit facility is subject only to a borrowing base restriction. However, at its current level of $55 million the borrowing base is substantially larger than the existing facility commitment. A larger liquidity facility could be supported under the same loan structure in the event that the company opts to obtain a more substantial buffer against unforeseen events. Stanadyne's access to the revolver is not subject to financial covenants, with the exception of a capital expenditure limitation at all times and a fixed charge coverage requirement that comes into effect only if availability under the revolver falls below $5 million for 10 consecutive days. This event would then trigger activation of a pre-established fixed charge coverage ratio requirement, which notably does have a significant cushion versus current performance levels. Required amortization on Stanadyne's US and foreign term loans is less than $1 million per year, and there are no material debt maturities scheduled prior to the August 2009 expiration of the revolver. Cash interest expense will notably rise by more than $5 million in 2005 due to the full year impact of the August 2004 leveraged acquisition by Kohlberg & Company, LLC, but this increase has already been incorporated into current projections. Stanadyne Corporation, headquartered in Windsor, Connecticut, is a leading designer and manufacturer of highly engineered precision-manufactured engine components, including fuel injection equipment for diesel engines and hydraulic lash compensating devices (hydraulic valve lifters) for gasoline engines. Revenues for the last twelve months ended September 2004 grew to approximately $340 million. STEEL CITY: Checks Being Returned for Insufficient Funds -------------------------------------------------------- The Troubled Company Reporter has learned that checks drawn on Steel City Products, Inc.'s bank account maintained at JPMorgan Chase Bank in Dallas, Texas, are being returned for insufficient funds. Steel City Products, Inc., based in McKeesport, Pennsylvania, and incorporated in Delaware, is a wholesale distributor of automotive accessories, non-food pet supplies and lawn and garden products, operating under the trade name "Steel City Products", selling mainly to supermarket retailers, drug stores, discount retail chains and hardware and automotive specialty stores, based principally in the Northeastern United States. Earlier this year, Steel City became a private company by effecting a one-for-300,000 reverse stock split and thereafter deregistering its common stock under the Securities Exchange Act. Sterling Construction Company, Inc., acquired 100% of the company's common stock in that transaction. At Sept. 30, 2003, Steel City's balance sheet $7.8 million in assets and a $1 million shareholder deficit. TARRANT COUNTY: Moody's Junks $5.4 Million Revenue Bonds -------------------------------------------------------- Moody's Investors Service has downgraded the rating on the approximate $5.4 million Tarrant County Housing Finance Corporation Multifamily Housing Revenue Bonds (Westridge Apartments Project), to Caa1 from B2 on the Senior Series 2001 A and B. The rating on the subordinates is currently at C. The Junior Subordinate Series 2001 D are not rated. As reflected in the ratings, the extremely poor financial security has resulted in trustee draws of the senior debt service reserve fund necessary to make December 1st payments. Debt service reserve funds on the subordinate and junior subordinate tranches continue to remain unreplenished from prior draws. Rental revenues have continued to decline. Increased vacancy, loss to leases has exerted downward pressure on total rental revenue. Concessions continue to be necessary to maintain stable occupancy. On the December 1st, 2004 debt service payment date the Trustee used funds from the Senior Debt Service Reserve to make an interest only payment of $156,475 on the Senior A and B Bonds. As the senior bond fund was at a deficit, $77,783 was sold from the Senior Debt Service Reserve to cover senior bond payment, leaving the Senior DSR underfunded at a balance of $195,250. Debt service payments on the Subordinate Series C and Junior Subordinate Series D were not made (principal and interest) and their respective debt service reserve funds remain underfunded and unreplenished. Unaudited debt service coverage based off a rolling 12 months of data as of October 31st reflect the continuing poor debt service coverage levels of all tranches. Deteriorating debt service coverage and heightened competitive pressures within the submarket were confirmed by a site visit in August 2003. Physical occupancy as of September 30, 2004 was reported at 83% as per managements rent roll report. Moody's will continue to assess Westridge's situation, which will include additional discussions with property management and assessment of the transaction's projected performance based on current rent levels, concessions and expenses. Lynd Management Company has a strong background in managing affordable housing properties throughout Texas, having a significant market share of units under management. As the ratings indicate, the bonds offer poor financial security, with the revenue and associated obligation not well safeguarded in the future. Outlook The outlook on the bonds continues to be negative, as the ratings reflect the extremely poor financial security of the bonds. Moody's expects to continue to monitor the workout progress and recovery. TFM S.A. DE C.V.: S&P Places B Rating on CreditWatch Positive ------------------------------------------------------------- Standard & Poor's Ratings Services placed its 'B' long-term corporate credit rating on TFM S.A. de C.V. on CreditWatch with positive implications. The CreditWatch placement followed Kansas City Southern's announcement that it has reached an agreement with Grupo TMM S.A. to take control of TFM. The CreditWatch Positive listing for TFM means that the ratings could be raised or affirmed based on the possibility that its financial or business profile could be enhanced if the merger with KCS is completed. TFM's ratings could be affirmed if no transaction is consummated and its business and credit profiles remain unchanged or upgraded by one notch. "We will monitor developments and resolve the CreditWatch placement after both TMM and KCS shareholders approve the transaction, and financing plans have been announced," said Standard & Poor's credit analyst Juan P. Becerra. Until the acquisition takes place, the rating reflects TFM's low cash-flow generation, financial policy driven by TMM, high fuel prices, underperformance of the automotive industry (22% of TFM's 2002 total sales), and unresolved value-added tax and government put option. The rating also reflects TFM's position as the leading provider of rail transportation service in Mexico, the improving relationship between partners, and a potential switch to rail from truck. TMM currently holds 41.2% of TFM, while KCS holds 38.8%. Although both together hold 80% of TFM, they represent 100% of the voting stake (51.8% TFM and 48.5% KCS). The Mexican government holds the other 20%. TFM holds a 50-year concession title, renewable for an additional 50 years, to provide freight transportation services over the Mexican northeast rail lines. TFM's railroad network runs through Mexico's industrial heartland. It is a direct link with Mexico City and Monterrey; with the major ports of Tampico, Altamira, Veracruz, and Lazaro Cardenas; and with the cities of Matamoros and Laredo, located on the border with the U.S. TROPICAL SPORTSWEAR: Files Chapter 11 Petition in M.D. Florida -------------------------------------------------------------- Tropical Sportswear Int'l Corporation (Nasdaq:TSIC) has filed for voluntary Chapter 11 bankruptcy protection with the U.S. Bankruptcy Court for the Middle District of Florida and entered into an asset purchase agreement with Perry Ellis International, Inc. (Nasdaq:PERY) to be acquired pursuant to section 363 of the U.S. Bankruptcy Code. TSI has secured a new $50 million debtor-in-possession credit facility with The CIT Group and Fleet Capital, the company's senior lenders, to finance its working capital needs and allow business operations to continue as normal during the sale process, including meeting obligations to employees, vendors and others. Under the terms of the asset purchase agreement, which is subject to the consent of TSI's creditors, higher or better offers, Hart Scott Rodino antitrust clearance, Bankruptcy Court approval, and other customary closing conditions, PEI would pay $85 million in cash to acquire substantially all of TSI's: -- accounts receivable, -- inventory, -- intellectual property, -- certain real property, and -- other specified assets, as well as the outstanding capital stock of TSI's European subsidiary, Farah Manufacturing (U.K.) Limited, and would assume certain operating liabilities of TSI. "TSI has been an important player in the men's apparel industry for several decades," said Mike Kagan, chief executive officer of TSI. "As the industry navigates a period of dramatic change, it has become necessary for domestic companies to take major steps to ensure their ability to remain competitive in an evolving global marketplace. We believe that a business combination with Perry Ellis, which has expressed a commitment to building and growing its men's pants business, is in the best interests of our customers and stakeholders. "The ongoing support from our existing lenders through our new DIP facility will allow us to continue business operations as normal as we move forward with the sale process," Mr. Kagan continued. "We will do everything possible to ensure that there is no disruption in the quality of service we provide to our customers during this transition period and that our obligations to employees, vendors and others are met." The Bankruptcy Court supervised sale approval process is expected to be completed during the first quarter of 2005. TSI has retained Alvarez & Marsal as financial advisors and Akerman Senterfitt as bankruptcy counsel. PEI is being advised on the sale by Greenberg Traurig, LLP. About Perry Ellis International Perry Ellis International, Inc., designs, distributes and licenses apparel and accessories for men and women. The company, through its wholly owned subsidiaries, owns a portfolio of highly recognized brands including Perry Ellis(R), Jantzen(R), Cubavera(R), Munsingwear(R), John Henry(R), Original Penguin(R), Grand Slam(R), Natural Issue(R), Penguin Sport(R), the Havanera Co.(R), Axis(R), and Tricots St. Raphael(R). The company also licenses trademarks from third parties including Nike(R) and Tommy Hilfiger(R) for swimwear, PING(R) and PGA Tour(R) for golf apparel and Ocean Pacific(R) for men's sportswear. Headquartered in Tampa, Florida, Tropical Sportswear Int'l Corp. -- http://savane.com/-- designs, produces and markets high- quality branded and retailer private branded apparel products that are sold to major retailers in all levels and channels of distribution. The Company and its debtor-affiliates filed for chapter 11 protection on Dec. 16, 2004 (Bankr. M.D. Fla. Case No. 04-24134). David E. Bane, Esq., Denise D. Dell-Powell, Esq., and Jill E. Kelso, Esq., at Akerman Senterfitt represent the Debtors in their chapter 11 cases. When the Debtor filed for protection from its creditors, it listed $247,129,867 in total assets and $142,082,756 in total debts. TROPICAL SPORTSWEAR: Case Summary & 23 Largest Unsecured Creditors ------------------------------------------------------------------ Lead Debtor: Tropical Sportswear Int'l Corp. 4902 West Waters Avenue Tampa, Florida 33634 Bankruptcy Case No.: 04-24134 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Savane International Corp. 04-24138 Apparel Network Corporation 04-24141 Tropical Sportswear Company, Inc. 04-24142 TSI Brands, Inc. 04-24147 TSIL, Inc. 04-24148 Type of Business: The Debtor designs, produces and markets branded branded apparel products that are sold to major retailers in all levels and channels of distribution. See http://www.savane.com/ Chapter 11 Petition Date: December 16, 2004 Court: Middle District of Florida (Tampa) Judge: Michael G. Williamson Debtors' Counsel: David E. Bane, Esq. Denise D. Dell-Powell, Esq. Jill E. Kelso, Esq. Akerman Senterfitt P.O. Box 231 Orlando, FL 32802 Tel: 407-843-7860 Fax: 407-843-6610 Total Assets Total Debts ------------ ----------- Tropical Sportswear Int'l Corp. $247,129,867 $142,082,756 Savane International Corp. $12,904,104 $5,302,022 Apparel Network Corporation $50M to $100M More than $100M Tropical Sportswear Co., Inc. $10M to $50M More than $100M TSI Brands, Inc. $50M to $100M More than $100M TSIL, Inc. $50M to $100M More than $100M A. Tropical Sportswear Int'l's 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ SunTrust, as Indenture Bond $105,500,000 Trustee c/o Sarah R. Borders, Esq. King & Spalding, LLP 191 Peachtree St. Atlanta, GA 30303 Galey & Lord, Inc. Trade debt $3,657,663 G&L Promotional Fabrics P.O. Box 404256 Atlanta, GA 30384 Avondale Mills, Inc. Trade debt $1,371,925 Graniteville Fabric P.O. Box 75431 Charlotte, NC 28275 Burlington Worldwide Trade debt $1,233,599 804 Green Valley Road Ste. 300 Greensboro, NC 27408 Interamericana Products Trade debt $182,583 International Lalchandani Family Taxes $127,955 Milliken & Co. Trade debt $62,914 Omega De Exportation Trade debt $54,584 GE Capital Corporation Trade debt $36,091 Avery Dennison Ticketing Trade debt $34,493 Paxar Americas, Inc. Trade debt $32,303 Eastern Shores Woven Label Trade debt $28,775 R-Pac International Trade debt $27,893 Packsource - Southern Trade debt $27,367 QST Industries, Inc. Trade debt $22,664 Micon Packaging, Inc. Trade debt $18,174 Eastern Freight Forwarders Trade debt $12,668 Crowley Liner Services, Inc. Trade debt $12,325 Tropical Shipping Trade debt $12,270 Thwing-Albert Trade debt $11,875 B. Savane International Corp.'s Largest Unsecured Creditor: Entity Nature Of Claim Claim Amount ------ --------------- ------------ SunTrust, as Indenture Bond $105,500,000 Trustee c/o Sarah R. Borders, Esq. King & Spalding, LLP 191 Peachtree St. Atlanta, GA 30303 C. Apparel Network Corporation's Largest Unsecured Creditor: Entity Nature Of Claim Claim Amount ------ --------------- ------------ SunTrust, as Indenture Bond $105,500,000 Trustee c/o Sarah R. Borders, Esq. King & Spalding, LLP 191 Peachtree St. Atlanta, GA 30303 D. Tropical Sportswear Company's Largest Unsecured Creditor: Entity Nature Of Claim Claim Amount ------ --------------- ------------ SunTrust, as Indenture Bond $105,500,000 Trustee c/o Sarah R. Borders, Esq. King & Spalding, LLP 191 Peachtree St. Atlanta, GA 30303 UAL CORP: Wants Court to Approve United Express Pact with TSA ------------------------------------------------------------- UAL Corporation and its debtor-affiliates ask the U.S. Bankruptcy Court for the Northern District of Illinois for permission to enter into a United Express Agreement with Trans States Airlines, Inc. The Debtors' business model calls for transportation of large numbers of passengers on long-haul flights using high-capacity aircraft. The Debtors' mainline flights are fed by routes that transport small numbers of passengers on short-haul flights with smaller aircraft. These "feeder" flights are outsourced to regional air carriers like TSA. The regional carriers operate under the Debtors' reservation code and the brand name "United Express." On November 21, 2003, the Debtors concluded negotiations with TSA and entered a new United Express Agreement, under which TSA will provide ten 50-seat regional jets for UAX Service. The Debtors have an option obligating TSA to provide another 15 50-seat regional jets for UAX Service. TSA has purchased or leased, and put into operation, 10 of the regional jets provided for under the Agreement. The Debtors have partially exercised the option, compelling TSA to make available another five regional jets. To comply with the Agreement, TSA has incurred over $350,000,000 in financial obligations to acquire aircraft. TSA will continue to take on liabilities for additional aircraft and related equipment. As a result, the Debtors ask the Court to approve the Agreement, nunc pro tunc, and allow the Agreement to be effective as of November 21, 2003. James H.M. Sprayregen, Esq., at Kirkland & Ellis, in Chicago, Illinois, assures the Court that the Agreement is in the best interests of the Debtors and their estates. The Agreement mitigates the risk to both parties if the Debtors liquidate or fail to confirm a plan of reorganization. The Agreement limits TSA's claims. The Agreement protects TSA's investment in that, if the Debtors liquidate or fail to confirm a plan, TSA will be granted an administrative expense claim that includes: a) unpaid obligations for services rendered by TSA; b) amounts TSA paid pursuant to the Agreement that have not been reimbursed by the Debtors; and c) sums for which TSA is liable to third parties in connection with the Agreement. According to Mr. Sprayregen, the Agreement should be approved for two reasons: 1) Competitors, noting that the Debtors have received Court approval for their other UAX Agreements, have publicly questioned the longevity and enforceability of the TSA Agreement. This could erode TSA's competitive position; and 2) General Electric Capital Aviation Services, which has provided over $97,000,000 in aircraft financing to TSA, wants the increased certainty that accompanies Court approval of the Agreement. The Agreement contains sensitive, confidential information. The Debtors will file the Agreement under seal for the Court's in camera review. Otherwise, both the Debtors' and TSA's competitors could utilize the information in an adverse way. Headquartered in Chicago, Illinois, UAL Corporation -- http://www.united.com/-- through United Air Lines, Inc., is the holding company for United Airlines -- the world's second largest air carrier. The Company filed for chapter 11 protection on December 9, 2002 (Bankr. N.D. Ill. Case No. 02-48191). James H.M. Sprayregen, Esq., Marc Kieselstein, Esq., David R. Seligman, Esq., and Steven R. Kotarba, Esq., at Kirkland & Ellis, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $24,190,000,000 in assets and $22,787,000,000 in debts. (United Airlines Bankruptcy News, Issue No. 69; Bankruptcy Creditors' Service, Inc., 215/945-7000) US AIRWAYS: Bankruptcy Court Approves GE Settlement Agreement ------------------------------------------------------------- US Airways won bankruptcy court approval allowing the company to proceed with the aircraft leasing, financing, and engine services agreement announced on Nov. 26, 2004, with GE Capital Aviation Services (GECAS), and GE Engine Services (GEES). The agreement provides US Airways with $140 million in interim liquidity through a new bridge facility and the deferral of aircraft debt and lease payments coming due over the next six months, as well as annual cash savings on aircraft ownership and engine maintenance costs. Also, GECAS will lease up to 31 new 70- and 90-seat regional jet aircraft to US Airways over the next three years, and US Airways would return 25 of its 281 mainline aircraft over the same time period. In exchange, upon successful emergence from Chapter 11, US Airways would issue to GECAS a 15-year convertible note for between $125 million and $216 million, depending on future lease options selected by US Airways. Headquartered in Arlington, Virginia, US Airways' primary business activity is the ownership of the common stock of: * US Airways, Inc., * Allegheny Airlines, Inc., * Piedmont Airlines, Inc., * PSA Airlines, Inc., * MidAtlantic Airways, Inc., * US Airways Leasing and Sales, Inc., * Material Services Company, Inc., and * Airways Assurance Limited, LLC. Under a chapter 11 plan declared effective on March 31, 2003, USAir emerged from bankruptcy with the Retirement Systems of Alabama taking a 40% equity stake in the deleveraged carrier in exchange for $240 million infusion of new capital. US Airways and its subsidiaries filed another chapter 11 petition on September 12, 2004 (Bankr. E.D. Va. Case No. 04-13820). Brian P. Leitch, Esq., Daniel M. Lewis, Esq., and Michael J. Canning, Esq., at Arnold & Porter LLP, and Lawrence E. Rifken, Esq., and Douglas M. Foley, Esq., at McGuireWoods LLP, represent the Debtors in their restructuring efforts. In the Company's second bankruptcy filing, it lists $8,805,972,000 in total assets and $8,702,437,000 in total debts. US AIRWAYS: Inks Tentative Cost Savings Pact with AFA ----------------------------------------------------- US Airways and its flight attendants, represented by the Association of Flight Attendants (AFA), reached a tentative agreement on $94 million in cost savings as part of the company's Transformation Plan. The agreement was reached with the union's negotiating committee and must be approved by the AFA's Master Executive Council, ratified by the AFA's approximately 5,200 members and approved by the bankruptcy court. Terms were not disclosed. The ratification process is expected to be completed by year-end. "Our flight attendant leaders have shown their willingness to make the tough decisions necessary to help keep our company flying and protect jobs for their members," said Bruce Ashby, US Airways senior vice president of alliances and president of US Airways Express, who headed negotiations for the company. "US Airways' success depends on the cooperation of all employees, and with this agreement, we are much closer to becoming a stronger and more competitive airline." US Airways has ratified agreements with the Air Line Pilots Association and the three units of the Transport Workers Union. A tentative agreement was reached on Dec. 2, 2004, with the Communications Workers of America (CWA). Negotiations continue with the International Association of Machinists' mechanics and related, fleet service workers, and maintenance training specialists. Headquartered in Arlington, Virginia, US Airways' primary business activity is the ownership of the common stock of: * US Airways, Inc., * Allegheny Airlines, Inc., * Piedmont Airlines, Inc., * PSA Airlines, Inc., * MidAtlantic Airways, Inc., * US Airways Leasing and Sales, Inc., * Material Services Company, Inc., and * Airways Assurance Limited, LLC. Under a chapter 11 plan declared effective on March 31, 2003, USAir emerged from bankruptcy with the Retirement Systems of Alabama taking a 40% equity stake in the deleveraged carrier in exchange for $240 million infusion of new capital. US Airways and its subsidiaries filed another chapter 11 petition on September 12, 2004 (Bankr. E.D. Va. Case No. 04-13820). Brian P. Leitch, Esq., Daniel M. Lewis, Esq., and Michael J. Canning, Esq., at Arnold & Porter LLP, and Lawrence E. Rifken, Esq., and Douglas M. Foley, Esq., at McGuireWoods LLP, represent the Debtors in their restructuring efforts. In the Company's second bankruptcy filing, it lists $8,805,972,000 in total assets and $8,702,437,000 in total debts. US AIRWAYS: Wants to Transfer ATSB Loan Tranche A to Govco ---------------------------------------------------------- In the first bankruptcy petition, US Airways, Inc., and its debtor-affiliates received a loan guarantee from the Air Transportation Stabilization Board. The attendant $1,000,000,000 Loan is divided into two tranches: -- a $900,000,000 Tranche A Loan, which is fully guaranteed by the ATSB; and -- a $100,000,000 Tranche B loan which is not guaranteed. The Tranche A Loan has a Primary Tranche A Lender, YC SUSI Trust, which is a commercial paper conduit that borrows at low interest rates. Tranche A has an Alternate Tranche A Lender, Bank of America, which is obligated to assume the Tranche A Loan if YC SUSI Trust is unable to borrow in the commercial paper market. The ATSB Loan is evidenced by a Loan Agreement between US Airways, Inc., US Airways Group, the Tranche A Lenders, the Tranche B Lenders, Phoenix American Financial Services, Inc., as Loan Administrator, BofA, as Agent for the Lenders and Collateral Agent, and the ATSB. The ATSB's $900,000,000 guarantee of the Tranche A Loan is described in a Guarantee Agreement. The outstanding principal balance of the ATSB Loan is $717,567,888, with $645,811,099 relating to the Tranche A Loan and $71,756,789 relating to the Tranche B Loan. The Debtors' second bankruptcy petition constituted an event of default. In response, on October 26, 2004, YC SUSI Trust sent the ATSB a Demand for Payment under the Guarantee. Brian P. Leitch, Esq., at Arnold & Porter, in Denver, Colorado, notes that if the ATSB pays YC SUSI Trust, the Debtors' interest rate for the Tranche A Loan will increase from a rate approximating AAA commercial paper plus 30 basis points, to the London Interbank Offered Rate plus 40 basis points. Mr. Leitch states that the Debtors want to maintain the lower interest rate for the duration of the Loan, which matures in October 2009. Accordingly, rather than allow the ATSB to pay YC SUSI Trust, the Debtors will assign the Tranche A Loan to a new primary lender and a new alternate lender. To facilitate the loan transfer, the Debtors ask the Court to approve the form and substance of three operative transaction documents. The Primary Tranche A Lender Assignment allows YC SUSI Trust to assign its position as Primary Tranche A Lender to Govco Incorporated. The Alternate Tranche A Lender Assignment allows BofA to assign its position as Alternate Tranche A Lender to Citibank, N.A. Amendment No. 5 to Loan Agreement effectuates the Assignments by substituting Govco and Citibank for the initial Lenders, and makes three technical changes to the Loan Agreement: i) Amendment No. 5 will change the definition of "Tranche A Applicable Interest Rate." The different formulation of the cost of capital adopts Govco's preferred statement without any material effect; ii) Amendment No. 5 will expand the breakage protection available, mitigating Govco's exposure to pre-payment and non-payment risk; and iii) Amendment No. 5 will revise the mechanics for appointment of a successor Agent or Collateral Agent to allow the Board to remove either entity without cause. To effectuate the loan transfer, the Debtors ask the Court for: a) permission to pay costs and fees, including a $10,000 assignment fee, plus the fees and expenses YC SUSI Trust, BofA, Govco, Citibank and the ATSB incurred in the negotiation and documentation of the Assignments; b) authorization to waive objections to the Assignments of the Tranche A Loan to the ATSB if Govco later demands payment under the Amended and Restated Guarantee; c) insulation of the Assignments from limitations on claims trading; d) authorization to release YC SUSI Trust, BofA, Govco, Citibank and the Agent from obligations for principal or interest on the Tranche A Loan which was paid; and e) permission to pay YC SUSI Trust the interest accrued on the Tranche A Loan as of December 27, 2004. The Debtors further ask the Court to hold that the Order will have no effect on the validity or enforceability of any lien, security interest or priority claim under the Final Cash Collateral Order. Mr. Leitch assures Judge Mitchell that the transactions contemplated by the Assignment are appropriate and will advance the administration of the estates. The alterations will allow the Debtors to enjoy a lower cost of capital. Phoenix American Responds Robert B. Kaplan, Esq., at Jeffer, Mangels, Butler & Marmaro, in San Francisco, California, informs the Court that Phoenix American Financial Services, Inc., as Loan Administrator, has not been contacted on this issue, other than by service of the Debtors' request. Accordingly, Phoenix American's consent to the request is not required and will not be forthcoming. Mr. Kaplan says Phoenix American does not object to the request. The Response is intended to clarify Phoenix American's role under the Loan Agreement. Headquartered in Arlington, Virginia, US Airways' primary business activity is the ownership of the common stock of: * US Airways, Inc., * Allegheny Airlines, Inc., * Piedmont Airlines, Inc., * PSA Airlines, Inc., * MidAtlantic Airways, Inc., * US Airways Leasing and Sales, Inc., * Material Services Company, Inc., and * Airways Assurance Limited, LLC. Under a chapter 11 plan declared effective on March 31, 2003, USAir emerged from bankruptcy with the Retirement Systems of Alabama taking a 40% equity stake in the deleveraged carrier in exchange for $240 million infusion of new capital. US Airways and its subsidiaries filed another chapter 11 petition on September 12, 2004 (Bankr. E.D. Va. Case No. 04-13820). Brian P. Leitch, Esq., Daniel M. Lewis, Esq., and Michael J. Canning, Esq., at Arnold & Porter LLP, and Lawrence E. Rifken, Esq., and Douglas M. Foley, Esq., at McGuireWoods LLP, represent the Debtors in their restructuring efforts. In the Company's second bankruptcy filing, it lists $8,805,972,000 in total assets and $8,702,437,000 in total debts. (US Airways Bankruptcy News, Issue No. 75; Bankruptcy Creditors' Service, Inc., 215/945-7000) W.R. GRACE: Debtors Propose New Case Management Order ----------------------------------------------------- David W. Carickhoff, Jr., Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, P.C., in Wilmington, Delaware, recounts that after three and one-half years since the Chapter 11 cases of W.R. Grace & Co. and its debtor-affiliates were filed, there remain over a hundred thousand unresolved asbestos claims pending or otherwise asserted against the Debtors' estates. The Debtors, pursuant to the Bankruptcy Court's instruction, filed their Plan of Reorganization on November 13, 2004. The Plan contemplates a process by which certain Holders of Asbestos Claims may elect to either settle their asbestos claims against the Debtors' estates or litigate pursuant to certain litigation protocols. In separate, accompanying papers, the Debtors have proposed settlement criteria for both Asbestos PI-SE Claims and Asbestos PI-AO Claims through the PI-SE Trust Distribution Procedures and PI-AO Trust Distribution Procedures. The Debtors hope that these TDPs can capture hoped-for settlements of many pending Asbestos PI Claims. Recognizing that not all Asbestos Claimants will meet the criteria set out in the TDPs and that some qualifying Asbestos PI Claimants will elect not to participate in these proposed settlements, the Debtors believe that a provision must also be made for litigation of non-settling Asbestos Claims. Therefore, the Debtors ask the U.S. District Court for the District of Delaware to enter a new case management order establishing protocols for litigating asbestos-related claims following plan confirmation. The Debtors seek to institute the litigation protocols by which non-settling Asbestos Claims can be effectively and efficiently resolved. In particular, the Debtors ask the District Court to either enter an order granting: (a) the Original CMO Motion, establishing pre-confirmation litigation protocols for the resolution of Asbestos Claims; or (b) the New CMO Motion, establishing litigation protocols for the post-confirmation resolution of non-settling Asbestos Claims. In either case, the Debtors ask the District Court to establish the process by which their Asbestos Claims liability can be resolved in an efficient and effective manner pursuant to certain defined and sequential litigation protocols. While the Debtors are confident that they would succeed at trial with respect to a substantial majority of the Asbestos Claims, it would be an unnecessary waste of the estates' assets to pursue costly individual litigation of the Asbestos Claims at this time, particularly where many of the Asbestos Claims share similar deficiencies that can be effectively resolved en masse, saving both the Debtors and the District Court valuable time and resources. The New CMO Motion proposes establishing case management protocols for the efficient post-confirmation resolution of the Asbestos Claims. Mr. Carickhoff reminds the District Court that the Debtors filed their Original CMO Motion to resolve their actual liability with Holders of Asbestos Claims through pre-confirmation common issues litigation. The Asbestos PI Committee opposed the Debtors' case management procedures, and responded instead with a proposal to estimate the size of the post-confirmation trust to be set aside for the clams based solely on its preferred method of extrapolating future claim obligations from the Debtors' pre- bankruptcy claim settlements. In the five or more years preceding the bankruptcy, those settlements were typically made on a large scale, "inventory" basis, because the volume of claims precluded the Debtors from resolving them through the tort system based on their individual merits. As detailed in the Original CMO Motion, an analysis of claims asserted against the Debtors showed that the vast majority lacked any reliable evidence of medical impairment or injury, and also lacked evidence of any actual exposure to the Debtors' asbestos products. While the Debtors are prepared to commence pre-confirmation litigation pursuant to the Original CMO Motion, the New CMO Motion provides an alternative path for litigating the common asbestos liability issues following the confirmation of the Plan. Toward that end, the Debtors propose to set aside the Asbestos Trust for Asbestos Claimants satisfying recognized evidentiary standards as to causation for asbestos-related claims, including sufficient exposure to the Debtors' asbestos-containing products. The Debtors also filed a separate motion asking the Bankruptcy Court to set a bar date by which certain Holders of Asbestos PI Claims or Previously Settled and Adjudicated Asbestos Claims as to which, in either case, litigation was actually commenced prior to the Petition Date must file proofs of claim to preserve their rights against the Debtors' estates. In connection with this process, the Estimation Motion seeks approval to use and distribute a customized short-form proof of claim and a detailed questionnaire for Holders of Asbestos PI Prepetition Litigation Claims. The Debtors propose to use the Asbestos PI Questionnaire for estimating the Debtors' aggregate Asbestos PI Claim liability and facilitating the settlement of Asbestos Claims by providing an option for Holders of Asbestos PI Claims to elect to receive a cash settlement payment from the Debtors' estates. The scope of each Asbestos PI Claimant's rights with respect to the election will depend on whether the Claimant holds an Asbestos PI-SE Claim or an Asbestos PI-AO Claim. The Debtors request that the proposed New CMO be applicable to Holders of Asbestos PI Claims who elect the Litigation Option under the Plan and non-ZAI Asbestos PD Claims. The Debtors and the Asbestos Trust propose this five-step process for the litigation and allowance or disallowance of all Asbestos Claims pursuant to the New CMO: (A) Omnibus Objections and Summary Judgment The Debtors propose to use the information obtained from the Asbestos PI Proofs of Claim, Asbestos PD Proofs of Claim and Asbestos PI Questionnaires, and initially file omnibus claims objections and, where necessary, move for summary judgment, requesting dismissal of Asbestos Claims that fail to meet certain threshold requirements for a valid claim, including: -- Asbestos Claims that fail to comply with the requirements for completing and submitting the Court- approved Proofs of Claim and Asbestos PI Questionnaires -- Asbestos Claims that are based on unreliable scientific evidence of injury or causation; -- Asbestos Claims that are subject to the statute of limitations defense; -- Asbestos Claims that fail to allege the requisite exposure to the Debtors' products; and -- Asbestos Claims that lack reliable evidence that the Debtors' products or conduct caused the claimed disease or property damage. The omnibus objections and summary judgment motions would be filed with the Court on an aggregate basis, allowing the Court to efficiently resolve these questions on a common issue basis with respect to numerous pending Asbestos Claims. (B) Rule 42 Trials For those Asbestos Claims that withstand summary judgment scrutiny, but which present common issues capable of resolution on an aggregate basis, the parties would proceed to Rule 42 common issue trials. (C) Application of Common Issue Trial rulings to pending claims The Debtors would file motions for summary judgment with respect to those individual claims or groups of claims that failed to state a claim under the Court's Common Issue Trial rulings. (D) Claims Review and Resolution Process Upon resolution of the Common Issue Trials and any follow- on summary judgment motions, the proposed New CMO will provide for an individualized claims review by the Debtors for purposes of determining a settlement offer, that, If necessary, will be followed by a settlement procedure, including mandatory, court-supervised mediation. (E) Jury Trial Those Holders of Asbestos Claims who reject the Debtors' settlement offer and for whom the mediation process is unsuccessful will retain the right to a jury trial in the District of Delaware. On July 19, 2004, the Bankruptcy Court granted the Debtors a limited waiver of Del. Bankr. L. Rule 3007-1 for the purpose of streamlining objections to non-ZAI Asbestos PD Claims filed pursuant to the March 2003 Bar Date Order. The Asbestos PD Gateway Order, however, does not provide for any additional protocols for resolving non-ZAI Asbestos PD Claims beyond the Gateway Omnibus Objections. Therefore, with respect to the non- ZAI Asbestos PD Claims, the Debtors request that the proposed litigation protocols under the New CMO apply for purposes of resolving those Asbestos PD Claims that withstand, or otherwise are not subject to, the Gateway Omnibus Objections. Among other things, the New CMO will provide for non-ZAI Asbestos PD Claims to be resolved through Rule 42 Common Issue Trials, mandatory settlement proceedings and, if necessary, trial. The Debtors believe that the use of the Asbestos PI Questionnaires and Court-approved Proofs of Claim is proper and efficient. It is consistent with prior Bankruptcy Court orders and with applicable law. Moreover, the information requested in the Questionnaire is consistent with the information required by major asbestos personal injury trusts when assessing the merits of an asbestos claim for purposes of determining a settlement amount. Headquartered in Columbia, Maryland, W.R. Grace & Co., -- http://www.grace.com/-- supplies catalysts and silica products, especially construction chemicals and building materials, and container products globally. The Company and its debtor- affiliates filed for chapter 11 protection on April 2, 2001 (Bankr. Del. Case No. 01-01139). James H.M. Sprayregen, Esq., at Kirkland & Ellis, and Laura Davis Jones, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, represent the Debtors in their restructuring efforts. (W.R. Grace Bankruptcy News, Issue No. 76; Bankruptcy Creditors' Service, Inc., 215/945-7000) WACHOVIA BANK: Fitch Puts Low-B Ratings on Six Mortgage Certs. -------------------------------------------------------------- Fitch Ratings affirms Wachovia Bank Commercial Mortgage Trust's commercial mortgage pass-through certificates, series 2003-C9: -- $97.2 million class A-1 'AAA'; -- $123.8 million class A-2 'AAA'; -- $210.3 million class A-3 'AAA'; -- $508.5 million class A-4 'AAA'; -- Interest-only class X-P 'AAA'; -- Interest-only class X-C 'AAA'; -- $34.5 million class B 'AA'; -- $17.2 million class C 'AA-'; -- $33.0 million class D 'A'; -- $14.4 million class E 'A-'; -- $15.8 million class F 'BBB+'; -- $15.8 million class G 'BBB'; -- $15.8 million class H 'BBB-'; -- $8.6 million class J 'BB+'; -- $5.7 million class K 'BB'; -- $4.3 million class L 'BB-'; -- $4.3 million class M 'B+'; -- $5.7 million class N 'B'; -- $2.9 million class O 'B-'. Fitch does not rate the $20.1 million class P certificates. The rating affirmations reflect the stable pool performance and minimal paydown since issuance. As of the November 2004 distribution date, the pool has paid down 1% to $1.14 billion from $1.15 billion at issuance. Fitch reviewed the credit assessments of these five loans: * West Oaks Mall (6.6%); * Park City Center (5.7%); * Chula Vista Center (5.6%); * Meadows Mall (4.8%); and * Columbia Corporate Center (0.9%). The debt service coverage ratio -- DSCR -- for each loan is calculated using borrower provided net operating income less reserves divided by debt service payments based on the current balance using a Fitch-stressed refinance constant. Based on their stable to improved performance, all five loans maintain investment-grade credit assessments. For the six months ended June 30, 2004, the DSCR for the West Oaks Mall was 1.40 times, compared with 1.37x at issuance. The DSCRs for the Park City Center and Chula Vista Center for the three months ended March 31, 2004 were 2.06x and 1.06x, compared with 2.13x and 1.05x at issuance, respectively. As of March 31, 2004, occupancy at the Park City Center remained unchanged from issuance at 96%, while occupancy at the Chula Vista Center improved to 95% from 88.4% at issuance. For the six months ended June 30, 2004, the DSCR for the Meadows Mall remained relatively stable at 2.00x, compared with 2.10x at issuance. Occupancy dropped just slightly to 95.8% as of Sept. 30, 2004, from 96.6% at issuance. For the Columbia Corporate Center, the DSCR was 1.42x as of year-end 2003, compared with 1.49x at issuance. Physical occupancy was 56%; however, the property remained 100% leased on a master lease. WAY TO PLAY INC: Case Summary & 7 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Way to Play, Inc. 1342 Pepperidge O'Fallon, Illinois 62269 Bankruptcy Case No.: 04-35052 Chapter 11 Petition Date: December 15, 2004 Court: Southern District of Illinois (East St Louis) Debtor's Counsel: Stephen R. Clark, Esq. Courtney, Clark & Associates 104 South Charles Street Belleville, IL 62220 Tel: 618-233-5900 Fax: 618-234-8028 Total Assets: $4,450,000 Total Debts: $1,800,950 Debtor's 7 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ First Bank Secured Value: $750,000 c/o The Kunin Law Office, $2,400,000 L.L.C. 412 Missouri Avenue East. St. Louis, IL 62201 Small Business Growth Corp. Secured Value: $750,000 2921 Greenbriar Drive, $2,400,000 Suite C Springfield, IL 62704-6425 Daryl Navo $115,000 137 Stricker Road Ellisville, MO 63011 Doyce Thorpe-Fiore $32,000 The Icee Company $1,700 Coca Cola Enterprises $1,150 Allen Foods $1,100 WCI STEEL: Court Says Reorganization Plans Need Legal Compliance ---------------------------------------------------------------- U.S. Bankruptcy Judge Marilyn Shea-Stonum filed an opinion late Wednesday concerning confirmation of the two proposed WCI Steel, Inc. reorganization plans previously presented to the court. The opinion reflects the judge's conclusion that neither plan meets all of the legal requirements for confirmation. The opinion is not a formal ruling on the plans, however, and the judge has said that she will not enter such a ruling for the next several weeks. The opinion contemplates a period of moratorium for further efforts by both plan sponsors to reach a consensual agreement. The WCI reorganization plan, sponsored by its ultimate parent company, The Renco Group, Inc., would have enabled WCI to emerge from bankruptcy under its current ownership with a new labor contract in place. Edward R. Caine, WCI vice chairman and chief restructuring officer, said that WCI remains committed to presenting a reorganization plan that maximizes the long-term value of the WCI estate. He added that the court's opinion did indicate that a framework for a confirmable plan exists and suggested that the parties explore possible amendments to the WCI plan as a means to that end. "We are obviously disappointed that completion of the process will be delayed, but WCI is resolute in our desire to bring forth a reorganization plan that will be confirmed," Mr. Caine said. "WCI is a solid company that will ultimately emerge from bankruptcy as a viable player in the steel market." Mr. Caine stressed that the court's opinion will not affect company operations, noting that WCI has reported strong profits in recent months and that the company's financial outlook remains positive. "We have the financial capability to meet our commitments to our bankers, vendors and employees," Mr. Caine said. "We've greatly appreciated their support during these proceedings and we ask for their continued patience as we work through the reorganization process." WCI is an integrated steelmaker producing more than 185 grades of custom and commodity flat-rolled steel at its Warren, Ohio facility. WCI products are used by steel service centers, convertors and the automotive and construction markets. WCI Steel filed for chapter 11 protection on Sept. 16, 2003 (Bankr. N.D. Ohio Case No. 03-44662). Christine M Pierpont, Esq., and G. Christopher Meyer, Esq., at Squire, Sanders & Dempsey, L.L.P., represent the Company. When WCI Steel filed for chapter 11 protection it reported $356,286,000 in total assets and liabilities totaling $620,610,000. WMC MORTGAGE: Fitch Junks Class B Series 1997-1 Certificates ------------------------------------------------------------ Fitch has taken rating actions on WMC Mortgage loan pass-through certificates: Series 1997-1: -- Class M-1 affirmed at 'AA'; -- Class M-2 affirmed at 'A-'; -- Class B remains at 'CCC'. Series 1997-2: -- Class M-1 affirmed at 'AA'; -- Class M-2 affirmed at 'A'; -- Class B affirmed at 'B'. Series 1998-1: -- Class M-1 affirmed at 'AA'; -- Class M-2 affirmed at 'A'; -- Class B downgraded to 'B' from 'BB'. Series 1999-A: -- Class A affirmed at 'AAA'; -- Class M-1 affirmed at 'AA'; -- Class M-2 affirmed at 'A'; -- Class M-3 affirmed at 'BBB'. Series 2000-A: -- Class A affirmed at 'AAA'; -- Class M-1 affirmed at 'AA'; -- Class M-2 affirmed at 'A'; -- Class B affirmed at 'BBB'. All of the mortgage loans in the aforementioned transactions were either originated or acquired by WMC Mortgage Corp. The mortgage loans consist of fixed-rate and adjustable-rate mortgages extended to subprime borrowers and are secured by first liens, primarily on one- to four-family residential properties. The affirmations reflect credit enhancement consistent with future loss expectations and affect approximately $109.8 million of outstanding certificates. The negative rating action, which affects approximately $1.8 million of outstanding certificates, is taken due to worse-than-expected performance of the underlying collateral, as well as diminishing credit enhancement. As of the November 2004 distribution date, the transactions are seasoned from a range of 55 to 87 months, and the pool factors (current mortgage loans outstanding as a percentage of the initial pool) range from approximately 4% to 14%. In the series 1998-1 transaction, the high level of losses incurred has resulted in the decline of overcollateralization --OC -- to $821,442, providing 6.44% credit enhancement (less than 2 times original) for class B. 90 plus delinquencies (including bankruptcies, foreclosures, and real estate owned) currently stand at 36.91%. The current pool factor for series 1998-1 is approximately 4%. Fitch will continue to closely monitor these deals. YUKOS OIL: Begs U.S. Bankruptcy Court for Order Halting Auction --------------------------------------------------------------- In an attempt to halt the auction of Yuganskneftegas equity seized by the Russian Government that's currently scheduled for Dec. 19, 2004, Yukos Oil Company filed a complaint in the U.S. Bankruptcy Court requesting an injunction against: * the Russian Federation, * OOO Gaspromneft, * ZAO Intercom, * OAO First Venture Company, * ABN Amro, * BNP Paribas, * Calyon, * Deutsche Bank, * JP Morgan * Dresdner Kleinwort Wasserstein, and * any and all other banks and financial institutions that do business in the United States that would provide any financing for any bidders at the December 19, 2004 auction scheduled in Moscow for the stock of Yuganskneftegas, which is Yukos' primary asset. Within a week, Zack A. Clement, Esq., at Fulbright & Jaworski, LLP, tells Judge Clark, Yukos is about to suffer immediate and irreparable harm if the Court doesn't issue the injunction. If Yukos is able to obtain an injunction now, the Company says, it may never need to file a Chapter 11 case for a host of affiliated companies. The Players OOO Gazpromneft has been instructed by the Russian Government (Gazpromneft's principal shareholder) to bid for the YNG stock in the Auction, according to press reports. As of December 10, 2004, three entities have been reported to have filed with Russia's Federal Antimonopoly Service to bid at the Auction: (1) Gazprom, (2) OAO First Venture Company, and (3) ZAO Intercom. Yukos understands from an Interfax press report that Gazprom is raising financing for the Auction from a consortium of international banks, including: (a) ABN Amro, (b) BNP Paribas, (c) Calyon, (d) Deutsche Bank, (e) Dresdner Kleinwort Wasserstein and (f) J.P. Morgan. All of these Auction Financiers have U.S. offices and operations. The Auction's Rigged Yukos believes that the Auction will not be conducted in a commercially reasonable fashion designed to bring the highest price. Bids at the Auction will start at $8.65 billion, yet the Russian Government's own appraisal of YNG valued it at between $15.7 and $18.6 billion and independent assessments of its asset value suggest $20 billion or more (YNG produces approximately 1 million barrels of oil a day and is, by itself, one of the world's largest oil and gas companies). Several major western oil companies and the Chinese national oil company which had previously expressed interest in the YNG assets have indicated that they will not participate in the Auction. Yukos is not aware of either Intercom or First Venture as a company involved in the oil and gas industry, or as a company capable of such a substantial transaction. If there is only one real bidder at the December 19 Auction, then the shares of YNG may be sold to state- owned Gazprom at a price substantially below YNG's asset value. Adding some color, Bruce K. Misamore, Chief Financial Officer and a Member of the Management Board of Yukos-Moscow, the managing company of Yukos Oil Company, tells Judge Clark that since announcing the Auction, the Russian Government has proceeded far down the ranks below Yukos' former CEO, Mikhail Khodorkovsky, with its efforts to arrest Yukos' managers, keeping them from doing their jobs, and has jailed or threatened to charge other company employees on improper criminal charges. For example, Mr. Misamore relates, within the past week, Svetlana Bakhmina, a young Deputy General Counsel of Yukos and the mother of two young children, was arrested late at night at her home in Moscow on charges relating to her legal work at Yukos. It has been reported to Mr. Misamore that she is currently in a semi- conscious state unable to recognize colleagues shown to her. This is just a solitary yet eminently repugnant example of a series of such recent malicious arrests of Yukos employees and outside service providers. The Injunction The Debtor tells Judge Clark they will suffer irreparable harm, for which there is no adequate remedy at law, if the Defendants, their officers, agents, servants, employees, attorneys, and those persons in active concert or participation with them, are not enjoined permanently from all actions seeking: (a) to continue pre-petition actions and proceeding against the Debtor to recover a claim against the Debtor that arose pre-petition; (b) the enforcement against the Debtor or against property of the estate of a judgment obtained pre-petition; (c) to obtain possession of property of the estate or of property from the estate or to exercise control over property of the estate; (d) to create, perfect, or enforce any lien against property of the estate; (e) to create, perfect, or enforce against property of the Debtor any lien to the extent that such lien secures a claim that arose pre-petition; (f) any act to collect, assess, or recover a claim against the Debtor that arose pre-petition; and (g) the setoff of any debt owing to the Debtor that arose pre-petition against any claim against the Debtor. In particular, the Debtor seeks to enjoin the Defendants, their officers, agents, servants, employees, attorneys, and those persons in active concert or participation with them, from taking any actions with respect to the YNG stock pending international arbitration between the Debtor and the Russian Federation concerning alleged tax liabilities. The issuance of a preliminary restraining order prohibiting an auction of the YNG Stock from taking place and temporarily enjoining all further attempts by parties to take away the Debtor's assets will protect the public interest by insuring that the investments of U.S. residents in the Russian Federation are treated in accordance with international norms as guaranteed by the Russian Federation in the Foreign Investment Law, Yukos argues. * * * Judge Clark convened hearings on Dec. 15 and 16 on Yukos Oil Co.'s request for an injunction to halt the Dec. 19 auction of Yukos' equity in Yuganskneftegas by the Russian Federation to satisfy Yukos' alleged tax obligations. Zack A. Clement, Esq., at Fulbright & Jaworski, LLP, stressed that time is of the essence. If the Russian Government's sham tax sale isn't stalled, 60% of Yukos will evaporate and that value will be lost forever. Threshold Jurisdictional Question Hugh M. Ray, Esq., at Andrews Kurth, LLP, appeared before Judge Clark to argue that Deutsche Bank AG objects to many things. Fundamentally, Deutsche Bank thinks Yukos' Chapter 11 case should never have been filed because Yukos doesn't have any significant ties to the Southern District of Texas. The $7 million on deposit in U.S. banks is de minimis in a multi-billion dollar enterprise, Yukos has no meaningful operations in the U.S., and having U.S. shareholders is irrelevant to the issue of the propriety of Yukos filing for Chapter 11 protection. In fact, in a lawsuit filed by Dardana Ltd. against Yukos in 2002 in Texas, Yukos argued at length that the case should be dismissed on the grounds that it had no ties to Texas and Dardana should have filed its lawsuit nine time zones to the east in Moscow. The lawsuit was ultimately settled before the Court issued any jurisdictional ruling. Yukos has a simple response to its 2002 arguments: times change. To provide the Court with a factual record, Mr. Clement called Bruce K. Misamore to the witness stand to talk about Yukos' connections with the Southern District of Texas. Mr. Misamore is Yukos' Chief Financial Officer and a Member of the Management Board of Yukos-Moscow, the managing company of Yukos Oil Company. Matthew J. Botica, Esq., at Winston & Strawn, LLP, representing Gazprom, asked Mr. Misamore exactly how many Yukos' 100,000 employees are in the United States. "One," Mr. Misamore responded. And the bulk of Yukos' assets are located where, Mr. Botica queried? "Russia," Mr. Misamore responded. Is Yukos' office in Houston your home office, Mr. Botica asked? "Yes," Mr. Misamore answered. There is ample case law, Mr. Clement says, to support Yukos' qualification to be a debtor under 11 U.S.C. Sec. 109. Mr. Clement directs Judge Clark's attention to In re Global Ocean Carriers Ltd., 251 B.R. 31 (Bankr. D. Del. 2000), a shipping company headquartered in Greece and 15 of its subsidiaries filed petitions in Delaware. Overruling a motion to dismiss brought by a small creditor and a group of minority shareholders, the Delaware Bankruptcy Court held that a few thousand dollars in a bank account and the unearned portions of retainers provided to local counsel constituted property sufficient to form a predicate for a filing in the United States; In re Iglesias, 226 B.R. 721, 722-23 (Bankr. S.D. Fla. 1998) ($500 in a bank account sufficient predicate with respect to a citizen of Argentina); and 2 L. King, Collier on Bankruptcy, par. 109.02[3] (15th ed. rev. 2003), stating without qualification, "there is virtually no formal barrier to a foreign entity commencing a case under title 11 in the United States." With respect to Mr. Misamore working from home, Mr. Clement points Judge Clark to In re Carnera, 6 F. Supp. 267, 269 (S.D.N.Y. 1933) (case under former Bankruptcy Act holding a New York City hotel room was a "principal place of business" for a boxer domiciled in Italy although there was no sign on the door). "Mr. Misamore's pre-petition presence in Houston, precipitated by the threats to the personal safety and freedom of Yukos' officers and employees, together with his carrying out of his duties as Chief Financial Officer of the Debtor in the Southern District of Texas establish that Yukos has a place of business in the United States," Mr. Clement argued. With that, Judge Clark said she'd heard enough. For the time being, the Court will operate under the assumption that Yukos is sufficiently qualified to proceed with a Chapter 11 case, subject to a ruling on the issue at a later date. Following the old maxim that justice delayed is justice denied, Judge Clark directed that the parties move forward and present their cases for and against the Bankruptcy Court issuing the injunction the Debtor's requested. Judge Clark made it clear that any injunction issued at this early juncture -- and that's not suggesting that one will be issued -- would be in the form of a 15-day temporary restraining order. Let's Talk About Value Judge Clark questioned the Debtor's assertions about the value of Yuganskneftegas. The Debtor's pleadings say that YNG is slated to be sold for $8.65 billion, and that number is much less than other folks' values ranging from $15.7 to more than $20 billion. The Court, Judge Clark indicated, needs evidence to support these allegations. Mr. Misamore offered Judge Clark information about his personal background, what he knows and what he's concluded. Mr. Misamore advised Judge Clark that he has worked for 27 years in the oil and gas industry, in Houston, London, Findlay (Ohio) and Moscow. "From December 1998 to October 1999, I was Senior Vice President at PennzEnergy Company in Houston, and before that I spent over five years at Pennzoil Company in Houston as, among other positions, Vice President and Treasurer," Mr. Misamore testified. "Prior to that I spent 17 years at USX Corporation/Marathon Oil Company, including time in its Houston office, in a host of different roles, including Director of Corporate Finance and Manager of Financial Planning." "In 1972, I received a B.S.B.A. in Finance, Banking and Credit Management, and in 1973, I received an M.B.A., with concentration of finance, both degrees undertaken and awarded from Bowling Green State University, Bowling Green, Ohio," Mr. Misamore testified concerning his academic credentials. Mr. Misamore mentioned to Judge Clark that he also currently serves as a Director on the U.S.-Russia Business Council in Washington, D.C. In his role as Yukos' CFO since 2001, Mr. Misamore relates he's been on the front line in every major discussion and decision relative to Yukos' multi-nationalization, negotiation and execution of joint venture investment and strategic alliance agreements with major international companies, and talks with major U.S. companies about their purchasing equity in Yukos subsidiaries. Mr. Misamore says he has personal knowledge that, at the Russian Government's request, Dresdner Kleinwort Wasserstein valued the shares of YNG in preparation for the auction. Dresdner came back with a valuation of US$15 to US$18 billion, after considering potential liabilities. In making its valuation, Dresdner: (i) reduced its valuation significantly for the alleged taxes owed by YNG; and (ii) reduced its valuation for YNG alone for guarantees owed collectively by a number of Yukos subsidiaries for loans taken out by Yukos. Mr. Misamore has personal knowledge of other independent bank appraisals reporting YNG asset values at around US$20 billion. Incredibly, Mr. Misamore says, the Russian Government has said it is prepared to auction YNG on Dec. 19 at an $8.65 billion -- less than half what YNG's worth. "With the price of crude oil today, and the identified recoverable resources which we believe are in YNG's portfolio," Mr. Misamore told Judge Clark, "a fair auction could value YNG well in excess of US$20 billion. I agree with the reports in the press that this auction is being organized by the Government so that it can sell our crown jewel to a Government-owned entity for an artificially low price. If the auction is consummated, Yukos will be severely and irreparably damaged." Gazpromneft Wants Out Konstantin A. Chuychenko, Esq., General Counsel for OAO Gazprom, gives Judge Clark 25 reasons that the U.S. Bankruptcy Court in Texas doesn't have personal jurisdiction over his company: 1. Gazpromneft is organized under the laws of the Russian Federation, Gazpromneft's principal place of business is and has always been located in the Russian Federation. 2. Gazpromneft has never had offices in the United States; its offices are and have always been in the Russian Federation. All of Gazpromneft's witnesses who would have knowledge of any matter relating to this action are located in the Russian Federation. 3. Gazpromneft has never been a corporation organized in the State of Texas or a corporation authorized to conduct business in Texas. 4. Gazpromneft has never owned any real property or paid taxes in the State of Texas or elsewhere within the territorial boundaries of the United States. 5. Gazpromneft has never engaged in any business in the State of Texas, nor committed any tort, in whole or in part, within the State of Texas or elsewhere within the territorial boundaries of the United States. 6. Gazpromneft has never maintained a place of business or other business operations in Texas or elsewhere within the territorial boundaries of the United States. 7. Gazpromneft has never sold, distributed, or licensed any products in the State of Texas. 8. Gazpromneft has never sold, distributed, or licensed any products through the mail into the State of Texas or elsewhere within the territorial boundaries of the United States. 9. Gazpromneft has never exercised daily control over any entity which has contacts with the State of Texas or elsewhere within the territorial boundaries of the United States. 10. Gazpromneft has never had any headquarters, registered office or registered agent in the State of Texas or elsewhere within the territorial boundaries of the United States. 11. Gazpromneft has never established an address or telephone number in the State of Texas or elsewhere within the territorial boundaries of the United States. 12. Gazpromneft has never appointed any agent for service of process in the State of Texas or elsewhere within the territorial boundaries of the United States. 13. Gazpromneft has never maintained a bank account in the State of Texas or elsewhere within the territorial boundaries of the United States. 14. Gazpromneft has never made a loan application or received a loan in the State of Texas or elsewhere within the territorial boundaries of the United States. 15. Gazpromneft has never had any officers, directors, shareholders, employees or agents in the State of Texas or elsewhere within the territorial boundaries of the United States. 16. Gazpromneft has never owned an interest in real or personal property located in the State of Texas or elsewhere within the territorial boundaries of the United States, nor has Gazpromneft paid any income or property taxes on property located in the State of Texas or elsewhere within the territorial boundaries of the United States. 17. Other than this lawsuit, Gazpromneft has never been a party to any legal action in the State of Texas or elsewhere within the territorial boundaries of the United States. 18. Gazpromneft has never contracted to insure any person, property, or risk located in the State of Texas at the time of contracting or elsewhere within the territorial boundaries of the United States. 19. Gazpromneft has never hired any employees who are or were at the time of employment domiciled in the State of Texas or elsewhere within the territorial boundaries of the United States. 20. Gazpromneft has never maintained continuous and systematic contacts with the State of Texas. 21. Gazpromneft has never created a substantial connection between itself and the State of Texas or elsewhere within the territorial boundaries of the United States. 22. Gazpromneft has never maintained records, goods, or other business supplies in the State of Texas or elsewhere within the territorial boundaries of the United States. 23. No meeting of Gazpromneft's Board of Directors has ever taken place in the State of Texas or elsewhere within the territorial boundaries of the United States. 24. Gazpromneft has never directed any of its advertising specifically toward Texas residents, nor has it ever advertised in any publications that are directed primarily toward Texas residents. 25. Gazpromneft has never derived revenue from goods sold in the State of Texas. Christine Kirchner, Esq., at Chamberlain, Hrdlicka, White, Williams & Martin, in Houston, argues that Gazpromneft should be dismissed from Yukos' lawsuit because it has insufficient contacts with the State of Texas to support the prosecution of a case against in and the Bankruptcy Court's exercise of jurisdiction over Gazpromneft would offend traditional notions of fair play and substantial justice. Not so, Yukos counters. William Helfand, Esq., from Chamberlain, Hrdlicka, entered an appearance at the Dec. 15 hearing on Gazpromneft's behalf and Mr. Botica, representing Gazprom, cross- examined Mr. Misamore on Dec. 16. Mr. Clement says that because Gazpromneft has entered an appearance and participated in Yukos' Chapter 11 case, Fifth Circuit case law says that Gazpromneft has consented to the jurisdiction of the U.S. Bankruptcy Court. See Adams v. Unione Mediterranea De Sicurta, 220 F.3d 659 (5th Cir. 2000) (citing Travelers Indem. Co., 798 F.2d at 834). Deutsche Bank's Real Problem Mr. Ray confirmed that Deutsche Bank AG leads the lending syndicate that's backing Gazprom's bid. The Lenders are scheduled to close on a 10 billion euro loan agreement some time Saturday. Deutsche Bank argues that it is improper for Yukos to interject itself into a borrower-lender transaction to which it is not a party. Mr. Ray says that the Lenders will suffer economic losses if the loan does not close, and hinted those lenders will be looking to someone for payment. Decision Forthcoming Judge Clark told Messrs. Clement and Ray that she understands the time pressure everybody's working under. Judge Clark will take the parties' arguments under advisement and issue her decision as soon as possible . . . which will need to be sometime tomorrow or very early Saturday. Predictions Lynn Cook and Tom Fowler at the Houston Chronicle surveyed a number of bankruptcy attorneys about Yukos' three-part strategy before the Bankruptcy Court. "The consensus seems to be the company has a snowball's chance in, well, Houston," Ms. Cook and Mr. Fowler say. Alan Gover, Esq., at Dewey Ballantine, told the reporters it's improbable Yukos will succeed since U.S. bankruptcy laws are designed to let companies protect U.S. assets on behalf of owners and creditors, but those laws don't carry much weight beyond American shores. Mr. Ray dubbed Yukos' filing "a legal Hail Mary" when he spoke to the reporters. Dan Harris, Esq., an attorney with Harris Moure, PLLC, in Seattle, with nearly 20 years experience handling numerous international dispute resolution cases, says Yukos has one more card to play if the three it's shown don't produce a winning hand. "There is an obscure law that allows US courts to take jurisdiction in a case pending elsewhere if the party seeking to have the US Court assume jurisdiction can show that the court in the other country is incapable of providing a fair trial," Mr. Harris explains. Yukos has made that argument and the facts Mr. Misamore has put into the record make that case. In 2002, Mr. Harris argued this law in a federal court case in Alaska, J.V. Ocean Fisheries (Cyprus) Limited v. Galina and Zarubino C Port Open Joint Stock Company. Mr. Harris opposed a Cypriot company's attempt to get the U.S. court to assume jurisdiction because of purported corruption in the Russian courts. He prevailed on his argument by convincing the court that the standard for finding such corruption must be very strong and that the Cypriot plaintiff had failed to meet that standard. Regarding Yukos, Mr. Harris says there is significant reason to believe the Russian courts may not be capable of providing a fair trial, given the involvement of Vladimir Putin and the Russian Government. Headquartered in Houston, Texas, Yukos Oil Company is an open joint stock company existing under the laws of the Russian Federation. Yukos is involved in the energy industry substantially through its ownership of its various subsidiaries, which own or are otherwise entitled to enjoy certain rights to oil and gas production, refining and marketing assets. The Company filed for chapter 11 protection on Dec. 14, 2004 (Bankr. S.D. Tex. Case No. 04-47742). Zack A. Clement, Esq., C. Mark Baker, Esq., Evelyn H. Biery, Esq., John A. Barrett, Esq., Johnathan C. Bolton, Esq., R. Andrew Black, Esq., Fulbright & Jaworski, LLP, represent the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $12,276,000,000 in total assets and $30,790,000,000 in total debts. * BOOK REVIEW: Macy's For Sale ------------------------------ Author: Isadore Barmash Publisher: Beard Books Paperback: 192 pages List Price: $34.95 Order your personal copy at http://www.amazon.com/exec/obidos/ASIN/1587981726/internetbankrupt Review by Henry Berry Isadore Barmash writes in his Prologue, "This book tells the story of Macy's managers and their leveraged buyout, the newest and most controversial device in the modern financial armament" when it took place in the 1980s. At the center of Barmash's story is Edward S. Finkelstein, Macy's chairman of the board and chief executive officer. Sixty years old at the time, Finkelstein had worked for Macy's for thirty-five years. Looking back over his long career dedicated to the department store as he neared retirement, Finkelstein was dismayed when he realized that even with his generous stock options, he owned less than one percent of Macy's stock. In the years leading up to his unexpected, bold takeover, Finkelstein had made over Macy's from a run-of-the-mill clothing retailer into a highly profitable business in the lead of the lucrative and growing fashion and "lifestyle" field. To aid him in accomplishing the takeover and share the rewards with him, Finkelstein had brought together more than three hundred of Macy's top executives. To gain their support for his planned takeover, Finkelstein told them, "The ones who have done the job at Macy's are the ones who ought to own Macy's." Opposing Finkelstein and his group were the Straus family who owned the lion's share of Macy's and employees and shareholders who had an emotional attachment to Macy's as it had been for generations, "Mother Macy's" as it was known. But the opponents were no match for Finkelstein's carefully laid plans and carefully cultivated alliances with the executives. At the 1985 meeting, the shareholders voted in favor of the takeover by roughly eighty percent, with less than two percent opposing it. The takeover is dealt with largely in the opening chapter. For the most part, Barmash follows the decision-making by Finkelstein, the reorganization of the national company with a number of branches, the activities of key individuals besides Finkelstein, Macy's moves in the competitive field of clothing retailing, and attempts by the new Macy's owners led by Finkelstein to build on their successful takeover by making other acquisitions. Barmash allows at the beginning that it is an "unauthorized book, written without the cooperation of the buying group." But as he quickly adds, his coverage of Macy's as a business journalist and his independent research for over a year gave him enough knowledge to write a relevant and substantive book. The reader will have no doubt of this. Barmash's narrative, profiles of individuals, and analysis of events, intentions, and consequences ring true, and have not been contradicted by individuals he writes about, subsequent events, or exposure of material not public at the time the book was written. Barmash does not limit himself to documenting the buyout of Macy's. While portraying the buyout as a momentous incident in American business history which sent ripples throughout the corporate world, he also places it in the context of the business environment of the time. The buyout took place in the aggressive, largely laissez-faire, capitalist business environment of the Reagan era. Without being judgmental, the author touches on both sides of this aggressiveness. While many corporations were awakened from their longtime inertia, this took a toll on many individuals in the way of felt betrayals, lost jobs, and uncertain futures. Besides focusing on Finkelstein and other factors at the center of the takeover, Barmash to some extent goes into the changes it brought to the American business world. He does this in a lucid style which gets right to the point of each subject at hand to present a multifaceted view of this watershed event in recent U. S. economic and corporate history. Isadore Barmash, a veteran business journalist and author, was associated with the New York Times for more than a quarter-century as business-financial writer and editor. He also contributed many articles for national media, Reuters America, and the Nihon Keizai Shimbun of Japan. He has published 13 books, including a novel, and is listed in the 57th edition of Who's Who in America. ********* 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 ***