/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/041223.mbx T R O U B L E D C O M P A N Y R E P O R T E R Thursday, December 23, 2004, Vol. 8, No. 283 Headlines A.C.E. ELEVATOR: Case Summary & 20 Largest Unsecured Creditors AAIPHARMA: Moody's Pares Rating on $175M Sub. Notes to C from Ca ACTUANT CORP: Prices 2.5 Million Common Shares at $49.50 Each AFTON FOOD: Court Further Extends CCAA Protection Until Feb. 14 AIRCAST INTL: Moody's Assigns Low-B Ratings to $100M Loans AMERICA WEST: Fitch Junks $600 Mil. Debt, Citing Limited Cash Flow ANGLO AMERICAN: Creditors Must File Proofs of Claim by Jan. 31 APOGENT TECH: Moody's Withdraws Ratings After Fisher Acquisition APPLIED EXTRUSION: Young Conaway Approved as Bankruptcy Co-Counsel APPLIED EXTRUSION: Combined Confirmation Hearing Set for Jan. 24 AQUILA INC: Terminates Batesville Merchant Power & Sale Agreements ARDENT HEALTH: Soliciting Consents to Amend 10% Sr. Note Indenture BEAR STEARNS: Fitch Downgrades Class B-5 Series 1997-4 to 'B-' BEAR STEARNS: Fitch Upgrades Class B-5 Series 2000-2 to 'BB+' BERTUCCI'S CORP: Very Poor Liquidity Spurs S&P to Junk Rating BOWNE & CO: Moody's Reviewing Low-B & Junk Ratings & May Upgrade BREUNERS HOME: Has Until Mar. 31 & Apr. 22 to Make Lease Decisions CALLIDUS DEBT: Moody's Puts Ba2 Rating on $8.5M Class E Notes CANADA MORTGAGE: Moody's Puts Low-B Ratings on Class E & F Certs. CASTLE HARBOR: Fitch Assigns 'BB-' on $3 Million Notes CATHOLIC: Spokane Wants to Continue Using Cash Management System CATHOLIC CHURCH: Spokane Wants to Maintain Existing Bank Accounts CITICORP MORTGAGE: Fitch Puts Low-B Ratings on Two $859,018 Certs. COMM 2000-C1: S&P Junks Certificate Classes M & N CONCERT IND: Applies for Delisting from Toronto Stock Exchange D.C.I. DANACO: Case Summary & 20 Largest Unsecured Creditors DAN RIVER: Files Supplement to Third Amended Chapter 11 Plan DELPHI CORP: S&P Downgrades Corporate Credit Rating to BB+ DEUTSCHE MORTGAGE: Fitch Affirms Two Classes With Low-B Ratings DII/KBR: Court Approves North Star Settlement Agreement EARL BRICE: Case Summary & 9 Largest Unsecured Creditors EAST CHICAGO: S&P Affirms BB Issuer Credit Rating ELECTRO PRIME: Case Summary & 80 Largest Unsecured Creditors FALCON PRODUCTS: Moody's Pares Rating on Sr. Sub. Notes to C FLEXTRONICS: To Report Third Quarter Results on Jan. 25 GE CAPITAL: Moody's Puts Ba2 Rating on $18.6M Class D Certificates GMAC COMMERCIAL: Fitch Puts Low-B Ratings on Six Mortgage Certs. GOLDEN EAGLE: Arranges $1 Million Bank Loan Payoff GOLDMAN SACHS: Fitch Puts Low-B Ratings on Three Classes HEDSTROM CORP: Auction at Arlington Heights HQ on Jan. 11 HEDSTROM CORP: Auction at Hazelhurst, Ga., Facility on Jan. 20 HEDSTROM CORP: Auction at Bedford, Pa., Facility on Feb. 1 & 2 HERBALIFE LTD: Completes IPO & Starts NYSE Stock Trading HOLLAND INVESTMENTS: Voluntary Chapter 11 Case Summary HOUSING SECURITIES: Fitch Upgrades Class B1 Series 1994-2 Cert. IDI CONSTRUCTION: Confirmation Hearing Set for February 10 INTEGRATED ELECTRICAL: Moody's Junks $173M Subordinated Notes INTEGRATED SURGICAL: Faces Liquidity Issues as Losses Continues INTEGRATED SURGICAL: Inks $2M Agreement with Fujifilm Medical INTELSAT: Moody's Says Liquidity Will Remain Good for 12 Months INTERMEDICAL HOSPITAL: Wants to Hire Nexsen Pruet as Counsel JONES MEDIA: Scripps Transaction Prompts Moody's to Lift Ratings KNOWLEDGE LEARNING: S&P Rates Planned $640M Sr. Sec. Debts at BB- KRAMONT REALTY: Moody's Reviewing B3 Preferred Stock Rating MISSISSIPPI AUTO RENTAL: List of Largest Unsecured Creditor MOONEY AEROSPACE: Emerges from Bankruptcy Protection MORGAN STANLEY: Fitch Puts Low-B Ratings on Six Mortgage Certs. NATIONAL COAL: Substantial Net Losses Trigger Going Concern Doubt NEIGHBORCARE: Acquires Belville Pharmacy for An Undisclosed Sum NORTEL NETWORKS: Court Extends Time for Annual Meeting to May 31 NORTHWEST ALUMINUM: Confirmation Hearing Set for December 23 NORTHWEST ALUMINUM: Stoel Rives Approved as Bankruptcy Counsel NOVA CHEMICALS: S&P Revises Outlook on BB+ Ratings to Stable OAKWOOD HOMES: S&P's Rating on Class B-1 Certificate Tumbles to D OAKWOOD MORTGAGE: Moody's Junks 12 Certificate Classes OMT INC: Raises $1.4 Million in Private Convertible Debt Offer ON SEMICONDUCTOR: Moody's Places B3 Rating on $645M Term Loan PARAMOUNT RESOURCES: Moody's Rates $215M Sr. Unsec. Notes at B3 PEAK ENTERTAINMENT: $2.1M Equity Deficit Spurs Going Concern Doubt PINNACLE ENTERTAINMENT: S&P Lifts Corporate Credit Rating to B+ POLYONE CORPORATION: Fitch Puts Low-B Ratings on Senior Debts PORTOLA PACKAGING: Nov. 30 Balance Sheet Upside Down by $47.1M RAMP CORP: AMEX Accepts Compliance Plan to Continue Listing RCN CORPORATION: Emerges from Bankruptcy Protection SAN JOAQUIN: Moody's Withdraws Ba2 Ratings After Notes Redeemed SERVICE LINKS: Case Summary & 18 Largest Unsecured Creditors SEQUENTIAL ELECTRONIC SYSTEMS: Voluntary Chapter 11 Case Summary SCHUFF INT'L: Extends Consent Solicitation Until Dec. 28 STELCO INC: Teachers & Sherritt Submit $1.8 Billion Recap Plan STELCO INC: Releases Proposals of Capital Raising Process TERRA INDUSTRIES: Completes Sale of 25 Mil. Shares of Common Stock TERRA INDUSTRIES: Settles Valuation Dispute with Revenue Canada TEXAS INDUSTRIES: Moody's Revises Ratings Outlook to Developing THISTLE MINING: To Restructure Balance Sheet Under CCAA TORCH OFFSHORE: Names David Phelps as Chief Restructuring Advisor TRUMP HOTELS: IRS Wants May 20 as Government Bar Date UNIONE ITALIANA: Section 304 Petition Summary USURF AMERICA: $12.4 Million Net Loss Triggers Going Concern Doubt VECTOR GROUP: Registers Convertible Notes with SEC for Resale WESTERN WATER: Needs to Sell Assets to Cover Operating Expenses YUKOS OIL: Menatep Intends to Sue to Recover its Losses Z-TEL TECH: Continues Stock Trading Following Nasdaq Compliance * Boyd Mulkey Joins Alvarez & Marsal as Managing Director * Salomon Green & Ostrow and Stevens & Lee Combine ********* A.C.E. ELEVATOR: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: A.C.E. Elevator Co., Inc. 352 Seventh Avenue New York, New York 10001 Bankruptcy Case No.: 04-17994 Type of Business: The Company is engaged in the business of elevator and escalator maintenance, repairs, construction, and modernization. Chapter 11 Petition Date: December 21, 2004 Court: Southern District of New York (Manhattan) Debtor's Counsel: Jonathan S. Pasternak, Esq. Rattet, Pasternak & Gordon Oliver, LLP 550 Mamaroneck Avenue, Suite 510 Harrison, New York 10528 Tel: (914) 381-7400 Fax: (914) 381-7406 Total Assets: $5,285,000 Total Debts: $7,700,000 Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Elevator Cabs of New York, Inc. $708,679 15 Jane Street Paterson, New Jersey 07522 Elevator Constructors U.L.1 $600,000 2185 Lemoine Avenue Fort Lee, New Jersey 07024 KONE, Inc. $437,859 c/o Rothbard Rothbard Kohn & Kellar 50 Park Place, Suite 1228 Newark, New Jersey 07102 Hollister-Whitney $420,000 PO Box 4025 2603 North 24th Street Quincy, Illinois 6230 Trustees of the National Elevator $159,944 Industry Pension c/o O'Donoshue & O'Donoghue, LLP Constitution Place, Suite 515 325 Chestnut Street Philadelphia, Pennsylvania 19106 Benfield Electric Supply Corporation $140,250 Motion Control Engineering $138,857 G.A.L. Manufacturing Corporation $127,563 Rockwell Automation $113,324 Savastano, Kaufman & Company $105,555 AFD International, Inc. $95,144 National Elevator Industry $81,132 Cemcolift $79,827 First Insurance Funding Corporation $47,916 O. Thompson Company $42,063 State Insurance Fund $36,156 CEC Elevator Cab Corporation $34,069 Adco Electric $32,000 Schmit Machine Corporation $28,730 Fox Rothschild $28,227 AAIPHARMA: Moody's Pares Rating on $175M Sub. Notes to C from Ca ---------------------------------------------------------------- Moody's Investors Service confirmed the Caa2 senior implied rating of aaiPharma, Inc., concluding a rating review initiated on March 31, 2004. At the same time, Moody's lowered the rating of aaiPharma's $175 million subordinated notes due 2010 to C from Ca and its issuer rating to Ca from Caa3. Following these rating actions, the outlook is stable. The confirmation of the Caa2 rating reflects the recent progress made at aaiPharma including being re-listed on NASDAQ, receiving bank covenant waivers, the appointments of a new CEO and CFO, and the engagement of Rothschild Inc. to pursue asset sales. However, the Caa2 rating also reflects Moody's belief that a near-term default of aaiPharma's debt remains possible based on: (1) uncertain cash flow ability over the next 12 months; (2) the likely reliance on asset sales in order to meet interest payments in 2005; (3) the potential costs associated with various investigations and litigation; and (4) the disclosure that internal control deficiencies may prevent the external auditor from attesting to aaiPharma's controls. Although Moody's does not rate aaiPharma's credit facilities, the Caa2 senior implied rating incorporates Moody's estimation that in the event of a bankruptcy filing, recovery rates for bank creditors could be in the 75-90% range. The lowering of the subordinated note rating to C from Ca reflects Moody's opinion that in the event of a bankruptcy filing, recover for subordinated note holders could be limited. In October 2004, aaiPharma increased its term loan from $140 million to $165 million, thereby positioning its unsecured creditors, including the subordinated note holders, more weakly within the capital structure. The issuer rating is being lowered to Ca from Caa3. As of September 30, 2004 aaiPharma reported tangible book assets of $130 million (consisting of current assets, net property and equipment, and other assets), compared to current liabilities of approximately $101 million and debt of $324 million. In addition, the company faces various litigation, including lawsuits with Athlon Pharmaceuticals, Inc., and CIMA Labs, Inc., which could result in contingent liabilities. Intangibles and goodwill totaled $296 million, which Moody's believes could derive value through liquidation. Based on third quarter results, aaiPharma's pharmaceutical products generate approximately $60 million in annualized sales, and valuation would reflect a multiple of sales. The company's product development and development services divisions generate approximately $120 million in annual sales, although Moody's ascribes less value to these assets, especially since contract terms may be short. The pharmaceutical pipeline, though modest, may also represent additional value. Following this rating action, the outlook is stable. The ratings could be raised if the company averts a default, or if recovery values exceed Moody's estimates. Conversely, the ratings could be lowered if recovery values fall below Moody's estimates. Rating confirmed: * Caa2 senior implied Ratings lowered: * Subordinated note rating to C from Ca * Issuer rating to Ca from Caa3 aaiPharma, Inc., headquartered in Wilmington, North Carolina, is a pharmaceutical company that acquires, develops, markets, sells, and licenses branded pharmaceutical products, develops drug- delivery technologies, and provides contract research and manufacturing services for pharmaceutical companies. The company previously reported revenues of $283 million for the full year ended December 31, 2003. ACTUANT CORP: Prices 2.5 Million Common Shares at $49.50 Each ------------------------------------------------------------- Actuant Corporation (NYSE:ATU) disclosed the pricing of a public offering of 2,500,000 shares of its Class A common stock at a price of $49.50 per share. The offered shares will be issued pursuant to an effective shelf registration statement. The Company has also granted the Underwriters an option to purchase up to 375,000 additional shares to cover over-allotments, if any. Wachovia Securities serves as sole book runner, JPMorgan and UBS Investment Bank serve as joint lead managers, and Robert W. Baird & Co. and Bear, Stearns & Co. Inc. serve as co-managers for this offering. The offering is conditioned upon the closing of the Company's acquisition of Key Components, Inc., the Company's amended senior credit agreement and other customary closing conditions, and is expected to close on Dec. 28, 2004. This announcement shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any offer of these securities in any State in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such state. A copy of the final prospectus supplement and prospectus relating to the offering may be obtained, when available, from: Wachovia Securities 7 St. Paul Street First Floor Baltimore, Maryland 21202 Attn: Equity Syndicate Desk These documents may also be obtained from the Securities and Exchange Commission, when available, and over the Internet at the SEC's web site at http://www.sec.gov/ Wachovia Securities is a trade name for Wachovia Capital Markets, LLC. About the Company Actuant -- http://www.actuant.com/-- 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. * * * 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). AFTON FOOD: Court Further Extends CCAA Protection Until Feb. 14 --------------------------------------------------------------- On July 16th, Afton Food Group Ltd. (TSX VENTURE:AFF) was granted protection under the Companies Creditors Arrangement Act (Canada). On December 13th, the Ontario Superior Court granted the third extension of the Company's restructuring under CCAA to Feb. 14, 2005. The Company is continuing its efforts to strengthen the franchise system and reduce operating costs. The Court previously approved the retention of Capitalink, L.C. (Capitalink) to provide investment banking services and to assist with the selection of investors that are able to aid in the sale of the business or recapitalization of the Company's balance sheet. Capitalink has circulated a confidential information memorandum on the Company. As a result of the information memorandum, several non-binding proposals have been received. The Company and Capitalink are negotiating with the interested parties to finalize a binding agreement, which will form the basis of the restructuring plan to be submitted to the Court. In compliance with Ontario Securities Commission Policy 57-603, the Company submitted a notice to the Ontario Securities Commission that it is in default of the financial statement filing requirement for the period ended June 30, 2004. The Company is also in default of the financial statement filing requirement for the period ended Sept. 30, 2004. Financial statements for the periods ended June 30 and Sept. 30, 2004, are expected to be filed at the conclusion of the CCAA process which is currently set for Feb. 14, 2005. In previous reports, Management expressed the opinion that the shares of the Company have no economic value. Management believes that Capitalink's success in identifying an investor that is able to aid in the recapitalization of the Company's balance sheet or the sale of the businesses, will not add to the economic value of these shares. Afton, through its subsidiaries, is a franchisor in the Quick Service Restaurant industry with locations throughout Canada operating under two principal brands, 241 Pizza(R) and Robin's Donuts(R). AIRCAST INTL: Moody's Assigns Low-B Ratings to $100M Loans ---------------------------------------------------------- Moody's Investors Service assigned a new rating of B3 to the second lien term loan of Aircast International Asset Acquisition Corp. All other ratings remain unchanged. The outlook remains stable. Ratings assigned: * B1 to the $5 million first lien revolving credit of Aircast * B1 to the $55 million first lien term loan * B3 to the $40 million second lien term loan * B2 senior implied for Aircast * B3 issuer rating for Aircast On November 4, 2004, Moody's had assigned a B2 rating to the second lien term loan to be put in place by Aircast as part of the financing of its acquisition by Tailwind Capital Partners. The company has since changed the financing structure of its acquisition. The original structure was: -- $ 5 million first lien revolving credit -- $50 million first lien term loan -- $30 million second lien term loan The final structure was: -- $5 million first lien revolving credit -- $55 million first lien term loan -- $40 million second lien term loan Moody's believes that this final structure still gives an asset collateral coverage of the first lien facilities that is high enough to justify a notching up of 1 from the senior implied rating. However, it also gives a weaker collateral coverage of the second lien term loan, justifying a notching down of 1 from the senior implied. With the original structure, our rating on the second lien debt was not notched down from the senior implied. Based in Summit, New Jersey, Aircast is a manufacturer and distributor of ankle braces, walkers, compression products and vascular systems. AMERICA WEST: Fitch Junks $600 Mil. Debt, Citing Limited Cash Flow ------------------------------------------------------------------ Fitch Ratings has affirmed the senior unsecured debt rating of America West Airlines, Inc. (NYSE: AWA) at 'CCC'. The Rating Outlook has been revised to Negative from Stable. The rating action applies to approximately $600 million of outstanding unsecured debt. The Rating Outlook revision follows a turn for the worse in AWA's revenue profile, as well as the difficult fuel price environment moving into 2005. America West's 'CCC' rating reflects ongoing concerns over the airline's limited cash flow generation capacity in an industry operating environment that remains difficult in light of high jet fuel prices and domestic overcapacity. After recovering somewhat in terms of relative unit revenue performance during 2003, the airline has failed to make progress in its attempts to enter traditional legacy carrier stronghold markets (e.g., transcontinental routes) this year. Moreover, revenue performance is likely to remain under pressure in 2005 as other low-cost carriers -- LCCs, such as Southwest, AirTran and JetBlue, take new aircraft deliveries and add capacity in markets served by AWA. Since the Air Transportation Stabilization Board -- ATSB -- approved a $429 million government-guaranteed loan that helped AWA avert a bankruptcy filing in January 2002, the airline has made limited headway in its effort to build operating cash flow and liquidity. Unrestricted cash and investments on hand stood at $417 million on Sept. 30, versus $517 million at year-end 2003. The poor operating outlook for the entire U.S. airline industry in 2005 provides little support for AWA's weak credit profile. Fitch believes that liquidity could be undermined significantly in 2005 if crude oil prices remain at or near $40 per barrel (translating into spot jet fuel prices of about $1.20 per gallon). While crude and jet fuel prices have fallen since November, there is little evidence to support the idea that oil prices will quickly fall to the $25-$35 per barrel range-where AWA and most other LCCs could remain profitable even in a tough fare environment. Fixed financing obligations, including scheduled debt and enhanced equipment trust certificate -- EETC -- payments, represent a significant claim on cash flow in 2005. Principal payments on the ATSB term loan total $86 million annually through 2008. AWA has also signed a new agreement with Airbus that calls for the delivery of 22 new A320 family aircraft. The timing of these commitments is a concern, particularly in light of the challenging growth outlook in 2005. AWA recently scaled back its projected 2005 available seat mile -- ASM -- growth rate to between 3% and 5%. Still, the carrier plans to take delivery of as many as 11 new Airbus aircraft next year. This will push aircraft lease commitments and off balance sheet obligations higher at a time when operating cash flow is likely to remain weak. A recovery in passenger unit revenue and some moderation in jet fuel prices remain the critical drivers of any prospective recovery in earnings and operating cash flow in 2005. AWA's forecasted average fuel price of $1.44 per gallon in the fourth quarter of 2004 is clearly unsustainable if another year of weak passenger yields unfolds next year. A 10-cent change in the price of jet fuel drives approximately $47 million in cash flow for AWA. A substantial move down in fuel prices, therefore, could lead to some stabilization of operating results next year. However, AWA's current fuel hedge portfolio--comprised of cashless collars on a portion of expected fuel exposure through much of 2005-would provide only limited protection in a prolonged $40-plus crude oil environment. Passenger revenue per ASM slipped badly in the third quarter of 2004, reflecting the impact of capacity additions by both legacy carriers and rapidly-growing LCCs in AWA markets. Passenger unit revenue fell by 9% year-over-year in the quarter, a weak showing even by industry standards. The announced pull-down of a majority of AWA's recently-launched transcontinental service indicates that AWA will be turning its attention elsewhere in the network for profitable growth opportunities in 2005. More capacity is being directed to non-hub flying in leisure markets such as California to the Mexican beach resorts. Revenue trends in connecting hub markets, however, have been very weak. Fitch believes that AWA will be hard pressed to deliver strong gains in revenue per ASM next year-contributing to the weak cash flow outlook. ANGLO AMERICAN: Creditors Must File Proofs of Claim by Jan. 31 -------------------------------------------------------------- Notice is hereby given that following approval of an Amending Scheme of Arrangement dated August 20, 2004 (the "Scheme") by the requisite majority of American Insurance Company Limited's Scheme Creditors under section 425 of the Companies Act 1985 of Great Britain, sanction by the English Court and the making of a permanent injunction order ("the Section 304 Order") under Section 304 of the United States Bankruptcy Code by the Bankruptcy Court, the provisions of the Scheme became effective on October 20, 2004 (the "Amending Scheme Effective Date"). The Bar Date for the purposes of the Scheme is 11:59 p.m. Greenwich Mean Time on January 31, 2005. Unless they have agreed the quantum of their claim with the Scheme Administrators under Part 2 of the Scheme before the Bar Date, Scheme Creditors MUST submit a Claim Form and full Supporting Information to the Scheme Administrators in accordance with Part 8 of the Scheme, so as to be received by them before the Bar Date, Scheme Creditors who do not make such a submission before the Bar Date will not be entitled to receive any payments under the Scheme in respect of Scheme Claims which are not already established at the Amending Scheme Effective Date. If you are a scheme Creditor or believe yourself to be a Scheme Creditor of Anglo and have not received a letter including a claims form notifying you of the Bar Date please contact the Scheme Administrators as soon as possible by email at angloamericaninsurance@kpmg.co.uk or in writing to: Scheme Administrators Anglo American Insurance Company Limited c/o KPMG LLP 8 Salisbury Square London, EC4Y 8BB In addition, if you are a Scheme Creditor of believe yourself to be a Scheme Creditor of Anglo and are subject to insolvency proceedings of the type referred in section 1 (1) of the Third Parties (Rights Against Insurers) Act 1930 you are required immediately to inform us the Scheme Administrators of this fact and provide a copy of the Amending Scheme documentation and Claim Form received to those of your creditors who have or might have claims against them which are insured by Anglo. By the Section 304 Order, the Scheme has full force and effect under United States law and is binding on and enforceable against all Scheme Creditors in the United States that have claims against Anglo, which claims are covered by, or afforded treatment under the Scheme. Specifically, pursuant to the Section 304 Order, Scheme Creditors are restrained from taking actions against Anglo, and parties are enjoined from relinquishing or disposing of property of Anglo, except as explicitly provided in the Scheme. You are hereby given notice of this Order, copies of which are available from http://www.angloamericaninsurance.co.uk For communication purposes, the Scheme permits the Scheme Administrators to treat those acting on behalf of Scheme Creditors in the ordinary course ("Representatives") as being fully authorized to represent the Scheme Creditors concerned. Accordingly, unless informed by the relevant Scheme Creditor in writing to the contrary, where the Scheme Administrators have previously been authorized to make payments to Representatives or others they intend to correspond with and make payments under the Scheme to those other parties. If you have any queries in connection with this Notice, please contact the Scheme Helpline or Scheme Administrators. Copies of the documents referred to above are also available from http://www.angloamericaninsurance.co.uk/anglo/ Anthony James McMahon John Mitchell Wardrop Scheme Administrators of Anglo American Insurance Company Limited APOGENT TECH: Moody's Withdraws Ratings After Fisher Acquisition ---------------------------------------------------------------- Moody's Investors Service confirmed the Ba2 rating of Apogent Technologies Inc.'s $345 million floating rate senior convertible contingent notes -- CODES -- due 2033, which have become the obligations of Fisher Scientific International, Inc. This rating action concludes the rating review initiated on March 17, 2004. Following this rating action, the rating outlook is positive. At the same time, Moody's withdrew certain other debt ratings of Apogent. The acquisition of Apogent by Fisher closed on August 2, 2004, resulting in an upgrade of Fisher's senior implied and senior unsecured debt ratings to Ba2 from Ba3 on August 5, 2004. On that date, Moody's lowered Apogent's ratings (senior convertible note rating to Ba2 from Ba1), and left the ratings under review for possible further downgrade to examine the position of Apogent's debt in the new capital structure and an evaluation of any support mechanisms related to Apogent's debt. Apogent's $345 million CODES due 2033 have become the direct obligation of Fisher by way of an exchange offer that aligned the conversion terms of Apogent's convertible debt with Fisher's currently outstanding convertible debt, and made Fisher the obligor through an unconditional guarantee. For this reason, Moody's is confirming the rating of the Apogent notes at Fisher's Ba2 rating for senior unsecured debt. Following this rating action, the rating outlook on the CODES is positive, similar to the rating outlook on Fisher's ratings. At the same time, Moody's withdrew certain other ratings of Apogent (Ba1 8% senior unsecured notes due 2011 and Ba3 senior subordinated notes due 2013) following recent tender offers in which substantially all of the outstanding notes were tendered. Ratings confirmed: * Ba2 $345 million floating rate senior convertible contingent notes -- CODES -- due 2033 Ratings withdrawn: * Ba1 8% senior unsecured notes due 2011 * Ba3 6.50% senior subordinated notes due 2013 Fisher Scientific International, Inc., based in Hampton, New Hampshire, distributes and manufacturers an array of products to the scientific research, clinical laboratory and industrial safety markets, both domestic and international. Revenues in 2003 were approximately $3.5 billion. APPLIED EXTRUSION: Young Conaway Approved as Bankruptcy Co-Counsel ------------------------------------------------------------------ The U.S. Bankruptcy Court for the District of Delaware gave Applied Extrusion Technologies, Inc. and its debtor-affiliates, permission to retain Young Conaway Stargatt & Taylor as their general bankruptcy co-counsel. The Debtors have employed Young Conaway since June 26, 2004, in connection with the planning and preparation of initial documents for its chapter 11 petition. Young Conaway will: a) provide legal advise with respect to the Debtors' powers and duties as debtors in possession in the continue operation of their business and management of their properties; b) prepare and pursue confirmation of a plan of reorganization and approval of a disclosure statement; c) prepare on behalf of the Debtors necessary applications, motions, answers, orders, reports and other legal papers; d) appear in Court to protect the interests of the Debtors; and e) perform all other legal services for the Debtors which may be necessary and proper in their bankruptcy proceedings. Pauline K. Morgan, Esq., a Partner at Young Conanway, is the lead co-counsel for the Debtors. Ms. Morgan discloses that the Firm received a $105,000 prepetition retainer. Ms. Morgan will bill the Debtors $450 per hour. Ms. Morgan reports Young Conaway's professionals bill: Professional Designation Hourly Rate ------------ ----------- ----------- Edward J. Kosmowski Attorney $335 Alfred Villoch, III Attorney 240 Thomas Hartzell Paralegal 155 Young Conaway assures the Court that it does not represent any interest adverse to the Debtors or their estates. Headquartered in New Castle, Delaware, Applied Extrusion Technologies, Inc. -- http://www.aetfilms.com/-- develops & manufactures specialized oriented polypropylene films used primarily in consumer products labeling and flexible packaging application. The Company and its debtor-affiliate filed for chapter 11 protection on Dec. 1, 2004 (Bankr. D. Del. Case No. 04-13388). Edward J. Kosmowski, Esq., and Pauline K. Morgan, Esq., at Young Conaway Stargatt & Taylor and Sheldon K. Rennie, Esq., at Fox Rothschild O'Brien & Frankel LLP represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $407,912,000 in total assets and $414,957,000 in total debts. APPLIED EXTRUSION: Combined Confirmation Hearing Set for Jan. 24 ---------------------------------------------------------------- The Honorable Mary F. Walrath of the U.S. Bankruptcy Court for the District of Delaware will convene a combined hearing at 9:30 a.m., on January 24, 2005, to consider Applied Extrusion Technologies, Inc. and its debtor-affiliates' motion to: a) approve the adequacy of the Debtors' Solicitation and Disclosure Statement; and b) approve the Solicitation Procedures and consider confirmation of the Debtors' prepackaged Plan of Reorganization. The Debtors filed their Solicitation and Disclosure Statement and prepackaged Plan of Reorganization on December 1, 2004. As reported in the Troubled Company Reporter on December 10, 2004, the Plan provides for a recapitalization of the Company by swapping $275,000,000 of existing 10-3/4% Series B Senior Notes due 2011 for a basket of new equity plus $50 million of new notes plus a cash cookie if the Senior Noteholders support the plan. Specifically, the Plan provides: (a) Noteholders holding $500,000 or more of Senior Notes will receive a ratable portion of: (1) AET new common stock, (2) new senior notes to be issued by Reorganized AET, (3) if the Class of Large Note Claims votes to accept the plan, $2.5 million in cash will be shared pro rata with the Class of Small Note Claims, upon satisfaction of certain conditions, to the existing holders of common stock of AET or returned to Reorganized AET if those conditions are not satisfied (b) Noteholders holding less than $500,000 of Senior Notes will receive: (1) an amount of cash equal to 49% of the outstanding principal amount of each small note claim, and (2) if the Class of Small Note Claims votes to accept the plan, $2.5 million in cash will be shared pro rata with the Class of Large Note Claims, upon satisfaction of certain conditions, to the existing holders of common stock of AET or returned to Reorganized AET if those conditions are not satisfied (c) All: (1) Administrative Claims (2) Priority Tax Claims (3) DIP Credit Agreement Claims (4) Other Priority Claims and (5) General Unsecured Claims will be paid in full, in cash. The Debtors cash obligations under the Plan and Reorganized AET's working capital needs will be funded by a new credit facility of up to $125 million to be provided to Reorganized AET on the effective date of the Plan. Prior to the bankruptcy petition date, the Class of Large Note Claims voted to accept the Plan. The Class of Small Note Claims voted to reject the Plan. The Debtors believe that the Plan is confirmable pursuant to Section 1129 of the Bankruptcy Code. Full text copies of the Solicitation and Disclosure Statement and the Plan is available for a fee at: http://www.researcharchives.com/download?id=040812020022 The Court set January 12, 2005, as the deadline by which all objections to the Solicitation and Disclosure Statement and the Plan must be filed and served. Headquartered in New Castle, Delaware, Applied Extrusion Technologies, Inc. -- http://www.aetfilms.com/-- develops & manufactures specialized oriented polypropylene films used primarily in consumer products labeling and flexible packaging application. The Company and its debtor-affiliate filed for chapter 11 protection on Dec. 1, 2004 (Bankr. D. Del. Case No. 04-13388). Edward J. Kosmowski, Esq., and Pauline K. Morgan, Esq., at Young Conaway Stargatt & Taylor and Sheldon K. Rennie, Esq., at Fox Rothschild O'Brien & Frankel LLP represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $407,912,000 in total assets and $414,957,000 in total debts. AQUILA INC: Terminates Batesville Merchant Power & Sale Agreements ------------------------------------------------------------------ Aquila, Inc. (NYSE:ILA) states that as part of the company's ongoing repositioning program aimed at exiting the energy merchant business, it has agreed to exit a power purchase and sale arrangement in Batesville, Mississippi, and, in a separate transaction, terminated a fourth long-term prepaid natural gas supply contract. Power Purchase and Sale Arrangement The exit from the Batesville power purchase and sale arrangement involves two agreements. Under the first, Aquila will assign its obligation to purchase power under a long-term contract from LSP Energy Partnership, owner of the Batesville facility, to South Mississippi Electric Power Association -- SMEPA. Under the second, Aquila and SMEPA will terminate a contract under which Aquila sold to SMEPA the power it purchased from LSP Energy. Essentially, these agreements will remove Aquila from the middle of an arrangement pursuant to which LSP Energy sold power to SMEPA. In consideration of this restructuring, SMEPA will pay Aquila $16.25 million, subject to certain adjustments. The agreements must receive approval from the Federal Energy Regulatory Commission -- FERC, the Kansas Corporation Commission and the U.S. Department of Agriculture's Rural Utilities Service. Termination of Long-Term Gas Contract Aquila also completed the termination of a long-term prepaid natural gas supply contract with the American Public Energy Agency -- APEA, a supplier of natural gas principally in Nebraska. Aquila has previously referred to this terminated contract as "APEA II." In connection with the termination, Aquila paid a termination fee of approximately $139 million. This amount was previously placed on deposit by Aquila for the benefit of the surety on the contract. Termination of the APEA II contract completes Aquila's previously announced plan to terminate four long-term prepaid natural gas supply contracts. Based in Kansas City, Missouri, Aquila operates electricity and natural gas distribution utilities serving customers in Colorado, Iowa, Kansas, Michigan, Minnesota, Missouri and Nebraska. The company also owns and operates power generation assets. More information is available at http://www.aquila.com. * * * On Oct 19, 2004, Standard & Poor's Ratings Services assigned its 'B-' rating to Aquila Inc.'s (B-/Negative/--) $220 million senior unsecured term loan credit facility and $110 million senior unsecured revolving credit facility. The two facilities have initial interest rates of LIBOR plus a spread of 5.75%. The outlook is negative. Kansas City, Missouri-based energy provider Aquila has about $2.7 billion of debt. A portion of the net proceeds was used toward refinancing Aquila's $430 million secured term loan due April 2006. As a result, the collateral securing the $430 million three-year term loan, including Aquila's utility assets in Colorado, Iowa, Michigan, and Nebraska, has been released. The ratings reflect the company's marginal credit measures and insufficient cash flow from operations to offset a burdensome debt level, which are not quite mitigated by management's efforts to refocus on its traditional utility business. "Although, Aquila has made significant progress toward repositioning itself as a domestic utility business, concerns remain over the company's burdensome debt level and lack of cash flow generation," said Standard & Poor's credit analyst Rajeev Sharma. "Rating stabilization is predicated on Aquila's ability to achieve further debt reduction, successful rate increases, and cost reductions," continued Mr. Sharma. ARDENT HEALTH: Soliciting Consents to Amend 10% Sr. Note Indenture ------------------------------------------------------------------ Ardent Health Services LLC'S subsidiary, Ardent Health Services, Inc., has commenced the solicitation of consents from the holders of its 10% Senior Subordinated Notes due 2013 to an amendment to the financial reporting covenant contained in the indenture governing the Notes. The amendment would provide that Ardent is not required to comply with the covenant until May 2, 2005. Ardent Health Services, Inc., is also seeking a waiver of all existing defaults under the indenture with respect to the financial reporting covenant. The consent solicitation is scheduled to expire at 5:00 p.m., EST, on Dec. 31, 2004, unless extended. Holders of Notes who deliver their consent on or prior to 5:00 p.m., EST, on Dec. 31, 2004, will, subject to the satisfaction of certain conditions, receive a consent payment of $5.00 per $1,000 principal amount of Notes validly consented. The completion of the consent solicitation is conditioned upon the satisfaction of certain conditions, including that consents representing a majority in principal amount of the notes must be received and a supplemental indenture for the notes must be executed. A more complete description of the consent solicitation and its conditions can be found in the consent solicitation statement to be distributed to Noteholders. As previously disclosed, the Audit Committee of Ardent's Board of Directors is conducting an independent review of accounting practices at Lovelace Sandia Health System, Inc., in Albuquerque, New Mexico. The Audit Committee is conducting the independent review with the assistance of the independent law firm of King & Spalding and the independent accounting firm of Deloitte & Touche. Because of the independent review, Ardent did not file its Form 10-Q for the third quarter of 2004 with the SEC by the Nov. 15, 2004 filing deadline. On Nov. 30, 2004, Ardent announced that due to the initial results of the independent review, the Audit Committee had concluded that Ardent will restate its financial results for the year ended Dec. 31, 2003, and for the first and second quarters of 2004. At that time, Ardent disclosed that it expected to file with the SEC the delayed Form 10-Q and certain restated financial statements for fiscal year 2003 and the first and second quarters of 2004 by the end of the first quarter of 2005. Since the November 30 announcement, Ardent and its independent auditors, Ernst & Young, have determined that additional time will be required to complete the historical and current financial statements . Ardent now expects that the third quarter Form 10-Q and the restated financial statements will be filed with the SEC by May 2, 2005. Accordingly, through the consent solicitation, Ardent Health Services, Inc. is seeking an extension for compliance with the financial reporting covenant in the indenture to May 2, 2005. Ardent intends to provide to holders of the notes preliminary unaudited financial information relating to its results of operations for the 2004 fiscal year by February 15, 2005. If the proposed amendment to the financial reporting covenant is approved and the existing defaults are waived by the Noteholders, Ardent may enter into certain previously-announced divestitures. At the time of the initial disclosure of the independent review, the company had contacted, among others, the SEC to inform them of the Audit Committee's actions. As anticipated, the SEC has requested that we voluntarily send to them information concerning issues identified in the review. The company intends to cooperate fully with this request for information. Ardent is also in discussions with its senior bank lenders regarding a proposed amendment to its senior secured credit agreement which would, among other things, extend the deadline for the delivery of its financial statements for the third quarter of 2004 and the 2004 fiscal year to May 2, 2005. Ardent has retained Citigroup Global Markets Inc. and Banc of America Securities LLC to serve as the solicitation agents and Global Bondholder Services Corporation to serve as the information agent and tabulation agent for the consent solicitation. Requests for documents may be directed to: Global Bondholder Services Corporation 65 Broadway, Suite 704 New York, NY 10006. Telephone (800) 470-3800 (U.S. toll-free) or (212) 430-3774 Questions regarding the consent solicitation may be directed to either: Citigroup Global Markets Inc. Telephone: (800) 558-3745 (U.S. toll-free) or (212) 723-6106 (collect) Attention: Liability Management Group - or - Banc of America Securities LLC Telephone (888) 292-0070 (U.S. toll-free) or (704) 388-9217 (collect) Attention: High Yield Special Products This announcement is not an offer to purchase or sell, a solicitation of an offer to purchase or sell or a solicitation of consents with respect to any securities. The solicitation is being made solely pursuant to Ardent Health Services Inc.'s consent solicitation statement dated December 20, 2004 and the related consent form. About the Company Ardent Health Services is a provider of health care services to communities throughout the United States. Ardent currently operates 35 hospitals in 14 states, providing a full range of medical/surgical, psychiatric and substance abuse services to patients ranging from children to adults. * * * As reported in the Troubled Company Reporter on Dec. 07, 2004, Standard & Poor's Ratings Services placed its single-B ratings on Ardent Health Services, Inc., on CreditWatch with negative implications. The CreditWatch listing reflects our increasing concerns about the hospital chain's ability to control its operations in a period of rapid growth and manage its tightened liquidity. Ardent's growth is illustrated by its ballooning revenues, which have increased by about 70% since 2003, taking into account its recent acquisition of Hillcrest HealthCare System. Ardent announced that it will lower its earnings in a financial restatement for 2003 and for the first two quarters of 2004. The restatement stems from accounting adjustments at its largest subsidiary, Lovelace Sandia Health System, and will result in an annualized reduction in earnings of about $20 million. The company will not release any financial statements until the end of the first quarter in 2005. Ardent is in the process of changing its financial accounting procedures to address these issues. Meanwhile, liquidity is tighter because Ardent has agreed with its banks not to draw on the revolving credit facility. "We are furthermore concerned about the potential for additional financial adjustments due to information technology issues," said Standard & Poor's credit analyst David Peknay. "The announcement of a $26 million impairment charge relating to the consolidation of information systems could indicate greater acquisition integration challenges than originally anticipated." Standard & Poor's expects to review management's efforts to better control its activities and handle its funding needs through the possible near-term sale of its Samaritan Hospital and through bank borrowing negotiations. BEAR STEARNS: Fitch Downgrades Class B-5 Series 1997-4 to 'B-' -------------------------------------------------------------- Fitch has taken rating actions on Bear Stearns Mortgage Securities Issues: Series 1996-6: -- Class A affirmed at 'AAA'; -- Class B-1 affirmed at 'AAA'; -- Class B-2 upgraded to 'AA' from 'A+' ; -- Class B-3 upgraded to 'BBB+' from 'BBB'. Series 1997-4: -- Class A affirmed at 'AAA'; -- Class B-1 affirmed at 'AAA'; -- Class B-2 affirmed at 'AA'; -- Class B-3 affirmed at 'BBB'; -- Class B-4 affirmed at 'BB'; -- Class B-5 downgraded to 'B-' from 'B'. The affirmations, affecting $37,880,374 of outstanding certificates, reflect asset performance and credit enhancement -- CE -- levels generally consistent with expectations. The upgrades, affecting $6,864,844 of outstanding certificates, are due to high levels of CE relative to future loss expectations. The downgrade, affecting $459,473 of outstanding certificates, is a result of low CE with respect to future loss expectations. The current CE for all classes from series 1997-4 has increased from their original levels: * class A benefits from 15.72% of CE (originally 7.00%), * class B-1 benefits from 9.25 (originally 4.25%), * class B-2 benefits from 5.72% (originally 2.75%), * class B-3 benefits from 3.95% (originally 2%), and * class B-4 benefits from 1.95% (originally 1.15%). The CE level for class B-5 has also increased, but only slightly from its' original level. Class B-5 benefits from 0.64% CE (originally .60%). As of the November distribution date, 4.21% of the loans are delinquent and 2.58% of the loans are in foreclosure, bankruptcy, or have been delinquent for 90+ days. Cumulative losses total 30%, and 74% of the collateral has paid down. The collateral consists of traditional and hybrid adjustable rate mortgages extended to prime borrowers. The current CE levels for all classes from series 1996-6 have increased substantially from their original levels: * class A benefits from 92.95% (originally 20.75%), * class B-1 benefits from 73.08 (originally 17%), * class B-2 benefits from 42.61% (originally 11.25%), * class B-3 benefits from 18.66% (originally 6.75%). The pool factor (current principal balance as a percentage of original) is 10%. The collateral consists of 25- to 30-year, fully amortizing, fixed rate loans secured by first liens on residential properties. All the mortgage loans were acquired by EMC (servicer) from a portion of the FHA National Single Family Loan Sale No. 1, from the United States Department of Housing and Urban Development. Further information regarding current delinquency, loss and credit enhancement statistics is available on the Fitch Ratings web site at http://www.fitchratings.com/ BEAR STEARNS: Fitch Upgrades Class B-5 Series 2000-2 to 'BB+' ------------------------------------------------------------- Fitch has taken rating actions on Bear Stearns ARM Trust Issue: Series 2000-2: -- Class A affirmed at 'AAA'; -- Class B-1 upgraded to 'AAA' from 'AA+'; -- Class B-2 upgraded to 'AA+' from 'AA-'; -- Class B-3 upgraded to 'A+' from 'A-'; -- Class B-4 upgraded to 'BBB+' from 'BBB-'; -- Class B-5 upgraded to 'BB+' from 'BB'. The affirmation, affecting $47,350,694 of outstanding certificates, reflect asset performance and credit enhancement -- CE -- levels generally consistent with expectations. The upgrades, affecting $3,043,133 of outstanding certificates, are due to strong collateral performance and high levels of CE relative to future loss expectations. The current CE for all classes is at least two times original levels: * class A benefits from 6.99% of CE (originally 2.75%), * class B-1 benefits from 5.09 (originally 2%), * class B-2 benefits from 4.07% (originally 1.60%), * class B-3 benefits from 3.05% (originally 1.20%), * class B-4 benefits from 1.78% (originally 0.70%), and * class B-5 benefits from 1.02% (originally 0.40%). As of the November distribution date 79% of the collateral has paid down, there are no loans delinquent, and cumulative losses are zero. The collateral consists of fully amortizing COFI adjustable rate, first lien, one- to four-family residential mortgage loans. Further information regarding current delinquency, loss and credit enhancement statistics is available on the Fitch Ratings web site at http://www.fitchratings.com/ BERTUCCI'S CORP: Very Poor Liquidity Spurs S&P to Junk Rating ------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on Bertucci's Corp. The corporate credit rating was lowered to 'CCC+' from 'B-'. The outlook is negative. "The downgrade is based on the company's very poor liquidity position, high leverage, and thin cash flow protection measures," explained Standard & Poor's credit analyst Robert Lichtenstein. "Bertucci's only had $6.2 million of cash available as of Sept. 30, 2004, and is operating without a credit facility, leaving the company vulnerable to competition in the restaurant industry, as well as rising costs." The ratings reflect Bertucci's participation in the highly competitive casual dining sector of the restaurant industry, its regional concentration, a highly leveraged capital structure, and very limited liquidity. Northborough, Massachusetts-based Bertucci's, with $200 million in annual revenues, is a very small player in the competitive casual dining sector. The chain is easily dwarfed by larger players, including Chili's, Olive Garden, and Red Lobster. Moreover, the company is regionally concentrated in the Northeastern U.S., leaving it vulnerable to a decline in the region's economy. Bertucci's has had some difficulties achieving operating efficiencies in the past. Operating performance in the first nine months of 2004 was negatively affected by higher costs. Comparable-store sales increased 1.9%; however, dine-in guest counts decreased by 4.3%. Moreover, operating margins for the 12 months ended Sept. 30, 2004, fell to 15.5% from 16.5%, primarily due to higher food costs. The company is very highly leveraged, with total debt to EBITDA at 7.0x for the 12 months ended Sept. 30, 2004. Moreover, cash flow protection measures are thin, with EBITDA covering interest only 1.3x. Ratios are highly variable because of the company's small EBITDA base of $17 million. BOWNE & CO: Moody's Reviewing Low-B & Junk Ratings & May Upgrade ---------------------------------------------------------------- Moody's Investors Services has placed all ratings for Bowne & Co., Inc. on review for possible upgrade. The ratings affected include Bowne & Company Inc.'s: * $75 million Convertible Subordinated Debentures due 2033 -- Caa1 * Senior Implied Rating -- B1 * Issuer Rating -- B2 This action follows the company's announcement that it has entered into an agreement to sell Bowne Business Solutions, Inc., (but not its litigation services business) to Williams Lea Group Limited for a cash consideration of $180 million. The review will focus upon the likelihood that this transaction will close according to the terms of the agreement, the degree to which debt will be permanently reduced from the proceeds of the sale, and the impact that any such debt reduction will have on the company's financial profile. In addition the review will assess recent improvements in the company's operating performance, the sustainability of the recent rebound in the financial services print sector and the possibility that the liquidity resulting from the sale might be used to for acquisition activity and/or stock repurchases. Neither Bowne's existing $115 million senior unsecured credit facility nor its $60 million privately placed senior unsecured notes are rated by Moody's. Bowne & Co., a global provider of document management solutions, is headquartered in New York City. It recorded sales of approximately $1 billion in 2003. BREUNERS HOME: Has Until Mar. 31 & Apr. 22 to Make Lease Decisions ------------------------------------------------------------------ The Honorable Peter J. Walsh of the U.S. Bankruptcy Court for the District of Delaware extended, until March 31 and April 22, 2005, the periods within which Breuners Home Furnishings Corp. and its debtor-affiliates can elect to assume, assume and assign, or reject for their two groups of unexpired nonresidential real property leases. The Court's March 31 lease decision period applies to the Debtors' group of leases referred to as the KLA Leases, consisting of 14 unexpired nonresidential leases. The April 22 deadline relates to the a group of leases referred to as the Cheyenne Leases, consisting of four unexpired nonresidential leases. Both groups of unexpired nonresidential leases are subject to Designation Rights Agreements, where the leases are packaged into designation rights bids and designation rights back-up bids. Under the Agreement, the successful designation rights purchaser or back-up purchaser conditioned its offer to purchase the rights of the leases on the Debtors' obtaining a Court order to extend the lease decision period for the leases. The Debtors conducted an auction for their interests in the leases on October 7, 2004. The highest bidders to emerge from the auction for the two groups of leases are KLA/Breuners LLC and Cheyenne LLC. Both KLA and Cheyenne conditioned their bids on the Debtors' motion for a Court order to extend the time to assume or reject the leases because they were unwilling to purchase the designation rights under the leases unless the Debtors obtained an order. The Debtors assure the Court that they are current on all the postpetition obligations under the KLA Leases and Cheyenne Leases and the extension will not prejudice any parties in interest under the leases. Headquartered in Lancaster, Pennsylvania, Breuners Home Furnishings Corp. -- http://www.bhfc.com/-- is one of the largest national furniture retailers focused on the middle the upper-end segment of the market. The Company, along with its debtor- affiliates, filed for chapter 11 protection on July 14, 2004 (Bankr. Del. Case No. 04-12030). Great American Group, Gordon Brothers, Hilco Merchant Resources, and Zimmer-Hester were brought on board within the first 30 days of the bankruptcy filing to conduct Going-Out-of- Business sales at the furniture retailer's 47 stores. Bruce Grohsgal, Esq., and Laura Davis Jones, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, represent the Debtors in their restructuring efforts. The Company reported more than $100 million in estimated assets and debts when it sought protection from its creditors. CALLIDUS DEBT: Moody's Puts Ba2 Rating on $8.5M Class E Notes ------------------------------------------------------------- Moody's Investors Service assigned ratings to nine Classes of Notes issued by Callidus Debt Partners CLO Fund III, Ltd. Moody's assigned these ratings to the Notes issued: * Aaa to the U.S. $50,000,000 Class A-1 Revolving Senior Secured Floating Rate Notes, * Aaa to the U.S. $212,000,000 Class A-2 Senior Secured Floating Rate Notes, * Aaa to the U.S. $32,000,000 Class A-3 Senior Secured Floating Rate Notes, * Aaa to the U.S. $8,000,000 Class A-4 Senior Secured Floating Rate Notes, * Aa2 to the U.S. $16,000,000 Class B Senior Secured Floating Rate Notes, * A2 to the U.S. $22,000,000 Class C Senior Secured Deferrable Floating Rate Notes, * Baa2 to the U.S. $17,000,000 Class D Senior Secured Deferrable Floating Rate Notes, and * Ba2 to the U.S. $8,500,000 Class E Senior Secured Deferrable Floating Rate Notes. Proceeds from the issuance will be used to purchase a diversified pool of performing, principally US dollar-denominated loans. The deal is brought to market by JPMorgan Securities. CANADA MORTGAGE: Moody's Puts Low-B Ratings on Class E & F Certs. ----------------------------------------------------------------- Moody's Investors Service has assigned definitive ratings to the Mortgage Pass-Through Certificates, Series 2004-C2 issued by Canada Mortgage Acceptance Corporation. The rating actions were: -- CAD272,412,000 Class A Certificates, Aaa -- CAD10,773,000 Class B Certificates, Aa2 -- CAD8,465,000 Class C Certificates, A2 -- CAD6,156,000 Class D Certificates, Baa2 -- CAD3,848,000 Class E Certificates, Ba2 -- CAD1,385,000 Class F Certificates, B2 -- CAD307,811,231* Class IO Certificates, Aaa * Initial notional amount The ratings on the Certificates are based on the quality of the underlying collateral -- a pool of residential mortgages located in Canada. The ratings on the Certificates are also based on the credit enhancement furnished by the subordinate tranches and on the structural and legal integrity of the transaction. Mortgage loans originated under criteria similar to those used for the Mortgage Pool are commonly referred to as "Alternative A" -- Alt-A -- and "subprime" mortgages. Alt-A mortgages, which make up the vast majority of the pool, are generally underwritten with broader underwriting criteria than those applied in originating "A" mortgages (for example, CMHC insured mortgages in Canada), but with more restrictive underwriting criteria than those applied in originating subprime mortgages. The subprime mortgages are targeted towards borrowers with historically troubled credit and those with re-established credit following a bankruptcy. The mortgages in the pool were originated by GMAC Residential Funding of Canada -- RFOC, a wholly owned entity of Residential Funding Corporation, one of the largest residential mortgage originators in the U.S.A. Residential Funding Corporation -- RFC -- will act as servicer of the portfolio of mortgages. As of September 30, 2004, RFC was responsible for servicing residential mortgage loans in the U.S. totaling approximately U.S.$98.3 billion. While RFC is ultimately responsible for servicing, it will rely on the services of MCAP Service Corporation as Sub-Servicer to service the Mortgage Loans. As of December 31, 2003, MCAP was responsible for servicing residential mortgage assets for various customers, including RFOC, with an aggregate outstanding principal balance of approximately $12.9 billion. The Mortgage Pool consisted of 1,935 fixed rate mortgage loans that amounted to an aggregate balance of $307,811,231. Each mortgage constitutes a first lien on a one to four family residential property located in Canada and are partially- amortizing, first mortgage loans with original terms to maturity ranging from 24 to 61 months in length. The pool's strengths included the relatively strong weighted average credit score of 695, the geographical diversity of the portfolio and the creditor friendly legal environment in Canada. Moody's concerns included the limited number of participants in the Alt A and subprime mortgage markets in Canada, which may increase the risk of refinancing the mortgages at their maturity dates. This concern has been reflected in the ratings assigned to the Certificates. The beginning loan-to-value ratio of the mortgage portfolio was 84.66% on a weighted average basis. CASTLE HARBOR: Fitch Assigns 'BB-' on $3 Million Notes ------------------------------------------------------ Castle Harbor II CLO, Ltd. (the issuer) will issue up to $60 million notes rated by Fitch Ratings: -- Class A $21,000,000 notes 'A'; -- Class B1 $26,000,000 notes 'BBB'; -- Class B2 $10,000,000 notes 'BBB'; -- Class C $3,000,000 notes 'BB-'; -- Combination notes $8,350,000 'BBB'. The rating of the class A, B1, and B2 notes addresses the likelihood that investors will receive full and timely payments of interest and ultimate receipt of principal by the scheduled maturity date. The rating of the class C and combination notes addresses the return of principal by the final maturity date. The rating does not address the likelihood of repayment of principal prior to the stated maturity date. The ratings are based upon the structure of the issuer, the financial strength of Bank of America, N.A. (rated 'F1+/AA-' by Fitch), as the swap provider, and the investment manager capabilities of Deerfield Capital Management, LLC., as the portfolio manager. Castle Harbor II CLO, Ltd., is a synthetic collateralized loan obligation -- CLO -- that provides investors with leveraged exposure to a diversified portfolio of high yield loans. Proceeds from the notes' issuance will also be invested in a diversified portfolio of high yield loans. The trust will enter into a total return swap with Bank of America, N.A., permitting the issuer to participate indirectly, on a leveraged basis, in the total return on a portfolio of leveraged bank loans of up to $360 million in notional amount with a weighted average rating of 'B+/B'. Fitch will monitor this transaction. Deal information on Castle Harbor II CLO, Ltd., is available on the Fitch Ratings web site at http://www.fitchratings.com/ CATHOLIC: Spokane Wants to Continue Using Cash Management System ---------------------------------------------------------------- The Diocese of Spokane seeks authority from the U.S. Bankruptcy Court for the Eastern District of Washington to continue using its existing cash management system. Michael J. Paukert, Esq., at Paine, Hamblen, Coffin, Brooke & Miller, LLP, in Spokane, Washington, explains that Spokane's cash flow, tracking and reconciliation practices permit the Diocese to control and account for its funds, and ensure that funds will be readily available as needed. Keeping those practices in place, Mr. Paukert points out, will save the Diocese and its estate the cost in time and money. As of the Petition Date, the Diocese of Spokane maintained four bank accounts at U.S. Bank, N.A.: 1. operating checking account, 2. savings account, 3. Automated Clearing House account, and 4. impressed pension account By limiting the number of its bank accounts to the minimum necessary to carry out its functions, Spokane has reduced the complexity of its cash management system and the accompanying risk of error and loss. Collections and Deposits Spokane receives funds from a variety of sources, including its own operations, fund raising campaigns like The Annual Catholic Appeal, billings to the Parishes and other organizations, and voluntary deposits by the Parishes. In addition, Spokane serves as the payee and custodian for national collections that are taken in the Parishes for restricted purposes like the U.S. Catholic Mission Collection and other like programs to which Parishes and parishioners donate. Mr. Paukert relates that it is more expedient for those organizations to receive one check from Spokane than it is to receive a number of checks. Therefore, it is part of Spokane's responsibility to receive checks from each Parish and transmit the funds to the national organizations benefiting from the collections. Spokane might also receive other funds from: -- third parties like the Parishes that are for a restricted purpose like support for seminarians; and -- participants in its employee pension plan, in which employees of the Diocese, Parishes and other associated organizations participate. These funds are deposited into the Pension Account. All receipts and amounts remitted are deposited by Spokane into one of the Existing Accounts and accounted for in the Diocese's books and records. Funds are then disbursed either directly to the organization that is the ultimate beneficiary or payee, or administered in accordance with a Deposit and Loan Fund Policy, or are temporarily invested in the Spokane Catholic Investment Trust until the funds are requested by the beneficiary. Funds reach Spokane primarily in the form of checks from each Parish. Cash and checks received are deposited into the Operating Account. Direct deposit funds are deposited into the ACH Account and transferred to the Operating Account. From the Operating Account, checks are issued for the benefit of the recipient for whom the funds were received by Spokane. Periodically, funds are transferred out of the Operating Account into the SCIT. Funds deposited in the SCIT are held and professionally managed in accordance with the "Spokane Catholic Investment Trust Investment Policy." Disbursements Spokane makes all disbursements to third parties from the Operating Account. For instance, Spokane maintains a Diocese-wide blanket insurance program under which the Diocese, the Parishes and certain other entities associated with the Diocese are insured under the same policy. The insurance program for the Diocese is a combined program which includes property and liability insurance. Within this program the Diocese is self-funded for the first $2,500 of property and liability claims and 100% self-insured for auto physical damage. To provide the funds for the self-insured portion, all Insured Entities are assessed a fee which is deposited into the Operating Account and accounted for under the Deposit and Loan Fund Policy. As claims are adjusted, funds are requested from the pool to cover claims up to the first $2,500 -- after the Insured Entity pays a primary deductible of $250. Mr. Paukert says it is important to Spokane and the entities served by the insurance pool that the normal functioning of this self-insurance fund be allowed to continue without interruption. Similarly, Spokane administers a medical and dental insurance program and a retirement program. Spokane pays the medical and dental insurance premiums for the Insured Entities out of the Operating Account, on the 1st of each month. In turn, all but the amounts relative to the Diocesan administrative employees are invoiced to the Insured Entities. Spokane acts as a clearing house for the medical and dental billings and payments. This ensures lower administrative costs. Also, Spokane's employees receive and process all retirement contributions through the Pension Account at the request of the Retirement Plan provider. This also keeps administrative costs low. It is critical that these functions continue without interruption to ensure uninterrupted employee eligibility. Spokane pays its employee-related obligations out of the Operating Account. Spokane pays its employees through its payroll service provider, Catholic Charities of the Diocese of Spokane, a Washington non-profit corporation. At the end of each month Spokane transfers funds in an amount equal to its accrued payroll liability from the Operating Account into the CCDS Payroll Account. After that, CCDS issues payroll checks to and executes automatic payroll deposits for employees of the Diocese. Deposit and Loan Fund Among the other services Spokane provides to the Parishes, Mr. Paukert says one in particular is critical: the Diocese acts as a "savings and loan" for the Parishes in accordance with the Deposit and Loan Fund Policy. The purpose of the Deposit and Loan Fund is to provide a savings account for the benefit of, and loans to, the Parishes. It has been Spokane's long-standing policy that Parishes and institutions of the Diocese deposit excess funds like ordinary savings, large gifts and amounts from estates, building fund proceeds, collections, with the Diocese. Pursuant to the Deposit and Loan Fund Policy, the Parish deposits, which currently yield 1.5% interest, are then used to provide loans to the Parishes. As unincorporated associations, the Parishes do not generally have access to commercial credit rates as favorable as corporate borrowers. Therefore, some of the Parishes have loans from the Deposit and Loan Fund at rates that are competitive with commercial rates. Small loans from the Deposit and Loan Fund, those under $30,000, are reviewed and approved by the Deposit and Loan Fund Committee. Larger loans, those over $30,000, require review and recommendation by the Bishop's Finance Council and approval by the Bishop. To qualify for a large loan, a Parish must have a specific amount of money on deposit in the Deposit and Loan Fund. For instance, for a loan: -- between $30,000 and $90,000, the Parish must have at least 20% of the requested loan amount on deposit; -- between $100,000 and $199,000, the Parish must have 40% of the requested loan amount on deposit; -- between $200,000 and $299,000, the percentage is increased to 60%; and -- of $300,000 or more, the percentage is 75% of the requested loan amount. In addition to the deposit requirements, six other factors are considered by the Bishop and his Finance Council, including: (1) The needs of the local Parish community; (2) The historic ability of the Parish to service its debt; (3) The strength of the Parish Council and Parish Finance Council; (4) The completeness of any construction plans, drawings and cost estimates from three contractors; (5) The Parish's ability and consistency in meeting its goals for the Annual Catholic Appeal, World and U.S. Missions Collections and other fundraising efforts; and (6) The ability of parishioners to step forward and help the Parish meets its financial needs. All loans are evidenced by a Promissory Note signed by the Parish priest. Small loans usually have a repayment term of five years or less. Large loans may have repayment terms up to 20 years. Currently, the interest rate on loans made from the Deposit and Loan Fund is 5.5% per annum. All deposits, withdrawals, loans and payments through the Deposit and Loan Fund are strictly accounted for. The Deposit and Loan Fund is audited annually by an independent financial auditor. The Archdiocese of Portland in Oregon filed for chapter 11 protection (Bankr. Ore. Case No. 04-37154) on July 6, 2004. Thomas W. Stilley, Esq., and William N. Stiles, Esq., at Sussman Shank LLP, represent the Portland Archdiocese in its restructuring efforts. In its Schedules of Assets and Liabilities filed with the Court on July 30, 2004, the Portland Archdiocese reports $19,251,558 in assets and $373,015,566 in liabilities. The Roman Catholic Church of the Diocese of Tucson filed for chapter 11 protection (Bankr. D. Ariz. Case No. 04-04721) on September 20, 2004, and delivered a plan of reorganization to the Court on the same day. Susan G. Boswell, Esq., and Kasey C. Nye, Esq., at Quarles & Brady Streich Lang LLP, represent the Tucson Diocese. The Roman Catholic Church of the Diocese of Spokane filed for chapter 11 protection (Bankr. E.D. Wash. Case No. 04-08822) on Dec. 6, 2004. Michael J. Paukert, Esq., at Paine, Hamblen, Coffin, Brooke & Miller, LLP, represents the Spokane Archdiocese in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $11,162,938 in total assets and $81,364,055 in total debts. (Catholic Church Bankruptcy News, Issue No. 13; Bankruptcy Creditors' Service, Inc., 215/945-7000) CATHOLIC CHURCH: Spokane Wants to Maintain Existing Bank Accounts ----------------------------------------------------------------- The Office of the United States Trustee generally requires debtors-in-possession to close all prepetition bank accounts and open new "debtor-in-possession" bank accounts. In addition, the U.S. Trustee often requires debtors-in-possession to maintain separate accounts for cash collateral and for taxes. Michael J. Paukert, Esq., at Paine, Hamblen, Coffin, Brooke & Miller, LLP, in Spokane, Washington, however, notes that courts have long recognized that the strict enforcement of bank account closing requirements does not serve the rehabilitative purposes of Chapter 11. Courts often waive these requirements, recognizing that they are often impractical in those cases. The Spokane Diocese believes that all parties-in-interest, including employees, trade vendors, and most important, the parishioners of the thirteen counties within the Diocese of Spokane, will be best served by preserving operational continuity and avoiding the disruption and delay to payroll and to the Diocese's financial activities that would necessarily result from closing the Diocese's existing bank accounts and the opening of new accounts. The Diocese, therefore, asks Judge Williams for authority to maintain and continue to use its Existing Accounts in the names and with the account numbers existing immediately before the Petition Date. Spokane reserves the right, however, to close certain of the Existing Accounts and open new DIP accounts as may be necessary to facilitate it's Reorganization Case and operations, on notice to the U.S. Trustee. The Diocese also seeks permission to deposit funds in and withdraw funds from any accounts by all usual means, including, but not limited to items like checks, wire transfers, automated clearinghouse transfers, electronic funds transfers and other debits, and to treat the Existing Accounts for all purposes as DIP accounts. Spokane has endeavored to ensure that no checks in payment of prepetition obligations remained outstanding as of the Petition Date. To further ensure against the payment of prepetition debts -- except for prepetition debts that the Court specifically authorizes to be paid -- Mr. Paukert says Spokane will stop payment on any checks for prepetition obligations that are outstanding as of the Petition Date and will begin issuing new checks postpetition with a significant gap in the numbering sequence, so as to make it easier to distinguish between prepetition and postpetition checks. Spokane also wants U.S. Bank, where the Diocese maintains its Accounts, directed to accept and honor all representations or instructions from the Diocese as to which checks, drafts, wire transfers, or other transfers should be honored or dishonored. The Archdiocese of Portland in Oregon filed for chapter 11 protection (Bankr. Ore. Case No. 04-37154) on July 6, 2004. Thomas W. Stilley, Esq., and William N. Stiles, Esq., at Sussman Shank LLP, represent the Portland Archdiocese in its restructuring efforts. In its Schedules of Assets and Liabilities filed with the Court on July 30, 2004, the Portland Archdiocese reports $19,251,558 in assets and $373,015,566 in liabilities. The Roman Catholic Church of the Diocese of Tucson filed for chapter 11 protection (Bankr. D. Ariz. Case No. 04-04721) on September 20, 2004, and delivered a plan of reorganization to the Court on the same day. Susan G. Boswell, Esq., and Kasey C. Nye, Esq., at Quarles & Brady Streich Lang LLP, represent the Tucson Diocese. The Roman Catholic Church of the Diocese of Spokane filed for chapter 11 protection (Bankr. E.D. Wash. Case No. 04-08822) on Dec. 6, 2004. Michael J. Paukert, Esq., at Paine, Hamblen, Coffin, Brooke & Miller, LLP, represents the Spokane Archdiocese in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $11,162,938 in total assets and $81,364,055 in total debts. (Catholic Church Bankruptcy News, Issue No. 13; Bankruptcy Creditors' Service, Inc., 215/945-7000) CITICORP MORTGAGE: Fitch Puts Low-B Ratings on Two $859,018 Certs. ------------------------------------------------------------------ Citicorp Mortgage Securities, Inc.'s -- CMSI -- REMIC pass-through certificates, series 2004-9, are rated by Fitch: -- $558.1 million class IA-1 through IA-10, IA-PO, IIA-1 and IIA-PO 'AAA'; -- $6.9 million class B-1 'AA'; -- $2.9 million class B-2 'A'; -- $2.0 million class B-3 'BBB'; -- $859,018 class B-4 'BB'; -- $859,018 class B-5 'B'. The 'AAA' rating on the senior certificates reflects the 2.55% subordination provided by: * the 1.20% Class B-1, * the 0.50% Class B-2, * the 0.35% Class B-3, * the 0.15% privately offered Class B-4, * the 0.15% privately offered Class B-5, and * the 0.20% privately offered Class B-6. In addition, the ratings reflect the quality of the mortgage collateral, strength of the legal and financial structures, and CitiMortgage, Inc.'s servicing capabilities as primary servicer, rated 'RPS1' by Fitch. The mortgage loans have been divided into two pools of mortgage loans. Pool I, with an unpaid aggregate principal balance of $472,766,861, consists of 925 recently originated, 20-30-year fixed-rate mortgage loans secured by one- to four-family residential properties located primarily in California (29.87%) and New York (24.37%). The weighted average current loan to value -- CLTV -- ratio of the mortgage loans is 68.34%. Condo properties account for 4.96% of the total pool and co-ops account for 8.45%. Cash-out refinance loans represent 15.14% of the pool and there are no investor properties. The average balance of the mortgage loans in the pool is approximately $511,099. The weighted average coupon -- WAC -- of the loans is 6.044% and the weighted average remaining term -- WAM -- is 357 months. Pool II, with an unpaid aggregate principal balance of $99,911,850, consists of 185 recently originated, 15-year fixed- rate mortgage loans secured by one- to four-family residential properties located primarily in California (29.75%) and New York (15.69%). The weighted average CLTV of the mortgage loans is 58.62%. Condo properties account for 5.41% of the total pool and co-ops account for 5.15%. Cash-out refinance loans represent 19.46% of the pool and investor properties represent 0.85% of the pool. The average balance of the mortgage loans in the pool is approximately $540,064. The WAC of the loans is 5.483% and the WAM is 178 months. None of the mortgage loans are 'high cost' loans as defined under any local, state or federal laws. For additional information on Fitch's rating criteria regarding predatory lending legislation, please see the press release issued May 1, 2003, entitled 'Fitch Revises Rating Criteria in Wake of Predatory Lending Legislation,' available on the Fitch Ratings web site at http://www.fitchratings.com/ The mortgage loans were originated or acquired by CMI and in turn sold to CMSI. A special purpose corporation, CMSI, deposited the loans into the trust, which then issued the certificates. U.S. Bank National Association will serve as trustee. For federal income tax purposes, an election will be made to treat the trust fund as one or more real estate mortgage investment conduits. COMM 2000-C1: S&P Junks Certificate Classes M & N ------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on classes B and C of COMM 2000-C1 Mortgage Trust's commercial mortgage pass- through certificates. At the same time, all other outstanding ratings from this transaction are affirmed. The raised and affirmed ratings reflect credit enhancement levels that provide adequate support through various stress scenarios. As of December 2004, the trust collateral consisted of 109 commercial mortgages with an outstanding balance of $816.7 million, down 9% since issuance. There have been three realized losses totaling $6.05 million (0.67% of initial pool balance) to date. The master servicer, ORIX Real Estate Capital Markets LLC -- ORIX, reported full year 2003 or partial year 2004 net cash flow -- NCF -- debt service coverage ratios (DSCRs) for 92.8% of the pool. Three loans (0.70%) have been defeased and one loan (1.5%) is a credit tenant lease loan -- CTL. Based on this information and excluding defeasance and the CTL, Standard & Poor's calculated a pool DSCR of 1.33x, down from 1.49x at issuance. The current weighted average DSCR for the top 10 loans, which comprise 42.75% of the pool, declined to 1.33x from 1.69x at issuance. Only three of the top 10 loans have improved DSCRs since issuance. The largest loan in the pool, the Crowne Plaza- Manhattan, experienced a 50% decrease in DSCR since issuance. However, operating results have improved this year, with an average daily rate -- ADR -- of $174.22 and occupancy of 90% through Sept. 30. The fourth quarter is expected to continue the improving trend and post superior results compared to 2003. There are six loans with a current combined balance of $28.44 million, or 3.48% of the pool, that are specially serviced by Allied Capital Corp., the special servicer for the transaction. Two of these loans are 90-plus days delinquent and in foreclosure, one is REO, and three are either current or within 60 days. There are no other delinquent loans in the pool. Significant loans are discussed below: -- The largest loan in special servicing is Eastgate Station with a balance of $8.8 million (1.08%, $57 per sq. ft.). The loan is current but just newly transferred to special servicing. The borrower indicated that a tenant, Rhodes Furniture, with 27% of net rentable area, has declared bankruptcy and will be leaving the center. The borrower wants to work with the special servicer to re-lease the space, but needs some sort of interim relief to do so. It is secured by a 156,000-sq.-ft. retail property built in 1990 that is located in Cincinnati, Ohio. -- Palo Verde Square has a balance of $4.6 million (0.56%, $135 per sq. ft.). It is secured by a 35,000-sq.-ft. retail center built in 1998 that is located in Scottsdale, Arizona. The borrower made a payment recently and the loan is now 60-plus days delinquent. The property was transferred to the special servicer in July due to monetary default stemming from a drop in occupancy due to its location at the periphery of development in Scottsdale. The property is currently 65% occupied and has a NOI DSCR of 0.80x. -- 6350 Court Street Road has a balance of $4.46 million and a total exposure of $4.875 million (0.55%, $71 per sq. ft.). It is secured by a 68,000-sq.-ft. office building built in 1977 that is located near Syracuse, New York. The asset is now REO. The empty property had been 100% occupied by a telecom company that declared bankruptcy in December 2002. A new appraisal valued the property as is at $2.5 million. The special servicer is expected to receive a payment from the bankruptcy claim, which can be used to reduce outstanding advances. A loss is expected upon disposition. The servicer's watchlist includes 33 loans totaling $355.9 million (44% of the pool). Four of the top 10 loans appear on the watchlist for low DSCRs or pending lease rollovers. The smaller loans on the watchlist appear due to low occupancies, DSCR, or upcoming lease expirations, and were stressed accordingly by Standard & Poor's. The pool has significant geographic concentrations in: * Michigan (21.5%), * New York (17.4%), * California (13.7%), * Illinois (7.9%), and * Virginia (5.4%). Significant collateral type concentrations include: * retail (23.1%), * multifamily (22.9%), * office (18.9%), * lodging (13.6%), * industrial (9.9%), and * manufactured housing (6.3%). Standard & Poor's stressed various loans in the mortgage pool, paying closer attention to the specially serviced and watchlisted loans. The expected losses and resultant credit enhancement levels adequately support the raised and affirmed ratings. Ratings Raised COMM 2000-C1 Mortgage Trust Commercial Mortgage Pass-Thru Certs Series 2000-C1 Rating Class To From Credit Enhancement ----- -- ---- ------------------ B AA+ AA 19.87% C A A- 15.06% Ratings Affirmed COMM 2000-C1 Mortgage Trust Commercial Mortgage Pass-Thru Certs Series 2000-C1 Class Rating Credit Enhancement ----- ------ ------------------ A-1 AAA 24.55% A-2 AAA 24.55% D A- 13.41% E BBB 10.25% F BBB- 8.88% G BB 5.58% H BB- 4.76% J B+ 3.93% K B 2.70% L B- 1.73% M CCC+ 0.91% N CCC- 0.36% X AAA N/A CONCERT IND: Applies for Delisting from Toronto Stock Exchange -------------------------------------------------------------- Concert Industries Ltd. (TSX:CNG) has applied to the Toronto Stock Exchange to de-list its shares and debentures. The de-listing will be effective as of the close of business December 31, 2004, to coincide with the implementation of the previously announced final plan of arrangement pursuant to the Companies' Creditors Arrangement Act of its Canadian operating subsidiaries. With the implementation of the Plan, the Tricap Restructuring Fund will become the direct or indirect sole shareholder of Concert's Canadian and European operating subsidiaries. Following these arrangements, the assets remaining in Concert Industries Ltd. will have no material value. 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. As reported in the Troubled Company Reporter on Dec. 17, 2004, the Quebec Superior Court approved the final plan of compromise and arrangement of Concert Industries Ltd. pursuant to the Companies' Creditors Arrangement Act of its Canadian operating subsidiaries. The Plan received overwhelming creditor approval on Dec. 10, 2004. D.C.I. DANACO: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: D.C.I. Danaco Contractors, Inc. 325 Wyandanch Avenue North Babylon, New York 11704 Bankruptcy Case No.: 04-27760 Type of Business: The Company is a general contractor specializing in mechanical construction. The Company also installs large industrial and commercial heating, cooling and power generation systems. Chapter 11 Petition Date: December 21, 2004 Court: Eastern District of New York (Brooklyn) Debtor's Counsel: James A. Beldner, Esq. Richard Kanowitz, Esq. Christopher A. Jarvinen, Esq. Jay R. Indyke, Esq. Kronish Lieb Weiner & Hellman LLP 1114 Avenue of the Americas New York, New York 10036 Tel: (212) 479-6275 Financial Condition as of September 30, 2004: Total Assets: $3,730,274 Total Debts: $3,012,560 Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Stewart & Stevenson Judgement $1,504,023 Services, Inc. 4516 Harrisburg Boulevard Houston, Texas 77011 Attn: Russ Alberts Tel: (713) 923-0375 Fax: (713) 923-2161 Stasick Power Equipment Trade $248,000 PO Box 394 Califon, New Jersey 07830 Attn: Jody Stasick Tel: (908) 832-8980 Fax: (908) 832-8982 Clement Mechanical Trade $105,300 733 Dean Drive Baldwin, New York 11510 Attn: Clement McClean Tel: (516) 486-2925 Fax: (516) 486-2527 IAR International Asbestos Trade $98,142 Removal, Inc. 68-08 Woodside Avenue Woodside, New York 11377 Attn: Gilberto Padilla Tel: (718) 335-0304 Villani Industries Trade $32,500 Atlas Steel Corporation Trade $32,064 Raptor Electrical Construction Trade $31,652 Corporation Eric Eisenlau, Inc. Trade $25,650 Miller Proctor Nickolas Trade $23,897 Paz Interiors Trade $20,564 New York Ladder & Scaffold Trade $17,600 Ondeo Nalco Trade $13,293 Sound Painting Trade $13,034 Striper Mechanical, Inc. Trade $11,923 Gilmour Supply Trade $10,067 Pescara Contracting Trade $9,999 Core Electric Inc. Trade $9,252 United Electric Power Trade $9,019 A-Plus Sheetmetal Trade $8,500 Kagan & Clinton Inc. Trade $4,615 DAN RIVER: Files Supplement to Third Amended Chapter 11 Plan ------------------------------------------------------------ Dan River, Inc., (OTC: DVERQ.PK) filed the Plan Supplement to its Third Amended and Restated Plan of Reorganization on Dec. 21, 2004. Filing of the Plan Supplement is another step required in order for Dan River to emerge from bankruptcy. The Plan Supplement addresses various organizational matters, including the expected identity of the senior management of the Company following its emergence from bankruptcy. The executive officers of reorganized Dan River are expected to be: * Barry F. Shea President and Chief Executive Officer * Daniel A. Hammer Executive Vice President Home Fashions Sales and Marketing * Greg R. Boozer Executive Vice President Manufacturing * Scott D. Batson Senior Vice President and Chief Financial Officer * Harry L. Goodrich Vice President Secretary and General Counsel James E. Martin is also expected to continue after emergence in his present capacity as President of Apparel Fabrics. Finally, Joseph L. Lanier, Jr., currently Chairman of the Board and Chief Executive Officer, is expected to continue as non-executive Chairman of the Board, and Mr. Shea is expected to be appointed a director. "As [the] announcement indicates, we have passed another milestone on the way toward a January emergence from bankruptcy," said Mr. Lanier. "Upon emergence Dan River will be well positioned both organizationally and structurally to meet the challenges of global textile competition. I look forward to a continued but less active association with the Company as it successfully meets these challenges." Mr. Shea commented, "We have the goal line in sight. With the significant distraction of bankruptcy behind us, we will be able to focus with renewed intensity on our number one priority -- the needs of our home fashions and apparel fabrics customers. Daniel Hammer and Jim Martin, and their respective sales organizations, will be contacting their customers over the coming weeks to explore in more detail how a reorganized Dan River can provide them with compelling, value-added products." As previously announced, a hearing to confirm the Company's Plan of Reorganization is scheduled for January 4, 2005. The confirmation hearing is the final approval required prior to emergence. On March 31, 2004, the Company and its domestic subsidiaries filed petitions in the United States Bankruptcy Court for the Northern District of Georgia, Newnan Division, for reorganization pursuant to Chapter 11 of the Bankruptcy Code. Headquartered in Danville, Virginia, Dan River Inc. -- http://www.danriver.com/-- designs, manufactures and markets textile products for the home fashions, apparel fabrics and industrial markets. The Company and its debtor-affiliates filed for chapter 11 protection on March 31, 2004 (Bankr. N.D. Ga. Case No. 04-10990). James A. Pardo, Jr., Esq., at King & Spalding represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $441,800,000 in total assets and $371,800,000 in total debts. DELPHI CORP: S&P Downgrades Corporate Credit Rating to BB+ ---------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on Delphi Corp. to 'BB+' from 'BBB-' and its short-term corporate credit rating to 'B' from 'A-3'. The ratings were removed from CreditWatch where they were placed Dec. 2, 2004. The outlook is stable. "The action reflected our view that Delphi's earnings outlook will remain weak for the next few years because of challenging conditions in the automotive industry, a heavy dependence on General Motors Corp. (BBB-/Stable/A-3), which is losing market share in the U.S., and continued heavy underfunded employee benefit obligations," said Standard & Poor's credit analyst Martin King. Troy, Michigan-based Delphi, the world's largest automotive supplier, has total debt of about $3.9 billion, including securitized accounts receivable, capitalized operating leases, and trust preferred securities, and total underfunded pension and other postretirement employee benefit -- OPEB -- liabilities that are likely to exceed $13 billion by year-end 2004. "We have re-assessed Delphi's business profile and now consider it to be below average because of the sensitivity of the company's operating performance to adverse developments at GM and the inability to generate positive net income despite relatively healthy overall industry demand," Mr. King said. "Our business profile assessment of Delphi could become stronger or weaker as GM's competitive position improves or deteriorates, but there is no direct linkage between the ratings of the two companies. Instead, the ratings on Delphi incorporate the health and prospects of GM, in addition to Delphi's own competitive position, earnings and cash flow generation potential, and balance-sheet strength." Challenging business conditions will depress Delphi's earnings during 2005, when the company expects to report a $200 million loss (before special charges) compared to a modest $100 million profit expected for 2004, which is well below Delphi's earlier expectations. Lower production volumes, high raw material costs, slower attrition, and increasing health-care and pension costs will result in weak operating results at least for the next year. But over time, Delphi's restructuring activities are expected to esult in a more competitive cost structure, while continued profitable growth in adjacent markets segments, in locations outside the U.S., and with non-GM customers should offset the negative effects of a gradual decline in GM revenue. DEUTSCHE MORTGAGE: Fitch Affirms Two Classes With Low-B Ratings --------------------------------------------------------------- Fitch Ratings has upgraded two & affirmed four classes of Deutsche Mortgage Securities residential mortgage-backed certificates: Deutsche Mortgage Securities, mortgage pass-through certificates, series 2002-1: -- Class A affirmed at 'AAA'; -- Class M affirmed at 'AAA'; -- Class B1 upgraded to 'AA' from 'A'; -- Class B2 upgraded to 'A' from 'BBB'; -- Class B3 affirmed at 'BB'; -- Class B4 affirmed at 'B'. The affirmations, representing approximately $94.7 million of outstanding principal, reflect credit enhancement consistent with future loss expectations. The pool factor for the transaction (current principal balance as a percentage of original) is currently at 16.30% outstanding. The pool has experienced losses of less than 1% of the original balance to date. The upgrade affects approximately $3.6 million in certificate principal. Credit enhancement (provided by subordination) for the upgraded classes has grown to at least 5 times the original amount. The underlying collateral for the series consists of traditional, fully amortizing 30 year fixed-rate mortgage loans secured by first liens on one- to four-family residential properties. Further information regarding current delinquency, loss and credit enhancement statistics is available on the Fitch Ratings web site at http://www.fitchratings.com/ DII/KBR: Court Approves North Star Settlement Agreement ------------------------------------------------------- At DII Industries, LLC and its debtor-affiliates' request, the United States Bankruptcy Court for the Western District of Pennsylvania approved a settlement agreement and mutual release entered into by DII Industries, Cooper Industries, Inc., and Federal-Mogul Products, Inc. -- formerly Wagner Electric Corporation -- with North Star Insurance Corporation. Michael G. Zanic, Esq., at Kirkpatrick & Lockhart, LLP, in Pittsburgh, Pennsylvania, tells the Court that the North Star Settlement Agreement effectuates a full and final settlement of all disputes among the parties relating to: (i) competing claims by DII, Cooper, and Federal-Mogul to coverage under North Star insurance policy numbered NSX- 8963; and (ii) an insurance coverage litigation captioned "DII Industries, LLC v. Federal-Mogul Products, Inc. et al.," Adversary Proceeding No. 01-09018, pending in the United States Bankruptcy Court for the District of Delaware. The North Star Insurance Policy provided coverage to Studebaker- Worthington, Inc., and its subsidiaries from January 1, 1971, to January 1, 1973. DII alleges that it has rights to access the North Star Insurance Policy in connection with, among other things, claims for insurance related to asbestos-related bodily injury claims. Each of Cooper and Federal-Mogul also alleges that it has rights to access the North Star Insurance Policy for similar claims. A coverage-in-place agreement between DII and North Star dated March 1, 1999 -- modified by letter dated April 20, 1999, to add Cooper and Federal-Mogul as parties to the agreement -- governs the application of the North Star Insurance Policy to certain asbestos-related bodily injury claims against, inter alia, DII, Federal-Mogul, and Cooper. The North Star Settlement Agreement constitutes a full and final settlement concerning the products limits of liability of the North Star Insurance Policy. The Agreement releases and terminates all rights, obligations, and liabilities, if any, that North Star may owe to the affiliates of DII, Cooper, or the Federal Mogul concerning the products limits of liability, in consideration of certain monetary payments and other matters. The material terms of the North Star Settlement Agreement are: (1) Settlement Payment North Star will pay $1,032,211 to DII in addition to other payments to certain other entities. (2) Releases DII, Cooper and Federal-Mogul and their affiliates will exchange mutual releases with North Star and its affiliates. DII, Cooper and Federal-Mogul will be deemed to release and forever discharge North Star. North Star will also be deemed to release and forever discharge DII, Cooper, and Federal-Mogul. The North Star Affiliates further agree not to pursue any claims for subrogation, equitable or legal indemnity, contribution or reimbursement of the North Star Settlement Amount or any part from any third party. (3) Indemnification by DII, Cooper and Federal-Mogul DII, Cooper and Federal-Mogul will indemnify and hold the North Star Affiliates harmless from any claim by any other person or entity who asserts that it is insured under the terms and conditions of the North Star Insurance Policy and alleges that North Star has wrongfully paid indemnity or defense costs pursuant to the terms and conditions of the North Star CIP Agreement or the North Star Settlement Agreement. DII will cooperate with the North Star Affiliates in all manners in the defense of any claim. (4) Dismissal of the Coverage Lawsuit DII and Federal-Mogul will dismiss, without prejudice, their claims against North Star in the Coverage Lawsuit and North Star will dismiss, without prejudice, its claims, if any, against DII Industries and Federal-Mogul in the Coverage Lawsuit. (5) Conditions Precedent to Payment of the Settlement Amount North Star is obliged to pay the North Star Settlement Amount on the satisfaction or waiver of these conditions: (a) Entry of a final order approving the Settlement Agreement including decretal provisions amending the Debtors' plan of reorganization to provide that: -- the North Star Settlement Agreement constitutes an Asbestos/Silica Insurance Settlement Agreement; -- North Star is a Settling Asbestos/Silica Insurance Company entitled to the protections of the Asbestos/Silica Insurance Company Injunction; -- Exhibits 1 and 2 to the Plan are amended to add the North Star Insurance Policy and the North Star Settlement Agreement; and -- the provisions of the North Star Settlement Agreement are binding on the Reorganized DII. (b) The occurrence of the Effective Date of the Plan. According to Mr. Zanic, the North Star Settlement Agreement will avoid the expense and uncertainty associated with continuing litigation with North Star. The North Star Settlement Agreement will also provide for a significant cash payment to the Debtors that will directly and immediately benefit their Estates. Finalizing the North Star Settlement Agreement in the most expeditious manner will result in the immediate distribution of additional amounts to the Debtors, which will pave the way for the funding of the Asbestos PI Trust and the Silica PI Trust and timely distributions to the Asbestos PI Trust Claimants and the Silica PI Trust Claimants. Headquartered in Houston, Texas, DII Industries, LLC, is the direct or indirect parent of BPM Minerals, LLC, Kellogg Brown & Root, Inc., Mid-Valley, Inc., KBR Technical Services, Inc., Kellogg Brown & Root Engineering Corporation, Kellogg Brown & Root International, Inc., (Delaware), and Kellogg Brown & Root International, Inc., (Panama). KBR and its subsidiaries provide a wide range of services to energy and industrial customers and government entities in over 100 countries. DII has no business operations. DII and its debtor-affiliates filed a prepackaged chapter 11 petition on December 16, 2003 (Bankr. W.D. Pa. Case No. 02-12152). Jeffrey N. Rich, Esq., Michael G. Zanic, Esq., and Eric T. Moser, Esq., at Kirkpatrick & Lockhart LLP, represent the Debtors in their restructuring efforts. On June 30, 2004, the Debtors listed $6.255 billion in total assets and $5.295 billion in total liabilities. (DII & KBR Bankruptcy News, Issue No. 22; Bankruptcy Creditors' Service, Inc., 215/945-7000) EARL BRICE: Case Summary & 9 Largest Unsecured Creditors -------------------------------------------------------- Debtor: Earl Brice Equipment, LLC 8535 Irvington Road Omaha, Nebraska 68122 Bankruptcy Case No.: 04-84283 Chapter 11 Petition Date: December 21, 2004 Court: District of Nebraska (Omaha Office) Debtor's Counsel: Jenna B. Taub, Esq. Robert Craig PC 1321 Jones Street Omaha, NE 68102 Tel: 402-408-6000 Estimated Assets: $10 Million to $50 Million Estimated Debts: $10 Million to $50 Million Debtor's 9 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ North Omaha Business Development $250,000 2505 North 24th St. Omaha, NE 68110 Spence McGruder $205,668 622 North 38th St. Omaha, NE 68131 Billy Liechti $150,000 2718 North 154th St. Omaha, NE 68164 C.J. MGT & Acct. Service $72,500 Star Equipment, LLC $55,000 Omaha Standard Truck Equipment Co. $5,572 GMAC Smart Lease $5,000 First Colony Life Insurance Co. $2,075 Prudential $672 EAST CHICAGO: S&P Affirms BB Issuer Credit Rating ------------------------------------------------- Standard & Poor' Ratings Services affirmed its 'BB' issuer credit rating on East Chicago, Indiana and removed it from CreditWatch, where it was placed in May 2004, when there were additional legal challenges facing Lake County and all of its underlying taxing entities during the statewide reassessment. The ability of these entities to secure short-term tax anticipation borrowing was at issue. Since May, the city has been able to secure short-term loans from local banks and hasn't needed to rely on more traditional sources, such as the Indiana Bond Bank. The long-term outlook on the rating is negative, reflecting potential fiscal uncertainties and the challenges awaiting the city's new administration, which will take office in January 2005. The rating reflects relative economic stability due to the local gaming industry and opportunities within the metropolitan area that have limited the impact of difficulties faced by the local steel industry. Factors that continue to limit the rating include: (1) weak demographics, including below-average income levels and high unemployment; (2) uncertainty regarding the future status of tax appeals, which, if successful, would represent a large additional liability for the city; and (3) continued uncertainty about the local steel industries. East Chicago's overall fiscal stability is now much more uncertain since a new administration will take office in January 2005. In November 2004, a court-ordered revote of the 2003 democratic primary was held and the incumbent mayor was defeated after holding office for more than 30 years. The official mayoral election will be held at the end of December 2004, but it is certain the democratic candidate will win and take office on Jan. 3, 2005. Lake County has completed its reassessment, but just announced it will not mail 2004 tax bills in December as planned, forcing the city to issue tax anticipation warrants to keep cash flowing for operations. The tax anticipation warrant borrowings are being done with Bank One and the transition teams for each administration are handling the borrowings. The city is expected to publish its Dec. 31, 2003, audit by January 2005. The city's already weak revenue performance is exacerbated by the constant cash flow borrowing, most of which has been caused by the delayed tax collection caused by the reassessment. The delayed collections have also made it more difficult to gauge a true bottom-line picture of the city's finances. For fiscal 2004, $19 million was borrowed, and another $19 million is expected to be borrowed for 2005. The stability of gaming revenues has kept the city afloat. Over the next several months, the city's fiscal performance will be monitored as the new administration establishes itself. ELECTRO PRIME: Case Summary & 80 Largest Unsecured Creditors ------------------------------------------------------------ Lead Debtor: Electro Prime Rossford, Inc. 4510 Lint Avenue #B Toledo, Ohio 43460 Bankruptcy Case No.: 04-70418 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Electro Prime Assembly, Inc. 04-70419 Electro Prime, Inc. 04-70420 Electro Prime Machining Services, Inc. 04-70421 Type of Business: The Debtor provides machine shop services. See http://www.electroprime.com/ Chapter 11 Petition Date: December 13, 2004 Court: Northern District of Ohio (Toledo) Judge: Mary Ann Whipple Debtors' Counsel: Thomas J. Schank, Esq. Hunter & Schank Co., L.P.A. One Canton Square 1700 Canton Avenue Toledo, OH 43624 Tel: 419-255-4300 Fax: 419-255-9121 Estimated Assets Estimated Debts ---------------- --------------- Electro Prime Rossford, Inc. $0 to $50,000 $1 M to $10 M Electro Prime Assembly, Inc. $0 to $50,000 $100,000-$500,000 Electro Prime, Inc. $0 to $50,000 $100,000-$500,000 Electro Prime Machining $0 to $50,000 $50,000-$100,000 Services, Inc. A. Electro Prime Rossford, Inc.'s 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Adecco Employment Services Trade debt $1,168,622 P.O. Box 371084 Pittsburgh, PA 15250 PPG Industries, Inc. Trade debt $457,300 P.O. Box 360175 Pittsburgh, PA 15251 Columbia Gas of Ohio, Inc. Trade debt $154,457 200 Civic Center Drive 11th Floor Columbus, OH 43215 Forklifts of Toledo Trade debt $68,877 Toledo Edison - First Energy Trade debt $66,524 Security Packaging Co., Inc. Trade debt $66,231 Hunger Hydraulics US Trade debt $50,258 TCI Powder Coatings Trade debt $46,602 Fontana Forest Products Trade debt $46,117 OMI Transportation, Inc. Trade debt $36,590 Colonial Surface Solutions Trade debt $36,482 Labor Works of Toledo Trade debt $32,904 Ryder Transporation Services Trade debt $31,049 Henkel Surface Technologies Trade debt $26,009 American Quality Stripping Trade debt $24,598 Carry-All, Inc. Trade debt $17,625 Wilkie Brothers Conveyors, Trade debt $16,236 Inc. Plymouth Technologies, Inc. Trade debt $14,017 Kolb Welding & Fabricating, Trade debt $12,212 Inc. Amerigas-Toledo 5678 Trade debt $11,759 B. Electro Prime Assembly, Inc.'s 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Adecco Employment Services Trade debt $101,935 P.O. Box 371084 Pittsburgh, PA 15250 Hunger U.S. Special Trade debt $20,426 Hydraulic Cylinder Corp. 63 Dixie Highway Rossford, OH 43460 Ohio Michigan Paper Co. Trade debt $15,605 P.O. Box 621 Toledo, OH 43697 Amerigas - Toledo 5678 Trade debt $11,075 GSI Lumonics Trade debt $8,036 FANUC Robotics North America Trade debt $7,530 Nortronic Company Trade debt $5,644 Toledo Abrasive & Supply Co. Trade debt $4,413 Cintas #306 Trade debt $4,218 Dmytryka Jacobs Engineers Trade debt $4,000 Industrial Tool Service Inc. Trade debt $3,412 Meyer, O.E. Co. Trade debt $3,154 Clear Beam, Co. Trade debt $3,028 ZEE Medical Service Trade debt $2,115 Applied Industrial Tech Trade debt $2,100 Roadlink USA Midwest, LLC Trade debt $1,907 Browing-Ferris Industries Trade debt $1,520 Airgas Great Lakes Trade debt $1,491 Brent Industries Trade debt $1,294 Aramark Uniform Services Trade debt $926 C. Electro Prime, Inc.'s 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ JFY Toledo Properties, Inc. Trade debt $236,666 Attn: Sheri Harper 7407 Angola Road Holland, OH 43528 Toledo Edison - First Energy Trade debt $50,073 1910 West Market Street CSC Building 0 Akron, OH 44313 Group Services Inc. Trade debt $49,441 Chamber of Commerce Plan P.O. Box 92953 Cleveland, OH 44194 First Insurance Funding Corp Trade debt $14,822 Adecco Employment Services Trade debt $11,923 The Guardian Group Trade debt $7,491 Verizon (Cellular) Wireless Trade debt $6,394 Applied Industrial Tech. Trade debt $6,246 William Vaughan Company Trade debt $5,880 AQSR Trade debt $5,508 Shumaker, Loop & Kendrick Trade debt $5,061 Sunshine Services Trade debt $2,754 ALRO Steel Corp. Trade debt $2,069 Grachek, Inc. Trade debt $1,894 SBC Trade debt $1,783 Ohio Michigan Paper Co. Trade debt $1,594 Airgas Great Lakes Trade debt $1,555 Aramark Uniform Services Trade debt $1,359 James M. Wilson Trade debt $1,350 MAC Mall $1,046 D. Electro Prime Machining's 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Precision Laser & Forming, Trade debt $16,208 Inc. 6500 Rd. #5 Leipsic, OH 45856 Walker Tool & Machine Trade debt $14,172 Company 7700 Ponderosa Road Perrysburg, OH 43551 Maumee Valley Machinery Trade debt $6,535 Corp. 13001 Roachton Road Perrysburg, OH 43551 ALRO Steel Corp. Trade debt $6,225 Contractors Steel Corp. Trade debt $5,135 Meyer, O.E. Co. Trade debt $3,998 William Vaughan Company Trade debt $2,284 Aramark Uniform Trade debt $1,750 Erie Steel, LTD. Trade debt $1,286 M&R Machining, Inc. Trade debt $1,250 Mazak Corporation Trade debt $992 St. Vincent Medical Center Trade debt $654 Cotton Fabrics Co., Inc. Trade debt $579 Bodyfast Trade debt $539 Dynamic Metal Treating, Inc. Trade debt $451 Marmon/Keystone Corp. Trade debt $419 Paben-Harlow Tool & Die Trade debt $350 ZEE Medical Service Trade debt $302 Forklifts of Toledo Trade debt $265 Safety-Kleen Systems, Inc. Trade debt $245 FALCON PRODUCTS: Moody's Pares Rating on Sr. Sub. Notes to C ------------------------------------------------------------ Moody's Investors Service downgraded the senior subordinated notes of Falcon Products, Inc., to C from Ca, and the issuer rating of Falcon Products, Inc., to C from Caa2, and downgraded the senior implied rating to Ca from Caa1. The rating outlook remains negative. The rating action reflects Falcon's announcement that it has not made its December 15, 2004, interest payment on its subordinated bonds. The Company is currently not in compliance with one of its covenants under its senior credit facilities. Moody's expects marginal recovery for all creditors and, in particular, for the holders of the subordinated notes in a potential restructuring of the company's capital structure. These ratings are affected: * Senior implied rating downgraded to Ca from Caa1; * Senior unsecured issuer rating downgraded to C from Caa2; * $100 million issue of 11.375% senior subordinated notes due 2009, downgraded to C from Ca. Falcon Products 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. FLEXTRONICS: To Report Third Quarter Results on Jan. 25 ------------------------------------------------------- Flextronics (Nasdaq: FLEX) will report third quarter results on Tuesday, Jan. 25, 2005. The conference call, hosted by Flextronics' senior management, will be held at 1:30 p.m. PST to discuss the financial results of the Company and its future outlook. This call will be broadcast via the Internet and may be accessed by logging on to the Company's Web site at http://www.flextronics.com/ A replay of the broadcast will remain available on the Company's Web site after the call. About the Company Headquartered in Singapore (Singapore reg no.199002645H), Flextronics -- http://www.flextronics.com/-- is the leading Electronics Manufacturing Services (EMS) provider focused on delivering innovative design and manufacturing services to technology companies. With fiscal year 2004 revenues of USD$14.5 billion, Flextronics is a major global operating company that helps customers design, build, ship, and service electronics products through a network of facilities in 32 countries and five continents. This global presence provides customers with complete design, engineering, and manufacturing resources that are vertically integrated with component capabilities to optimize their operations by lowering their costs and reducing their time to market. * * * As reported in the Troubled Company Reporter on Nov. 16, 2004, Moody's Investors Service assigned a Ba2 rating to Flextronics International Ltd.'s new $500 million 6.25% senior subordinated notes, due 2014. At the same time, the company was assigned a liquidity rating of SGL-1, reflecting Flextronics' significant on-hand liquidity, unfettered access to the sizeable $1.1 billion revolver and the expectation for generating moderately positive free cash flow (pre-Nortel payments) over the next twelve months. The affirmation of the existing ratings and stable outlook incorporates the company's fairly conservative capital structure as well as its sustained ability to produce meaningful sales growth and slow, steady margin expansion. The ratings further balance the execution risk presented by the Nortel acquisition and the company's ability to produce adequate capital returns on each of the emerging ODM and software initiatives. The ratings outlook is stable. Net proceeds from the notes offering will be utilized to repay existing borrowings under the revolving credit facility, with excess of approximately $145 million set aside in support of general corporate purposes. GE CAPITAL: Moody's Puts Ba2 Rating on $18.6M Class D Certificates ------------------------------------------------------------------ Moody's Investors Service assigned ratings of Aaa to Class A and Class IO certificates, A2 to Class B certificates, Baa2 to Class C certificates and Ba2 to Class D certificates issued in a business loan securitization sponsored by General Electric Capital Corporation -- GECC. This is GECC's fourth term securitization of business loans. The complete rating actions are: -- Business Loan Pass-Through Certificates, Series 2004-2 * Class IO Certificates, rated Aaa; * $655,745,277 Class A Certificates, rated Aaa; * $52,161,556 Class B Certificates, rated A2; * $18,629,127 Class C Certificates, rated Baa2; * $18,629,127 Class D Certificates, rated Ba2. The ratings of the class A, B, C and D certificates are based on the quality of the collateral, which consists of loans secured by first liens on commercial real estate with an average LTV of 70.3%, subordination protecting the Class A, B and C certificates, which totals 12%, 5% and 2.5% protection, respectively; approximately 2.0% excess spread per year available to absorb losses; a reserve account that will be available for principal and interest shortfalls and will be funded at the target level of 1.50% of the original principal balance 10 months after closing and 3.0% of the original pool balance when the original principal balance is amortized by 50%; and the experience of GECC as Servicer. In addition to these factors, the rating of the IO certificates, which promise a fixed dollar amount per month for four years after deal closing, is based on the cash flow available to make payments and the placement of payments to the IO class at the top of the payment priority, pro-rata with Class A interest. Approximately 72% of the loan pool was originated by General Electric Commercial Finance Business Property Corporation -- BPF -- and 28% from General Electric Capital Corporation, through its small business finance lending division -- SBF. BPF provides middle-market U.S. public and private companies business loans that are secured by single-tenant or owner-occupied commercial real estate. SBF is a provider of small business commercial real estate loans primarily through the SBA 504 and direct lending programs. The loan pool consists of 337 loans with an average principal balance of $2.2 million and a maximum loan size of $12.0 million. The weighted average seasoning of the pool is 4 months, with a weighted average original term of 173 months. Approximately 55% of the loan pool is comprised of balloon loans, with the remainder fully amortizing. The average LTV at maturity for the balloon loans is 56.1%. Single-tenant properties represent 46% of the pool by principal balance with the remainder consisting of owner- occupied loans. The loan pool is reasonably diversified from industry and geographic perspectives; loans are spread out over 146 different SIC Codes with the hotel sector comprising 10.1% of the pool by principal balance, followed by general government, 5.8%, and medical offices and clinics, 3.6%. California comprises 20.1% of the pool by principal balance, followed by Texas, 9.3%, Florida, 8.8%, and Washington, 5.5%. With $518 billion in assets as of June 30, 2004, GECC (Aaa, P-1) is the largest finance company in the U.S. The certificates were sold in privately negotiated transactions without registration under the Securities Act of 1933. The issuance has been designed to permit resale under Rule 144A. GMAC COMMERCIAL: Fitch Puts Low-B Ratings on Six Mortgage Certs. ---------------------------------------------------------------- GMAC Commercial Mortgage Securities, Inc., series 2004-C3, commercial mortgage pass-through certificates are rated by Fitch Ratings: -- $15,500,000 class A-1 'AAA'; -- $351,441,000 class A-1A 'AAA'; -- $28,700,000 class A-2 'AAA'; -- $137,900,000 class A-3 'AAA'; -- $266,000,000 class A-4 'AAA'; -- $62,731,000 class A-AB 'AAA'; -- $138,600,000 class A-5 'AAA'; -- $82,885,000 class A-J 'AAA'; -- $31,277,000 class B 'AA'; -- $14,075,000 class C 'AA-'; -- $20,330,000 class D 'A'; -- $12,511,000 class E 'A-'; -- $15,639,000 class F 'BBB+'; -- $1,251,090,921 class X-1* 'AAA'; -- $1,211,222,000 class X-2* 'AAA'; -- $10,947,000 class G 'BBB'; -- $20,330,000 class H 'BBB-'; -- $3,128,000 class J 'BB+'; -- $6,255,000 class K 'BB'; -- $4,692,000 class L 'BB-'; -- $4,691,000 class M 'B+'; -- $3,128,000 class N 'B'; -- $3,128,000 class O 'B-'; -- $17,202,921 class P 'NR'; * Notional Amount and Interest Only. Class P is not rated by Fitch Ratings. Classes A-1, A-2, A-3, A- 4, A-5, A-J, A-1A, A-AB, X-2, B, C, and D are offered publicly, while classes X-1, E, F, G, H, J, K, L, M, N, and O are privately placed pursuant to Rule 144A of the Securities Act of 1933. The certificates represent beneficial ownership interest in the trust, primary assets of which are 92 fixed-rate loans having an aggregate principal balance of approximately $1,251,090,921, as of the cutoff date. For a detailed description of Fitch's rating analysis, please see the Report titled 'GMAC Commercial Mortgage Securities, Inc., Series 2004-C3' dated Dec. 1, 2004, and available on the Fitch Ratings web site at http://www.fitchrating.com GOLDEN EAGLE: Arranges $1 Million Bank Loan Payoff -------------------------------------------------- Golden Eagle International Inc. (OTCBB: MYNG) has reached agreement in principal for the full and final payoff of its $1 million note to Frost Bank of Houston, prior to its maturity date of Dec. 29, 2004. Two trusts, which have been long-term shareholders in Golden Eagle, have agreed to pay the Frost note off in full. The company will then be obligated to these trusts in the future. The terms and conditions of the new note with the trusts are: -- a one-year term, monthly interest payments at an annual rate of 8.5%; and -- quarterly principal payments of $250,000 beginning in the first quarter of 2005. In a simultaneous debt negotiation that enhances the company's balance sheet, Golden Eagle announced that a long-time Golden Eagle shareholder and lender has agreed to convert her current note and accrued interest with the company, totaling $1,037,000, to restricted common stock at $0.045 per share. This conversion completes a debt elimination process begun by the company two years ago. As a result of that process, the net equity on Golden Eagle's balance sheet has climbed to $5.2 million. "We are pleased with the confidence shown in Golden Eagle's future by these supportive shareholders," stated Terry C. Turner, Golden Eagle's CEO. "We have now eliminated substantially all debt in the company with the exception of the new loan announced today that we plan to pay off in 2005. Our company is on a very positive financial course as we prepare to bring the Buen Futuro project on-line in Bolivia and direct Golden Eagle toward sustained profitability. This financial restructuring through the elimination of debt and interest significantly improves our ability to finance our Buen Futuro project." About the Company Golden Eagle International Inc.-- http://www.geii.com/-- is a gold exploration and mining company located in Salt Lake City, and La Paz and Santa Cruz, Bolivia. The company is currently focusing its efforts on developing its mining rights on its Buen Futuro project within its 136,500 acres (213 square miles) in eastern Bolivia's Precambrian Shield. Buen Futuro is projected to produce 5,900 troy ounces of gold and 4.4 million pounds of copper per month once brought on-line. The company also owns mining rights on 49,900 acres (77 square miles) in the Tipuani Gold District located in western Bolivia, which has produced 32 million ounces of gold in its known history. Golden Eagle is a mining company with a social conscience, having provided many humanitarian programs at its mine site, including the only hospital, doctor and nurse in Cangalli, Bolivia, for the past eight years, as well as having provided for the educational needs of the students of the area. Going Concern Doubt In its Form 10-Q for the quarterly period ended Sept. 30, 2004, filed with the Securities and Exchange Commission, Golden Eagle disclosed that its auditors included an explanatory paragraph indicating a going concern consideration contained in its 2003 audit opinion. As of Sept. 30, 2004, the Company reported a working capital deficit and has incurred substantial losses since its inception. "Unless we successfully obtain suitable significant additional financing arrangements or generate significant additional income, there is substantial doubt about our ability to continue as a going concern," the Company said in its SEC filing. "Our plans to address these matters include private placements of stock in reliance on exemptions to registration found in Sections 4(2) and 4(6) of the Securities Act of 1933; obtaining short-term loans; seeking suitable joint venture relationships; and increasing the production levels at the existing operation and commencing mining operations at other claims we own or on properties we may acquire." GOLDMAN SACHS: Fitch Puts Low-B Ratings on Three Classes -------------------------------------------------------- Fitch has taken rating actions on Goldman Sachs Mortgage Participation Securities, mortgage pass-through certificates: GS Mortgage Participation Securities, mortgage pass-through certificate, series 1998-1: -- Class A affirmed at 'AAA'; -- Class M affirmed at 'A+'. GS Mortgage Participation Securities, mortgage pass-through certificate, series 1998-2: -- Class A affirmed at 'AAA'; -- Class M affirmed at 'A+'. GS Mortgage Participation Securities, mortgage pass-through certificate, series 1998-3: -- Class A affirmed at 'AAA'; -- Class M affirmed at 'A+'. GS Mortgage Participation Securities, mortgage pass-through certificate, series 1998-4: -- Class A affirmed at 'AAA'; -- Class M affirmed at 'A+'. GS Mortgage Participation Securities, mortgage pass-through certificate, series 1998-5: -- Class A affirmed at 'AAA'; -- Class M affirmed at 'AA'. GS Mortgage Participation Securities, mortgage pass-through certificate, series 1999-1: -- Class A affirmed at 'AAA'; -- Class B-1 upgraded to 'AAA' from 'AA+' ; -- Class B-2 upgraded to 'AA' from 'A+'; -- Class B-3 upgraded to 'A' from 'BBB'; -- Class B-4 upgraded to 'BBB' from 'BB'; -- Class B-5 upgraded to 'BB' from 'B'. GS Mortgage Participation Securities, mortgage pass-through certificate, series 1999-2: -- Class A affirmed at 'AAA'; -- Class M affirmed at 'A'. GS Mortgage Participation Securities, mortgage pass-through certificate, series 1999-3: -- Class A affirmed at 'AAA'; -- Class M upgraded to 'A+' from 'A'. GS Mortgage Participation Securities, mortgage pass-through certificate, series 2000-1: -- Class A affirmed at 'AAA'; -- Class M affirmed at 'A'. GS Mortgage Participation Securities, mortgage pass-through certificate, series 2001-1: -- Class B-1 affirmed at 'AA'; -- Class B-2 affirmed at 'A'; -- Class B-3 affirmed at 'BBB'; -- Class B-4 affirmed at 'BB'; -- Class B-5 affirmed at 'B'. GS Mortgage Participation Securities, mortgage pass-through certificate, series 2001-2: -- Class A affirmed at 'AAA'; -- Class M affirmed at 'A+'. The affirmations, representing approximately $310.1 million of outstanding principal, reflect credit enhancement consistent with future loss expectations. The upgrades affect approximately $6.5 million in certificate principal. Credit enhancement (provided by subordination) for each of the upgraded classes has grown to more than two times the original amount. The pools factors (current principal balance as a percentage of original) for the transactions range from approximately 19% to 35% outstanding. The underlying collateral for these transactions consists of both FHA and VA reperforming loans. Historically, realized losses on these types of securitizations are low, given the FHA and VA insurance coverage. Currently, none of the pools in the transactions are experiencing more than 0.80% realized losses as a percentage of original balance. Further information regarding current delinquency, loss and credit enhancement statistics is available on the Fitch Ratings web site at http://www.fitchratings.com/ HEDSTROM CORP: Auction at Arlington Heights HQ on Jan. 11 --------------------------------------------------------- The Daley-Hodkin Group will auction computers & electronics, office and business equipment, and other furniture owned by Hedstrom Corporation on January 11, 2005 at 11:00 a.m., Central Time, at the company's headquarters located at 3436 North Kennicott Ave. in Arlington Heights, Illinois. The Auction is being held pursuant to a Bankruptcy Court order. The Office Furniture to be sold includes executive office desks; credenzas; bookcases; office partitions & modular work stations: conference room tables: upholstered, leather, folding & stackable chairs; folding tables; 3 to 5 drawer file cabinets; marking boards; and cork boards. The Office Equipment includes a Cannon M310016 microfilm scanner; two 3M 910 & 9200 overhead projectors; a GBC P400 binding system; a GBC image maker 2000 manual binder; typewriters; computers; laptops; printers; external CD writers; monitors; televisions; VCR and DVD players; and more. For additional information about the sale, contact: Larry Garten 135 Pinelawn Road Melville, NY 11747-3144 Phone: (631) 293-0200 Fax: (631) 293-0328 auction@daley-hodkin.com Headquartered in Arlington Heights, Illinois, Hedstrom Corporation -- http://www.hedstrom.com/-- manufactures and markets well- established children's leisure, outdoor recreation and home d,cor products, including outdoor gym sets, spring horses, trampolines, skating equipment (through Backyard Products Unlimited, currently in a Canadian receivership proceeding); play balls (through non- debtor BBS Industries, Inc.); and arts and crafts kits, game tables, indoor sleeping bags, play tents and wall decorations (through ERO Industries). The Company filed for chapter 11 protection on October 18, 2004 (Bankr. N.D. Ill. Case No. 04- 38543). Allen J. Guon, Esq., and Steven B. Towbin, Esq., at Shaw Gussis Fishman Glantz Wolfson & Towbin LLC, represent the Debtors in their restructuring. When the Company filed for chapter 11 protection, it listed estimated assets of $10 million to $50 million and estimated debts of more than $100 million. HEDSTROM CORP: Auction at Hazelhurst, Ga., Facility on Jan. 20 -------------------------------------------------------------- The Daley-Hodkin Group will auction real estate and personal property owned by Hedstrom Corporation on January 20, 2005 at 2:00 p.m., Eastern Time, at the company's facility located at 46 S. Williams St. in Hazelhurst, Georgia. The Auction is being held pursuant to a Bankruptcy Court order. The personal property includes scores of sewing machines, cutting room equipment, quilting materials, material handling equipment, machine shop tools, and office furniture and equipment. For additional information about the sale, contact: Larry Garten 135 Pinelawn Road Melville, NY 11747-3144 Phone: (631) 293-0200 Fax: (631) 293-0328 auction@daley-hodkin.com Headquartered in Arlington Heights, Illinois, Hedstrom Corporation -- http://www.hedstrom.com/-- manufactures and markets well- established children's leisure, outdoor recreation and home d,cor products, including outdoor gym sets, spring horses, trampolines, skating equipment (through Backyard Products Unlimited, currently in a Canadian receivership proceeding); play balls (through non- debtor BBS Industries, Inc.); and arts and crafts kits, game tables, indoor sleeping bags, play tents and wall decorations (through ERO Industries). The Company filed for chapter 11 protection on October 18, 2004 (Bankr. N.D. Ill. Case No. 04- 38543). Allen J. Guon, Esq., and Steven B. Towbin, Esq., at Shaw Gussis Fishman Glantz Wolfson & Towbin LLC, represent the Debtors in their restructuring. When the Company filed for chapter 11 protection, it listed estimated assets of $10 million to $50 million and estimated debts of more than $100 million. HEDSTROM CORP: Auction at Bedford, Pa., Facility on Feb. 1 & 2 -------------------------------------------------------------- The Daley-Hodkin Group will auction real estate, personal property and intellectual property owned by Hedstrom Corporation on February 1 and 2, 2005 starting at 10:00 a.m., Eastern Time, each day, at the company's facility located at 550 Sunnyside Road in Bedford, Pennsylvania. The Auction is being held pursuant to a Bankruptcy Court order. The property to be sold is listed at: http://www.daley-hodkin.com/auction_detail.asp?AuctionID=8157 For additional information about the sale, contact: Larry Garten 135 Pinelawn Road Melville, NY 11747-3144 Phone: (631) 293-0200 Fax: (631) 293-0328 auction@daley-hodkin.com Headquartered in Arlington Heights, Illinois, Hedstrom Corporation -- http://www.hedstrom.com/-- manufactures and markets well- established children's leisure, outdoor recreation and home d,cor products, including outdoor gym sets, spring horses, trampolines, skating equipment (through Backyard Products Unlimited, currently in a Canadian receivership proceeding); play balls (through non- debtor BBS Industries, Inc.); and arts and crafts kits, game tables, indoor sleeping bags, play tents and wall decorations (through ERO Industries). The Company filed for chapter 11 protection on October 18, 2004 (Bankr. N.D. Ill. Case No. 04- 38543). Allen J. Guon, Esq., and Steven B. Towbin, Esq., at Shaw Gussis Fishman Glantz Wolfson & Towbin LLC, represent the Debtors in their restructuring. When the Company filed for chapter 11 protection, it listed estimated assets of $10 million to $50 million and estimated debts of more than $100 million. HERBALIFE LTD: Completes IPO & Starts NYSE Stock Trading -------------------------------------------------------- Herbalife Ltd., formerly known as WH Holdings (Cayman Islands) Ltd. (NYSE:HLF), has closed its previously disclosed initial public offering and that its common shares have begun trading on the New York Stock Exchange under the symbol HLF. The offering consisted of 14,500,000 common shares, 13,500,000 of which were sold by Herbalife and 1,000,000 of which were sold by certain shareholders of Herbalife. The net proceeds of the offering to the company totaled approximately $172.6 million. 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. Herbalife granted the underwriters a 30-day option to purchase an additional 2,175,000 shares at $13.02 per share, net of underwriting discount, to cover over-allotments, if any. No portion of the over-allotment option has been exercised to date. Also, Herbalife has advised The Bank of New York, as trustee of the indenture governing its 9-1/2% Notes due 2011, that Herbalife has elected to redeem $110.0 million, or 40%, aggregate principal amount of its 9-1/2% Notes with the proceeds of its initial public offering. Herbalife also requested that the Trustee mail a Notice of Redemption to each holder of the 9-1/2% Notes. The 9-1/2% Notes will be redeemed on February 4, 2005 at a price equal to 109.5% of the principal amount of the 9-1/2% Notes, plus accrued and unpaid interest to the Redemption Date. Today Herbalife's indirect subsidiary, Herbalife International, Inc. executed its previously announced $225.0 million credit facility with a syndicate of financial institutions, with Morgan Stanley Senior Funding Inc. and Merrill Lynch, Pierce, Fenner & Smith Incorporated as joint lead arrangers and joint book-runners. The credit facility is comprised of a $200 million term loan and a $25 million revolving credit facility. Herbalife International retired its previous senior credit facility using approximately $66.7 million in proceeds from Herbalife's initial public offering. Also, Herbalife International consummated its previously announced tender offer and consent solicitation for any and all of its outstanding 11-3/4% Series B Senior Subordinated Notes due 2010. A total of approximately $159.8 million, or approximately 99.9%, aggregate principal amount of 11-3/4% Notes were tendered prior to the expiration date. Herbalife has accepted and paid for all 11-3/4% Notes tendered pursuant to the Offer. The proposed amendments to the indenture governing the 11-3/4% Notes, which eliminated substantially all of the restrictive covenants and certain events of default contained in such indenture, became operative Tuesday. A copy of the prospectus relating to Herbalife's initial public offering of common shares 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 A registration statement relating to Herbalife's initial public offering of common shares has been filed with and declared effective by the Securities and Exchange Commission. This press release is for informational purposes only and is not an offer to sell or a solicitation of an offer to purchase. 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. HOLLAND INVESTMENTS: Voluntary Chapter 11 Case Summary ------------------------------------------------------ Debtor: Holland Investments 1049 South McCord Road Holland, Ohio 43528 Bankruptcy Case No.: 04-70461 Chapter 11 Petition Date: December 15, 2004 Court: Northern District of Ohio (Toledo) Judge: Mary Ann Whipple Debtor's Counsel: James M. Perlman, Esq. Philip R. Joelson, Esq. 1776 Tremainsville Toledo, OH 43613 Tel: 419-478-1776 Total Assets: $1 Million to $10 Million Total Debts: $500,000 to $1 Million The Debtor did not file a list of its 20-largest creditors. HOUSING SECURITIES: Fitch Upgrades Class B1 Series 1994-2 Cert. --------------------------------------------------------------- Fitch Ratings has upgraded two classes and affirmed five classes from Housing Securities, Inc. mortgage-pass through certificate: Housing Securities, Inc. mortgage pass-through certificates, series 1994-2: -- Class A1-A3 affirmed at 'AAA'; -- Class M-1 affirmed at 'AAA'; -- Class M-2 affirmed at 'AA+'; -- Class M3 upgraded to 'AA' from 'AA-'; -- Class B1 upgraded to 'BB+' from 'BB'. The affirmations, representing approximately $5.30 million of outstanding principal, reflect credit enhancement consistent with future loss expectations. The pool factor for the transaction (current principal balance as a percentage of original) is currently at 5.30% outstanding. The pool has experienced losses of less than 1% of the original balance to date. The upgrades affect approximately $0.10 million in certificate principal. Credit enhancement (provided by subordination) for the upgraded classes has grown to at least 1.75 times the original amount. The underlying collateral for the series consists of both traditional and hybrid, fully amortizing 15-year fixed-rate mortgage loans secured by first liens on one to four-family residential properties. IDI CONSTRUCTION: Confirmation Hearing Set for February 10 ---------------------------------------------------------- The Honorable Prudence Carter Beatty of the U.S. Bankruptcy for the Southern District of New York will convene a hearing at 2:30 p.m., on February 10, 2005, to consider the adequacy of the Disclosure Statement prepared by IDI Construction Company, Inc., to explain its Liquidating Plan of Reorganization filed on December 15, 2004. The Plan provides for the appointment of a Liquidating Agent who will work together with the Debtor's counsel to complete the collection and liquidation of the Debtor's Assets in accordance with the terms, conditions and limitations of the Plan. The Liquidating Agent will be vested with all the rights, powers and benefits afforded to a "trustee in bankruptcy" under Sections 704 and 1106 of the Bankruptcy Code. The Plan groups claims and interest into 4 classes and provides for these recoveries: a) Class 1 unimpaired claims consisting of Allowed Secured Claims will receive the proceeds from the sale of the Debtor's assets to secure those claims and as agreed upon by the Debtor, the Liquidating Agent and the claimants; b) Class 2 impaired claims consisting of Priority Claims will be paid in full with payments equal to their Pro Rata share of the funds in the Priority Distribution Account, into which the proceeds of accounts receivable collected in excess of $3.4 million and the proceeds of collection of Other Assets in excess of $400,000 will be deposited; c) Class 3 impaired claims consisting of Unsecured Claims including the Trust Fund Claims and Claims for damages arising from the rejection of executory contracts will be paid in full by the Liquidating Agent of their Pro Rata share of: (i) the A/R Guaranty plus all the remaining proceeds of the accounts receivable after all Priority Claims are paid in full, (ii) the first $400,000 of the proceeds of the Other Assets, plus all the remaining proceeds of the Other Assets after all Priority Claims are paid in full, (iii) the first $3 million of Kohl's interests in the proceeds of the sale of Hampton's Home or the first $3 million of Kohl's interest in the Matrimonial Assets, or a combination of both assets not to exceed $3 million, (iv) $100,000 that is payable in $50,000 each from shareholders Mr. Prince and Mr. Gorecki, to be paid in 36 equal monthly installments commencing on March 1, 2005, (v) the Future Profits and the Future Compensation, and (vi) the Claims Gap Guaranty payments that are equal to the Pro Rata amount payable to those claims that will not exceed $500,000; and d) Class 4 impaired claims consisting of holders of Interests will not receive any distribution under the Plan and their stocks will be deemed canceled on the Effective Date of the Plan. A full text copy of the Disclosure Statement and Plan is available for a fee at: http://www.researcharchives.com/download?id=040812020022 Headquartered in New York, New York, IDI Construction Company, Inc., is engaged in the construction industry. The Company filed for chapter 11 protection on December 15, 2004 (Bankr. S.D.N.Y. Case No. 04-17881). Marilyn Simon, Esq., at Marilyn Simon & Associates represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed total assets of $5,645,400 and total debts of $18,550,000. INTEGRATED ELECTRICAL: Moody's Junks $173M Subordinated Notes ------------------------------------------------------------- Moody's Investors Service has downgraded the ratings of Integrated Electrical Services, Inc., and assigned a stable outlook to the company's debt ratings. The downgrade reflects the company's weakened financial performance for 2004 and the expectation that 2005 will include various significant challenges that will constrain the company's financial and operating performance. The downgrade also reflects the challenges that the company is anticipated to encounter as it seeks to improve its portfolio of companies. Additionally, Integrated Electrical has had: (1) challenges related to commercial margin improvement; (2) difficulty in timely filing its June 2004 financials; (3) large goodwill charges; and (4) challenges accessing the surety bonding market. The company also has had various additional negative announcements that affected its reputation, including the loss of two Chief Financial Officers. This concludes the review of Integrated Electrical's rating action. Moody's has downgraded these ratings: * Senior Implied, downgraded to B2 from B1; * Senior Unsecured Issuer Rating, downgraded to B3 from B2; * $173 million (remaining balance) of 9.375% senior subordinated notes due 2009 (in two series), downgraded to Caa1 from B3. The ratings outlook is stable. The ratings downgrade reflects: (1) Integrated Electrical's low margins, (2) the financial and operating drag caused by various weak subsidiaries, (3) low interest coverage, (4) its operating history, and (5) uncertainty regarding the company's operating outlook and ability to significantly boost its margins over the intermediate term. The company's EBITDA margins for the year ended Sept. 30, 2004, was only 2.6% (before goodwill impairment and other one-time charges) vs. 4.8% for the same period in 2003. Integrated Electrical has announced that it has broken its operations into three segments comprised of its core operations, under review, and planned divestitures. Additionally, the company's scale and scope will decline with the sale of multiple subsidiaries. Although the company's relatively large $100 million goodwill write-down suggests that the subsidiaries being divested are unlikely to be sold for a substantial loss relative to the current carrying cost, there is uncertainty as to the net proceeds for these operations. The company's ratings are also constrained by its limited access to the surety bonding market and concerns that reduced access will not only pressure revenues but also cash flow generation and liquidity. Integrated Electrical raised $36 million through the sale of a convertible stock instrument, in December 2004, to improve its liquidity. The company's revolver (not rated) has been reduced to $82 million from $125 million as a result of recent events. The company has also had to post portions of its cash positions due to reduced access to surety bonds. As of September 30, the company's cost to complete projects under surety bonds was approximately $200 million. Recent year's financial performance has been difficult as evidenced by its retained earnings that peaked at $528 million at the end of September 2001 and decreased to $143 million at the end of September 2004. Of this $385 million reduction, $383 million was due to goodwill impairment charges in two separate years. Total debt for the same periods was $286 million and $231 million, respectively. The company's ratings benefit from its core operations that enjoy higher margins than the consolidated average. The ratings also benefit from geographic diversity as the company's services are offered on a nationwide basis thereby limiting the impact of regional economic weakness. The ratings also consider, but do not necessarily reflect, the uncertainty surrounding the company's CFO turnover. Integrated Electrical lost two CFOs in 2004 and has not yet replaced the last CFO with a permanent hire. Although high CFO turnover is normally a concern, the filing of the company's audited financials reduces Moody's short-term concern on this subject. The ratings benefit from Moody's anticipation that the remaining Integrated Electrical businesses post-divestment will reflect a portfolio of the stronger companies with higher return on assets, and higher margins. The ratings outlook is stable but somewhat tenuous given the challenges that lie ahead with its divestment strategy, bonding related issues, and possible volatility in liquidity levels. The ratings and or outlook may deteriorate if the company's free cash flow from its core operations relative to its debt levels does not improve, if its divestment strategy brings in significantly less cash than is currently anticipated, or if these divestitures took longer than anticipated. The outlook could be affected if its core and under review operating units were to experience margin contraction or increased competition. A return to a debt financed acquisition strategy would also likely pressure the ratings. An improvement in the company's outlook and or rating would likely result from higher free cash flow relative to the company's anticipated leverage levels, the hiring of a permanent CFO that lasts more than 12 months, and higher margins. Success in the company's planned divestment of non-core assets without higher than expected write-downs would also be positive. For fiscal year 2005, earnings before interest and taxes -- EBIT -- to total assets is estimated to be under 4%, EBITDA less capital expenditures to interest is estimated to be under 2 times and its EBIT margin is expected to be in the low single digits. Total debt to EBITDA for FYE 2005 is estimated to be over 7 times. As of September 30, 2004, the company had $45 million in net property plant and equipment and $98 million in goodwill. Formed in 1997 and headquartered in Houston, Texas, Integrated Electrical Services, Inc., is a national provider of electrical solutions to the commercial and industrial, residential, and service markets. INTEGRATED SURGICAL: Faces Liquidity Issues as Losses Continues --------------------------------------------------------------- Integrated Surgical Systems Inc.'s condensed consolidated financial statements for the nine-month period ended Sept. 30, 2004, showed a net loss for the nine-month period of $1,045,133 and had an accumulated deficit as of Sept. 30, 2004, of $68,776,342. Going Concern Doubt For the year ended December 31, 2003, the Company incurred a net loss of $3,250,219 and had an accumulated deficit at Dec. 31, 2003, of $67,731,209. The report of independent auditors on the Company's December 31, 2003, consolidated financial statements includes an explanatory paragraph indicating there is substantial doubt about the Company's ability to continue as a going concern. The Company plans to address these issues and enable the Company to continue operating through September 30, 2005. This plan includes: * obtaining additional equity or debt financing, * increasing product sales in existing markets, * increasing sales of system upgrades, and * further reductions in operating expenses as necessary. Although the Company believes that the plan will be realized, there is no assurance that these events will occur. In the event that the Company is unsuccessful in realizing the benefits of the plan, it is possible that the Company will cease operations and seek bankruptcy protection. Liquidity Problems The Company's cash position is inadequate, and although the Company has identified potential sources of cash for future operations, there cannot be any assurance given that the Company will receive these cash amounts, or that these cash amounts will be sufficient to assure continuing operations. At Sept. 30, 2004, the Company's "quick ratio" (cash and accounts receivable divided by current liabilities), a conservative liquidity measure designed to predict the Company's ability to pay bills, was only 5%. It has been difficult for the Company to meet obligations, including payroll, as they come due, and the Company expects this situation to continue through Sept. 30, 2005. Integrated Surgical Systems, Inc., designs, manufactures, sells and services image-directed, computer-controlled robotic software and hardware products for use in orthopedic and neurosurgical procedures. INTEGRATED SURGICAL: Inks $2M Agreement with Fujifilm Medical ------------------------------------------------------------- Integrated Surgical Systems, Inc., entered into a $2.5 million agreement with Fujifilm Medical Systems, USA on December 14, 2004. Under the agreement Fuji will license the Company's orthopedic surgical planning technology for its use solely in the Picture Archiving and Communications Systems -- PACS -- market. Under the terms of the license agreement the Company received $0.5 million in conjunction with the signing of the agreement. Additional milestone payments totaling $2.0 million will be paid to the Company over a two-year period, assuming all the milestones are met. Going Concern Doubt For the year ended December 31, 2003, the Company incurred a net loss of $3,250,219 and had an accumulated deficit at Dec. 31, 2003, of $67,731,209. The report of independent auditors on the Company's December 31, 2003, consolidated financial statements includes an explanatory paragraph indicating there is substantial doubt about the Company's ability to continue as a going concern. Integrated Surgical Systems, Inc., designs, manufactures, sells and services image-directed, computer-controlled robotic software and hardware products for use in orthopedic and neurosurgical procedures. INTELSAT: Moody's Says Liquidity Will Remain Good for 12 Months --------------------------------------------------------------- Moody's believes that the liquidity of Intelsat, Ltd., will remain "Good" over the next twelve months. Intelsat's SGL-2 speculative grade liquidity rating reflects the company's strong liquidity profile. Moody's believes that Intelsat, with approximately $400 million in cash on hand at Sept. 30, 2004, high operating margins, meaningful annual free cash flow capacity, and $400 million unused availability under its committed revolving credit facility, has sufficient liquidity to meet its near-term operating, investment and financial obligations. Moody's, however, expects Intelsat's liquidity to deteriorate in the intermediate term, as a result of an anticipated higher interest burden associated with the expected increase in leverage as a result of the announced Zeus transaction where ownership will transfer to a consortium of private equity firms. The higher interest burden will not only erode free cash flow but will also require the company to refinancing its revolving credit facility due to the level of financial covenants in the current facility. At Sept. 30, 2004, Intelsat faced two near-term bond maturities: (i) $200 million 8.375% notes that matured in the 4th quarter of 2004; and (ii) $200 million 8.125% notes that mature in the 1st quarter of 2005. Intelsat chose to retire the 8.375% notes in October using cash on hand. Although Intelsat has sufficient liquidity to retire the 8.125% notes maturing in 2005 as well, Moody's believes that Intelsat will choose to refinance this debt as part of the Zeus financing package in order to somewhat preserve the strength of its current liquidity. Other than this obligation, Intelsat does not face any significant maturities until 2008. Intelsat enjoys high operating and cash flow margins, which allow it to generate substantial unlevered free cash flow. Furthermore, because Intelsat is coming to the end of a significant capital investment cycle, Moody's expects its capital spending needs to remain comparatively low over the next several years. The flexibility in the timing of the company's investment spending has historically led to stabile free cash flow generation. Moody's believes that Intelsat's ability to generate stable operating cash flow will remain high, despite the recent disruption on the AI-7 satellite; however, the levels of available free cash flow will be diminished over the near term as a result of significantly higher anticipated interest costs associated the Zeus acquisition. Moody's estimates that Intelsat's annual free cash flow generating capacity, post Zeus acquisition, will be approximately $250 million. To further support its liquidity, Intelsat currently has access to same day borrowings under a $400 million revolving credit facility. The facility was undrawn on Sept. 30, 2004. Moody's believes that, based on Intelsat's current performance, the company can comfortably meet the two financial covenants to draw down on the facility. These EBITDA-based covenants include a total leverage test that steps down to 3.25x from 3.5x on Dec. 31, 2004, and an interest coverage test of 3.5x. It is unlikely that Intelsat will meet these covenants, however, on a proforma basis after the proposed Zeus transaction. Moody's believes that Intelsat will need to renegotiate this revolving credit agreement in order to maintain liquidity back-up for general operations after the close of the Zeus acquisition. As an alternate source of liquidity in the event of a liquidity crisis, the bank credit facility allows Intelsat to securitize up to $300 million of account receivables. As of Sept. 30, 2004, Intelsat's receivable balance was $205 million. Intelsat, headquartered in Hamilton, Bermuda, owns and operates a global communication satellite system that provides capacity for voice, video, networks services, and the Internet in more than 200 countries and territories. Intelsat's current Ba3 senior implied rating is currently on review for possible downgrade. * * * As reported in the Troubled Company Reporter on Aug. 19, 2004, Moody's Investors Service downgraded Intelsat, Ltd's senior unsecured notes to Ba3 from Baa3 and its short term rating to Not Prime (NP) from P-3 after the company announced a definitive agreement to merge with Zeus Holdings, Ltd., a subsidiary of a consortium of private equity firms, for approximately $3 billion, or $18.75 per share. At the same time, Moody's has assigned Intelsat a Ba3 senior implied rating. Moody's is downgrading these Intelsat ratings: -- Senior Unsecured Notes to Ba3 from Baa3; -- Unsecured Issuer Rating to Ba3 from Baa3; and -- Short term rating to Not Prime from P-3. Moody's assigned these ratings for Intelsat: -- Senior Implied Ba3 INTERMEDICAL HOSPITAL: Wants to Hire Nexsen Pruet as Counsel ------------------------------------------------------------ InterMedical Hospital of South Carolina, Inc., ask the U.S. Bankruptcy Court for the District of South Carolina for permission to employ Nexsen Pruet Adams Kleemeier, LLC, as its bankruptcy counsel. Nexsen Pruet will: a. advise the Debtor with respect to its powers and duties as debtor-in-possession in the continued operation of its Business and management of its property; b. prepare applications, motions, pleadings, objections, memoranda, briefs, orders, reports and other legal papers as may be necessary or appropriate in this case; c. provide legal advice and assistance in the development of a plan of reorganization, a disclosure statement, and other pleadings and documents relating to the disposition of assets and the payment and treatment of claims against the bankruptcy estate; and d. provide legal advice on various other matters that may arise in this case. Nexsen Pruet's professionals will bill the Debtor at their current hourly rates: Attorney Rate -------- ---- Julio E. Mendoza $285 Laura A. Becker $215 Suzanne Taylor Graham Grigg $150 Janette P. Carter $95 Armando E. Colombo, President of InterMedical Hospital, discloses that Intermedical Hospital delivered a $30,839 retainer to Nexsen Pruet prior to the chapter 11 filing. To the best of the Debtor's knowledge, Nexsen Pruet is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. Headquartered in Columbia, South Carolina, InterMedical Hospital of South Carolina, Inc. -- http://www.intermedicalhospital.com/-- operates a hospital. The Company filed for chapter 11 protection on December 10, 2004 (Bankr. D. S.C. Case No. 04-14722). Julio E. Mendoza, Jr., Esq., at Nexsen Pruet Adams Kleemeier, LLC represents the Debtor in its restructuring efforts. When the Debtor filed for protection from their creditors, they listed $3,641,273 in total assets and $8,876,236 in total debts. JONES MEDIA: Scripps Transaction Prompts Moody's to Lift Ratings ---------------------------------------------------------------- Moody's Investors Service upgraded the ratings of Jones Media Networks, Ltd., as a result of the close the Jones Media/Scripps transaction. The outlook is stable. This concludes the review that began in October 2004. The upgrade is based on Moody's understanding that all of the 11.75% Senior Secured Notes due 2005 have been repaid with the $140 million in proceeds from the company's sale of the Great American Country Network, as required under the bond indenture. Further, Moody's will withdraw the ratings of Jones given the completion of this redemption. Moody's upgraded these ratings: * $100 million 11.75% Senior Secured Notes due 2005 to B3 from Caa2 * Senior implied rating to B3 from Caa2, and * Senior unsecured issuer rating to Caa1 from Caa3. The outlook is now stable. Jones Media Networks, Ltd., is an independent provider of programming to radio stations and also leases transponder space and provides ad representation services to radio programmers. It is headquartered in Englewood, Colorado. KNOWLEDGE LEARNING: S&P Rates Planned $640M Sr. Sec. Debts at BB- ----------------------------------------------------------------- Standard & Poor's affirmed its 'B+' corporate credit rating on child-care services provider Knowledge Learning Corp. At the same time, Standard & Poor's assigned its 'BB-' senior secured debt rating to the company's proposed $100 million senior secured revolving credit facility due in 2010 and to its $540 million senior secured term loan due in 2012. Standard & Poor's also assigned its 'B-' subordinated debt rating to Knowledge Learning's $251 million senior subordinated notes due in 2015. The existing ratings were taken off CreditWatch, where they were placed with negative implications on Nov. 8, 2004; the outlook is now negative. The company is expected to use the proceeds from the term loan and subordinated notes, in addition to $200 million of new common equity contributed by Knowledge Learning's principal investors, to purchase KinderCare Learning Centers, Inc. KinderCare's ratings also were affirmed and removed from CreditWatch, where they were placed with negative implications on April 27, 2004. Although KinderCare's rating outlook is negative, the rating may be withdrawn upon conclusion of the transaction. "The low, speculative-grade rating reflects the heavy debt burden assumed by Knowledge Learning and the company's weakened financial profile," said Standard & Poor's credit analyst Jesse Juliano. Knowledge Learning will pay $550 million to purchase KinderCare's existing equity, $405 to repay some of the existing debt at Knowledge Learning and KinderCare, some $6 million to repay outstanding preferred stock, and $61 million to pay restructuring expenses and deal-related fees. Knowledge Learning will also assume $318 million of KinderCare debt, including its $295 million CMBS loan. Pro forma for the transaction, Knowledge Learning will have approximately $1.1 billion of total debt outstanding. Knowledge Learning will triple in size, and despite the company's track record of successfully integrating acquisitions, a transaction of this scale will likely present integration challenges. The ratings also reflect the company's narrow operating focus in the child-care services sector and the difficult operating environment in this field. These concerns are only partially offset by the company's strong liquidity for its ratings category, its leading position in a highly fragmented industry, and its diversification across 2,038 facilities in 39 states in the U.S. The negative outlook reflects Standard & Poor's concerns regarding the heavy debt load, the integration risk, and the difficult operating environment in child-care services. Knowledge Learning will have significant liquidity and will use a more credit- friendly strategy of managing KinderCare's assets, by using cash flow generation to reduce debt rather than to expand in the manner KinderCare had in the past. However, if the company experiences unanticipated operating shortfalls, we will lower our ratings on the company. While the KinderCare transaction will give Knowledge Learning the scale to improve its negotiating leverage for employer-sponsored programs and should help with its marketing effort, there are also associated risks. The company will greatly increase its debt obligations, which will reduce Knowledge Learning's cushion to absorb operating shortfalls, such as those caused by potential future enrollment declines. Also, the company will be tripling its size, which presents integration risk. However, given Knowledge Learning's successful integration of ARAMARK Corp.'s child-care services division in 2003, Standard & Poor's gains some comfort in the company's ability to integrate KinderCare. Knowledge Learning's management team closed underperforming ARAMARK centers, focused on generating cash flow from the existing assets, and was able to meet Standard & Poor's performance expectations. San Rafael, California-based Knowledge Learning Corp., a wholly owned subsidiary of Knowledge Schools, Inc., will be, after the KinderCare acquisition, the largest provider of child-care services in the U.S. The combined company will have 1,909 community centers, 129 employer-sponsored centers, school partnerships at 661 sites, and a small online education program. It will serve more than 200,000 students in 39 states, and will have annual revenues of more than $1.4 billion. KRAMONT REALTY: Moody's Reviewing B3 Preferred Stock Rating ----------------------------------------------------------- Moody's Investors Service placed its B3 preferred stock rating of Kramont Realty Trust under review for upgrade due to the announcement on December 19 that Kramont agreed to merge into Centro Watt America REIT III LLC, an affiliate of Melbourne, Australia-based Centro Properties Limited (ASX: CNP), a property trust. Simultaneously, other affiliates of Centro will be merged into Kramont. The transaction is expected to close during the first quarter of 2005. During its review, Moody's will review the pro forma financial and strategic structure of Centro and its US affiliates, and the disposition of the Kramont preferred stock. The review for upgrade reflects Centro's status as a larger, more diverse and seemingly more financially robust company than Kramont. Moody's does not rate Centro. The transaction has been approved by Kramont's Board, and is subject to approval of the common and Series B-1 convertible shareholders. Centro will pay US$23.50 cash per common share of Kramont. Centro is the fourth-largest listed property trust in Australia, with A$6.4 billion of assets under management. Centro owns stakes in 130 shopping centers in Australia. In 2003, it expanded into the USA in partnership with Watt Commercial Properties. The partnership now owns and manages 17 community centers, mostly in California. The acquisition of Kramont will initially be funded with debt: (i) $400 million of existing secured debt being assumed, (ii) $300 million new secured and mezzanine debt, and (iii) a $500 million Centro direct investment to be funded from Australian bank facilities. Kramont's current Series B-1 preferred stockholders will receive either a series B-1 preferred share in the new entity (Centro Watt America REIT III LLC) or US$25, plus accrued and unpaid dividends. The Series E holders will receive a US $25 liquidation preference, plus accrued and unpaid dividends, per preferred share. These ratings were placed under review for upgrade: -- Kramont Realty Trust * Series B-1 and Series E Preferred Shares at B3; * preferred stock shelf at (P)B3; * unsecured debt shelf at (P)B1. Kramont Realty Trust [NYSE: KRT], headquartered in Plymouth Meeting, Pennsylvania, USA, is a self-administered, self-managed real estate investment trust specializing in the acquisition, leasing, development and management of neighborhood and community shopping centers. At September 30, 2004, Kramont had assets of US$858 million and equity of US$274 million. MISSISSIPPI AUTO RENTAL: List of Largest Unsecured Creditor ----------------------------------------------------------- Mississippi Auto Rental Service, LLC, released a list of its Largest Unsecured Creditor: Entity Claim Amount ------ ------------ Capital Auto Rental Service Unknown c/o Billy C. Campbell, Jr., Esq. Holcomb Dumbar P.O. Box 190 Southaven, MS 38671 Headquartered in Tupelo, Mississippi, Mississippi Auto Rental Service, LLC provides auto rental services. The Debtor filed for chapter 11 protection (Bankr. N.D. Miss. Case No. 04-17899) on December 10, 2004. Craig M. Geno, Esq., at Harris & Geno, PLLC, represents the Company in its restructuring efforts. When the Debtor filed for protection from its creditors, it estimated assets and debts of more than $1 Million. MOONEY AEROSPACE: Emerges from Bankruptcy Protection ---------------------------------------------------- J. Nelson Happy, President and CEO of Mooney Aerospace Group, Ltd. (MNYG.pk), reported that the U. S. Bankruptcy Court for the District of Delaware signed the confirmation order confirming the company's Plan of Reorganization on December 15, 2004. Therefore, the Company's Plan of Reorganization became effective on December 14, 2004. As previously announced, as part of the plan existing shareholders will be issued new shares of Mooney Aerospace Group, Ltd., common stock based on a reverse split of 3,223 old MASG shares for one share of new common stock. According to Mr. Happy: "The Company's board of directors decided today to not issue fractional shares but to exchange them for cash, thus simplifying the process of conversion. Our existing shareholders should submit their shares to their stock transfer agent: American Stock Transfer and Trust Co. 59 Maiden Lane, Plaza Level New York, N.Y. 10038 Phone 800-937-5449 by a traceable method such as certified mail or through their stock broker. Market makers in the company's stock are now applying to the NASD to allow the shares to trade after they are exchanged." Mr. Happy also announced: "The board of directors has also decided that all shares that were previously issued by the company should be free trading after they are exchanged. However, the plan imposes two restrictions on the sale of the new stock issued to all other classes. As to them, no sale of the stock may occur until 90 days after the plan's effective date. Thereafter, no more than 10% of each shareholder's total holdings can be sold per month. For exact details, please review the terms of the Amended Plan of Reorganization which the Company filed with the SEC." Headquartered in Kerrville, Texas, Mooney Aerospace Group, Ltd. -- http://www.mooney.com/-- is a general aviation holding company that owns Mooney Airplane Co., located in Kerrville, Texas. The Company filed for chapter 11 protection on June 10, 2004 (Bankr. Del. Case No. 04-11733). Mark A. Frankel, Esq., at Backenroth Frankel & Krinsky LLP, represents the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed $16,757,000 in total assets and $69,802,000 in total debts. MORGAN STANLEY: Fitch Puts Low-B Ratings on Six Mortgage Certs. --------------------------------------------------------------- Fitch Ratings affirms Morgan Stanley Capital I Trust commercial mortgage pass-through certificates, series 2003-IQ5: -- $94.4 million class A-1 at 'AAA'; -- $120 million class A-2 at 'AAA'; -- $60 million class A-3 at 'AAA'; -- $373.7 million class A-4 at 'AAA'; -- Interest Only (I/O) class X-1 at 'AAA'; -- I/O class X-2 at 'AAA'; -- $22.4 million class B at 'AA'; -- $30.2 million class C at 'A'; -- $7.8 million class D at 'A-'; -- $5.8 million class E at 'BBB+'; -- $6.8 million class F at 'BBB'; -- $7.8 million class G at 'BBB-'; -- $5.8 million class H at 'BB+'; -- $2.9 million class J at 'BB'; -- $4.9 million class K at 'BB-'; -- $2.9 million class L at 'B+'; -- $1.9 million class M at 'B'; -- $1 million class N at 'B-'. Fitch does not rate the $7.8 million class O. The affirmations are due to the stable pool performance and minimal paydown since issuance. As of the December 2004 distribution date, the pool's aggregate principal balance has decreased 3% to $756.2 million from $778.8 million at issuance. There are no delinquent or specially serviced loans. GMAC Commercial Mortgage Corp. -- GMACCM -- the master servicer collected year-end 2003 financial operating statements for 90.5% of the transaction. The YE 2003 weighted average debt service coverage ratio -- DSCR -- based on net operating income -- NOI -- was 1.81 times compared to 1.79x at issuance for the same loans. The six credit assessed loans (33.8% of the pool) remain investment grade. Fitch reviewed operating statement analysis reports and other performance information provided by GMACCM. The DSCR for the loans are calculated based on a Fitch adjusted net cash flow -- NCF -- and a stressed debt service based on the current loan balance and a hypothetical mortgage constant. Two Commerce Square (8.3%) is secured by a 40-story class A office building totaling 953,276 square feet -- sf -- located in Philadelphia, Pennsylvania. As of December 2004, the whole loan had an outstanding principal balance of $125.4 million, of which two of the four pari-passu notes totaling $62.7 million serve as collateral for this transaction. There is an additional $74.3 of mezzanine debt secured by the equity of the borrower. As of July 2004 occupancy has remained flat since issuance at 97.4%. The DSCR as of YE 2003 increased to 1.76x compared to 1.65x at issuance. 55 East Monroe (7.7%) is secured by a 50-story office building totaling 1,602,749 sf located in the East Loop submarket of Chicago, Illinois. As of December 2004 the whole loan was $117 million, of which one of the four pari-passu notes totaling $58.5 million serves as collateral for this transaction. The DSCR as of YE 2003 has remained flat at 1.83x since issuance. As of September 2004 occupancy dropped to 79% compared to 89% in December 2003 and 92.7% at issuance. At issuance, the borrower funded approximately $2.8 million into a lender-controlled account for future leasing costs. In addition, the loan has a springing monthly reserve for leasing and replacement costs. The property benefits from the experienced sponsorship and management through Tishman Speyer/Travelers Real Estate Venture, L.P., Fitch will continue to monitor the leasing activity at the property. International Plaza (4.9%) is secured by 583,490 sf of a 1,225,466 sf two-level regional mall located in Tampa, Florida. The mall is anchored by Dillard's, Nordstrom, and Neiman Marcus. None of the anchor tenants serve as collateral. As of December 2004, the whole loan balance was $185.8 million, of which one of the three pari-passu notes totaling $36.9 million serves as collateral for this transaction. As of March 2004, occupancy dropped to 88.4% compared to 92.4% at issuance. The DSCR as of YE 2003 was 1.45x compared to 1.40x at issuance. Fitch will continue to monitor the leasing activity at the property. The remaining three credit assessed loans, Invesco Funds Corporate Campus (5.2%), 3 Times Square (4.5%) and 200 Berkeley & Stephen L Brown Buildings (3.3%) have performed at or better than issuance. The weighted average DSCR for the three remaining loans as of YE 2003 was 2.14x compared to 2.00x at issuance. NATIONAL COAL: Substantial Net Losses Trigger Going Concern Doubt ----------------------------------------------------------------- National Coal Corporation experienced relatively flat coal sales for the three-month period ended September 30, 2004, compared to the three-month period ended June 30, 2004. For the three months ended September 30, 2004, it had a total of seven customers, two of which accounted for approximately 62% of the Company's sales. These sales were made pursuant to short term contracts to deliver each customer 100,000 tons of coal during a one-year period. Royalty receipts for the nine months ended September 30, 2004, were the result of recognition of deferred revenue relating to National Coal's sale in August 2003 for $250,000 of royalty rights relating to coal mined on the Smoky Mountain portion of the Company's New River Tract property. There will not be any more royalty revenue pursuant to this transaction. As of September 30, 2004, National Coal had cash and cash equivalents of approximately $5,809,000. As of Sept. 30, 2004, it had negative working capital of approximately $949,000, not accounting for $1,763,940 of debt discount pursuant to the beneficial conversion feature of the convertible notes issued in August 2004, and stockholders' equity of approximately $13,678,100. The Company expects a significant use of cash during the balance of fiscal 2004 and fiscal 2005 as it continues to expand its coal mining operations. The Company anticipates that its current cash reserves plus cash it expects to generate from operations will be sufficient to fund its operational expenditures for the next twelve months. If the Company acquires additional assets and mining operations, however, it will require additional equity or debt financing, the amount and timing of which will depend in large part on the Company's spending program. For instance, its pending acquisition of coal mining rights, leases and permits from Appalachian Fuels, LLC is expected to require approximately $19 million. If additional funds are raised through the issuance of equity securities, the current stockholders may experience dilution. Furthermore, there can be no assurance that additional financing will be available when needed or that if available, such financing will include terms favorable to the stockholders. If the financing is not available when required or is not available on acceptable terms, National Coal may be unable to take advantage of business opportunities or respond to competitive pressures, any of which could have a material adverse effect on its business, financial condition and results of operations. Going Concern Doubt From inception to date, the Company has incurred significant outstanding current obligations and has incurred substantial net losses. This factor, among others, raises substantial doubt as to the Company's ability to continue as a going concern. About National Coal National Coal Corporation engages in coal production by locating, assembling, acquiring or leasing, assessing, permitting and developing coal properties in Eastern Tennessee in the Central Appalachian coal region. The Company, after obtaining permits from the Department of the Interior, mines said properties, or contracts with independent mine operators, for extraction of the coal minerals on a negotiated fee basis. Some contracts may be on a per ton basis, and some may be on a cost plus basis. The variance is usually due to varying extraction conditions and circumstances. NEIGHBORCARE: Acquires Belville Pharmacy for An Undisclosed Sum --------------------------------------------------------------- NeighborCare, Inc. (Nasdaq: NCRX) announced that it has completed the acquisition of Belville Pharmacy Services, Inc., of San Diego, California. Belville is a long-term care pharmacy serving skilled and residential facilities and hospices in Southern California. As announced on November 9, 2004, NeighborCare agreed to acquire Belville which currently generates revenue of approximately $50 million on an annualized basis and serves approximately 17,000 beds. Financial terms of the transaction were not disclosed. About NeighborCare, Inc. NeighborCare, Inc. (Nasdaq: NCRX) is one of the nation's leading institutional pharmacy providers serving long-term care and skilled nursing facilities, specialty hospitals, assisted and independent living communities, and other assorted group settings. NeighborCare also provides infusion therapy services, home medical equipment, respiratory therapy services, community-based retail pharmacies and group purchasing. In total, NeighborCare's operations span the nation, providing pharmaceutical services in 32 states and the District of Columbia. * * * As reported in the Troubled Company Reporter on May 26, 2004, Standard & Poor's Ratings Services placed its ratings on Omnicare Inc., including the 'BBB-' corporate credit ratings, on CreditWatch with negative implications after the long-term care pharmacy provider disclosed an all-cash offer to purchase competitor NeighborCare Inc. At the same time, the ratings on NeighborCare, including the 'BB-' corporate credit rating, were also placed on CreditWatch with negative implications, as the pro forma combination is likely to have a markedly weaker financial profile than NeighborCare. The purchase price of $1.5 billion includes the assumption or repayment of a $250 million NeighborCare debt issue. Estimating the effect of additional debt and not assuming any cost savings, total debt to EBITDA is expected to rise to over 4x, while funds from operations to total debt will fall to less than 15%. "We expect to meet with Omnicare management to determine what cash flow benefits can be realized and the ultimate nature of the financial structure of the combined company before resolving the CreditWatch listing," said Standard & Poor's credit analyst David Lugg. NORTEL NETWORKS: Court Extends Time for Annual Meeting to May 31 ---------------------------------------------------------------- Nortel Networks Corporation (NYSE:NT)(TSX:NT) and its principal operating subsidiary, Nortel Networks Limited, provided a status update pursuant to the alternative information guidelines of the Ontario Securities Commission. These guidelines contemplate that the Company and NNL will normally provide bi-weekly updates on their affairs until such time as they are current with their filing obligations under Canadian securities laws. The Company and NNL reported that there have been no material developments in the matters reported in their status updates of June 2, 2004, June 15, 2004, June 29, 2004, July 13, 2004, July 27, 2004, August 10, 2004, August 19, 2004, September 2, 2004, September 16, 2004, September 30, 2004, October 14, 2004, October 27, 2004, November 11, 2004, November 24, 2004 and December 8, 2004; the Company's press release "Nortel Networks Announces New Waiver from Export Development Canada" dated December 10, 2004; and the Company's press release "Nortel Provides Estimated Unaudited Results for Q1, Q2 and Q3 2004 and Years 2001, 2002 and 2003" dated December 14, 2004, with the exception of the matters described below. Annual Shareholders' Meeting The Company was granted an order by the Ontario Superior Court of Justice extending the time for calling the Company's 2004 Annual Shareholders' Meeting to a date no later than May 31, 2005. The Company had previously obtained an earlier order from the Court extending the time for calling the Meeting to a date no later than March 31, 2005 so that the Company's 2003 audited financial statements could be completed and mailed to shareholders in time for the Meeting. The latest extension was obtained, after discussions with the Staff of the United States Securities and Exchange Commission, to permit compliance with a specific SEC rule which would require, in these circumstances, that the Company provide to shareholders its 2004 audited financial statements either prior to or concurrently with the mailing of the proxy materials for the Meeting. As this would not be possible if the Meeting were to be held by March 31, 2005 (which would require the Company to commence the mailing of its proxy materials by no later than mid February 2005), the Company applied for and was granted an order by the Court further extending the time for calling the Meeting to a date no later than May 31, 2005 in order to permit the Company to comply with this requirement of United States securities laws. Despite the need to obtain this further extension, the Company and its Board of Directors remain committed to holding the Meeting at the earliest practicable time. This order does not have any impact on the Company's expectation, most recently announced in its Dec. 8, 2004 press release and subject to the limitations therein, as to the commencement of the filing of its and NNL's audited financial statements for 2003 and unaudited financial statements for the first and second quarters of 2004 and related periodic reports on January 10, 2005, and to follow thereafter, as soon as practicable, with the filing of its and NNL's unaudited financial statements and related periodic reports for the third quarter of 2004, and any required amendments to periodic reports for prior periods. The Company's and NNL's next bi-weekly status update is expected to be released during the week of January 3, 2005. About the Company Nortel is a recognized leader in delivering communications capabilities that enhance the human experience, ignite and power global commerce, and secure and protect the world's most critical information. Serving both service provider and enterprise customers, Nortel delivers innovative technology solutions encompassing end-to-end broadband, Voice over IP, multimedia services and applications, and wireless broadband designed to help people solve the world's greatest challenges. Nortel does business in more than 150 countries. For more information, visit Nortel on the Web at http://www.nortel.com/ * * * As reported in the Troubled Company Reporter on Dec. 10, 2004, Standard & Poor's Ratings Services placed its B-/Watch Developing credit rating on Nortel Networks Lease Pass-Through Trust certificates series 2001-1 on CreditWatch with negative implications. The rating on the pass-through trust certificates is dependent upon the ratings assigned to Nortel Networks Ltd. and ZC Specialty Insurance Co. This CreditWatch revision follows the Dec. 3, 2004, withdrawal of the ratings assigned to ZC Specialty Insurance Co. Previously, the rating had a CreditWatch developing status due to the CreditWatch developing status on the rating assigned to Nortel. The pass-through trust certificates are collateralized by two notes that are secured by five single-tenant, office/R&D buildings that are leased to Nortel ('B-'). Nortel guarantees the payment and performance of all obligations of the tenant under the leases. The lease payments do not fully amortize the notes. A surety bond from ZC Specialty Insurance Co. insures the balloon amount. The notes mature in August 2016, at which time a final principal payment of $74.7 million is due. If this amount is not repaid, the indenture trustee can obtain payment from the surety, provided certain conditions are met. The notes will remain on CreditWatch while Standard & Poor's examines the impact of the withdrawal of the ratings on ZC Specialty Insurance Co. NORTHWEST ALUMINUM: Confirmation Hearing Set for December 23 ------------------------------------------------------------ The Honorable Randall L. Dunn of the U.S. Bankruptcy Court for the District of Oregon will convene a hearing today, Thursday, December 23, 2004, at 9:00 a.m., to consider the adequacy of the Disclosure Statement explaining the Joint Plan of Reorganization filed by Northwest Aluminum Company and its debtor-affiliates. The Debtors' filed their Disclosure Statement and Joint Plan of Reorganization on November 17, 2004. The Plan provides for the formation of a new Delaware corporation, referred to as Holdco, where Golden Northwest Aluminum, Inc., will transfer substantially all of its assets, including its ownership interests in Northwest Aluminum Company, Northwest Aluminum Specialties Inc., and Northwest Aluminum Technologies, LLC. The reorganization will be accomplished by issuing Holdco equity in exchange for most of the Debtors' prepetition debt, by raising capital through the sale of certain Holdco promissory notes, and by raising additional working capital intended primarily for Aluminum Specialties' use through a new revolving credit facility. Pursuant to the Plan, Holdco, or a newly formed subsidiary of Holdco is expected to acquire substantially all of the assets of Goldendale Aluminum Company, including its Goldendale aluminum smelter, through enforcement of the First Mortgage Notes, which will be transferred to Holdco. The Plan provides for these recoveries: a) each First Mortgage Noteholders will receive a pro rata share of $10 million in aggregate principal amount of 10% Mortgage Notes of Holdco due 2011, which will be guaranteed and secured by the Reorganized Subsidiary Debtors on the same basis but subordinate to Holdco Notes, and 1,000 shares of Holdco Common Stock; b) holders of Allowed Unsecured Claims will receive in lieu of the cash payments owed to them: (i) a pro rata distribution of 449,000 shares of Holdco Common Stock, or (ii) cash payment equal to 10% of the Allowed Unsecured Claim for those claims that are equal to or less than $25,000 or (iii) cash payment equal to 100% of the Allowed Unsecured Claim for those claims that are equal to or less than $1,000; and c) the pre-petition holder of Golden Northwest' common stock, Brett Wilcox will not receive any distributions under the Plan because the stocks that Mr. Wilcox retains will be rendered worthless with the transfer of substantially all of Golden Northwest's assets to Holdco. Full text copies of the Disclosure Statement and Plan are available for a fee at: http://www.researcharchives.com/download?id=040812020022 Headquartered in The Dalles, Oregon, Northwest Aluminum Company, - -- http://www.nwaluminum.com/-- is a subsidiary of Golden Northwest Aluminum, Inc., engaged in the production of aluminum billet for hot extrusion, hot or cold impact extrusion, and hot or cold forging stock in most aluminum alloys. The Company and its debtor-affiliates filed for chapter 11 protection on November 10, 2004 (Bankr. D. Ore. Case No. 04-42061). Richard C. Josephson, Esq., at Stoel Rives LLP represents the Debtors' restructuring. When the Company filed for protection from its creditors, it listed estimated assets of $10 million to $50 million and estimated debts of more than $100 million. NORTHWEST ALUMINUM: Stoel Rives Approved as Bankruptcy Counsel -------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Oregon gave Northwest Aluminum Company and its debtor-affiliates permission to employ Stoel Rives LLP as their general bankruptcy counsel. Stoel Rives will: a) advise the Debtors with respect to their powers and duties as debtors-in-possession in the continued management and operation of their businesses; b) attend meetings and negotiate with representatives of creditors and other parties in interest; c) take all necessary action to protect and preserve the Debtors' estates, including: (i) prosecution of actions on behalf of the Debtors, (ii) the defense of actions commenced against the Debtors, and (iii) negotiations concerning all litigation involving the Debtors and objection to claims filed against the Debtors; d) prepare on the Debtors' behalf all motions, applications, answers, orders, reports, and papers necessary to the administration of their estates; e) negotiate and prepare on the Debtors' behalf a plan of reorganization, disclosure statement, and all related agreements and documents to the plan and disclosure statement and take any necessary action to obtain their confirmation; f) represent the Debtors in connection with obtaining postpetition financing and advise the Debtors with any potential sale of assets; g) appear before the Court and any appellate courts to protect the interests of the Debtors estates; h) consult with the Debtors regarding tax matters; and i) perform all other necessary legal services to the Debtors in connection with their chapter 11 cases. Richard C. Josephson, Esq., a Member at Stoel Rives, is the lead attorney for the Debtors. Mr. Josephson discloses that the Firm received a $150,000 retainer. Mr. Josephson reports that the Firm's hourly rates for attorneys and paralegals performing services to the Debtors range from $165 to $400 per hour. Stoel Rives assures the Court that it does not represent any interest adverse to the Debtors or their estates. Headquartered in The Dalles, Oregon, Northwest Aluminum Company, - -- http://www.nwaluminum.com/-- is a subsidiary of Golden Northwest Aluminum, Inc., engaged in the production of aluminum billet for hot extrusion, hot or cold impact extrusion, and hot or cold forging stock in most aluminum alloys. The Company and its debtor-affiliates filed for chapter 11 protection on November 10, 2004 (Bankr. D. Ore. Case No. 04-42061). When the Company filed for protection from its creditors, it listed estimated assets of $10 million to $50 million and estimated debts of more than $100 million. NOVA CHEMICALS: S&P Revises Outlook on BB+ Ratings to Stable ------------------------------------------------------------ Standard & Poor's Ratings Services revised its outlook on petrochemicals producer Nova Chemicals Corp. to stable from negative. At the same time, Standard & Poor's affirmed the 'BB+' long-term corporate credit and senior unsecured debt ratings on Nova. "The outlook revision follows an improvement in Nova's operating performance through 2004, good operating prospects for 2005, and expectations of stable liquidity and modest debt reduction in the next year," said Standard & Poor's credit analyst Kenton Freitag. The ratings on Calgary, Alberta-based Nova reflect the cyclicality and commodity-like nature of Nova's petrochemical products, its mixed cost profile, and an improving financial profile. Importantly, the ratings are supported by management's moderate financial policies, which have emphasized the maintenance of good liquidity through all points of the industry cycle. Nova's primary petrochemical segments are highly cyclical and operating margins tend to trend in the same direction, thereby limiting the benefits of diversification because both product chains consume energy-related raw materials, and demand is linked to economic activity. The outlook is stable. Credit measures should improve in the next year based on currently favorable and improving market conditions. The ratings on Nova's recognize the company's efforts to achieve sustained improvement in financial performance, including a material reduction in the company's debt burden, and a prudent approach to liquidity management that recognizes the cyclical nature of its businesses. OAKWOOD HOMES: S&P's Rating on Class B-1 Certificate Tumbles to D ----------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on the class B-1 certificates from two Oakwood Homes Corp.-related transactions. The lowered ratings reflect the unlikelihood that investors will receive timely interest and the ultimate repayment of their original principal investments. Oakwood Mortgage Investors Inc.'s series 1997-C and OMI Trust 2002-A each reported an outstanding liquidation loss interest shortfall for their class B-1 certificates on the November 2004 payment date. Standard & Poor's believes that interest shortfalls for these deals will continue to be prevalent in the future, given the adverse performance trends displayed by the underlying pools of manufactured housing retail installment contracts originated by Oakwood Homes Corp., and the location of subordinate class write-down interest at the bottom of the transactions' payment priorities (after distributions of senior principal). Standard & Poor's will continue to monitor the outstanding ratings associated with these transactions in anticipation of future defaults. Ratings Lowered Oakwood Mortgage Investors Inc. Series 1997-C Rating Class To From ----- -- ---- B-1 D CC OMI Trust 2002-A Rating Class To From ----- -- ---- B-1 D CC OAKWOOD MORTGAGE: Moody's Junks 12 Certificate Classes ------------------------------------------------------ Moody's Investors Service is downgrading the ratings on certain senior and mezzanine certificates of Oakwood's manufactured housing securitizations concluding the review, which began on November 24, 2004. Moody's previously downgraded the ratings on certificates of 18 Oakwood securitizations in March 2004. The rating actions were triggered by the weaker-than-anticipated performance of Oakwood's pools and the resulting erosion in credit support. Since the prior rating action, performance of Oakwood's pools continued to deteriorate with repossession and loss severities remaining much higher than original expectations. As a result, subordinate tranches of many securitizations have been written down completely. The transactions are currently being serviced by Vanderbilt ABS Corp. and subserviced by Vanderbilt Mortgage and Finance, Inc. In 2004, Clayton Homes, Vanderbilt's parent, acquired the assets of Oakwood. Vanderbilt continues to originate manufactured housing paper, providing stability for the servicing platform. Vanderbilt has instituted loan extension and assumption programs to mitigate repossessions and losses. The complete rating actions are: -- Series 1998-C * 6.45% Class A, rated Baa1, downgraded to Baa3 * Adjustable Rate Class A-1, rated Baa1, downgraded to Baa3 * 6.78%, Class M-1, rated Caa3, downgraded to Ca -- Series 1998-D * 6.40% Class A, rated Baa3, downgraded to Ba1 * Adjustable Rate Class A-1, rated Baa3, downgraded to Ba1 -- Series 1999-A * 5.89% Class A-2, rated Baa2, downgraded to Ba1 * 6.09% Class A-3, rated Baa2, downgraded to Ba1 * 6.65% Class A-4, rated Baa2, downgraded to Ba1 * 6.34% Class A-5, rated Baa2, downgraded to Ba1 -- Series 1999-B * 7.18% Class M-1, rated Ca, downgraded to C -- Series 2000-C * 7.72% Class A-1, rated Ba2, downgraded to B2 * 8.49% Class M-1, rated Ca, downgraded to C -- Series 2000-D * 6.74% Class A-2, rated B3, confirmed at B3 * 6.99% Class A-3, rated B3, downgraded to Caa1 * 7.40% Class A-4, rated B3, downgrade Caa3 -- Series 2001-B * LIBOR+0.375%, Class A-2, rated Baa2, downgraded to Ba3 * 6.535%, Class A-3, rated Baa2, downgraded to Ba3 * 7.21%, Class A-4, rated Baa2, downgraded to Ba3 * 7.92% Class M-1, rated Ca, downgraded to C -- Series 2001-C * 6.00% Class A-IO, rated Caa1, downgraded to Caa3 * 5.16% Class A-1, rated Caa1, downgraded to Ca * 5.92% Class A-2, rated Caa1, downgraded to Ca * 6.61% Class A-3, rated Caa1, downgraded to Ca * 7.41% Class A-4, rated Caa1, downgraded to Ca -- Series 2001-D * 6.00% Class A-IO, rated Ba2, downgraded to B1 * 1M LIBOR+0.15% Class A-1, rated Ba2, downgraded to B2 * 5.26% Class A-2, rated Ba2, downgraded to B2 * 5.90% Class A-3, rated Ba2, downgraded to B2 * 6.93% Class A-4, rated Ba2, downgraded to B2 * 7.38% Class M-1, rated Ca, downgraded to C -- Series 2001-E * 6.00% Class A-IO, rated Ba3, downgraded to B2 * 1M LIBOR + 0.30%, Class A-1, downgraded to B3 * 5.05% Class A-2, rated Ba3, downgraded to B3 * 5.69% Class A-3, rated Ba3, downgraded to B3 * 6.81% Class A-4, rated Ba3, downgraded to B3 * 7.56% Class M-1, rated Ca, downgraded to C -- Series 2002-A * 1M LIBOR+0.25% Class A-1, rated Ba3, downgraded to B1 * 5.01% Class A-2, rated Ba3, downgraded to B1 * 6.03% Class A-3, rated Ba3, downgraded to B1 * 6.97% Class A-4, rated Ba3, downgraded to B1 -- Series 2002-B * 1M LIBOR+0.23% Class A-1, rated Ba1, downgraded to Ba2 * 5.19% Class A-2, rated Ba1, downgraded to Ba2 * 6.06% Class A-3, rated Ba1, downgraded to Ba2 * 7.09% Class A-4, rated Ba1, downgraded to Ba OMT INC: Raises $1.4 Million in Private Convertible Debt Offer -------------------------------------------------------------- OMT Inc. (TSX VENTURE:OMT) announced today that it has raised approximately $1.4 Million in new investment through a private placement offering and completed a financial restructuring of OMT. Subsequent to this closing, OMT will continue the same offering at the terms as defined below, which will allow for additional public investment of up to $400,000 plus up to an additional $400,000 in matching funds from ENSIS. OMT has completed the private placement offering (the "Offering") of $1,000,000 principal amount of 4 year 8% subordinate convertible redeemable debentures (the "Debentures") to subscribers resident in the Provinces of Manitoba and British Columbia. The Debentures are convertible into common shares of OMT at a price equal to $0.10 per share for two years, $0.11 in year three and $0.12 in year four. The Debentures are subject to a four month hold period pursuant to applicable securities law and the policies of the TSX Venture Exchange. Wellington West Capital Inc., an independent investment dealer with offices located throughout Canada, acted as the principal agent on a best efforts basis with respect to the Offering. Wellington and certain subagents who assisted with the Offering were paid a commission of 7% of the gross proceeds of the Offering, which is equal to $70,000. Wellington and certain of its subagents also received an aggregate of 100,000 broker warrants of OMT. Each broker warrant entitles the holder thereof to purchase one common share of OMT at a price of $0.10 for a period of two years from the date of issuance. Concurrently with the closing of the Offering, OMT completed the conversion of a loan of $570,116 (including outstanding interest) from ENSIS Growth Fund Inc. -- EGF -- into a 4 year 8% subordinate convertible redeemable loan having substantially the same terms as the Debentures. OMT also completed the subscription by EGF for an additional 4 year 8% subordinate convertible redeemable loan in the amount of $429,884 on substantially the same terms as the Debentures. Mark Ahrens-Townsend, Vice President, Investments at ENSIS, states, "We independently analyzed the market opportunity and competitive environment in relation to the company. We believe that the company is very well-placed in the industry and positioned for strong and profitable growth." Concurrently with the foregoing transactions, OMT completed the redemption of all of its issued and outstanding preferred shares (the "Preferred Shares") for a total value of $3,702,784. The Preferred Shares were held by Renaissance Capital Manitoba Ventures Fund Limited Partnership, EGF and ENSIS Investment Limited Partnership -- EILP. $2,000,000 of the redemption price of the Preferred Shares, being the stated capital amount of the Preferred Shares, was satisfied by the issuance of an aggregate of $2,000,000 principal amount of convertible loans on substantially the same terms as the Debentures to Renaissance, EGF and EILP. The remainder of the redemption price of the Preferred Shares, being the interest owing on the Preferred Shares, was satisfied by the issuance of an aggregate of 17,027,840 common shares of OMT to Renaissance, EGF and EILP at a deemed price of $0.10 per common share. "We are pleased with the level of financing that was raised within just five weeks of issuing this offering, especially during the holiday season. We believe this clearly indicates that the market sees the same sizeable opportunity that we do in the entertainment broadcast industry. The expanded support of ENSIS, one of our strategic investors, also underscores this belief," states Scott Farr, President and CEO of OMT Inc. "We plan to launch our aggressive marketing and sales programs in the first quarter of 2005. With the continuance of this offering, we will also have sufficient time to discuss further investment from strategic accredited private investors and companies in the USA and Canada," adds Farr. The terms of the foregoing transactions are still subject to the final approval of the TSX Venture Exchange. About OMT OMT Inc. (TSXV:OMT) is a technology and multi-media content solution provider to the entertainment and broadcast industry. Intertain Media, the digital entertainment division, and iMediaTouch, the radio broadcast solution group, distribute multi- media content that is heard by millions of people worldwide every day through television, radio, satellite, cable and Internet broadcasts. To learn more about the Company, visit its websites at http://www.omt.net/ http://www.intertainmedia.com/ and http://www.imediatouch.com/ * * * At June 30, 2004, OMT Inc.'s balance sheet showed a $2,868,206 stockholders' deficit, compared to a $2,591,936 deficit at December 31, 2003. ON SEMICONDUCTOR: Moody's Places B3 Rating on $645M Term Loan ------------------------------------------------------------- Moody's Investors Service affirmed the debt ratings of ON Semiconductor and its subsidiary, Semiconductor Components Industries, LLC, and assigned a rating of B3 to the new $645 million Tranche G term loan. The rating outlook remains positive. Moody's maintains these ratings for ON Semi and its subsidiaries: * Senior implied rating of B3; * $25 million secured revolving credit facility and $320 million Tranche F Term Loan maturing through Nov. 2007, both rated B3; * First lien secured notes and second lien secured notes rated B3 and Caa1, respectively; * Senior unsecured issuer rating of Caa1. The ratings of the Tranche F term loan and the senior secured notes will be withdrawn once the tender is complete. The new term loan will replace the existing term loan and will be used to finance the tender of the secured public notes. Moody's has not rated the $260 million convertible notes due 2024. The rating outlook remains positive. The new debt structure has somewhat reduced ON's balance sheet strength in order to significantly reduce future interest payments, but Moody's anticipates that the company will continue to generate positive cash flow which can be used for debt reduction or to restore the financial flexibility lost in this transaction. Lower interest rates as a result of the refinancing would have caused pro-forma estimated full year fixed charge coverage to rise to 3.22 from 2.16, and EBITDAR less capex to fixed charges to have been 2.61 versus 1.64, indicating a significant improvement in cash flow after fixed expenses. Leverage metrics will be stable at the close of the transaction, however ON Semi will use about $70 million of cash balances to pay tender premia and deal fees. Future changes to leverage metrics will depend on ON Semi's ability to generate cash flow, and the decisions made about the use of cash given its increased flexibility to use cash for alternate purposes. In general, ratings could rise if ON Semi continues to improve operating flexibility through a combination of controlled costs and working capital investment. Changes to the capital structure, which reduce fixed expenses and improve or maintain financial flexibility and liquidity could also drive ratings improvement. A reduction in debt to EBITDA below 4.5 times, combined with continued confidence in the company's operating ability, could trigger a rating upgrade. Ratings could stabilize or fall if ON Semi reverses positive operating cost trends or reduces liquidity to finance capital needs or operating losses. Ratings could also stabilize if the company changes its financial policy and uses cash for unanticipated purposes. Under the terms of the Tranche G facility, ON Semi has met the financial performance and leverage levels which relax certain covenant levels and restricted payments terms. This could allow more cash to flow out of the company for purposes other than debt reduction, or be used to benefit other holders besides the senior creditors. The Tranche G term loan is secured by effectively all assets of ON Semi, Semiconductor Components, and their most significant subsidiaries. Coverage has been reduced, since formerly the amount of first lien debt has increased by $195 million to take out the second lien notes which had been rated Caa1. The bank facility now represents all of the seniormost debt of the borrowing group, although it is still effectively subordinated to liabilities of non-domestic subsidiaries. Tangible asset coverage is modest, with approximately $530 million of liquid assets and $480 million of PP&E covering $645 million of first lien debt. ON Semiconductor, headquartered in Phoenix, Arizona, is a leading global manufacturer of power- and data-management semiconductors and standard semiconductor components. Revenues are forecast to be above $1.2 billion for 2004. PARAMOUNT RESOURCES: Moody's Rates $215M Sr. Unsec. Notes at B3 --------------------------------------------------------------- Moody's affirmed the B3 senior implied and assigned a B3 rating to the company's new senior unsecured exchange notes offering for Paramount Resources, Ltd, following the company's announced spin- off of the majority of its reserves into a yet to be created Unit Trust. While the ratings have been affirmed, the outlook remains negative and the company's ability to retain the ratings will depend on how soon after the transaction's close that management clearly declares in what time frame it will monetize the units to reduce debt to supportable levels. It is Moody's expectation that the company will utilize the units to fund future acquisitions or reduce debt, however, the timing and amounts of are key to the ratings, especially given the amount of pro forma leverage (approximately CAD $16.02/boe or US$13.60/boe) against the company's very short PD reserve life of 4.4 years. To prevent a downgrade, Paramount must reduce and maintain leverage to under CAD $10.00/boe (US $8.50/boe) within the next six months and under CAD $8.00/boe (US $6.80/boe) by year-end 2005 assuming commodity prices remain near current strong level. Maintaining the current ratings will also depend on Paramount demonstrating organic reserve and production growth from the remaining properties after giving effect to the spin-off. The negative outlook reflects: (1) very high leverage on the estimated 2004 year-end proved developed -- PD -- reserves ($16.02/boe) (US$13.60/boe) pro forma for the transaction and borrowings to supplement Q1'05 capex (the company's seasonal high point for drilling spending) expenditures in excess of cash flow; (2) a pro forma reserve base that will be approximately 59% smaller, and; (3) a production base that will be about 45% lower than pre- spin-off which significantly increases concentration risk; (4) the still high all-sources finding and development costs of over CAD $23.00/boe. A stable outlook would necessitate: (1) an acquisition of sufficient scale that is funded with either equity, cash flow or proceeds from the Trust unit sales that would bring the company's sustainable leverage to under CAD $7.00/boe (US$6.00/boe) with visibility to reduce further in the near term; (2) reserves and production levels are rebuilt to above pre- spin-off levels with the potential to drive further debt reduction; and (3) internally funded reserve replacement. However, to meet these leverage targets, it appears that Paramount would need to sell the majority of the trust units at once, and given the potential market and economic impact on the unit price, this appears unlikely in the near term. Paramount's ratings are restrained by: (1) the company's very high gross leverage; (2) a very short PD reserve life; (3) smaller more concentrated reserve and production base post the Trust spin-off; (4) high full cycle costs that appear unsupportable in lower commodity price environments; and (5) properties that require longer lead times for growth opportunities and are capital intensive without the full support of cash flows from already producing properties that are going into the new Trust. The ratings are supported by: (1) the net debt position after accounting for the Trust units that Paramount is expected to own after the spin-off; (2) current outlook for commodity prices that should support solid cash flows at least for 2005; and (3) the high percentage of operated properties which provides some financial flexibility to Paramount. Paramount's ratings are: * Assigned a B3 -- proposed US$215 million senior unsecured exchange notes * Affirmed at B3 -- Paramount's senior implied rating * Affirmed at Caa1 -- Paramount's unsecured issuer rating The new exchange notes are currently not notched below Paramount's senior implied rating as the amount of secured debt outstanding pro forma for the transaction will be less than 20% of the capitalization. However, future notching would be reconsidered if secured borrowings increase to a greater percentage of the capital structure. The proposed notes offering will be exchanged for US $215 million (CAD $255 million) of the company's old notes as Paramount spin- off about 60% of reserves into a separate Unit Trust. To execute this transaction, Paramount will exchange the old notes for the new ones while also redeeming approximately US $85 (CAD $102 million) of the old notes as part of the equity claw back redemption under the indentures following the company's equity issue in November 2004, leaving approximately US $215 million (CAD $255 million) of new notes. Then Paramount will establish the new separate trust as well as a trust partnership as a subsidiary of Paramount and initially place the trust assets down there. Following the redemption and exchange, the company will spin its East Kaybob, Marten Creek assets, (most of which were acquired within the last year) which has approximately 19.8 mboe/d of production and 31.4 mmboe of proved developed reserves into the new subsidiary. Contemporaneously with shareholder approval of Paramount's Plan of Arrangement, the Trust will put in place its own credit facilities. The trust assets will be acquired from Paramount for $150 million cash and 100% of the trust units. Paramount will distribute 81% of the trust units to its shareholders through the Plan of Arrangement, and will be free to dispose of the remaining 19% through subsequent prospectus offerings. However, the timing of the unit offerings will depend on market conditions. While Moody's understands the market and economic impact of selling too many of the units too fast, nonetheless, funds from these unit sales will be the driving force behind Paramount being able to meet the previously mentioned leverage reduction milestones in order the maintain the ratings. The assets that will remain at Paramount will be its Kaybob West, Grand Prairie, West Liard, the Southern Alberta coalbed methane properties, as well as acreage in Colville Lake and Oil Sands leases in NE Alberta. These properties will have approximately 21 mmboe of proved developed reserves with production of about 16.1 mboe/day. While the company sees drilling and development opportunities in these properties, some of these plays which are unconventional, particularly the Oil Sands properties which are SAGD properties and the Colville Lake properties which are capital intensive and will require significant lead times as the development technology and techniques are still being evaluated. Pro forma for the transaction, Paramount's liquidity will be adequate to cover expected capex in excess of cash flow during the Q1'05 (approximately CAD $39 million), which is typically the high point in drilling activity due to the weather in Canada. Upon close of the transaction, the company will have a borrowing base credit facility of about CAD $125 to $150 million, with about $70 million to $90 million available, to fund this bulge in planned capex, with planned capex and repayment of bank borrowings estimated in the subsequent quarters. Paramount Resources is headquartered in Calgary, Alberta, Canada. PEAK ENTERTAINMENT: $2.1M Equity Deficit Spurs Going Concern Doubt ------------------------------------------------------------------ Peak Entertainment Holdings, Inc., reported that at Sept. 30, 2004, and for the nine months then ended, it has suffered recurring losses, negative cash flows from operations, negative working capital, an accumulated deficit of $6,336,922 and a stockholders' deficiency of $2,143,303. These factors raise substantial doubt about the Company's ability to continue as a going concern. The Company has developed a business plan to increase revenue by capitalizing on its integrated media products. However, the Company must obtain funds from outside sources in fiscal 2004 and 2005 to provide needed liquidity and successfully implement its business plan. During the quarter ended September 30, 2004, $500,000 was raised from the sale of common stock and common stock purchase warrants. Presently, the Company has no firm commitments from outside sources to provide further funds. These factors raise substantial doubt about the Company's ability to continue in existence. While the Company is optimistic that it can execute its revised business plan, there can be no assurance that: -- increased sales necessary to obtain profitability will materialize, and -- The Company will be able to raise sufficient cash to fund the additional working capital requirements. Peak Entertainment's revenues have been insufficient to cover its operating expenses. Since inception, the Company has been dependent on loans from the Company's officers and on private placements of the Company's securities in order to sustain operations. Management expects to satisfy liquidity needs on a short-term basis through private placements of the Company's securities, including the issuance of debt. There can be no assurances that the proceeds from private placements or other capital transactions will continue to be available, that revenues will increase to meet cash needs, that a sufficient amount of Company securities can, or will, be sold, or that any common stock purchase options/warrants will be exercised to fund Company operating needs. Management believes that the Company will need operating capital of approximately $2,000,000 in the next twelve months to maintain current operations, and operating capital of approximately $5,500,000 in the next twelve to twenty four months to complete its planned entertainment projects already in the pre-production and production stages. As of September 30, 2004, Peak Entertainment had commitments for capital and other expenditures aggregating $8,953,569 included in current and long term liabilities, payable over a maximum 20-year period. Peak Entertainment Holdings, Inc., formerly Peak Entertainment, Ltd., was formed on November 20, 2001, as an integrated media group focused on children. Its activities include the production of television entertainment, character licensing and consumer products development, including toy and gift manufacturing and distribution. Integration enables Peak Entertainment Holdings, Inc., to take property from concept to consumer, in-house, controlling and coordinating broadcast, promotions and product launches (toys, apparel, video games, etc.) to build market momentum and worldwide brand quality. PINNACLE ENTERTAINMENT: S&P Lifts Corporate Credit Rating to B+ --------------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on Pinnacle Entertainment Inc., including its corporate credit rating to 'B+' from 'B'. The outlook is stable. Total debt outstanding at Sept. 30, 2004, was $633 million. Las Vegas, Nevada-based Pinnacle is a casino owner and operator. "The upgrade follows Pinnacle's steadily improved operating results over the past several quarters and our expectation that this trend is likely to continue in the near term," said Standard & Poor's credit analyst Michael Scerbo. The company's recent completion of a 4.6 million share secondary stock offering (approximately $80 million in net proceeds), combined with several other cash generating transactions over the past few quarters, have provided significant excess cash balances that will be used to fund the completion of its ongoing Lake Charles, Louisiana development project and to help fund the company's two planned projects in St. Louis. As a result, consolidated credit measures over the next few years are expected to remain in line with the new rating, despite the company's aggressive capital spending plans. The stable outlook reflects Standard & Poor's expectation that Pinnacle's portfolio of gaming assets will continue to generate a relatively stable cash flow stream, despite the intense competition and low growth in many of the markets it serves. The opening of the company's Lake Charles project in Spring 2005 will further diversify the company's portfolio of assets and will likely decrease its dependence upon its Belterra facility. POLYONE CORPORATION: Fitch Puts Low-B Ratings on Senior Debts ------------------------------------------------------------- Fitch Ratings has affirmed PolyOne Corporation's credit ratings and revised the Rating Outlook to Stable from Negative. PolyOne is rated by Fitch: -- Senior secured credit facility 'BB-'; -- Senior unsecured debt 'B'. The Stable Rating Outlook reflects the improving trend in operating margin; continued debt reduction; and projected strong vinyls market conditions in 2005. PolyOne's operating margins have continued to trend upward in 2004, through the end of the third quarter. EBIT margin improved to 3.1% from 0.4% at year-end 2003. Similarly, EBITDA margin improved to 5.2% from 3% at year- end 2003. Total debt (including accounts receivable program balance) has also declined to $721.4 million at Sept. 30, 2004, from $855.2 at the end of 2003, facilitated by asset sales proceeds. Total debt is expected to decline further in 2004's fourth quarter. Additionally, Fitch believes the vinyl chain could experience very favorable supply/demand fundamentals in 2005 due in part to vinyl chloride monomer supply reductions and continued robust demand. The ratings, however, continue unchanged given PolyOne's low operating margins, high debt level, and earnings volatility. For the twelve months ended Sept. 30, 2004, EBITDA-to-interest incurred was 1.4 times and total debt (including A/R program)-to- EBITDA was 6.6x. PolyOne, headquartered in Avon Lake, Ohio, is the largest compounder of plastics and a leading distributor of plastic resins in North America. At the end of the third quarter, PolyOne's debt (including the A/R program balance) totaled $721.4 million. PORTOLA PACKAGING: Nov. 30 Balance Sheet Upside Down by $47.1M -------------------------------------------------------------- Portola Packaging, Inc., reported results for its first quarter of fiscal year 2005, ended November 30, 2004. Sales were $62.8 million compared to $59.8 million for the same quarter of the prior year. Portola had operating income of $1.7 million for the first quarter of fiscal year 2005, compared to operating income of $2.1 million for the first quarter of fiscal year 2004. Foreign exchange gain for the first quarter of fiscal 2005 totaled $2.0 million as compared to a gain of $1.3 million for the same period in fiscal 2004. Portola reported a net loss of $1.6 million for the first quarter of fiscal year 2005 compared to a net loss of $1.0 million for the same period of fiscal year 2004. The increase in net loss of $0.6 million is primarily attributed to delays in passing resin increases to customers, competitive pressures in the US and UK markets in fiscal year 2004 that adversely affected first quarter fiscal year 2005 prices, as well as higher interest expense. This was partially offset by increased sales volume in Canada, lower selling, general, administrative and research and development costs as well as a higher gain on foreign exchange. EBITDA(a)(c) decreased $0.2 million to $7.7 million in the first quarter of fiscal year 2005 compared to $7.9 million in the first quarter of fiscal year 2004. Adjusted EBITDA(b)(c), which excludes the effect of restructuring charges, (gains) losses on sale of assets, one-time relocation costs, and warrant interest (income) expense, decreased to $7.8 million in the first quarter of fiscal 2005 compared to $8.2 million in the first quarter of fiscal 2004. About Portola Packaging, Inc. Portola Packaging is a leading designer, manufacturer and marketer of tamper evident plastic closures used in dairy, fruit juice, bottled water, sports drinks, institutional food products and other non-carbonated beverage products. The Company also produces a wide variety of plastic bottles for use in the dairy, water and juice industries, including various high density bottles, as well as five-gallon polycarbonate water bottles. In addition, the Company designs, manufactures and markets capping equipment for use in high speed bottling, filling and packaging production lines. The Company is also engaged in the manufacture and sale of tooling and molds used in the blow molding industry. For more information about Portola Packaging, visit the Company's web site at http://www.portpack.com. At Nov. 30, 2004, Portola Packaging's balance sheet showed a $47.1 million stockholders' deficit, compared to a $46.4 million deficit at Nov. 30, 2003. RAMP CORP: AMEX Accepts Compliance Plan to Continue Listing ----------------------------------------------------------- The American Stock Exchange has accepted Ramp Corporation's (Amex: RCO) plan of compliance to continue the listing of Ramp on the AMEX and granted the Company an extension of time to March 13, 2006, to regain compliance with the continued listing standards, subject to AMEX's periodic review to ensure the Company's progress is consistent with the plan. Ramp Corporation, through its wholly owned HealthRamp subsidiary, markets the CareGiver and CarePoint suite of technologies. "The combination of our recent reverse split, and the exchange of our debt for equity, were part of decisive actions we are taking to regain compliance with the AMEX listing standards. We are committed to maintaining our AMEX listing, and believe that these events, in combination with our anticipated business results over the coming 18 months, will allow us to do so," stated Ramp CEO and President, Andrew Brown. The Company submitted its compliance plan to AMEX on October 21, 2004, and provided additional information to the exchange through December 15, 2004. The Company will be subject to periodic review by AMEX staff during the extension period. Failure to make progress consistent with the plan or to regain compliance with the continuing listing standards by the end of the extension period could result in the commencement of delisting proceedings by the AMEX. Alternatively, the AMEX may deem the Company in compliance if for a period of 2 consecutive quarters prior to March 13, 2006, the Company is able to demonstrate compliance with the continued listing standards, or an ability to qualify under an original listing standard. Prior to the Company's submission of its compliance plan, on Sept. 13, 2004, the Company received a written notice from the AMEX informing the Company that it was not in compliance with various subsections of Section 1003 of the AMEX Company Guide. Specifically, the Company is not in compliance of: -- Sections 1003(a)(i) and (ii) of the AMEX rules as a result of stockholder's equity of the Company being less than $2,000,000 and $4,000,000, and losses from continuing operations and/or net losses in two out of three, and three out of four, of its most recent fiscal years, respectively. -- Section 1003(a)(iv) of the AMEX rules whereby, as a result of the Company's substantial sustained losses in relation to its overall operations or its existing financial resources, or its impaired financial condition, it appeared questionable, in the opinion of the AMEX, as to whether the Company will be able to continue operations and/or meet its obligations as they mature. -- Section 1003(f)(v) of the AMEX rules as a result of the Company's common stock selling for a substantial period at a low price per share. The notice from AMEX was not a notice of delisting from the AMEX or a notice by AMEX to initiate delisting proceedings. Ramp Corporation -- http://www.Ramp.com/-- through its wholly owned HealthRamp subsidiary, markets the CareGiver and CarePoint suite of technologies. CareGiver allows long term care facility staff to easily place orders for drugs, treatments and supplies from a wireless handheld PDA or desktop web browser. CarePoint enables electronic prescribing, lab orders and results, Internet- based communication, data integration, and transaction processing over a handheld device or browser, at the point-of-care. HealthRamp's products enable communication of value-added healthcare information among physician offices, pharmacies, hospitals, pharmacy benefit managers, health management organizations, pharmaceutical companies and health insurance companies. Going Concern Doubt In its Form 10-Q for the quarterly period ended Sept. 30, 2004, filed with the Securities and Exchange Commission, Ramp Corporation disclosed that its recurring substantial losses plus a $11,312,000 working capital deficit at Sept. 30, 2004, raise substantial doubt about its ability to continue as a going concern. RCN CORPORATION: Emerges from Bankruptcy Protection --------------------------------------------------- RCN Corporation (Nasdaq: RCNIV) consummated its plan of reorganization and formally emerged from Chapter 11. The plan, confirmed on December 8, 2004, by Judge Robert Drain of the Bankruptcy Court in New York, converted approximately $1.2 billion in unsecured obligations into 100% of RCN's new equity, and eliminated approximately $1.8 billion in preferred share obligations. RCN's emergence financing was comprised principally of borrowings under a new senior secured financing facility syndicated by Deutsche Bank AG Cayman Islands Branch in the amount of $330 million. In addition, RCN issued $125 million of convertible second-lien notes to certain investors and holders of the company's prepetition bond obligations. The proceeds from the Deutsche Bank facility and the convertible second-lien notes were primarily utilized to pay in full-secured indebtedness held by a syndicate of lenders led by JPMorgan Chase Bank. RCN also completed the acquisition of PEPCO's 50% stake in the StarPower Communications, LLC joint venture, enabling RCN to take full ownership of the Washington, D.C. market for bundled telephone, cable television and high-speed Internet services. Headquartered in Princeton, New Jersey, RCN Corporation -- http://www.rcn.com/-- provides bundled Telecommunications services. The Company, along with its affiliates, filed for chapter 11 protection (Bankr. S.D.N.Y. Case No. 04-13638) on May 27, 2004. Frederick D. Morris, Esq., and Jay M. Goffman, Esq., at Skadden Arps Slate Meagher & Flom LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $1,486,782,000 in assets and $1,820,323,000 in liabilities. SAN JOAQUIN: Moody's Withdraws Ba2 Ratings After Notes Redeemed --------------------------------------------------------------- Moody's Investors Service had withdrawn the ratings of two classes of combination notes issued by SAN JOAQUIN CDO I, LIMITED. The classes affected are: 1) U.S.$3,750,000 Class 1 Combination Securities, Due 2013, and 2) U.S.$25,000,000 Class 2 Combination Securities, Due 2013. According to Moody's, the ratings had been withdrawn due to the full redemption of the Notes. The transaction closed in October 25 of 2001. Rating Action: Rating Withdrawn Issuer: SAN JOAQUIN CDO I, LIMITED. Class Description: U.S.$3,750,000 Class 1 Combination Securities, Due 2013 Prior Rating: Ba2 Current Rating: Withdrawn Class Description: U.S.$25,000,000 Class 2 Combination Securities, Due 2013 Prior Rating: Ba2 Current Rating: Withdrawn SERVICE LINKS: Case Summary & 18 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Service Links International New York, Inc. fdba Airport Valet Parking fdba Thrifty Rent-a-Car 175 Buell Road Rochester, New York 14624 Bankruptcy Case No.: 04-25395 Chapter 11 Petition Date: December 17, 2004 Court: Western District of New York (Rochester) Judge: John C. Ninfo II Debtor's Counsel: Raymond C. Stilwell, Esq. Adair, Kaul et al. 300 Linden Oaks, Suite 220 Rochester, NY 14625 Tel: 585-248-3800 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 18 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Thrifty Rent-a-Car System Franchise agreement $480,000 5310 East 31st St. Tulsa OK 74135 Bank of Castile Loan for vehicle $250,000 135 N. Center Road purchases Perry NY 14530 M&T Bank Monies loaned $48,000 1 Fountain Plaza Attn: Robert VanWart Special Assets 9th fl. Buffalo NY 14203 Advanta Bank Corp. Monies loaned $6,000 Tops Markets LLC $2,539 Verizon Wireless Phone charges $2,412 NYS Insurance Fund Insurance $2,280 Rochester Gas & Electric Utility Bills $1,600 University of Rochester $695 Upstate Disposal Services $647 Briceland Agency, Inc. Insurance $520 Cintas Corp. $497 Frontier Telephone Phone charges $379 Time Warner Cable $226 ACN Communications Service Services $173 Inc. Paychex Payroll service $169 Flower City Communications Services $120 MCI Phone charges $91 SEQUENTIAL ELECTRONIC SYSTEMS: Voluntary Chapter 11 Case Summary ---------------------------------------------------------------- Debtor: Sequential Electronic Systems, Inc. 249 North Saw Mill River Road Elmsford, New York 10523 Bankruptcy Case No.: 04-20729 Type of Business: The Company designs and manufactures electro- optical products. It is an affiliate of The Finx Group, Inc. Chapter 11 Petition Date: December 20, 2004 Court: Southern District of New York (White Plains) Judge: Adlai S. Hardin Jr. Debtor's Counsel: William J. Reilly, Esq. 401 Broadway, Suite 912 New York, New York 10013 Tel: (212) 683-1570 Total Assets: $32,443 Total Debts: $3,235,352 The Debtor did not file a list of its 20 Largest Unsecured Creditors. SCHUFF INT'L: Extends Consent Solicitation Until Dec. 28 -------------------------------------------------------- Schuff International Inc. (AMEX:SHF), a family of companies providing fully integrated steel construction services, has further extended the consent solicitation relating to a certain proposed amendment to the Indenture pursuant to which its 10-1/2% Senior Notes due 2008 were issued. Schuff has extended the expiration date until 5 p.m., New York City time, on Dec. 28, 2004, unless the Consent Solicitation is further extended or earlier terminated if the requisite consent is obtained before the expiration date. The adoption of the proposed amendment is conditioned on delivery of consents from holders of at least a majority of the principal amount of the Notes. The adoption of the Proposed Amendment is also subject to certain other conditions, which are described in Schuff's Consent Solicitation dated Dec. 8, 2004. This announcement is not an offer to purchase, a solicitation of an offer to purchase, or a solicitation of consent with respect to any securities. The Consent Solicitation is being made solely by means of a Consent Solicitation Statement dated Dec. 8, 2004. Except as otherwise described above, all terms and conditions of the Consent Solicitation are unchanged. Guggenheim Capital Markets LLC is serving as Solicitation Agent in connection with the Consent Solicitation. Questions regarding the terms of the Consent Solicitation may be directed to the Solicitation Agent at 212-381-7500, Attention: Joe Bencivenga. Global Bondholder Services Corporation is serving as Tabulation Agent and Information Agent in connection with the Consent Solicitation. Questions regarding the delivery procedures for the consents and requests for additional copies of the Consent Solicitation Statement or related documents may be directed to the Information Agent at 212-430-3774. About the Company Schuff International Inc. is a family of steel fabrication and erection companies providing a fully integrated range of steel construction services, including design engineering, detailing, joist manufacturing, fabrication and erection, and project management expertise. The company has multi-state operations primarily focused in the U.S. Sunbelt. * * * As reported in the Troubled Company Reporter on June 21, 2004, Standard & Poor's Ratings Services lowered its corporate credit and senior unsecured debt ratings on Schuff International, Inc., to 'CCC' from 'B-'. The outlook is negative. STELCO INC: Teachers & Sherritt Submit $1.8 Billion Recap Plan -------------------------------------------------------------- The Island Energy Partnership, a 50/50 joint venture between the Ontario Teachers' Pension Plan Board and Sherritt International Corporation, has submitted a comprehensive $1.8 billion recapitalization plan to Stelco Inc. IEP first approached Stelco in January, 2004 prior to Stelco entering creditor protection under the Company Creditors Arrangement Act. IEP's initial proposal to modernize and expand Stelco's coke and utility assets and construct co-generation assets has now been expanded to encompass a full recapitalization of Stelco. The Plan allows Stelco to emerge from CCAA as a competitive North American steel producer with a strong balance sheet, improved liquidity, and significant capital committed for investment in both the Hamilton and Lake Erie core steel manufacturing operations. Key elements of the Plan are: -- Acquisition of Stelco's non-core utilities assets, including its coke batteries, materials handling facilities and boilers; -- Commitment to expand Lake Erie's coke battery by 500,000 tonnes and construct new co-generation facilities at Lake Erie and Hamilton utilizing off-gases currently being flared; -- Underwriting of an equity rights issue to existing shareholders and subscription for new equity, a portion of which will be made available to the Union, employees, and creditors; -- Fixed and revolving debt facilities will be provided to the level necessary to offer Stelco strong liquidity and low leverage post-restructuring. Teachers' and Sherritt believe this Plan offers the best solution for a rejuvenated Stelco over the long term, a Stelco which will not have to seek court protection from creditors a second time. Other advantages are: -- IEP's commitment to expand coke production and build cogeneration facilities on a variable rate of return basis will provide coke and electricity to Stelco at below current market prices and on a competitive basis throughout the commodity cycle. -- Sufficient capital will be available for Stelco to upgrade its Lake Erie hot strip mill and to install a new pickle line in Hamilton. -- The acquisition of utilities assets will incorporate sufficient land and access to infrastructure to enable construction of larger electricity generation facilities at Lake Erie and Hamilton to expand Ontario's electricity supply. IEP will commit to sell this additional electricity to Stelco at competitive prices. -- Teachers' and Sherritt will work with the United Steelworkers' Union of America to develop a clearly defined plan for Stelco's pension obligations. -- Productivity benefits will be equitably shared between Stelco and its employees, providing a foundation for productive labour-management relationships and contributing to competitive steel production. The Plan builds on Teachers' and Sherritt's commitment to excellent labour relations and anticipates the active participation of Stelco Union leadership, the fair treatment of Stelco's employees and pensioners and the adherence to the USWA's seven principles for the restructuring of Stelco. As Teachers' Senior Vice President, Public Equities, Brian Gibson explained, "This is a "made in Ontario" solution which is beneficial for all stakeholders, and which will lead to improved air quality by reducing harmful emissions. It will also ensure that Stelco remains competitive in an industry which is vital to Ontario's economy." Sherritt Chairman Ian Delaney added, "Sherritt is excited about the opportunity to invest, through the Island Energy Partnership, in Stelco's utilities assets. This strategic investment is consistent with our view of the long-term value of electricity generation and builds on our operational expertise in electricity cogeneration from off-gases. Our proposal will allow Stelco to focus on its core business of steelmaking." The Ontario Teachers' Pension Plan is an independent corporation responsible for investing the fund's assets and administering the pensions of Ontario's 155,000 elementary and secondary school teachers and 97,000 retired teachers. The plan had net assets of $79 billion at June 30, 2004, and a long-term rate of return of 11% per year since 1990. In 2003, $3.2 billion of pension payments were made to retired teachers by the plan. Approximately 46% of the plan's assets are invested in equities, 26% invested in fixed-income securities and the remaining 28% invested in inflation-sensitive investments. Sherritt International Corporation is a diversified Canadian natural resource company that operates in Canada and internationally. Sherritt, directly and through its subsidiaries, has significant interests in thermal coal production; nickel and cobalt production; oil and gas exploration, development and production; and electricity generation. Sherritt has assets of over $2.4 billion and a cash balance of $516 million as of September 30, 2004. During the nine month period ending September 30, 2004, Sherritt generated $241 million in cash flow from operations. The Corporation employs more than 4,000, either directly or through its joint ventures, and has more than 50 years of experience managing utility assets, including materials handling, steam, electricity and water treatment. Stelco, Inc. -- http://www.stelco.ca/-- which is currently undergoing CCAA restructuring proceedings, is a large, diversified steel producer. Stelco is involved in all major segments of the steel industry through its integrated steel business, mini-mills, and manufactured products businesses. Consolidated net sales in 2003 were $2.7 billion. STELCO INC: Releases Proposals of Capital Raising Process --------------------------------------------------------- Stelco Inc. (TSX:STE) issued an update on the Company's Court- approved capital raising process. The Company indicated that a number of prospective financial and strategic investors have shown, and continue to show, substantial interest in Stelco's core integrated and non-core businesses. Two such prospective bidders made public their expressions of interest today. Earlier this afternoon, Algoma Steel Inc. announced its possible interest in participating in the process. Later in the afternoon, the Island Energy Partnership -- IEP, a joint venture between the Ontario Teachers' Pension Plan Board and Sherritt International Corporation, announced that it had submitted a $1.8 billion recapitalization and asset purchase proposal. This $1.8 billion proposal includes the purchase of assets and additional capital investment by IEP in the assets after they have acquired them from Stelco. Courtney Pratt, Stelco President and Chief Executive Officer, said, "We're delighted with the expressions of interest announced today and previously as part of our Court-approved capital raising process. Our goal has been a vigorous and competitive process that benefits all of our stakeholders. The expressions of interest we've received suggest that our goal is being achieved." Hap Stephen, Stelco Chief Restructuring Officer, said, "We're pleased to note the Algoma and Island Energy Partnership's announcements of this afternoon. Each proposal will be subject to due diligence and negotiation before any binding offers are requested under Phase II of the process approved by the Court on November 29, 2004. The next stage for Algoma will be to provide to us some details of what it has in mind. Island Energy's proposal does include some details including a list of proposed benefits with dollar values associated with each element. At this stage, it is hard to predict how those values will change as due diligence takes place." The Company noted that the Island Energy Partnership expression of interest is complex and will require thorough review. This expression of interest encompasses a refinancing including equity rights, the acquisition by IEP of Stelco's selected coke and utility assets, and the provision of funds for future capital projects related to those particular assets acquired by Island Energy. Stelco, Inc. -- http://www.stelco.ca/-- which is currently undergoing CCAA restructuring proceedings, is a large, diversified steel producer. Stelco is involved in all major segments of the steel industry through its integrated steel business, mini-mills, and manufactured products businesses. Consolidated net sales in 2003 were $2.7 billion. TERRA INDUSTRIES: Completes Sale of 25 Mil. Shares of Common Stock ------------------------------------------------------------------ Terra Industries Inc. (NYSE:TRA) announced that Anglo American plc (NASDAQ:AAUK), through a wholly-owned subsidiary, has completed the sale of its remaining 25,060,725 shares of Terra common stock in a private placement to a group of investors at a price of $7.50 per share. Lazard LLC acted as the sole placement agent. "This transaction will increase and diversify Terra's shareholder base, affording more investors the opportunity to participate in the upside potential and future growth of Terra," said Michael L. Bennett, Terra's President and Chief Executive Officer. "Our planned acquisition of Mississippi Chemical expands Terra's product sourcing and distribution capabilities and strengthens our industrial nitrogen market position. We remain confident that this transaction will enhance Terra's earnings power throughout the nitrogen market cycle and deliver significant value to our shareholders." The investors that purchased the shares from Anglo American have agreed not to sell them publicly until February 15, 2005. Terra has agreed not to offer or sell any new shares, except under existing commitments, until March 15, 2005. The shares of Terra common stock sold by Anglo American in the private placement have not been registered under the Securities Act of 1933, as amended, or any state securities laws. Unless so registered, the shares may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act and applicable state securities laws. This press release does not constitute an offer to sell or the solicitation of an offer to buy the shares. Terra Industries Inc., with 2003 revenues of $1.4 billion, is a leading international producer of nitrogen products. * * * As reported in the Troubled Company Reporter on Nov. 9, 2004, Fitch Ratings raised the ratings for Terra Industries' senior secured credit facility and 12.875% senior secured notes to 'BB-' from 'B+'. Fitch has also upgraded the 11.5% senior secured second priority notes to 'B' from 'B-'. Fitch has assigned a rating of 'CCC+' to the convertible preferred shares. Fitch revised the Rating Outlook to Positive from Stable. TERRA INDUSTRIES: Settles Valuation Dispute with Revenue Canada --------------------------------------------------------------- Terra Industries Inc. (NYSE: TRA) today that it has reached a settlement on an outstanding valuation issue with Revenue Canada. Under terms of the settlement, Terra will realize a refund of $10 million which, together with a reduction in reserves, will increase Terra's 2004 fourth quarter income by approximately $25 million. In 1996, after receiving a favorable ruling from Revenue Canada, Terra refreshed its tax basis in plant and equipment at its Canadian subsidiary by entering into a transaction with a Canadian subsidiary of Anglo American plc, resulting in a deferred tax asset for Terra. In 2000, Revenue Canada challenged the refreshed amount of this tax basis, and Terra established a reserve against the previously recorded tax asset. Terra contested Revenue Canada's 2000 decision and reached this final settlement. Terra Industries Inc., with 2003 revenues of $1.4 billion, is a leading international producer of nitrogen products and methanol. * * * As reported in the Troubled Company Reporter on Nov. 9, 2004, Fitch Ratings raised the ratings for Terra Industries' senior secured credit facility and 12.875% senior secured notes to 'BB-' from 'B+'. Fitch has also upgraded the 11.5% senior secured second priority notes to 'B' from 'B-'. Fitch has assigned a rating of 'CCC+' to the convertible preferred shares. Fitch revised the Rating Outlook to Positive from Stable. TEXAS INDUSTRIES: Moody's Revises Ratings Outlook to Developing --------------------------------------------------------------- Moody's Investors Service affirmed the ratings of Texas Industries, Inc., and changed the rating outlook to developing from stable. The change in outlook is prompted by TXI's announcement that it plans to spin-off its steel business. The transaction is intended to be in the form of a tax-free stock dividend to TXI shareholders and is not anticipated to be concluded until the summer of 2005. There remains a number of details yet to be determined, such as capital structure and financing, as well as a number of conditions to be met. Moody's will continue to monitor progress in these areas and the capital structure and level of debt remaining at TXI post spin will be key factors looked at in assessing the ratings. TXI operates in two core business segments: cement, aggregates and concrete operations -- CAC -- and steel, principally structural steel, where the company ranks number two in North America. The CAC business enjoys efficient operations, a substantial reserve base, and has continued to perform well in recent years, while the structural steel business has demonstrated its sensitivity to volatile industry conditions and weakness in the commercial construction markets in particular. Reflecting current demand strength and pricing improvement in both of its core operating segments, TXI reported operating profit of $118.7 million on revenues of $943 million for the six months to November 30, 2004. For the comparable period in its fiscal 2004 year, operating profit was $8 million. Operating profit at CAC remained relatively flat YoY, impacted by unusually wet weather in the company's Texas markets. Generally improving markets and better pricing contributed to the steel segment returning to profitability, reporting operating profit of $101 million compared with a $16 million loss for the comparable fiscal 2004 period. Ratings affirmed are: -- Texas Industries, Inc.: * B1 rated 10.25% guaranteed notes due 2011, * B1 senior implied rating, * B2 issuer rating, * (P)B1 senior secured shelf, * (P)B3 subordinated shelf, * (P)Caa1 preferred stock shelf -- TXI Capital Trust 1: * B3 preferred stock rating, * (P)B3 preferred stock shelf registration Headquartered in Dallas, Texas, TXI had revenues of $1.7 billion in its fiscal year ended May 31, 2004. THISTLE MINING: To Restructure Balance Sheet Under CCAA ------------------------------------------------------- Thistle Mining Inc. (TSX: THT and AIM: TMG) intends to undertake a restructuring of its debt and equity in accordance with a restructuring and lock-up agreement signed Dec. 20, 2004, among Thistle, Meridian Capital Limited and Meridian's affiliate, Thistle Holdings Limited. The proposed restructuring will result, upon implementation, in the following percentages of all the issued shares of Thistle being held as follows: -- 70% Meridian Capital Limited; -- 25% Holders of secured and certain unsecured convertible loan notes; and -- 5% Affected unsecured creditors and existing shareholders of Thistle Mining Inc. The existing equity issued by Thistle will be cancelled. The 5% of new equity to be issued by Thistle to its affected unsecured creditors and its existing shareholders upon implementation will be allocated between them in a manner to be determined by Meridian Capital Limited. The percentage of shares to be received by the existing shareholders will depend on the amount of claims by Thistle's affected unsecured creditors. Upon implementation, Thistle will be indebted to Meridian in the principal amount of US$ 20 million (and in the additional principal amounts loaned by Meridian to any subsidiary of Thistle after Dec. 16, 2004 and before the date of the initial CCAA Order). Such amount will include the principal amount of Cdn $3,930,000 loaned by Meridian to a subsidiary of Thistle on Dec. 20, 2004. Holders of a significant principal amount of Thistle's secured convertible loan notes are in support of the plan. Thistle is confident that the proposed plan will enable the Company to restructure in a manner which will be beneficial to Thistle and its creditors. TORCH OFFSHORE: Names David Phelps as Chief Restructuring Advisor ----------------------------------------------------------------- Torch Offshore, Inc. (NASDAQ: TORC) announced that its Board of Directors has appointed David Phelps of Bridge Associates LLC, a nationally known turnaround and crisis management consulting firm, as Chief Restructuring Advisor of the Company. The Company engaged a Chief Restructuring Advisor as part of its previously announced strategy to overcome its current liquidity situation. As Chief Restructuring Advisor, Mr. Phelps' tasks will include: * working with the Company's senior management to monitor and improve the Company's liquidity; * reviewing and assisting in the negotiation of all material contracts; * reviewing the financial aspects of all operations and working directly with the Company's other advisors to review and negotiate any proposed financial transactions. Lyle G. Stockstill, the Company's Chairman and Chief Executive Officer, will continue to be responsible for the daily operational activities of the Company. Established in 1978, Torch Offshore, Inc., is involved in offshore pipeline installation and subsea construction for the oil and natural gas industry. Torch Offshore, Inc., is expanding beyond its established shallow water niche market in order to serve the industry's worldwide growing needs in the deep waters. * * * Going Concern Doubt In its Form 10-Q for the quarterly period ended Sept. 30, 2004, filed with the Securities and Exchange Commission, Torch Offshore's financial statements reflect a net loss of $14.7 million for the first nine months of 2004 and a working capital deficit of $116.0 million as of September 30, 2004, which includes all of the Company's debt ($113.5 million) classified as current and in default as of September 30, 2004. These factors raise substantial doubt about the Company's ability to continue as a going concern. Also, the Company generated a net loss of $9.2 million for the year ended December 31, 2003, $6.8 million of which was realized in the fourth quarter of 2003. The Company faces significant liquidity and working capital challenges, in addition to costs of expanding the Company's operations into the deepwater market, and will need to cure its current debt defaults and raise additional capital to continue to meet its debt obligations, conduct its operations as currently contemplated and continue as a going concern. TRUMP HOTELS: IRS Wants May 20 as Government Bar Date ----------------------------------------------------- The U.S. Bankruptcy Court for the District of New Jersey set February 18, 2005, as the Bar Date for governmental units. The Bar Date Order specifically provided that all governmental units could object to the Bar Date as not being in compliance with Section 502(b)(9) of the Bankruptcy Code. Pursuant to Section 502(b)(9), the United States Internal Revenue Service asks the Court to: (a) vacate the Bar Date Order as it pertains to its timely filing of federal tax claims; and (b) fix the bar date for filing the IRS federal tax claims on May 20, 2005. The IRS is a potential prepetition creditor in the Debtors' cases. According to United States Trial Attorney Gregory S. Hrebiniak, the IRS has commenced an audit of the tax liabilities of certain of the Debtors. The IRS audit has been scheduled and will not be concluded until well after February 18, 2005. Mr. Hrebiniak relates that the IRS is not one of the creditors that have been contacted by the Debtors' counsel in an attempt to submit the Debtors' pre-packaged reorganization to the Court. The IRS has not consented to the fixing of the bar date prior to that allowed by law, and instead, objects to the established Bar Date. The IRS's request and objection is without prejudice to the U.S. Government's seeking an extension of the statutory bar date for good cause shown. Headquartered in Atlantic City, New Jersey, Trump Hotels & Casino Resorts, Inc., through its subsidiaries, owns and operates four properties and manages one property under the Trump brand name. The Company and its debtor-affiliates filed for chapter 11 protection on Nov. 21, 2004 (Bankr. D. N.J. Case No. 04-46898 through 04-46925). Robert A. Klymman, Esq., Mark A. Broude, Esq., John W. Weiss, Esq., at Latham & Watkins, LLP, and Charles Stanziale, Jr., Esq., Jeffrey T. Testa, Esq., William N. Stahl, Esq., at Schwartz, Tobia, Stanziale, Sedita & Campisano, P.A., represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed more than $500 million in total assets and more than $1 billion in total debts. UNIONE ITALIANA: Section 304 Petition Summary --------------------------------------------- Petitioner: Board of Directors Unione Italiana (UK) Reinsurance Company Limited Cavell Insurance Company Limited Debtor: Unione Italiana (UK) Reinsurance Company Limited, and Cavell Insurance Company Limited P.O Box 62 Rose Lane Business Centre Rose Lane, Norwich, Norfolk, NR1 JY United Kingdom, NY Case No.: 04-17989 & 04-17990 Type of Business: Unione Italiana traded as a motor insurer and Cavell traded as a marine and aviation insurer. The Companies have been in run-off since 1995 & 1993, respectively. Section 304 Petition Date: December 21, 2004 Court: Southern District of New York (Manhattan) Judge: Cornelius Blackshear Petitioner's Counsel: Howard Seife, Esq. Francisco Vazquez, Esq. Chadbourne & Parke LLP 30 Rockefeller Plaza New York, New York 10112 Tel: (212) 408-5361 Fax: (212) 541-5369 Audited Financial Condition as of December 31, 2003: A. Unione Italiana (UK) Reinsurance Company Limited Total Assets: GBP125,588,000 Total Debts: GBP102,688,000 B. Cavell Insurance Company Limited Total Assets: GBP143,691,000 Total Debts: GBP84,496,000 USURF AMERICA: $12.4 Million Net Loss Triggers Going Concern Doubt ------------------------------------------------------------------ USURF American, Inc., reported that for the nine months ended September 30, 2004 and 2003,it incurred a net loss of $12,448,539 and $1,990,795, respectively. As of September 30, 2004, USURF had an accumulated deficit of $56,310,384. These factors raise substantial doubt about the Company's ability to continue as a going concern. The Company is actively seeking customers for its services. The Company's financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classification of liabilities that might be necessary in the event the Company cannot continue in existence. At September 30, 2004, USURF had a net working capital deficit of $1,711,155, compared to a net working capital deficit of $757,040 at December 31 2003. A net working capital deficit means that current liabilities exceeded current assets. Current assets are generally assets that can be converted into cash within one year and can be used to pay current liabilities. Currently, management believes the Company has sufficient cash from the sale of securities and commitments from Atlas Capital financing transactions to continue current business operations through December 31, 2004. During the nine months ended Sept. 30, 2004, USURF received approximately $1,600,000 from the sale of securities, $543,000 in debt from Evergreen that was converted to securities and $4,420,000 in debt from the Atlas Capital financing transaction. At September 30, 2004, the Company had cash on hand of $260,795. Subsequent to September 30, 2004, the Company executed a Subscription Agreement whereby the Company agreed to issue and sell to the Purchasers, 10,000 shares of Series A Convertible Preferred Stock at $100.00 per share, for a total consideration of $1,000,000. In connection with the purchase and sale of the Series A Stock, the Purchasers will receive Warrants to purchase up to an aggregate of 7,000,000 shares of the Company's common stock, at an exercise price of $0.075 per share subject to certain adjustment. Management anticipates that the Company's capital needs will be met through financing transactions arranged by Atlas Capital. USURF will also seek other sources of financing to fund operations, although it may not be successful in its efforts. The Company may not be able to secure adequate capital as it is needed. Without additional capital, management says USURF would be forced to curtail or cease its operations. Acquired Assets In October 2003, the Company signed a Letter of Intent to acquire the assets of Apollo Communications, Inc., of Colorado Springs. Apollo provides data and high-speed internet access services as well as local and long distance telephone services. Additionally, in February 2004, the Company signed a definitive agreement to acquire the assets of SunWest Communications, Inc. The assets included SunWest's network of fiber optic lines, its operations facilities and equipment and, subject to Colorado Public Utility Commission approval, its customer base. Through September 30, 2004 the Company advanced a combined total of $1,830,000 to SunWest and Apollo and recorded this amount as "other long term assets". Through September 30, 2004 the Company supported through its operations $1,443,257.71 of customer care and related expenses of SunWest and Apollo. During the quarter ended September 30, 2004, the senior secured lenders of SunWest and Apollo foreclosed on the assets of these companies. As a result, the Company has written off the balance of other assets of $1,830,000 and reclassified the related expenses of $1,443,257.71 as write off of other assets and reclassification of related expenses. The Company has not made a determination whether to seek legal recourse to recover damages as a result of the foreclosure. About USURF America During 2003 and through September 30, 2004, USURF America continued to implement and expand its business plan beyond solely offering wireless Internet access service. The Company currently operates as a provider of video (cable television) and data (Internet) services to business and residential customers and since the completion of the acquisition of Connect Paging Inc. d/b/a/ Get-A-Phone, the Company also offers additional telecommunications services including local, long distance and enhanced telephone (voice) services. Its current business plan involves obtaining, through internal growth, as many, voice, video and data customers as possible offering various combinations of bundled packages of communications services. Its growth strategy also includes acquisitions of telecommunications-related businesses and properties, which would provide an immediate or potential customer base for its services. VECTOR GROUP: Registers Convertible Notes with SEC for Resale ------------------------------------------------------------- Vector Group Ltd. (NYSE: VGR) has filed with the Securities and Exchange Commission a registration statement on Form S-3. The registration statement relates to the resale by the holders of up to $81.875 million principal amount of Vector Group's 5% Variable Interest Senior Convertible Notes due 2011 and the common stock issuable upon conversion of the notes. The notes were originally sold on Nov. 18, 2004, in a private placement to qualified institutional buyers. The filing of this registration statement is required by the registration rights agreement entered into by Vector Group. A registration statement relating to these securities has been filed with the Securities and Exchange Commission but has not yet become effective. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any state in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state. About the Company Vector Group-- http://www.VectorGroupLtd.com/-- is a holding company that indirectly owns Liggett Group Inc., Vector Tobacco and a controlling interest in New Valley Corporation. At Sept. 30, 2004, Vector Group's balance sheet showed a $93,721,000 stockholders' deficit, compared to a $46,475,000 deficit at Dec. 31, 2003. WESTERN WATER: Needs to Sell Assets to Cover Operating Expenses --------------------------------------------------------------- Western Water Company has been, and continues to be, unable to generate sufficient cash from operations to pay for operating expenses, to meet debt service obligations, and to pay preferred stock dividends. The Company had paid for these financial obligations using cash from its consulting activities, the sale of assets, and short-term, asset-secured loans. However, there is substantial doubt about the Company's ability to generate additional cash from asset sales and loans to fund its operations through September 30, 2005, and beyond, or to meet other financial obligations following the expenditure of its current cash balance. Needs to Timely and Orderly Sell California Assets The Company is dependent upon the orderly and timely sales of its California assets to provide a portion of the cash necessary to fund the Company's operations for the twelve months ending September 30, 2005. The Subordinated Debentures will mature within the next twelve months on September 30, 2005. The Company currently plans to meet its obligation to pay the Subordinated Debentures ($8,318,000) through the monetization of its Cherry Creek Project. However, there can be no assurance regarding the Company's ability to sell its remaining California assets at fair value in a timely manner in order to fund operations or to monetize the Cherry Creek Project for an amount or within the time necessary to pay the Subordinated Debentures. The Company's water resources in Colorado consist of the Cherry Creek Project, which is the largest asset on the Company's condensed consolidated balance sheet. While management believes that demand for the Company's water resources in Colorado continues to increase, the schedule for monetizing the value of the Project is uncertain (based, in part, on the denial by the Colorado Office of the State Engineer of the Company's application for approval of a substitute water supply plan which proposed plan included elements designed to assure the Project's current and prospective customers of reliable water deliveries from the Project). Management believes that the fair value of the Project, if and when fully developed or sold, will exceed the current carrying value of that asset on the Company's balance sheet. Accordingly, the Company is attempting to marshal its assets in a manner that will provide the Company the working capital required to finance the orderly development and sale of the Project. However, the Company can provide no assurance regarding its ability to monetize the value of the Project, or that any revenue generated from the Project will occur in a timely manner to fund the Company's operations and financial obligations. Moreover, the Company will be required to incur additional expenses to develop the Project in order to position it to be monetized. The Company can provide no assurances that the Company will have the necessary funds to do so. The Company plans to fund its foreseeable working capital needs from existing cash, from net proceeds of the anticipated sale of certain existing assets, from the sale of Cherry Creek Project water delivery contract units, and from the proceeds of asset- secured loans. No assurance can be given that the Company will be able to sell its assets as planned or that the Company will be able to raise additional funds on commercially reasonable terms when, and if, needed to sustain its operations, including Cherry Creek Project development activities. The inability of the Company to sell its assets as planned or raise additional funds on commercially reasonable terms when, and if, needed could impair the Company's ability to operate as a going concern. As stated, the Company's outstanding Subordinated Debentures mature in September 2005 and additionally, the Series C Preferred Stock and Series F Preferred Stock are subject to mandatory redemption beginning in fiscal 2007 and fiscal 2010, respectively. Going Concern Doubt In light of the uncertainties associated with the Company's ability to continue as a going concern, the Company's previous independent registered public accounting firm provided a going concern uncertainty explanatory paragraph in its unqualified opinion with respect to the Company's consolidated financial statements for the year ended March 31, 2004. About Western Water The principal business of Western Water Company has been to manage, develop, sell and lease water and water rights in the western United States. Prior to 2000, the Company had been developing this business through the acquisition of water rights and other interests in water, the purchase of real estate for the water rights associated with such real estate, and the sale or lease of water. The Company's principal activity had been to acquire and develop water assets in California and in the Cherry Creek basin in Colorado because it believed that there is a growing demand for water resources in both of these areas and the demand is expected to exceed the water resources currently available. The Company, directly and indirectly, owns certain water rights, as well as a limited amount of real estate, in California and Colorado. YUKOS OIL: Menatep Intends to Sue to Recover its Losses ------------------------------------------------------- Menatep, Yukos' largest shareholder, tells Sylvia Pfeifer at The Telegraph that it plans to sue the Russian Federation, the successful bidder and the bidder's lenders for $100 billion if the Yuganskneftegas auction goes forward. Tim Osborne, the managing director of Menatep, which controls around 53% of Yukos stock, told The Telegraph: "We are committed to legal action. . . . The damages claim would be pretty good. If you assume Yukos will be bankrupt [after the auction] then our starting point on our shareholding will be zero. At the highest point, Menatep's shareholding was worth $30bn. We would employ forensic experts to see what it would have been valued at if there hadn't been any problems. It could be double that and we would then request punative damages. I can easily see this claim being $100bn or more." Mr. Osborne told Ms. Pfeifer he's confident a claim would be successful. "What are our chances? Good. I believe in the European Union and the US, where the rule of law does prevail and there is an independent judiciary, the treatment of Yukos and its shareholders will immediately have any judge on your side." Headquartered in Houston, Texas, Yukos Oil Company -- http://www.yukos.com/-- 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. (Yukos Bankruptcy News, Issue No. 4; Bankruptcy Creditors' Service, Inc., 215/945-7000) Z-TEL TECH: Continues Stock Trading Following Nasdaq Compliance --------------------------------------------------------------- Z-Tel Technologies, Inc. (NASDAQ/SC: ZTEL), parent company of Z- Tel Communications, Inc., a leading provider of enhanced wireline and broadband telecommunications services, has received indication from the NASDAQ Stock Market that it has regained compliance with the rules for continuing inclusion on the NASDAQ SmallCap Market. Z-Tel had been subject to delisting for non-compliance with the $35 million market capitalization requirement and the $1.00 minimum bid price requirement. The company regained compliance by effecting two transactions in November: -- a tender offer for all of its outstanding preferred shares; and -- a 1 for 5 reverse split. Z-Tel shares begins trading under its old ticker symbol "ZTEL". The company has previously announced its intention to change its name to Trinsic, Inc., effective as of the close of business on Jan. 3, 2005. Its new NASDAQ trading symbol at that time will be "TRIN." About the Company Z-Tel Technologies -- http://www.ztel.com/-- offers consumers and businesses nationwide enhanced wire line and broadband telecommunications services. All Z-Tel products include proprietary services, such as Web-accessible, voice-activated calling and messaging features that are designed to meet customers' communications needs intelligently and intuitively. Z- Tel is a member of the Cisco Powered Network Program and makes its services available on a wholesale basis to other communications and utility companies, including Sprint. At Sept. 30, 2004, Z-Tel Technologies' balance sheet showed a $166,227,000 stockholders' deficit, compared to a $131,019,000 deficit at December 31, 2003. * Boyd Mulkey Joins Alvarez & Marsal as Managing Director --------------------------------------------------------- Boyd Mulkey has joined Alvarez & Marsal Business Consulting, LLC as a Managing Director, responsible for coordinating client service and market activities in Central Texas. He is based in San Antonio. With over 16 years of consulting experience, Mr. Mulkey has an established track record collaborating with clients in a range of industries to improve their businesses through business process redesign, ERP implementations, merger integration services, activity-based costing and benchmarking/best practice studies. He also has significant expertise assisting companies in the evaluation, implementation and operation of outsourcing arrangements in various functional areas including finance, human resources and information technology. Prior to joining A&M, Mr. Mulkey was a Managing Director in the Energy Industry Sector of BearingPoint where he was responsible for managing key account relationships for select high profile Fortune 100 energy companies. Previously, he was the partner responsible for creating and managing Arthur Andersen's Business Consulting practices in San Antonio and Austin, Texas. "Since forming Alvarez & Marsal Business Consulting, we have attracted a growing team of top-tier professionals who have extensive consulting industry experience," said Tom Elsenbrook, an A&M Managing Director and head of Alvarez & Marsal Business Consulting. "Boyd brings an outstanding background to the firm and will enhance our ability to serve current and future clients in a variety of industries." Mr. Mulkey earned a Bachelor of Business Administration (BBA) in Accounting from the University of Texas at Austin and is a Certified Public Accountant in the State of Texas. Alvarez & Marsal Business Consulting provides services including: Strategy and Corporate Solutions, such as post-merger integration, cost management, business development and marketing; Finance Solutions, such as finance strategy, shared services, business process outsourcing advisory, financial process improvement, business planning and performance management; Information Technology Strategy and Integration, such as software evaluation and selection and ERP optimization; Human Resources Solutions, such as HR operational improvement, compensation and performance management, talent management and organizational effectiveness solutions; and Supply Chain Solutions, such as strategic sourcing, procure to pay process improvement, warehouse and inventory management and transportation and logistics. About Alvarez & Marsal Founded in 1983, Alvarez & Marsal is a global professional services firm that helps businesses organizations in the corporate and public sectors navigate complex business and operational challenges. With professionals based in locations across the US, Europe, Asia, and Latin America, Alvarez & Marsal delivers a proven blend of leadership, problem solving and value creation. Drawing on its strong operational heritage and hands-on approach, Alvarez & Marsal works closely with organizations and their stakeholders to help address critical business challenges, implement change and favorably influence results. For more information about the firm, please visit: http://www.businessconsulting.alvarezandmarsal.com or contact Rebecca Baker, Chief Marketing Officer at 212.759.4433. To find out more about Alvarez & Marsal Business Consulting contact Tom Elsenbrook, Managing Director at 713.259.7080. * Salomon Green & Ostrow and Stevens & Lee Combine -------------------------------------------------- Stevens & Lee and Salomon Green & Ostrow jointly announced today that they will combine their practices effective January 1, 2005. Seven former Salomon Green & Ostrow lawyers, including Chester Salomon, David Green, Alec Ostrow, Nicholas Kajon, Walter Benzija, Jocelyn Keynes and Constantine Pourakis, and two paralegals and related staff, will join Stevens & Lee and will remain in the combined firm's New York City office at Salomon Green's former 485 Madison Avenue location. "The combination of our firms results in a total of about 20 lawyers who practice almost exclusively before the Bankruptcy Courts and gives us a presence in both the Southern District of New York and the District of Delaware," said Chester Salomon, Senior Partner of Salomon Green & Ostrow. "It also provides us with the breadth and depth of a 180-lawyer law firm to handle larger, more complex cases, and particular segment expertise in the equipment leasing, health care, pharmaceutical, retail, financial services and basic manufacturing areas." "Salomon Green is a preeminent bankruptcy boutique and we welcome this group of excellent lawyers," said Beth Stern Fleming, a member of Stevens & Lee's Executive Committee and the Bankruptcy/Workout Department. "This combination also gives us a presence in New York City - a long-time firm objective - which will help us to help our clients," added Robert Lapowsky, also a member of Stevens & Lee's Executive Committee and the Bankruptcy/Workout Department. Salomon Green & Ostrow lawyers are well-known for their representation of parties in reorganization and liquidation, trustees, examiners, creditors' committees, landlords, equipment lessors, litigants and asset purchasers in bankruptcy proceedings in the Southern and Eastern Districts of New York and throughout the country. In the past several years, they've represented parties in the Enron, WorldCom, Adelphia, Polaroid, General Media, LTV, Bethlehem Steel and Ames Department Store bankruptcies, among many others. About Stevens & Lee Stevens & Lee is a professional services provider, which together with its affiliated businesses, totals over 220 lawyers and other business professionals providing a full range of legal and consulting services to regional, national and international clients. The firm maintains offices in Princeton and Cherry Hill, NJ; Philadelphia, Valley Forge, Reading, Lancaster, Harrisburg, the Lehigh Valley, Scranton and Wilkes-Barre, PA; Wilmington, DE; and now, New York City. ********* 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 ***