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/raid1/www/Hosts/bankrupt/TCR_Public/050217.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, February 17, 2005, Vol. 9, No. 40 Headlines ACE SECURITIES: Moody's Rates $25.4MM Class B-1 Certs. at Ba2 ADVANCED MEDICAL: Expects to Complete VISX Merger in 2nd Quarter AERO PLASTICS: Files Schedules of Assets & Liabilities in Georgia AIR CANADA: Transportation Agency Wants Sanction Order Clarified ALLIANCE LAUNDRY: Launches Exchange Offer for 8-1/2% Sr. Sub. Debt AMERICAN AIRLINES: Pilots Urge Defeat on Proposed Tax Increase AMKOR TECHNOLOGY: Moody's Junks Subordinated Notes ANCHOR GLASS: Inks $20 Million Revolving Loan with Madeleine APPLIED EXTRUSION: To File Late Financial Reports by Feb. 28 ATLANTIC EXPRESS: Soliciting Consents to Amend Sr. Note Indenture ATLANTIS PLASTICS: Moody's Junks $125MM Senior Subordinated Notes BILTMORE GROUP: Voluntary Chapter 11 Case Summary CAPITAL ONE: Successfully Remarkets Senior Notes Due 2007 CAPITAL TRUST: S&P Puts Low-B Ratings on $2.3 Million Certificates CATHOLIC CHURCH: Riddell Retention by Spokane Claimants Draws Fire CITIGROUP INC: Merger Prompts Fitch to Affirm Ratings CLEARLY CANADIAN: Common Stock Begins Trading on CNQ Today CROWN CASTLE: Hosting Fourth Quarter Conference Call on March 10 CSFB MORTGAGE: Moody's Junks Class I & J Certificates DMX MUSIC: Wants to Hire Pachulski Stang as Bankruptcy Counsel DMX MUSIC: Wants to Continue Hiring Ordinary Course Professionals DUO DAIRY: Hires Dickensheet & Associates as Auctioneer E*TRADE FINANCIAL: Segments Customers & Cuts Trading Commissions ENTERPRISE PRODUCTS: S&P Rates $500 Mil. of Senior Debt at BB+ EXIDE TECH: Mellon HBV Discloses 5.8% Equity Stake GALCHEM INCORPORATED: Case Summary & 4 Largest Unsecured Creditors GLOBAL LEARNING: Asks Court to Set March 15 as Claims Bar Date HAPPY KIDS: Committee Taps Chadbourne & Parke LLP as Counsel HAYES LEMMERZ: Perry Corp. Discloses 6.47% Equity Stake HERBALIFE LTD: IPO Prompts Moody's to Raise Sr. Unsec. Debt Rating HOLLINGER INC: Shareholders to Discuss Ravelston Proposal on March HOLY CROSS: Moody's Affirms B2 Rating on $21.5MM Series 1994 Bonds INTEGRATED ELECTRICAL: Posts $17.6 Million Net Loss in 1st Quarter INTERSTATE BAKERIES: Court Okays Hiring Hilco as Consultant J.P. MORGAN: Moody's Puts Ba2 Rating on $1.075MM Class B-4 Certs. LAIDLAW INT'L: Jeffrey McDougle Acquires 2,500 Common Shares LAS VEGAS LODGING: Case Summary & 33 Largest Unsecured Creditors LAS VEGAS SANDS: 98% of Noteholders Agree to Amend Mortgage Notes LB-UBS COMMERCIAL: Fitch Puts Low-B Ratings on Six Classes LIN TV: 88% of Noteholders Agree to Amend Senior Note Indenture MASONITE INT'L: Posts $27.3 Million of Net Income in 4th Quarter MCCANN: Wants to Settle Lawsuit Against the U.S. Govt. for $300K MERIT SECURITIES: Fitch Downgrades Class B-3 Rating to B MERRILL LYNCH: Fitch Maintains Junk Rating on $29M Mortgage Certs. MERRILL LYNCH: Moody's Lifts Rating on Series 1995-C2 Certificates MIRANT CORP: Gets Court Nod to Modify Cash Management Procedures MULTI SECURITY: S&P Puts Low-B Ratings on Six Classes of Certs. NORTEL NETWORKS: Has Until March 15 to File Financial Reports OAKWOOD HOMES: High Losses Prompt Fitch to Junk 52 Classes ORIGEN FINANCIAL: Fitch Holds Junk Ratings on Two 2001-A Classes PEGASUS SATELLITE: Court Approves Administrative Claim Bar Date PENTECOSTAL HOUSING: Voluntary Chapter 11 Case Summary PHILADELPHIA'S CHURCH: Case Summary & Largest Unsecured Creditors PLASTECH ENGINEERED: S&P Puts BB- Corp. Rating on CreditWatch Neg. PMA CAPITAL: Posts $10.3 Million Net Loss in Fourth Quarter QUEBECOR MEDIA: Earns $88.2 Million of Net Income in 2004 RADIANT ENERGY: Taps Brant Securities to Market Secured Debentures RIVIERA HOLDINGS: Dec. 31 Balance Sheet Upside-Down by $29.3 Mil. RIVIERA HOLDINGS: Board Approves Three-for-One Stock Split ROGERS COMMUNICATIONS: Posts $450.5M Net Loss in 4th Quarter ROUGE INDUSTRIES: Wants Plan Filing Period Extended to June 16 SALTON INC: Third Point Demands CEO Termination ASAP SANMINA-SCI: Moody's Puts B1 Rating on $300MM Senior Sub. Notes SATCON TECH: Names David O'Neil as VP of Finance & Treasurer SAXON ASSET: Moody's Reviews Ratings on 11 Certs. & May Downgrade SBA COMMUNICATIONS: Changes Accounting for Ground Leases SOLUTIA INC: Cuts Rent on Ashley Warehouse Lease by $540,000 STELCO INC: Board Will Review Bids This Friday TELCORDIA TECHNOLOGIES: S&P Puts B+ Corp. Credit Rating to Stable TIMBERLAND LOGGING: Case Summary & 20 Largest Unsecured Creditors TOWER AUTOMOTIVE: Bankruptcy Prompts Moody's to Withdraw Ratings US AIRWAYS: Court Denies Pegasus' Request for Adequate Protection US HOTEL CORP: Case Summary & 20 Largest Unsecured Creditors VALOR COMMS: Appoints Six New Directors to Board VEO: List of its 20 Largest Unsecured Creditors VERITAS FINANCIAL: Case Summary & 9 Largest Unsecured Creditors W.R. GRACE: Asks Court to Approve New CEO Employment Agreement X10 WIRELESS: Confirmation Hearing Scheduled for March 16 YUKOS OIL: Plan of Reorganization's Overview & Summary * Morrison & Foerster Names Larren Nachelsky as Managing Director * Dennis Stout Joins Alvarez & Marsal as Senior Director * Michael Sullivent Joins Alvarez & Marsal's Dispute Analysis ********* ACE SECURITIES: Moody's Rates $25.4MM Class B-1 Certs. at Ba2 ------------------------------------------------------------- Moody's Investors Service has assigned Aaa ratings to the senior certificates issued by ACE Securities Corp. Home Equity Loan Trust, Series 2005-HE1, and ratings ranging from Aa1 to Baa3 to the subordinate certificates in the deal. The securitization is backed by adjustable-rate and fixed-rate subprime mortgage loans originated by Fremont Investment & Loan (79.81%), Ownit Mortgage Solutions, Inc. (6.33%), and other originators (13.86%). The ratings are based primarily on the credit quality of the loans and on the credit enhancement in the transaction. Credit enhancement includes overcollateralization, subordination, and excess spread. The credit quality of the loan pool is in line with the average loan pool backing recent subprime securitizations. The loans are being serviced by Ocwen Federal Bank FSB and Saxon Mortgage Services, Inc. with Wells Fargo Bank, National Association as the master servicer. Moody's has assigned its top servicer quality rating (SQ1) to Wells Fargo as a primary servicer of subprime loans. The Complete rating actions are: * Ace Securities Corp. Home Equity Loan Trust, Series 2005-He1 * Asset Backed Pass-Through Certificates * $729,291,000 Class A-1A Adjustable Rate Certificates rated, Aaa * $182,323,000 Class A-1B Adjustable Rate Certificates rated, Aaa * $185,769,000 Class A-2A Adjustable Rate Certificates rated, Aaa * $60,016,000 Class A-2B Adjustable Rate Certificates rated, Aaa * $47,430,000 Class A-2C Adjustable Rate Certificates rated, Aaa * $58,509,000 Class M-1 Adjustable Rate Certificates rated, Aa1 * $49,271,000 Class M-2 Adjustable Rate Certificates rated, Aa2 * $30,024,000 Class M-3 Adjustable Rate Certificates rated, Aa3 * $29,255,000 Class M-4 Adjustable Rate Certificates rated, A1 * $36,953,000 Class M-5 Adjustable Rate Certificates rated, A2 * $20,016,000 Class M-6 Adjustable Rate Certificates rated, A3 * $15,397,000 Class M-7 Adjustable Rate Certificates rated, Baa1 * $19,246,000 Class M-8 Adjustable Rate Certificates rated, Baa2 * $18,477,000 Class M-9 Adjustable Rate Certificates rated, Baa3 * $25,405,000 Class B-1 Adjustable Rate Certificates rated, Ba2 ADVANCED MEDICAL: Expects to Complete VISX Merger in 2nd Quarter ---------------------------------------------------------------- Advanced Medical Optics, Inc. (NYSE: AVO) and VISX, Incorporated (NYSE: EYE) now expect to complete their proposed merger during the second quarter of 2005. Earlier the companies had indicated they were working to complete the merger during the first quarter of 2005. The companies are awaiting the completion of their respective year-end audited financial statements, which are now required to be included in their joint proxy statement/prospectus under applicable securities laws, prior to scheduling their respective stockholder meetings and mailing the joint proxy statement/prospectus to their stockholders. About VISX VISX -- http://www.visx.com/-- is a worldwide market leader in the design, manufacture, and sale of laser vision correction systems. The Company was founded in 1988 and received FDA approval for its first laser vision correction product in 1996. VISX holds over 200 patents worldwide and has licensed its technology to Alcon, Bausch & Lomb, LaserSight, Nidek, Schwind, Zeiss-Meditec, and WaveLight Technologies. About the Company Advanced Medical Optics, Inc., is a global leader in the development, manufacturing and marketing of ophthalmic surgical and eye care products. The company focuses on developing a broad suite of innovative technologies and devices to address a wide range of eye disorders. The company has operations in about 20 countries and markets products in approximately 60 countries. For more information, visit the company's Web site at http://www.amo-inc.com/ * * * As reported in the Troubled Company Reporter on Feb. 15, 2005, Standard & Poor's Ratings Services placed Advanced Medical Optics Inc.'s (AMO) 'BB-' senior secured debt ratings on CreditWatch with positive implications; the company's 'BB-' corporate credit rating and stable outlook are affirmed. Once the VISX Inc., transaction is completed, the senior secured debt rating will be raised to 'BB' from 'BB-' and the bank loan rating will be raised to '1' from '2', indicating the likelihood of full recovery in the event of a payment default. A Jan. 7, 2005, amendment increased AMO's existing bank facilities by $200 million to facilitate the acquisition of VISX Inc. The increase in debt is more than offset by the additional security that will be obtained for lenders as a result of the acquisition; VISX has no encumbered assets, S&P observed. AERO PLASTICS: Files Schedules of Assets & Liabilities in Georgia ----------------------------------------------------------------- Aero Plastics, Inc., delivered its Schedules of Assets and Liabilities to the U.S. Bankruptcy Court for the Northern District of Georgia, Atlanta Division, disclosing: Name of Schedule Assets Liabilities ---------------- ------ ----------- A. Real Property B. Personal Property $26,165,499 C. Property Claimed As Exempt D. Creditors Holding $19,196,083 Secured Claims E. Creditors Holding 127,791 Unsecured Priority Claims F. Creditors Holding 12,320,068 Unsecured Nonpriority Claims ----------- ----------- Total $26,165,499 $31,643,944 Headquartered in Leominster, Massachusetts, Aero Plastics, Inc. -- http://www.aeroplastics.com/-- manufactures household products. The Company filed for chapter 11 protection on Jan. 6, 2005 (Bankr. N.D. Ga. Case No. 05-60451). J. Michael Lamberth, Esq., at Lamberth, Cifelli, Stokes & Stout, PA, represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it estimated assets and debts between $10 million and $50 million. AIR CANADA: Transportation Agency Wants Sanction Order Clarified ---------------------------------------------------------------- The Canadian Transportation Agency asks the Ontario Superior Court of Justice (Commercial List) to confirm that the Order approving Air Canada's Plan of Reorganization, Compromise and Arrangement does not extinguish applications pursuant to the Canada Transportation Act, S.C. 1996, c. 10 and Regulations thereto, that are currently before the Agency. The applications relate to events arising before the April 1, 2003, Petition Date and require Air Canada to cooperate with any ongoing investigations or comply with any decisions rendered by the Agency on or before the Petition Date. The CTA also asks Mr. Justice Farley to declare that the Sanction Order does not extinguish enforcement action or appeal proceedings relating to the prepetition applications. The CTA is an independent quasi-judicial administrative tribunal, which reports to the Parliament of Canada through the Minister of Transport. In addition to being the economic regulator of the federal transportation network, the CTA has human rights mandate under Part V of the Canada Transportation Act. Specifically, the CTA is responsible for processing matters that come under the jurisdiction of the Act and other related legislation, as they affect rail, air and marine activities within federal jurisdiction. With respect to the regulation of air carriers, the CTA's regulatory duties include but are not limited to: -- investigating complaints regarding domestic fares and cargo rates on non-competitive routes; -- ensuring that air carriers provide appropriate notification before reducing or discontinuing domestic air services; -- negotiating, administering and implementing numerous bilateral air transport agreements between Canada and other countries; -- ensuring that air services, both foreign and domestic, are properly insured; -- ensuring compliance with international obligations; -- resolving complaints by passengers against airlines and airlines against other airlines; -- assuring access to air travel for persons with disabilities and investigating complaints of undue obstacles to the mobility of persons with disabilities and ensuring the undue obstacles are removed from federal transportation services and facilities; -- protecting the interests of consumers and carriers by ensuring that air carriers operating to, from, and within Canada meet certain minimum economic requirements; -- administering an air carrier licensing system, international air agreements, and domestic and international air tariffs; and -- protecting consumer interests through an air travel complaints program. CCAA Stay of Regulators During the restructuring, Air Canada took the position that, to successfully restructure, it needed the CCAA Court to stay the CTA from taking any action which could affect the carrier's rights or require Air Canada to invest any sums of money in respect of complaints about its failure to comply with the Transportation Act and associated regulations, including actions respecting: 1. complaints about the accessibility of transportation services including allergy and oxygen related complaints; 2. complaints concerning Air Canada's tariffs or its failure to comply with tariffs; 3. pricing complaints; and 4. complaints to the Office of the Air Travel Complaints Commissioner against Air Canada and its subsidiaries. The Attorney General of Canada, on behalf of the CTA and other federal regulators, the Privacy Commissioner, and the Commissioner of Official Languages had challenged the jurisdiction of the CCAA Court to stay regulatory activity. In July 2003, the Court held that the CCAA authorized or alternatively, that the Court had inherent jurisdiction to grant a "temporal," procedural stay of regulatory activity, proceedings and enforcement. The stay of regulators was granted based on Air Canada's evidence that continuing to have to deal with regulatory matters beyond the "four pillars" of health, safety, security, and airworthiness, would "seriously impair" its ability to deal with its business and its restructuring activities on an ongoing basis. Nevertheless, regulators were authorized by the CCAA Court to enforce any regulatory order or equivalent, on "objective, justifiable grounds," in relation to the "four pillars." The Court suggested that Air Canada and the regulators reach an arrangement whereby they could co-exist -- modus vivendi -- during the stay period. After emerging from Court protection, Air Canada has taken the position that CTA applications relating to events arising before the Petition Date have been extinguished by the Sanction Order. Pending Issues Against Air Canada Gavin Currie, Director General of the Air and Accessible Transportation Branch of the CTA, reports that there are currently some 114 applications against Air Canada relating to events arising before April 1, 2003, being handled by the CTA: 75 Part V applications -- accessible transportation; and 39 Part II applications -- refusal to transport, pricing, tariff and consumer complaints. Despite the Court's direction, Air Canada was not prepared to achieve a modus vivendi to address those regulatory matters during the restructuring. Accessible Transportation Files Part V of the Transportation Act provides the CTA with the legislative mandate to eliminate undue obstacles to the mobility of persons with disabilities from the federal transportation network by two means: regulation promulgation (section 170) and complaint adjudication (section 172). Where the CTA determines, upon consideration of a complaint, that there is an undue obstacle, it has the power to require the taking of corrective measures and, where appropriate, direct the payment of compensation for any expense incurred by the person arising out of the undue obstacle. The CTA may make regulations or, on application, inquire into a matter in relation to which a regulation could be made under subsection 170(1), regardless of whether a regulation has been made, to determine whether there is an undue obstacle to the mobility of persons with disabilities with respect to: (a) the design, construction or modification of, and the posting of signs on, in or around, means of transportation and related facilities and premises, including equipment used in them; (b) the training of personnel employed at or in those facilities or premises or by carriers; (c) tariffs, rates, fares, charges and terms and conditions of carriage applicable in respect of the transportation of persons with disabilities or incidental services; and (d) the communication of information to persons with disabilities. Mr. Currie relates that majority of the applications received under Part V of the Act do not request compensation for expenses incurred. The types of corrective measures ordered include: * repair or replacement of lost or damaged mobility aids; * purchase of equipment to assist persons with disabilities; * training of personnel; * amendment of tariffs; * development of policies and procedures in relation to persons with disabilities; and * issuance of bulletins to transportation service provider staff to advise them of findings of the CTA. The 75 accessible transportation files that Air Canada argues are extinguished by the Sanction Order can be broken down as: 54 active investigations; 20 follow-up investigations to determine Air Canada's compliance with outstanding orders for corrective measures contained in CTA decisions; and 1 appeal of a CTA decision before the Federal Court of Appeal. "A great deal of time, resources and money had been invested both by Applicants and the CTA in many of the 75 accessible transportation files that [Air Canada] now considers 'extinguished' by the Sanction Order," Mr. Currie tells Mr. Justice Farley. As of December 23, 2004, the CTA had determined that the issues raised in 27 of the 54 active applications warranted public hearings. Pricing, Consumer, Refusal to Transport, and other Tariff Complaints In the area of air transportation, Part II of the Transportation Act, in conjunction with the Air Transport Regulations, provides the CTA with the power to regulate the economic aspects of both domestic and international air services. Pursuant to the regulatory scheme established by the Act, the ATR and the various international air transport agreements and arrangements to which Canada is a party, air carriers operating air services to, from or within Canada must: -- publish tariffs, which are schedules of fares, rates, charges and terms and conditions of carriage and other incidental services applicable to the provision of an air service; -- make their tariffs available to the public on request; and -- apply the provisions of their published and effective tariffs. The CTA reviews and analyzes tariffs applicable to the operation of international air services when they are filed or revised to ensure that they are consistent with Canadian law, government policy, and the applicable international air transport agreements and arrangements. The CTA also investigates complaints in respect of allegations that air carriers are not respecting their tariffs and air carriers' terms and conditions of carriage are unclear, unjust, unreasonable or unduly discriminatory. The CTA investigates complaints in respect of allegations that the passenger fares or cargo rates published or offered on routes within Canada served only by one carrier and its affiliates are unreasonable or that the range of fares or rates offered on those routes are inadequate -- section 66 of the Act. The office of the Air Travel Complaints Commissioner, which is part of the CTA, reviews and attempts to resolve a broad range of air travel complaints filed against an air carrier where the complainant and the carrier have not been able to reach 1a satisfactory agreement. By the use of alternative dispute resolution mechanisms, the Office attempts to affect a resolution that is fair and equitable and that is consistent with the carriers' legal responsibilities as established by international agreements and Canadian Law. The majority of complaints received by the Office deal with those issues as the quality of service provided by air carriers, baggage handling, and flight schedules. According to Mr. Currie, the CTA presently has 39 applications affected by Air Canada's interpretation of the effect of the Sanction Order, consisting of: 2 applications related to Air Canada's refusal to transport passengers; 2 domestic airline pricing complaints under section 66 of the Act; 2 tariff complaints; and 33 air travel consumer complaints. Effect of Air Canada's Restructuring on CTA's Regulatory Activity Mr. Currie tells the Court that CTA regulatory activity under the Transportation Act resumed business as usual, after Oct. 1, 2004: 1. With the participation of Air Canada, a scheduling order was obtained from the Federal Court of Appeal regarding the pending Appeal of a CTA decision; 2. Decisions were issued under Part V, five of which contained findings of undue obstacles and four of which contained orders for corrective measures. Air Canada has been actively complying with those orders; and 3. Follow-up investigations and active applications investigations were recommenced with Air Canada complying with all requests or orders for production for information or materials. The CTA decided to treat as "extinguished": 1 refusal to transport a passenger complaint; 88 air travel consumer complaints; and 1 tariff investigation, based on the CTA's belief that those particular applications fell into the definition of "affected unsecured creditor" claims. Requests for compensation under section 172(3) of the Act were also considered extinguished. According to Mr. Currie, Air Canada first took the position that the Sanction Order was not limited to extinguishing only financial compensation claims but rather extinguished Part V applications in their entirety in December 2004. Louise Helene Senecal, counsel for Air Canada, articulated the airline's position that all Part V Applications were extinguished, in their entirety, by the Sanction Order in a January 6, 2005 letter to Liz Barker, counsel for the CTA. On January 19, 2005, Air Canada sent a further letter asserting that the Sanction Order also extinguished applications for non-financial relief to affected Part II applications. Air Canada filed for CCAA protection on April 1, 2003 (Ontario Superior Court of Justice, Case No. 03-4932) and filed a Section 304 petition in the U.S. Bankruptcy Court for the Southern District of New York (Case No. 03-11971). Mr. Justice Farley sanctioned Air Canada's CCAA restructuring plan on Aug. 23, 2004. Sean F. Dunphy, Esq., and Ashley John Taylor, Esq., at Stikeman Elliott LLP, in Toronto, serve as Canadian Counsel to the carrier. Matthew A. Feldman, Esq., and Elizabeth Crispino, Esq., at Willkie Farr & Gallagher, serve as the Debtors' U.S. Counsel. When the Debtors filed for protection from their creditors, they listed C$7,816,000,000 in assets and C$9,704,000,000 in liabilities. On September 30, 2004, Air Canada successfully completed its restructuring process and implemented its Plan of Arrangement. The airline exited from CCAA protection raising $1.1 billion of new equity capital and, as of September 30, has approximately $1.9 billion of cash on hand. (Air Canada Bankruptcy News, Issue No. 58; Bankruptcy Creditors' Service, Inc., 215/945-7000) ALLIANCE LAUNDRY: Launches Exchange Offer for 8-1/2% Sr. Sub. Debt ------------------------------------------------------------------ Alliance Laundry Systems LLC, a Delaware limited liability company and Alliance Laundry Corporation, a Delaware Corporation disclosed that the Issuers commenced, on Feb. 15, 2005, an offer to exchange their 8-1/2% Senior Subordinated Notes due 2013 which are registered under the Securities Act of 1933, for any and all of their outstanding 8-1/2% Senior Subordinated Notes due 2013, which were not registered under the Securities Act. The offer will expire on March 16, 2005, at 5:00 P.M., New York City time, unless extended by the Issuers. The Old Notes may not be offered or sold except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and the applicable state securities laws. This press release shall not constitute an offer to sell or solicitation of an offer to buy nor shall there be any sale of the Old Notes or the New Notes 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 Alliance Laundry Systems LLC -- http://www.comlaundry.com/-- headquartered in Ripon, Wisconsin, is a leading North American manufacturer of commercial laundry products and provider of services for laundromats, multi-housing laundries and on-premise laundries. The Company offers a full line of washers and dryers for light commercial use as well as large frontloading washers, heavy duty tumbler dryers, and presses and finishing equipment for heavy commercial use. The company's products are sold under the well-known brand names Speed Queen(R), UniMac(R), Huebsch(R), and Ajax(R). * * * As reported in the Troubled Company Reporter on Jan. 7, 2005, Moody's Investors Service assigned a B3 rating to Alliance Laundry Systems LLC's proposed guaranteed senior subordinated notes (the notes will be co-issued by Alliance Laundry Corporation) and a B1 rating to Alliance Laundry Systems LLC's proposed senior secured revolving credit facility and senior secured term loan. Additionally, Moody's assigned a B1 senior implied rating to Alliance Laundry Systems LLC and withdrew the B2 senior implied rating of Alliance Laundry Holdings, Inc. In May 2004, Moody's downgraded the company's senior implied rating to B2 from B1, reflecting the concern that the issuance of income deposit securities -- IDS -- securities would significantly elevate Alliance's risk profile. Alliance recently withdrew its registration statement for the IDS. The restoration of the B1 senior implied rating reflects Moody's expectation that the company's liquidity profile under the proposed capital structure will be much stronger than under the IDS structure. The ratings are also supported by the company's strong market position within the commercial laundry market as well as the relative stability of its cash flows. Nevertheless, the ratings also recognize: (1) the significant increase in debt that will result from Teachers' Private Capital's, the private equity arm of the Ontario Teachers' Pension Plan, purchase of Alliance from Bain Capital and minority shareholders for $450 million (implying an LTM EBITDA multiple of approximately 8.0 times); and (2) Alliance's high pro forma leverage with adjusted debt to EBITDA of 6.8 times for the LTM ended September 30, 2004, (debt includes the new financing, securitized receivables and the overcollateralization of securitized finance receivables while EBITDA excludes non-recurring expenses associated with the IDS issuance). Although Moody's acknowledges that the company's pro forma credit metrics are weak for the B1 rating category, the ratings are predicated on our expectation that the company will continue to generate positive free cash flow that will be applied to debt reduction. The rating outlook is stable. The stable outlook reflects Moody's expectation that Alliance will generate no less than $20 million of free cash flow (FCF - cash from operations less capital expenditures) on an annual basis and that the company's adjusted leverage will decline below 6.0 times within the next 12 to 18 months. Conversely, Alliance's ratings would come under downward pressure should operating performance deteriorate or rising input costs increase adjusted leverage beyond 7.0 times or annual FCF fall below $20 million. These summarizes the ratings activity: Ratings assigned: * $150 million guaranteed senior subordinated notes, due 2013 -- B3 * $50 million guaranteed senior secured revolver, due 2011 -- B1 * $200 million guaranteed senior secured term loan B, due 2012 -- B1 * Senior implied rating -- B1 * Senior unsecured issuer rating -- B2 Ratings to be withdrawn: * $110 million senior subordinated notes, due 2008 -- B3 * $45 million senior secured revolver, due 2007 -- B1 * $136 million senior secured term loan, due 2007 -- B1 Alliance's ratings reflect: (1) its leading market position with 39% of the North American stand-alone commercial laundry equipment market serving laundromats, on-premises laundry, and multi-housing sectors, and (2) its entrenched relationships with distributors and route operators. AMERICAN AIRLINES: Pilots Urge Defeat on Proposed Tax Increase -------------------------------------------------------------- The Allied Pilots Association, collective bargaining agent for the 13,500 pilots of American Airlines (NYSE:AMR), expressed its concern over a proposed doubling of aviation security taxes and urged Congress to reject the proposal. "Aviation security is a matter of national defense and should be funded accordingly," said Captain Ralph J. Hunter, APA President. "Given the precarious financial condition of our nation's airlines, the last thing they need is yet another expense." Capt. Hunter noted that in today's hyper-competitive airline industry, the nation's carriers have been unable to raise ticket prices, which means the airlines would be forced to absorb the $1.5 billion in new taxes contained in the White House proposal. "When our pilots agreed to $660 million in annual concessions to help American Airlines avoid bankruptcy two years ago, they did not envision a significant portion of that investment going toward new taxes," he said. "Right now more than one quarter of the cost of a $200 airline ticket is made up of taxes and fees, making air travel more heavily taxed than cigarettes or alcoholic beverages. Adding yet more taxes to this already burdensome level of taxation on an industry vital to our nation's economic well being makes no sense whatsoever. "We therefore urge Congress to reject this anti-airline proposal. Otherwise, airline employees are the ones who will continue to bear the brunt through even more job losses and further downward pressure on wages and benefits. With almost 2,800 of our own pilots on furlough and with those remaining having experienced significant reductions in compensation, we have already paid a very heavy price for the sustained industry downturn," said Capt. Hunter. "We also encourage the Bush Administration to be more cautious in proposing new taxes on an industry that already pays a disproportionate share to the federal government." Founded in 1963, APA is headquartered in Fort Worth, Texas. There are currently 2,777 American Airlines pilots on furlough. The furloughs began shortly after the September 11, 2001 attacks. Also, several hundred American Airlines pilots are on full-time military leave of absence serving in the armed forces. The union's Web site address is http://www.alliedpilots.org/ About the Company American Airlines is the world's largest carrier. American, American Eagle and the AmericanConnection regional carriers serve more than 250 cities in over 40 countries with more than 3,800 daily flights. The combined network fleet numbers more than 1,000 aircraft. American's award- winning Web site, AA.com, provides users with easy access to check and book fares, plus personalized news, information and travel offers. * * * As reported in the Troubled Company Reporter on Dec. 1, 2004, Standard & Poor's Ratings Services assigned its 'B+' bank loan rating and its '1' recovery rating to an $850 million amended and restated senior secured credit facility available to AMR Corp. subsidiary American Airlines, Inc. (B-/Stable/--). AMKOR TECHNOLOGY: Moody's Junks Subordinated Notes -------------------------------------------------- Moody's Investors Service affirmed the ratings for Amkor Technology, but revised the ratings outlook to negative from stable in response to the Company's recent earnings and capital spend guidance for Q1 2005. The expectation for weaker than projected sales growth, margins and profitability combined with the planned increase in capital spend indicates that the Company remains challenged in its execution within the highly volatile semiconductor assembly & test industry. This reflects the Company's ongoing difficulties in accurately assessing near term demand, causing associated capital spend levels and their allocation to be potentially mistimed. As a result, it is expected that the Company will generate weaker operating results, continued cash flow burn and increased liquidity strain during the next twelve months period. The outlooks for the ratings revised to negative are. * Senior implied rating of B2; * Senior secured term loan rating of B1; * Senior unsecured notes rating of B3; * Senior unsecured issuer rating of B3; and * Subordinated notes rating of Caa1. * The speculative grade liquidity rating of SGL-2 was affirmed. On February 8, Amkor Technology announced weaker-than-expected first quarter guidance resulting from still poor demand visibility. This is expected to produce slightly weaker first quarter seasonal performance, consisting of net sales sequentially declining 8% to 12% despite a sub-par seasonal peak for the fourth quarter of 2004 and the expected contribution from newly ramping IBM assembly & test business. Moody's believes that increased capital investment in fiscal 2004 raised the company's net sales break-even point, with resulting sub-par utilization levels in this softened sales environment expected to produce a near 400 basis points reduction to gross margin for Q1 2005. Further, EBIT to interest expense coverage is expected to be negative for the quarter. The change in outlook is driven by this expectation for weaker than previously forecasted 2005 operating results, as well as the materially increased guidance for 2005 capital investment ($150 million versus prior estimates of $100 million). This planned 50% increase in 2005 capital spend intensifies pre-existing concerns about the sufficiency of the company's prior investment levels, particularly whether these adequately positioned Amkor Technology to meet evolving market demand. A continuation of these negative operating trends, consisting of sub-par sales well short of break-even utilization, resultant strains on profitability and continued free cash flow burn could lead to a ratings downgrade. Conversely, the ratings could stabilize if Amkor Technology is able to reap the top line growth benefits from its recent, significant capital investments, with resulting gross margins rapidly approaching the 20%+ area (16% in Q4 2004) and free cash flow levels turning positive. The credit ratings continue to be supported by Amkor Technology's ability to dramatically scale back capital spend should management change its view of demand levels; the Company's assembly and test agreement with IBM; and the strength of its customer relationships built on a proven ability to deliver cost effective solutions to both the IDM and fabless communities. Amkor Technology's SGL-2 speculative grade liquidity rating is largely supported by the company's cash balances, which totaled $372 million at the close of fiscal 2004. The rating reflects expectations that the Company will consume cash in the first two quarters of 2005, but still be able to materially reduce capital spend later in the year should expected demand not materialize. Amkor Technology maintains a $30 million revolving credit facility, which Moody's considers insufficiently sized as a supplemental (back-up) source of liquidity. The Company will need to address its June 2006 maturity of $233 million of convertible debt in coming quarters, an event that may increasingly place downward pressure on this liquidity rating. Amkor Technology, Inc., headquartered in West Chester, Pennsylvania, is one of the world's largest providers of contract semiconductor assembly and test services for integrated semiconductor device manufacturers as well as fabless semiconductor operators. For the most recent FY2004, the Company generated net sales of $1.9 billion and adjusted EBITDA of $340 million. Bloomberg data shows that $250,000,000 of Amkor's 5.75% Convertible Subordinated Notes due June 1, 2006, are outstanding, and trade at 97.5 for a 7.84% yield. ANCHOR GLASS: Inks $20 Million Revolving Loan with Madeleine ------------------------------------------------------------ Anchor Glass Container Corporation (NASDAQ:AGCC) has entered into a $20 million revolving credit facility with Madeleine L.L.C., an affiliate of its largest stockholders, funds and accounts managed by Cerberus Capital Management L.P. and its affiliates. As availability under the new facility is not subject to a borrowing base, the new facility will provide the company with liquidity in excess of that provided by the borrowing base under its $115 million primary lending facility. The company anticipates that it will have approximately $22 million of availability under its two revolving credit facilities, after the interest payment on its $350 million senior secured notes due 2013 scheduled to be made on Feb. 15. The new revolving credit facility will mature on August 30, 2007, contemporaneously with the maturity of the company's existing revolving credit facility, and will bear interest on drawn portions thereof at LIBOR plus 8%. Interest on the new facility will be payable in kind if availability under the company's existing revolving credit facility is less than an agreed upon threshold. The new revolving credit facility will be secured by a second lien on the company's inventory, receivables and general intangibles. Modifications Under Existing Revolving Credit Facility and Waivers Anchor Glass has reached an agreement with its lenders under its existing revolving credit facility to modify the fixed charge coverage ratio under the facility for the remainder of 2005 as the Company seeks to reduce costs and improve free cash flow generation. Also, the lenders have waived the Company's expected failure to comply with its fixed charge coverage ratio covenant as of December 31, 2004 that resulted from the company's weaker than anticipated cash flows and operating results during the fourth quarter. Anchor Glass expects to announce final fourth quarter results on March 9, 2005. Anchor Glass has also entered into a similar agreement and waiver with its lender under its $11.7 million capital lease arrangements. Operational Review The company is continuing the implementation of the results of its previously announced operational review to increase asset productivity, improve working capital efficiency, reduce capital spending and boost free cash flow generation. To date, the company has implemented programs to reduce procurement costs, to lower labor costs through its previously announced reduction in force and through other initiatives, and to ameliorate increases in freight costs through increasing load density. Management is actively pursuing other cost reduction and revenue enhancement initiatives. About the Company Anchor Glass Container Corporation is the third largest manufacturer of glass containers in the United States. It has eight facilities where it produces a diverse line of flint (clear), amber, green and other colored glass containers for the beer, beverage, food, liquor and flavored alcoholic beverage markets. * * * As reported in the Troubled Company Reporter on Feb. 4, 2005, Standard & Poor's Ratings Services placed its 'B+' corporate credit rating on Anchor Glass Container Corporation on CreditWatch with negative implications. "The CreditWatch placement incorporates concerns regarding the company's limited liquidity given elevated natural gas prices (the principal fuel for manufacturing glass), lower-than-expected sales volume trends, and the company's disappointing operating and financial performance trend in 2004," said Standard & Poor's credit analyst Liley Mehta. At Sept. 30, 2004, Anchor Glass' balance sheet showed $698 million in assets and $90 million in shareholder equity. APPLIED EXTRUSION: To File Late Financial Reports by Feb. 28 ------------------------------------------------------------ Applied Extrusion Technologies, Inc. (OTC: AETC.PK) won't file its Form 10-Q for the period ending Dec. 31, 2004, on time. The company cites the timing and associated critical demands of its recent prepackaged Chapter 11 filing, including the evaluation of the financial reporting implications of the Chapter 11 filing, as the cause of the delay. The Company anticipates that it will complete and file its quarterly report by Feb. 28, 2005. Additionally, the Company confirmed that the preparations for implementing its prepackaged recapitalization plan, approved on Jan. 24, 2005, by the U.S. Bankruptcy Court for the District of Delaware, are proceeding on schedule and the Company anticipates that it will emerge from chapter 11 in approximately 20 to 25 days. The implementation of the recapitalization plan will significantly reduce the Company's debt and, upon emergence from bankruptcy, the Company will become a non-reporting company pursuant to the U.S. securities laws. Trade creditors will be paid in full pursuant to the plan. 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. ATLANTIC EXPRESS: Soliciting Consents to Amend Sr. Note Indenture ----------------------------------------------------------------- Atlantic Express Transportation Corp. is initiating a consent solicitation of the holders of its 12% Senior Secured Notes due 2008 and its Senior Secured Floating Rate Notes due 2008 in connection with proposed amendments and waivers to the Indenture governing the Notes. Details of the proposed amendments and waivers are contained in the Company's Consent Solicitation Statement, dated Feb. 15, 2005, and the related Consent Letter, which are being sent to holders of the Notes. The proposed amendments and waivers would, as described more fully in the Consent Solicitation Statement, permit the Company to borrow up to an additional $15.0 million (plus the principal amount of new PIK notes issued in connection therewith) of secured debt in the form of $15.0 million aggregate principal amount of Third Priority Senior Secured Notes due 2008 and to waive compliance with certain provisions of the Indenture and certain events of default. The solicitation of consents will expire at 5:00 p.m., New York City time, on Feb. 23, 2005, unless terminated or extended by the Company. Copies of the official Consent Solicitation Statement and related information are available on request from Jefferies & Company, Inc., as information agent, by telephone at (504) 681-5721. The Consent Solicitation and the payment of the consent fee remain subject to all of the terms and conditions contained in the official Consent Solicitation Statement, including the consummation of the offering of Additional Indebtedness. About the Company Atlantic Express is the fourth largest provider of school bus transportation in the United States and the leading provider in New York City, the largest market in which it operates. The Company has contracts to provide school bus transportation in 138 school districts in New York, Missouri, Massachusetts, California, Pennsylvania, New Jersey, Illinois and Vermont. The Company generally provides services for the transportation of open enrollment students through the use of standard school buses, and the transportation of physically or mentally challenged students through the use of an assortment of vehicles, including standard school buses, passenger vans and lift-gate vehicles, which are capable of accommodating wheelchair-bound students. Atlantic Express has a fleet of approximately 5,800 vehicles to service its school bus operations, consisting of school buses, minivans and cars, lift and ramp-equipped vehicles, coaches and service and support vehicles. * * * As reported in the Troubled Company Reporter on Dec. 14, 2004, Standard & Poor's Ratings Services lowered its corporate credit and senior secured debt ratings on Atlantic Express Transportation Corp. to 'CCC+' from 'B' and removed the ratings from CreditWatch, where they were placed July 6, 2004. The outlook is developing. The rating actions reflect the company's greater-than-expected liquidity pressures in recent months and Standard & Poor's belief that challenging market conditions will continue to put pressure on earnings and cash flow over the next few years, despite recent financing activities that have provided some breathing room for the company over the near term. The Staten Island, New York-based school bus transportation company, which emerged from Chapter 11 bankruptcy protection in December 2003, has about $150 million of lease-adjusted debt. "Earlier this year, the company disclosed that it expects cash flow over the coming year to be adversely affected by a number of factors, including higher-than-expected fuel costs and other expenses," said Standard & Poor's credit analyst Lisa Jenkins. "Although the company subsequently tapped some additional sources of funding, liquidity remains tight and leaves the company extremely vulnerable to cost and revenue pressures." ATLANTIS PLASTICS: Moody's Junks $125MM Senior Subordinated Notes ----------------------------------------------------------------- Moody's Investors Service withdrew the first time ratings and ratings outlook for Atlantis Plastics, Inc., following the company's public disclosure of its decision to cancel the previously proposed issuances: * Caa1 for the $125 million senior subordinated notes * B2 for the $105 million senior secured credit facility * B2 senior implied rating * B3 senior unsecured issuer rating (non-guaranteed exposure) * Stable ratings outlook * SGL-3 Speculative Grade Liquidity Rating Headquartered in Atlanta, Georgia, Atlantis Plastics, Inc., is a predominantly domestic manufacturer of polyethylene stretch and custom films and molded plastic products. For the twelve months ended September 30, 2004, net revenue was approximately $334 million. BILTMORE GROUP: Voluntary Chapter 11 Case Summary ------------------------------------------------- Debtor: Biltmore Group of Louisiana, LLC 2500 North 7th Street, Suite 400 West Monroe, Louisiana 71291 Bankruptcy Case No.: 05-30347 Chapter 11 Petition Date: February 11, 2005 Court: Western District of Louisiana (Monroe) Judge: Henley A. Hunter Debtor's Counsel: John T. Scott, Esq. P.O. Box 1966 West Monroe, LA 71294 Tel: 318-325-1966 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million The Debtor did not file a list of its 20-largest creditors. CAPITAL ONE: Successfully Remarkets Senior Notes Due 2007 --------------------------------------------------------- Capital One Financial Corporation (NYSE:COF) disclosed the successful remarketing of approximately $704.5 million aggregate principal amount of its 6.25 percent Senior Notes due 2007. As a result of the remarketing, the annual interest rate on the Senior Notes was reset to 4.738 percent, paid quarterly, effective Feb. 17, 2005. The Senior Notes were sold to investors at a price of 101.500 percent of the principal amount. The Senior Notes no longer form part of Capital One's Upper DECS (NYSE:COFPRC). The remarketing was conducted pursuant to the terms of the Upper DECS and is scheduled to close on Feb. 17, 2005. The remarketing was conducted on behalf of Upper DECS holders who did not opt out of the remarketing. Proceeds from the remarketing of the Senior Notes will be used to purchase U.S. Treasury securities that will be pledged to secure the stock purchase obligations of the participating Upper DECS holders. Holders of record on Feb. 16, 2005, of the outstanding Upper DECS whose Senior Notes participated in the remarketing will receive, on or about Feb. 17, 2005, the remaining proceeds from the remarketing (after deduction of the remarketing fee and the purchase price of the portfolio of U.S. Treasury securities) in an amount equal to $0.126 per Upper DECS. About Capital One Headquartered in McLean, Virginia, Capital One Financial Corporation -- http://www.capitalone.com/-- is a bank holding company whose principal subsidiaries, Capital One Bank and Capital One, F.S.B., offer consumer lending products and Capital One Auto Finance, Inc., offers automobile and other motor vehicle financing products. Capital One's subsidiaries collectively had 48.6 million accounts and $79.9 billion in managed loans outstanding as of December 31, 2004. Capital One, a Fortune 500 company, is one of the largest providers of MasterCard and Visa credit cards in the world. Capital One trades on the New York Stock Exchange under the symbol "COF" and is included in the S&P 500 index. * * * As reported in the Troubled Company Reporter on Sept. 10, 2004, Standard & Poor's Ratings Services raised its long-term counterparty credit rating on Capital One Financial Corp. to 'BBB-' from 'BB+' and the long-term counterparty credit rating on its bank subsidiaries, Capital One Bank, Falls Church, VA and Capital One FSB, to 'BBB' from 'BBB-'. The short-term counterparty credit ratings are affirmed at 'A-3'. At the same time, Standard & Poor's revised the outlook to stable from positive. "The ratings action considers Capital One's successful navigation through a challenging operating environment, the company's success to-date in diversifying its business lines, the moderation of its managed loan growth, and management's adoption of a long-term strategy that considers further diversification," said Standard & Poor's credit analyst John K. Bartko, C.P.A. Despite some weakening of asset quality metrics due in large part to opportunistic forays into subprime lending in late 2002 and into early 2003, Capital One nevertheless navigated its way through a challenging operating environment that, though not a deep recession, saw sector competitors marginalized, credit quality compromised, and regulatory scrutiny intensified. CAPITAL TRUST: S&P Puts Low-B Ratings on $2.3 Million Certificates ------------------------------------------------------------------ Standard & Poor's Ratings Services assigned its preliminary ratings to Capital Trust RE CDO 2005-1 Ltd./Capital Trust RE CDO 2005-1 Corporation's $337.8 million CDOs series 2005-1. The preliminary ratings are based on information as of Feb. 15, 2005. Subsequent information may result in the assignment of final ratings that differ from the preliminary ratings. The preliminary ratings reflect the credit support provided by the subordinate classes of certificates, the economics of the loans and CMBS classes, and the geographic and property type diversity of the collateral. Standard & Poor's analysis determined that, on a weighted average basis, the properties have an LTV of 99.9% based on the all-in leverage of the A, B, and C notes and the mezzanine debt for all of the properties, and a trust pool LTV of 71.7%. A copy of Standard & Poor's complete presale report for this transaction can be found on RatingsDirect, Standard & Poor's Web- based credit analysis system, at http://www.ratingsdirect.com/ The presale can also be found on the Standard & Poor's Web site at http://www.standardandpoors.com/ Select Credit Ratings, and then find the article under Presale Credit Reports. Preliminary Ratings Assigned Capital Trust RE CDO 2005-1 Ltd. Capital Trust RE CDO 2005-1 Corporation Class Rating Amount ----- ------ ------ A AAA $211,941,000 B AA $36,309,000 C A $21,110,000 D BBB $14,354,000 E BBB- $15,199,000 F BB $6,755,000 G B $6,755,000 H B- $10,133,000 J N.R. $11,821,000 Preferred shares N.R. $3,377,776 N.R. - Not rated CATHOLIC CHURCH: Riddell Retention by Spokane Claimants Draws Fire ------------------------------------------------------------------ As previously reported, Spokane's Official Committee of Tort Claimants seeks Judge William's approval to retain Riddell Williams P.S. as its legal counsel. The Tort Committee selected Riddell Williams because of the firm's experience in bankruptcy and insurance coverage matters, and because of the other practice specialties available at the firm that may be required in representing the Tort Committee. * * * On behalf of Michael Shea and the Estate of James Maguire, Deirdre Ann Sullivan, Esq., at Milbank, Tweed, Hadley & McCloy LLP, in New York, points out that Riddell Williams represents the Archdiocese of Seattle purportedly for the purpose of negotiating an environmental indemnity agreement relating to real property gifted to two parishes. Riddell Williams' representation of the Seattle Archdiocese creates an irreconcilable conflict of interest prohibited by RPC 1.7 (a) and (b). Mr. Shea and the Estate of James Maguire are in the Diocese of Spokane's Chapter 11 case. "We have been given no details about the extent of the problem, but anyone with experience in dealing with environmental contamination litigation knows that the cost of remediating can be astronomical," Ms. Sullivan says. If there is not an immediate conflict of interest, Ms. Sullivan continues, there is a substantial probability of a future conflict of interest when the issue of ownership by a corporation sole is finally resolved. Ms. Sullivan explains that representing the Archdiocese of Seattle in an environmental contamination liability context places Riddell Williams at polar opposites with the interests of the tort claimants in this cause and constitutes a lack of disinterestedness. This infringes on the basic appearance of fairness doctrine which, Ms. Sullivan submits, is required by the due process clause of the Fifth Amendment. Mr. Shea and the Estate of James Maguire, therefore, asks Judge Williams to disqualify Riddell Williams as counsel for the Tort Committee because of the firm's actual or inevitable conflict with the rights of the tort claimants, as well as to preserve the appearance of justice. 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. 17; Bankruptcy Creditors' Service, Inc., 215/945-7000) CITIGROUP INC: Merger Prompts Fitch to Affirm Ratings ----------------------------------------------------- Fitch Ratings affirms the 'AA+/F1+' long- and short-term debt ratings of Citigroup Inc. following the announced plan to merge Citicorp and Citigroup Holdings Inc. with and into Citigroup. Fitch anticipates assigning the same debt ratings to issues of Citigroup Funding Inc., a newly formulated legal entity. The merger simplifies the holding company structure, creates a single brand for debt issuance and eliminates any potential price inefficiencies between offerings. CFI will issue short- and intermediate-term debt beginning in the second quarter of 2005. All new short and long-term debt will be issued by either Citigroup Inc. or Citigroup Funding Inc. Fitch's ratings for Citigroup incorporate an expectation of strong financial performance accompanied by a high level of stability. The sustainability of this performance will depend on many factors, including market share expansion in global consumer and investment banking, the maintenance of good asset quality, efficient operations, and accretive acquisitions. The breadth of Citigroup's products and its disciplined credit and market risk management are also integral to the ratings. Fitch believes these factors also contribute to its strong financial performance. Headline risk is expected to continue and may result in negative press. Fitch expects Citigroup management to remain diligent in responding to these issues by continuing to emphasize a longer term view for business performance. Its ratings may be negatively impacted if their ability to conduct its global corporate business is impaired as a result of regulatory investigations. Material litigation reserves have been set aside to address potential future settlements. While ultimate settlements may exceed current reserves, Citigroup's earnings generation capacity provides Fitch with sufficient comfort to maintain a Stable Rating Outlook. Following the completion of the merger anticipated in the second quarter of 2005, Citigroup will assume the debt outstanding of Citicorp. At the same time, Citigroup will issue a guarantee on the outstanding public indebtedness of Citigroup Global Markets Holdings Inc. Citigroup will also replace Citicorp as guarantor for any debt Citicorp has previously guaranteed (Associates and CitiFinancial as examples) and guarantee any debt issued by Citigroup Funding. This action will affect approximately $128 billion of long-term debt issued by Citicorp, Associates, CitiFinancial Credit Corp., and Citigroup Global Market Holdings Inc. An additional $24 billion of short-term debt will also be affected. A complete list of ratings is found at the end of this document. These ratings have been affirmed by Fitch: Citigroup Inc. -- Senior unsecured 'AA+'; -- Subordinated debt 'AA'; -- Preferred stock 'AA'; -- Short-term rating 'F1+'; -- Individual 'A'; -- Support '5'; -- Rating Outlook Stable. Citigroup Capital Trust II through X -- Preferred stock 'AA'; Citicorp Capital Trusts I through III -- Preferred stock 'AA'; Citigroup Global Markets Holdings Inc. -- Senior unsecured 'AA+'; -- Subordinated debt 'AA'; -- Preferred stock 'AA'; -- Short-term rating 'F1+'. Citigroup Global Markets Inc. -- Short-term rating 'F1+'. These bank ratings are also affirmed: Citibank N.A. Citibank (Nevada) N.A. Citibank (South Dakota) N.A. Citibank Delaware Citibank FSB Citibank(New York State) Citibank West FSB -- Long-term deposits 'AA+'; -- Long-term senior 'AA+'; -- Short-term deposits 'F1+'; -- Short-term 'F1+'; -- Individual 'A' -- Support '1' -- Rating Outlook Stable. Citibank International Bank -- Senior unsecured 'AA+'; -- Short-term 'F1+'; -- Support '1'. CitiFinancial Europe PLC -- Senior unsecured 'AA+'; -- Subordinated debt 'AA'. Associates First Capital Corp. -- Senior unsecured 'AA+'; -- Subordinated debt 'AA'. Associates Corp of North America -- Senior unsecured 'AA+'; -- Subordinated debt 'AA'. Arcadia Financial LTD. -- Senior debt 'B'. Ratings to be withdrawn upon completion of restructure Citicorp Inc. -- Senior unsecured 'AA+'; -- Subordinated debt 'AA'; -- Preferred stock 'AA'; -- Short-term 'F1+'; -- Individual 'A'; -- Support '5'. Citigroup Global Markets Holdings Inc. -- Individual 'B'; -- Support '1'. Citibank (West) Holdings Inc. -- Senior unsecured 'AA+'. -- Individual 'A'; -- Support '1' Citibank (West) Bancorp Inc. -- Senior unsecured 'AA+'. -- Individual 'A'; -- Support '1' Avco Financial Services, Inc. -- Senior unsecured 'AA+'. CLEARLY CANADIAN: Common Stock Begins Trading on CNQ Today ---------------------------------------------------------- Clearly Canadian Beverage Corporation (TSX:CLV)(OTCBB:CCBC) reported the approval by the Canadian Trading and Quotation System, Inc., -- CNQ -- for listing and trading of its common shares on the CNQ under the symbol "CCBC". Trading on the CNQ is scheduled to commence on today, February 17, 2005. Concurrently, the Company has voluntarily delisted its shares from the Toronto Stock Exchange -- TSX. The shares of the Company also trade in the United States on the OTC Bulletin Board. "The CNQ offers a fully electronic exchange with instant order execution and transparency for investors. Listing on the CNQ provides our shareholders an efficient new marketplace for trading equity securities," said Douglas L. Mason, President and C.E.O. of Clearly Canadian Beverage Corporation. About the CNQ CNQ -- http://www.cnq.ca-- commenced operations in July 2003 and became Canada's newest stock exchange, recognized by the Ontario Securities Commission, in May 2004. It has an innovative market designed to address the needs of emerging companies and their investors by providing a simple and effective trading system. CNQ's market fosters liquidity through a unique blend of a central auction market and a competitive market making system. There are 40 companies listed and 17 major investment dealers from across Canada, through which all other dealers have access. CNQ has established a Service Directory on www.cnq.ca that provides introductions to key providers of services to brokers, issuers and investors. About Clearly Canadian Based in Vancouver, British Columbia, Clearly Canadian Beverage Corporation -- http://www.clearly.ca/-- markets premium alternative beverages, including Clearly Canadian(R) sparkling flavored water, Clearly Canadian O+2(R) oxygen-enhanced water beverage and Tre Limone(R) sparkling lemon drink which are distributed in the United States, Canada and various other countries. At September 30, 2004, Clearly Canadian's balance sheet showed a $681,000 stockholders' deficit, compared to $1,125,000 in positive equity at December 31, 2003. CROWN CASTLE: Hosting Fourth Quarter Conference Call on March 10 ---------------------------------------------------------------- FCrown Castle International Corp. (NYSE: CCI) plans to release its fourth quarter and year end 2004 results on March 9, 2005, after the market closes. In conjunction with the release, Crown Castle has scheduled a conference call for March 10, 2005, 9:30 a.m. eastern time. The conference call may be accessed by dialing 303-262-2130 and asking for the Crown Castle call at least 10 minutes prior to the start time or live over the Internet by logging on to the web at http://www.crowncastle.com/ A telephonic replay of the conference call will be available from 11:30 a.m. eastern time on March 10, 2005, through 11:59 p.m. eastern time on March 17, 2005, and may be accessed by dialing 303-590-3000 using passcode 11024424#. An audio archive will also be available on Crown Castle's website at http://www.crowncastle.com/shortly after the call and will be accessible for approximately 90 days. Review of Lease Accounting In consultation with its external auditors, Crown Castle is reviewing certain non-cash items relating to its lease accounting practices as a result of a public letter issued by the SEC to the American Institute of Certified Public Accountants on Feb. 7, 2005 clarifying the interpretation of existing accounting literature applicable to certain leases and leasehold improvements. Similar to other companies that operate properties on long-term ground leases, Crown Castle will adjust its method of accounting for tenant leases, ground leases and depreciation. Crown Castle expects to complete its review of this matter and its impact on 2004 and prior years' financial statements before releasing fourth quarter and full year 2004 results. Crown Castle believes that the aggregate amount of the expected corrections will be material to the 2004 financial statements. Therefore, Crown Castle will amend the appropriate filings with the SEC to include restated financial statements for the two-year period ended December 31, 2003, and for the first three quarters of 2004 to reflect these corrections in the proper periods. The corrections will be non-cash adjustments primarily attributable to increases in site rental revenue, ground rent and depreciation expense. The adjustments will not affect historical or future cash flow or the timing of payments under related leases. Moreover, any corrections should result in non-cash adjustments and are not expected to have any impact on cash balances, compliance with any financial covenant or debt instrument, or the current economic value of Crown Castle's leaseholds and its tower assets. Historically, Crown Castle has calculated straight-line ground rent expense using the current lease term (typically 5 to 10 years) without regard to renewal options. Further, Crown Castle depreciated all tower assets over a 20-year useful life, without regard to the underlying ground lease because of its historical experience in successfully renewing ground leases prior to expiration. As a result of this accounting adjustment, Crown Castle will calculate its straight-line ground lease expense using a time period that equals or exceeds the time period used for depreciation. The result of any depreciation correction will shorten the depreciable lives of certain tower assets that have ground leases shorter than 20 years. 2005 Outlook Crown Castle believes any corrections in its accounting treatment of leases will affect its 2005 Outlook, but such corrections are expected to only affect non-cash elements of the financial statements. Crown Castle has adjusted its 2005 Outlook for Site Rental Cost of Operations from between $175 million and $185 million to between $180 million and $190 million primarily due to the expected non- cash acceleration of the recognition of land lease expense for certain leases. Further, Crown Castle adjusted its 2005 Outlook for interest expense from between $100 million and $110 million to between $108 million and $118 million based on the short-term delay in Crown Castle's expected execution of certain refinancing activities until audited 2004 results are available. Crown Castle's 2005 Outlook for interest expense includes expected savings that may be achieved through refinancings and further debt reductions associated with the application of cash balances. About the Company Crown Castle International Corp. engineers, deploys, owns and operates technologically advanced shared wireless infrastructure, including extensive networks of towers. Crown Castle offers significant wireless communications coverage to 68 of the top 100 United States markets and to substantially all of the Australian population. Crown Castle owns, operates and manages over 10,600 and over 1,300 wireless communication sites in the U.S. and Australia, respectively. For more information on Crown Castle visit: http://www.crowncastle.com/ * * * As reported in the Troubled Company Reporter on Jan. 18, 2005, Standard & Poor's Ratings Services raised its ratings on Houston, Texas-based wireless tower operator Crown Castle International Corporation. The corporate credit rating was raised to 'B' from 'B-'. All ratings were removed CreditWatch, where they were placed with positive implications June 28, 2004. The outlook is stable. As of Sept. 30, 2004, the company had about $1.9 billion of debt and $508 million of redeemable preferred stock outstanding. The previous CreditWatch listing cited the potential credit improvement if substantially all after-tax proceeds of the $2 billion sale of Crown Castle's U.K. operation were used to pay down debt. "The upgrade reflects the fact that Crown Castle did indeed apply the bulk of the U.K. sale proceeds to debt reduction," said Standard & Poor's credit analyst Catherine Cosentino. "As a result, debt to EBITDA (including preferred stock and on a lease-adjusted basis) is expected to be in the high 7x area for 2005, substantially down from 10.1x for 2003." Despite the material improvement in leverage, Crown Castle's credit profile continues to be constrained by a still fairly aggressive financial profile, which overshadows the favorable characteristics of its tower business. The company's tower portfolio has good growth prospects, limited competitive risk, and strong operating leverage. Tower-related spending by wireless carriers is expected to remain robust in the next few years due to continued growth in subscribers and minutes of use, and increasing emphasis by carriers on network quality. Competitive risk is limited by such factors as long-term lease contracts with carriers, real estate zoning, and lack of a technology substitute. With mostly fixed costs and limited maintenance capital expenditures, the tower business has strong operating leverage, as revenues from the combination of contractual rent escalation and additional lease-ups stream directly to EBITDA and free cash flow. All these factors enabled Crown Castle to grow revenues by about 8% year over year and maintain strong EBITDA margins of 49% during the third quarter of 2004. CSFB MORTGAGE: Moody's Junks Class I & J Certificates ----------------------------------------------------- Moody's Investors Service upgraded the ratings of four classes, downgraded the ratings of two classes and affirmed the ratings of four classes of Credit Suisse First Boston Mortgage Securities Corp., Commercial Mortgage Pass-Through Certificates, Series 1997-C1. Moody's rating actions are: * Class A-1C, $446,312,243, Fixed, affirmed at Aaa * Class A-X, Notional, affirmed at Aaa * Class A-2, $44,955,890, Fixed, affirmed at Aaa * Class B, $94,936,000, Fixed, upgraded to Aaa from Aa2 * Class C, $67,812,000, Fixed, upgraded to Aaa from A2 * Class D, $61,030,000, Fixed, upgraded to A2 from Baa2 * Class E, $33,906,000, Fixed, upgraded to Baa1 from Baa3 * Class H, $27,125,000, Fixed, affirmed at B3 * Class I, $16,952,000, Fixed, downgraded to Caa3 from Caa2 * Class J, $8,009,029, Fixed, downgraded to C from Ca As of the January 20, 2005 distribution date, the transaction's aggregate principal balance has decreased by approximately 35.2% to $879.0 million from $1.356 billion at securitization. The Certificates are collateralized by 108 loans secured by commercial and multifamily properties. The loans range in size from less than 0.1% to 6.4% of the pool, with the top loan groups representing 43.5% of the pool. The pool consists of a conduit component, representing 84.6% of the pool, and a credit tenant lease -- CTL -- component, representing 15.4% of the pool. Eight loans, representing 7.7% of the pool, have defeased and have been replaced with U.S. Government securities. Fourteen loans have been liquidated from the pool resulting in aggregate realized losses of approximately $19.1 million. Unrated Class K has been eliminated due to losses. Four loans, representing 2.4% of the pool, are in special servicing. Moody's has estimated aggregate losses of approximately $3.4 million for all of the specially serviced loans. The trust has realized interest shortfalls due to appraisal reductions, special servicing fees and trust expenses. As of the most recent remittance statement, Class J has experienced interest shortfalls of approximately $235,000. Moody's was provided with year-end 2003 operating results for 95.3% of the performing conduit loans and partial year 2004 results for 91.5% of the performing conduit loans. Moody's weighted average loan to value ratio -- LTV -- for the conduit component is 74.3%, compared to 80.6% at Moody's last full review in June 2003 and 78.1% at securitization. Based on Moody's analysis, 10.5% of the pool has a LTV greater than 100.0%, compared to 21.7% at Moody's last review and 1.2% at securitization. The upgrade of Classes B, C, D and E is due to increased subordination levels and improved pool performance. The downgrade of Classes I and J is due to realized and expected losses from the specially serviced loans. The top three loan groups represent 17.2% of the outstanding pool balance. The largest loan is the D&D Building Loan ($56.2 million - 6.4%), which consists of two loans secured by leasehold interests in a 590,000 square foot office building located in midtown Manhattan, New York. The property is primarily tenanted by furniture and furnishing wholesalers. The property was 99.0% occupied at year-end 2004, compared to 96.0% at securitization. Moody's LTV is 64.5%, compared to 67.7% at last review and 85.0% at securitization. The second largest loan is the Pan-Pacific Portfolio Loan ($50.1 million - 5.7%), which is secured by a portfolio of four retail properties located in Nevada, Kentucky, Washington and New Mexico. The portfolio's overall occupancy at year-end 2004 was 94.0%, compared to 97.5% at securitization. Moody's LTV is 71.8%, compared to 77.6% at last review and 78.7% at securitization. The third largest loan is the Hyatt Aruba Loan ($45.0 million - 5.1%), which is secured by a 360-room luxury resort property located in Aruba. Performance improved significantly in 2004. Full year 2004 RevPAR was $214.52, compared to $178.80 in 2002 and $187.76 at securitization. Moody's LTV is 43.2%, compared to 44.8% at securitization. The CTL component includes 11 loans secured by properties under bondable leases. The largest CTL exposures are Summit Bank ($24.8 million; parent Bank of America Corporation; Moody's senior unsecured rating Aa2), RadioShack Corporation ($13.9 million; Moody's senior unsecured rating Baa1) and Kohl's Corporation ($6.6 million; Moody's senior unsecured rating A3). The pool's collateral is a mix of: * retail (46.4%), * hotel (16.4%), * office and mixed use (16.4%), * U.S. Government securities (7.7%), * industrial (6.5%), * multifamily (5.2%), * other (1.3%), and * healthcare (0.1%). The collateral properties are located in 25 states and the island of Aruba. The highest state concentrations are: * New York (27.2%), * Florida (14.4%), * California (12.7%), * Maryland (6.4%), and * Nevada (6.0%). All of the loans are fixed rate. DMX MUSIC: Wants to Hire Pachulski Stang as Bankruptcy Counsel -------------------------------------------------------------- DMX Music, Inc., and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of Delaware for permission to employ Pachulski, Stang, Ziehl, Young, Jones & Weintraub P.C., as their general bankruptcy counsel. Pachulski Stang is expected to: a) provide legal advice to the Debtors with respect to their powers and duties as debtors-in-possession in the continued operation of their businesses and management of their properties; b) assist the Debtors in preparing and pursuing approval of a disclosure statement and confirmation for a plan of reorganization; c) prepare necessary applications, motions, answers, orders, reports and other legal papers on behalf of the Debtors and appear in Court to protect the interests of the Debtor; and d) perform all other legal services to the Debtors which are necessary and proper in their chapter 11 cases. Laura David Jones, Esq., a Shareholder at Pachulski Stang, discloses that the Firm received prepetition payments, including a retainer, in the amount of $1,554,192.69 from the Debtors. Ms. Jones will bill the Debtors $595 per hour for her services. Ms. Jones reports Pachulski Stang's professionals bill: Designation Hourly Rate ----------- ----------- Partners and Shareholders $525 - $675 Counsel and Associates $255 - $425 Paralegals $135 - $150 Pachulski Stang assures the Court that it does not represent any interests adverse to the Debtor or their estates. Headquartered in Los Angeles, California, DMX MUSIC, Inc., -- http://www.dmxmusic.com/-- is majority-owned by Liberty Digital, a subsidiary of Liberty Media Corporation, with operations in more than 100 countries. DMX MUSIC distributes its music and visual services worldwide to more than 11 million homes, 180,000 businesses, and 30 airlines with a worldwide daily listening audience of more than 100 million people. The Company and its debtor-affiliates filed for chapter 11 protection on Feb. 14, 2005 (Bankr. D. Del. Case No. 05-10431). The case is jointly administered under Maxide Acquisition, Inc. (Bankr. D. Del. Case No. 05-10429). When the Debtors filed for protection from their creditors, they estimated more than $100 million in assets and debts. DMX MUSIC: Wants to Continue Hiring Ordinary Course Professionals ----------------------------------------------------------------- DMX Music, Inc., and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of Delaware for permission to continue to retain, employ and pay professionals they turn to in the ordinary course of their business without bringing formal employment applications to the Court. In the day-to-day operation of their businesses, the Debtors regularly avail of the services of various attorneys, accountants, actuaries, consultants and other professionals to represent them in matters arising in the ordinary course of their businesses that are unrelated to their chapter 11 cases. Because of the complexity of their businesses, the Debtors submit it would be costly and time-consuming to require each Ordinary Course Professional to apply for separate employment and compensation applications to the Court because the costs of those applications would be significant and be borne by the Debtors' estates. The Debtors assure the Court that: a) no Ordinary Course Professional will be paid in excess of $38,000 per month and the aggregate monthly income for all those Professionals will not exceed $300,000 per month; b) if any Ordinary Course Professional's payments exceeds $38,000 per month, that Professional will be required to submit a formal compensation application to the Court; c) each Ordinary Course Professional will be required to submit to the Court, the Debtors' counsel, the U.S. Trustee and the counsel for the creditors committee within 30 days after the Court's order, an affidavit containing: (i) the name of the Ordinary Course Professional and a description of the services of that Professional, and (ii) the fees and expenses for the Ordinary Course Professional's services; d) no Ordinary Course Professionals will be involved in the administration of the Debtors' chapter 11 cases. Although some of the Ordinary Course Professionals may hold minor amounts of unsecured claims, the Debtors do not believe that any of them have an interest materially adverse to the Debtors, their creditors and other parties-in-interest. Headquartered in Los Angeles, California, DMX MUSIC, Inc., -- http://www.dmxmusic.com/-- is majority-owned by Liberty Digital, a subsidiary of Liberty Media Corporation, with operations in more than 100 countries. DMX MUSIC distributes its music and visual services worldwide to more than 11 million homes, 180,000 businesses, and 30 airlines with a worldwide daily listening audience of more than 100 million people. The Company and its debtor-affiliates filed for chapter 11 protection on Feb. 14, 2005 (Bankr. D. Del. Case No. 05-10431). The case is jointly administered under Maxide Acquisition, Inc. (Bankr. D. Del. Case No. 05-10429). Curtis A. Hehn, Esq., and Laura Davis Jones, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub P.C., represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they estimated more than $100 million in assets and debts. DUO DAIRY: Hires Dickensheet & Associates as Auctioneer ------------------------------------------------------- Dennis W. King, the chapter 7 Trustee overseeing the liquidation of Duo Dairy, Ltd., LLP, sought and obtained permission from the U.S. Bankruptcy Court for the District of Colorado to retain Dickensheet & Associates, Inc., as liquidator and auctioneer of the estate. Dickensheet will also secure and store personal property of the estate. William Dickensheet, President of Dickensheet & Associates, discloses that it will charge the estate an hourly rate of $70 for securing and transporting personal property of the estate. To the best of the Trustee's knowledge, Dickensheet is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. Headquartered in Loveland, Colorado, Duo Dairy, LTD., LLP, filed for chapter 11 protection on March 12, 2004 (Bankr. D. Colo. Case No. 04-14827). The case was converted to chapter 7 on October 27, 2004, and Dennis W. King was appointed as the Chapter 7 Trustee to oversee the company's liquidation. Jeffrey A. Weinman, Esq., and William A. Richey, Esq., at Weinman & Associates, P.C., represent the Debtor. When the Debtor filed for protection from its creditors, it estimated assets of $50 Million and estimated debts of $50 million. E*TRADE FINANCIAL: Segments Customers & Cuts Trading Commissions ---------------------------------------------------------------- E*TRADE Financial Corporation (NYSE: ET) disclosed a refined customer segmentation model for retail investors that rewards the customer's overall relationship with the Company. The news is tied to E*TRADE Financial's recent corporate realignment, which was designed to more directly link the Company's business operations with its high growth retail and institutional customer segments. The new segmentation and pricing changes bring increased value to all customers by creating what the Company believes is the industry's most compelling combination of value pricing, high-performance product functionality and broadly accessible service. "[The] announcement represents the disciplined execution of our 2005 retail customer strategy and is in accordance with the operational and earnings guidance set forth in December 2004," said R. Jarrett Lilien, President and Chief Operating Officer, E*TRADE Financial. "Our 2005 operating plan more appropriately segments our retail customers and more significantly rewards customers within these segments. The ongoing refinement of our retail value proposition is directed at increasing market share in trading volume, asset deposits and lending balances in 2005." E*TRADE Financial has enhanced its customized offerings for each of its three primary retail customer segments: Active Trader, Serious Investor and Main Street Investors. In addition, Power E*TRADE customers will be offered expanded options trading capabilities. Specific changes to retail customer segmentation, pricing, functionality and service include: Active Traders and Options Traders -- lowered segment qualification criteria to just 5 trades per month from a previous qualification of 9 trades per month -- expanded the 2-second execution guarantee to include ETFs -- enhanced the dedicated active trader service team with new options specialists -- introduced three new pricing tiers: New Segment Criteria/Pricing NOW NOW NOW PREVIOUSLY ---------------- --- --- --- ---------- Trades Per Month 500+ 50 to 499 5 to 49 9+ Flat Commissions on Stock and Options Trades $6.99 $7.99 $9.99 $9.99 Per Options Contract Fee $0.75 $1.00 $1.25 $1.25-$1.50 Serious Investors [Customers with $50,000 or more in assets in combined retail accounts] -- reduced commissions on stock and options trades as follows: New Pricing NOW PREVIOUSLY ----------- --- ---------- Commissions on Stock(2) and Options Trades $11.99 $12.99 Main Street Investors [Customers with less than $50,000 in assets in combined retail accounts] -- reduced commissions on stock and options trades as follows: New Pricing NOW PREVIOUSLY ----------- --- ---------- Commissions on Stock(3) and Options Trades $14.99 $19.99 + $3.00 order handling fee All customer segmentation and pricing changes will be in effect on February 18, 2005. All E*TRADE FINANCIAL customers benefit from an upgraded www.etrade.com. The point of entry for Active Traders, Serious Investors and Main Street Investors on the Web, including an enhanced balance details page that now includes real-time account valuations, the introduction of Stop-Limit orders with separate and distinct "stop" and "limit" fields and the upgraded OptionsEdge Center with advanced options chains and educational content. "Customers have made it clear that the combination of product functionality, service and price will win the battle for the self- directed retail investor," said R. Jarrett Lilien, President and Chief Operating Officer, E*TRADE Financial. "Customer loyalty will be retained and enhanced by the company that provides the most complete, customized solutions that meet the varied needs of Active Traders, Serious Investors and Main Street Investors." E*TRADE Financial offers three trading platforms for active traders and options traders. Ranked as the #1 trading platform for active traders by WatchFire Gomez for the last five years in a row, Power E*TRADE is the Company's premium service for its Active Trader segment. Power E*TRADE includes an advanced combination of trading platforms, execution speed, dedicated service and low prices. Power E*TRADE Pro is an advanced, no-fee, direct access trading platform for highly active stock and options traders. Recent upgrades include integrated options trading capabilities and new trailing stops and bracketed orders designed for active traders and options traders who seek a customizable trading platform that is capable of executing commands at fast speeds. Power E*TRADE MarketTrader is a no-fee, all-in-one, web-based trading platform for active stock and options traders. E*TRADE Financial's investing, optimized cash management and lending solutions are particularly attractive to its Serious Investor and Main Street Investor customer segments because the Company has shown its commitment to advocating for the individual investor in ways other financial services providers do not, including: the 12b-1 mutual fund fee rebate program, with nearly $2 million in rebates paid to customers in 2004(5); the lowest cost S&P 500, Russell 2000 and International index fund expense ratios in the industry(6), and no fee, no minimum IRAs(7). The E*TRADE FINANCIAL family of companies provide financial services including brokerage, banking and lending for retail, corporate and institutional customers. Securities products and services are offered by E*TRADE Securities LLC (Member NASD/SIPC). Bank and lending products and services are offered by E*TRADE Bank, a Federal savings bank, Member FDIC, or its subsidiaries. * * * As reported in the Troubled Company Reporter on Jan 21, 2005, Standard & Poor's Ratings Services affirmed its 'B+' long-term counterparty rating on E*TRADE Financial Corp. E*TRADE Bank's counterparty ratings were affirmed at 'BB/B.' ENTERPRISE PRODUCTS: S&P Rates $500 Mil. of Senior Debt at BB+ -------------------------------------------------------------- Standard & Poor's Rating Services assigned its 'BB+' rating to Enterprise Products Operating L.P.'s $250 million senior unsecured notes due 2015 and $250 million senior unsecured bonds due 2035. At the same time, Standard & Poor's affirmed its 'BB+' corporate credit ratings on Enterprise Products Operating and Enterprise Products Partners L.P., and revised its outlook on the companies to positive. As of Dec 31, 2004, Houston, Texas-based Enterprise Products Operating had about $4.3 billion of debt outstanding. "The outlook revision follows the partnership's strong financial performance in the first full quarter following its merger with GulfTerra Energy Partners," said Standard & Poor's credit analyst Aneesh Prabhu. "The performance addresses some of our concerns about Enterprise's ability to manage integration risks associated with the large merger," Aneesh Prabhu added. Standard & Poor's also said that the outlook revision factors the partnership's willingness to issue further equity units to reduce debt and maintain a more balanced capital structure. An upgrade to investment grade will depend on further demonstration of successful merger integration and a reduction in earnings volatility. Enterprise Products Partners does not issue debt but does guarantee Enterprise Products Operating's debt; therefore, Enterprise Products Partners carries the same rating as Enterprise Products Operating. EXIDE TECH: Mellon HBV Discloses 5.8% Equity Stake -------------------------------------------------- In a regulatory filing with the Securities and Exchange Commission, dated January 26, 2005, Mellon HBV Alternative Strategies, LLC, discloses that it is now deemed to beneficially own 1,405,816 shares of Exide Common Stock. Mellon HBV serves as investment adviser of certain clients, none of which individually own more than 5% each but the Clients collectively hold the Shares. Mellon HBV has sole voting and dispository power of the shares held by each Client. As of February 10, 2005, 24,407,068 shares of common stock were outstanding. Headquartered in Princeton, New Jersey, Exide Technologies is the worldwide leading manufacturer and distributor of lead acid batteries and other related electrical energy storage products. The Company filed for chapter 11 protection on Apr. 14, 2002 (Bankr. Del. Case No. 02-11125). Matthew N. Kleiman, Esq., and Kirk A. Kennedy, Esq., at Kirkland & Ellis, represent the Debtors in their restructuring efforts. Exide's confirmed chapter 11 Plan took effect on May 5, 2004. On April 14, 2002, the Debtors listed $2,073,238,000 in assets and $2,524,448,000 in debts. (Exide Bankruptcy News, Issue No. 60; Bankruptcy Creditors' Service, Inc., 215/945-7000) GALCHEM INCORPORATED: Case Summary & 4 Largest Unsecured Creditors ------------------------------------------------------------------ Debtor: Galchem, Incorporated P.O. Box 1360 Payson, Arizona 85541 Bankruptcy Case No.: 05-01941 Chapter 11 Petition Date: February 10, 2005 Court: District of Arizona (Phoenix) Judge: Randolph J. Haines Debtor's Counsel: Michael E. Neumann, Esq. DeConcini McDonald Yetwin & Lacy 2025 North 3rd Street, #230 Phoenix, AZ 85004 Tel: 602-282-0500 Fax: 602-282-0520 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 4 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Compass Bank $765,000 P.O. Box 52180 Phoenix, AZ 85072 White Mountain Building Products $450,000 P.O. Box 1360 Payson, AZ 85541 Compass Bank $150,000 P.O. Box 52180 Phoenix, AZ 85072 M & I Bank $17,900 GLOBAL LEARNING: Asks Court to Set March 15 as Claims Bar Date -------------------------------------------------------------- Global Learning Systems, Inc., and its debtor-affiliate, Keystone Learning Systems Corp., ask the U.S. Bankruptcy Court for the District of Maryland, Greenbelt Division, to set March 15, 2005, as the deadline for all creditors owed money by the Debtors on account of claims arising prior to June 6, 2004, to file their proofs of claim. The Honorable Paul Mannes will consider confirmation of the company's Amended Plan of Reorganization on March 3, 2005. If the plan isn't confirmed, the March 3 hearing agenda calls for Judge Mannes to consider a request by the U.S. Trustee for Region 4 to dismiss the Debtors' chapter 11 cases. Headquartered in Frederick, Maryland, Global Learning Systems, Inc., is improvement solutions company. The Company and its debtor-affiliates filed for chapter 11 protection June 6, 2003 (Bankr. Md. Case No. 03-30218). Brent C. Strickland, Esq., at Whiteford, Taylor & Preston LLP, represents the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed assets of over a million and debts of more than $10 million. HAPPY KIDS: Committee Taps Chadbourne & Parke LLP as Counsel ------------------------------------------------------------ The Official Committee of Unsecured Creditors of Happy Kids Inc., and its debtor-affiliates asks the U.S. Bankruptcy Court for the Southern District of New York for permission to employ Chadbourne & Parke LLP, as its counsel. Chadbourne & Parke is expected to: a) provide the Committee with legal advice with respect to its rights, duties and powers in the Debtors' chapter 11 cases; b) consult with the Debtors, their counsel, other professionals retained in their chapter 11 cases and the U.S. Trustee concerning the administration of the Debtors' chapter 11 cases and their impact on the estates; c) assist and advise the Committee in analyzing the claims of creditors and in negotiations with those creditors; d) assist and advise in the Committee's investigation of the acts, conduct, assets, liabilities, and financial condition of the Debtors, the operation of their businesses, and any other matters relevant to the Debtors' chapter 11 cases, including considering the appointment of a trustee or examiner, as appropriate; e) assist and advise the Committee in its analysis and negotiations with the Debtors and any third parties, and in the formulation of any plan of reorganization or liquidation; f) assist and advise the Committee with respect to its communications with the general creditor body regarding significant matters in the Debtors' chapter 11 cases and in preparing pleadings, motions, applications, objections and other papers as may be necessary in furtherance of the Committee's interests and objectives; g) analyze and advise the Committee of the meaning and import of all pleadings and other documents filed with the Court and represen the Committee at all hearings and other proceedings; and h) perform all other legal services to the Committee that are necessary and required in the Debtors' chapter 11 cases. David M. Lemay, Esq., a Member at Chadbourne & Parke, is the lead attorney for the Committee. Mr. Lemay charges $680 per hour for his services. Mr. Lemay reports Chadbourne & Parke's professionals bill: Designation Hourly Rate ----------- ----------- Partners $520 - $750 Counsel $460 - $620 Associates $295 - $510 Paralegals $100 - $205 Chadbourne & Parke assures the Court that it does not represent any interests adverse to the Committee, the Debtors or their estates. Headquartered in New York, New York, Happy Kids Inc, and its affiliates are leading designers and marketers of licensed, branded and private label garments in the children's apparel industry. The Debtors' current portfolio of licenses includes Izod (TM), Calvin Klein (TM) and And1 (TM). The Company and its debtor-affiliates filed for chapter 11 protection on Jan. 3, 2005 (Bankr. S.D.N.Y. Case No. 05-10016). Sheldon I. Hirshon, Esq., at Proskauer Rose LLP, represents the Debtors in their restructuring efforts. When the Debtor filed for protection from its creditors, it listed total assets of $54,719,000 and total debts of $82,108,000. HAYES LEMMERZ: Perry Corp. Discloses 6.47% Equity Stake ------------------------------------------------------- In a regulatory filing with the Securities and Exchange Commission dated February 8, 2005, Richard C. Perry and Perry Corp. disclose that they may be deemed to beneficially own 2,551,238 shares of Hayes Lemmerz International, Inc., Common Stock: No. of Shares Percentage Beneficially Outstanding Reporting Person Owned of Shares ---------------- ------------- ----------- Richard C. Perry 2,551,238 6.47% Perry Corp. 2,551,238 6.47% The number of shares of common stock outstanding as of December 9, 2004, was 37,822,962 shares. Richard C. Perry is the President and sole stockholder of Perry Corp. Perry Corp. is an investment adviser registered under Section 203 of the Investment Advisers Act of 1940. However, Mr. Perry disclaims any beneficial ownership interest of the shares of Common Stock held by any funds for which Perry Corp. acts as the general partner or investment adviser, except for that portion of those shares that relates to his economic interest in those shares. Hayes Lemmerz International, Inc., is a world leading global supplier of automotive and commercial highway wheels, brakes, powertrain, suspension, structural and other lightweight components. The Company filed for chapter 11 protection on December 5, 2001 (Bankr. D. Dela. Case No. 01-11490). The Bankruptcy Court confirmed the company's plan on May 12, 2003, and the plan took effect on June 3, 2003. Eric Ivester, Esq., and Mark S. Chehi, Esq., at Skadden, Arps, Slate, Meager & Flom represent the Debtors. (Hayes Lemmerz Bankruptcy News, Issue No. 60; Bankruptcy Creditors' Service, Inc., 215/945-7000) HERBALIFE LTD: IPO Prompts Moody's to Raise Sr. Unsec. Debt Rating ------------------------------------------------------------------ Moody's Investors Service has taken several actions regarding its ratings on Herbalife Ltd., formerly WH Holdings (Cayman Islands) Ltd., following the Company's recent initial public equity offering and subsequent debt repayment: 1) upgraded Herbalife's senior unsecured debt and issuer ratings; 2) withdrawn ratings on repaid debt facilities of subsidiary Herbalife International, Inc. -- HII; and 3) affirmed remaining ratings and positive outlook of Herbalife Ltd., and HII. The upgrade of the Company's senior unsecured debt and issuer ratings concludes the review actions initiated on Herbalife's unsecured debt ratings on November 9, 2004, following the announcement of its planned IPO and other recapitalization transactions. Although ultimate IPO proceeds were less than originally contemplated, an even greater reduction in special dividend payments resulted in debt repayment that was substantially identical to plan. The rating upgrades reflect the significant reduction in higher priority and pari passu obligations under the recapitalization, including the near-full tendering of HII's senior subordinated notes and the claw back of $110 million of Herbalife's senior notes. The affirmation of Herbalife Ltd.'s existing ratings and positive outlook reflects the Company's steady operating performance and strong cash flow generation on a global basis through September 2004, but also recognizes challenges the company may face in sustaining earnings growth, including continued declines in its largest markets (US, Japan and South Korea). The affirmation also recognizes that although the recapitalization reduces debt to 2.2x from 3.0x EBITDA and improves interest coverage to 5.6x from 3.5x, these improvements were mostly achieved through utilization of cash balances that supplement the company's modest external liquidity sources. Herbalife Ltd.'s ratings continue to be supported by its strong credit measures and cash flow, which benefits from low working capital needs, Company often receives payment via credit card prior to delivering product, outsourced production from multiple suppliers, and modest research and development expenditures. The demographic trends underlying demand for the company's products are positive. An aging population, increasing obesity rates, greater acceptance of herbal and dietary supplements, and growth in worldwide health expenditures are favorable trends suggesting ongoing fundamental demand for weight management and nutritional products. In addition, long-term interest in working at home, self- employment and supplemental family income has led to high single digit growth rates for the direct marketing industry, and provides a sustainable recruiting environment for MLM companies going forward. Herbalife Ltd.'s franchise value and market position, built over its twenty-five-year history in these markets, provides a substantial platform to benefit from these continuing trends. In addition, the new CEO that was hired in April 2003 has further strengthened the existing management team with several additional hires with expertise in the areas of legal, product development, operations and marketing. The ratings remain restrained by the substantial operating risks that are associated with selling weight management, nutritional and other ingested products through an independent, multi-level marketing (MLM) distributor network of over one million people in 59 countries and the high turnover rates characteristic of MLM companies. Moody's notes that Herbalife Ltd. is exposed to regulatory, legal and publicity risks from both its products and its widespread business model, which is subject to control concerns regarding inappropriate marketing practices. Furthermore, the Company faces intense competition from MLM and non-MLM companies with regard to both its products and ongoing recruiting needs. Herbalife Ltd. has performed well through the nine-month period ended September 2004, with growth in sales and EBITDA of around 13% and 5%, respectively. Despite the need for above-average statistics to compensate for substantial business risks and weak assets, Herbalife's improved earnings levels and the debt reduction from the recapitalization result in pro forma credit protection measures that are strongly-positioned in the current ratings category. Sustained improvements in sales, earnings, and cash flow could support a ratings upgrade over the coming year, particularly if the company is able to stabilize operating performance in its largest markets and maintain debt levels below 2.0x EBITDA. Moody's notes that the Company has credible plans to grow in niche market segments, to expand its China operations, and to invest in tools and marketing programs in order to increase distributor recruiting and retention. The outlook could be stabilized and ultimately ratings pressure could begin to build if operating performance trends falter, if there are material adverse developments regarding lawsuits, regulatory investigations or tax audits, or if leverage increases to fund changing financial and strategic policies. Specifically, current rating levels would likely be challenged if credit metrics materially erode such that debt-to-EBITDA exceeds 3.5x, EBITDA less capex interest coverage falls below 2.5x, or free cash flow to debt drops under 10%. Moody's notes that the Company's strong growth has been aided by favorable currency rate moves and by promotional activity in Europe, which could result in more challenging earnings performance going forward. Herbalife Ltd.'s difficulties in the U.S. market could be heightened by increasing competition, an improving employment outlook, and weak discretionary spending trends. In addition, the Company's increasing reliance on more volatile geographies presents a meaningful risk to the sustainability of current earnings levels. The ratings of Herbalife International, Inc., affected by these actions are: * $25 million senior secured five-year revolving credit facility, affirmed at Ba3; * $200 million senior secured six-year term loan facility, affirmed at Ba3; * $25 million senior secured revolving credit facility due 2007, rating withdrawn; * $120 million senior secured term loan due 2008, rating withdrawn; * $158.3 million 11 _% senior subordinated notes due 2010, rating withdrawn. The ratings of Herbalife Ltd. affected by this action are: * Senior implied rating, affirmed at Ba3; * $165 million 9 1/2% senior unsecured notes due 2011, upgraded to B2 from B3; * Senior unsecured issuer rating, upgraded to B2 from B3. Herbalife Ltd., with corporate headquarters in Los Angeles, California, is a marketer of weight management products, nutritional supplements and personal care items, sold through a global network of independent distributors in 59 countries. Net sales for the twelve months ended September 2004 were approximately $1.3 billion. HOLLINGER INC: Shareholders to Discuss Ravelston Proposal on March ------------------------------------------------------------------ Hollinger, Inc., (TSX:HLG.C)(TSX:HLG.PR.B) will provide notice to applicable Canadian securities regulators of a proposed special meeting of shareholders to be held on March 31, 2005, to consider the proposed share consolidation going private transaction involving Hollinger. As reported in the Troubled Company Reporter on Nov. 1, 2004, Hollinger's board of directors was formally advised in writing by its Chairman and Chief Executive Officer, Conrad Black, of a proposal by The Ravelston Corporation Limited, Hollinger's controlling shareholder, for a proposed going private transaction involving Hollinger. The proposed transaction would be structured as a consolidation of the outstanding retractable common shares and Series II Preference Shares of Hollinger. Upon completion of the Going Private Transaction, the sole shareholder of Hollinger would be Ravelston, directly or indirectly. As previously disclosed, the approvals obtained by Hollinger from the requisite holders of the Corporation's outstanding 11.875% Senior Secured Notes due 2011 which would enable the Proposed Transaction to proceed, provide that all necessary corporate, shareholder and regulatory approvals in connection with the Proposed Transaction relating to Hollinger's outstanding Common Shares must be obtained on or prior to March 31, 2005. Hollinger's Board has been advised by The Ravelston Corporation Limited, Hollinger's controlling shareholder, that there can be no assurances that Ravelston would support the Proposed Transaction on its current terms (or at all) if the Common Share Approvals are not obtained by the March Deadline. At the time of announcing the Proposed Transaction, the Board established a committee of independent directors known as the "Independent Privatization Committee" to, among other things, consider, evaluate and make a recommendation to Hollinger's Board of Directors concerning the Proposed Transaction. The Independent Privatization Committee has engaged GMP Securities Ltd. as its independent financial advisor to provide a formal valuation of Hollinger's outstanding Common Shares and Series II Preference Shares. Neither GMP nor the Independent Privatization Committee has completed its work at this time. As a result, Hollinger's Board has not determined whether or not to proceed with the Proposed Transaction. The Proposed Transaction remains subject to the approvals and processes referenced in Hollinger's October 28, 2004 news release. Ravelston informed the Board that if the Common Share Approvals are not obtained for any reason such that the Proposed Transaction does not proceed, Ravelston will reimburse Hollinger, on a secured basis, for all of the fees and expenses incurred by Hollinger in connection with the Proposed Transaction, including those fees and expenses that Ravelston had already agreed to reimburse. Hollinger's principal asset is its interest in Hollinger International, Inc., which is a newspaper publisher, the assets of which include the Chicago Sun-Times, a large number of community newspapers in the Chicago area and a portfolio of news media investments, and a portfolio of revenue-producing and other commercial real estate in Canada, including its head office building located at 10 Toronto Street, Toronto, Ontario. * * * As reported in the Troubled Company Reporter on August 31, 2004, as a result of the delay in the filing of Hollinger's 2003 Form 20-F (which would include its 2003 audited annual financial statements) with the United States Securities and Exchange Commission by June 30, 2004, Hollinger is not in compliance with its obligation to deliver to relevant parties its filings under the indenture governing its senior secured notes due 2011. Approximately $78 million principal amount of Notes is outstanding under the Indenture. On August 19, 2004, Hollinger received a Notice of Event of Default from the trustee under the Indenture notifying Hollinger that an event of default has occurred under the Indenture. As a result, pursuant to the terms of the Indenture, the trustee under the Indenture or the holders of at least 25 percent of the outstanding principal amount of the Notes will have the right to accelerate the maturity of the Notes. Approximately $5 million in interest on the Notes was due on September 1, 2004. Hollinger has deposited the full amount of the interest payment with the trustee under the Indenture and noteholders will receive their interest payment in a timely manner. There was in excess of $267.4 million aggregate collateral securing the $78 million principal amount of the Notes outstanding. Hollinger also received notice from the staff of the Midwest Regional Office of the U.S. Securities and Exchange Commission that they intend to recommend to the Commission that it authorize civil injunctive proceedings against Hollinger for certain alleged violations of the U.S. Securities Exchange Act of 1934 and the Rules thereunder. The notice includes an offer to Hollinger to make a "Wells Submission", which Hollinger will be making, setting forth the reasons why it believes the injunctive action should not be brought. A similar notice has been sent to some of Hollinger's directors and officers. HOLY CROSS: Moody's Affirms B2 Rating on $21.5MM Series 1994 Bonds ------------------------------------------------------------------ Moody's Investors Service has affirmed the B2 bond rating on Holy Cross Hospital's $21.5 million of outstanding Series 1994 bonds issued through the Illinois Health Facilities Authority. The outlook remains negative. The rating reflects a very low liquidity level and continued operating challenges resulting from persistently declining volumes and an unfavorable payer mix. Despite recent improvement in operating performance, the negative outlook signals our ongoing concerns that Holy Cross can generate sufficient profit to fund much needed capital projects and bolster cash reserves. We note that Holy Cross has been able to pay its debt service without tapping into the debt service reserve fund, but with diminishing liquidity, making future debt payments may be challenging in its financially compromised position. Security: Security interest in the Unrestricted Receivables of the obligated group, which consists solely of the hospital. There is no mortgage or property security pledge. Depleted Liquidity Continues To Be Primary Concern Despite Expected Financial Improvement In Fiscal-Year 2005 Management prepared six-month interim statements (December 31) for fiscal year (FY) 2005 reflect a very low cash position of $3.0 million (9.7 days cash-on-hand), representing a decrease from an already weak $4.1 million absolute cash position at fiscal year end (FYE) 2004 and $7.2 million at FYE 2003. Unrestricted cash decreased during FY 2004 as Holy Cross reduced the high amount of accounts payable accrued in prior years. The further decrease in liquidity in FY 2005 is attributable to negative cash flows resulting from weak volumes in the first months of FY 2005, highlighting the lack of financial cushion that Holy Cross has to manage any unforeseen operating challenges. Following years of significant volume decline, inpatient and outpatient volume is down again in the six-months of FY 2005 compared to the same period in FY 2004. We note, however, that management has reported an improvement in cash of $2.5 million in January, primarily from Holy Cross' first Safety Net Adjustment Payment (SNAP) of $1.5 million from the state of Illinois for the first half of FY 2005. This new source of revenue provides relief for Holy Cross, which will receive $750 thousand each quarter to offset the continued operating losses stemming from its high indigent load. The SNAP payments are fixed payments, independent of patient volume or payer mix and are expected to be recurring annually. We expect that these payments will enable Holy Cross to break-even from operations in FY 2005 for the first time in six years. Additionally, Holy Cross will receive approximately $2.1 million later this year from the new Illinois Hospital Assessment Program, which will provide further liquidity but will not likely be recurring. Due to its distressed financial situation, Holy Cross has preserved cash through very low and deliberate cutbacks in non-essential capital expenditures, which have ranged between $500 thousand to $1 million annually for the past three fiscal years. Holy Cross's average age of plant now exceeds 18 years, leading Holy Cross to borrow $1.3 million of a $5 million capital project loan provided from the Sisters of Saint Casimir to fund necessary capital projects and equipment in FY 2005 and 2006. Management has not drawn the remaining loan funds since they expect the additional revenue from SNAP and the Assessment Program to provide positive, although modest, cash flows that will allow the hospital to reinvest in its facility. With the $1.3 million capital project loan and another $1.3 million loan received after mortgaging a medical office building in FY 2005, Holy Cross has increased its debt service creating additional cash flow pressures on the organization and adding further uncertainty to future debt payments. Holy Cross Hospital is a 241-staffed bed acute care hospital located in Chicago, Illinois. Key Data And Ratios: (Based on audited data ending June 30, 2004 followed by management prepared six-month FY 2005; investment returns normalized at 6%) -- Total Admissions: 10,958; 5,311 -- Total Operating Revenue: $117.3 million; $55.1 million -- Net Revenue Available for Debt Service: $4.3 million; $2.0 million -- Days cash on hand: 12.7days; 9.7 days -- Debt to cash flow: 11.6 times; 14.6 times -- Maximum Annual Debt Service: 1.0 time -- Total Debt Outstanding: $27.1 million; $28.7 million -- Operating Cash flow Margin: -1.8%; -2.3% Outlook: Despite recent improvement in operating performance, the negative outlook signals our ongoing concerns that Holy Cross can generate sufficient profit to fund much needed capital projects and bolster cash reserves. INTEGRATED ELECTRICAL: Posts $17.6 Million Net Loss in 1st Quarter ------------------------------------------------------------------ Integrated Electrical Services, Inc. (NYSE: IES) reported results for its fiscal 2005 first quarter ended Dec. 31, 2004. The company reported revenues of $303.2 million and a net loss for the first quarter of $17.6 million, compared to revenues of $331.6 million and net income of $6.3 million for the first quarter one year ago. The 2005 first quarter net loss includes: -- A loss of $6.6 million or $0.17 per share from discontinued operations, including $6.1 million of goodwill write-offs -- A charge of $2.7 million or $0.07 per share related to marking to market embedded derivatives in the recent $36 million convertible bond issue -- An expense of $1.7 million or $0.04 per share from greater than ordinary legal, accounting and bank advisor fees -- A charge of $1.6 million or $0.04 per share related to establishing valuation allowances against deferred tax benefits created by the company's first quarter loss -- A charge of $0.3 million or $0.01 per share from writing off deferred financing costs related to the company's credit facility -- A charge of $0.3 million or $0.01 per share related to losses in an investment as determined by the equity method of accounting The items detailed above total $13.2 million in the first quarter of fiscal 2005. Excluding the above items, the net loss in the first quarter of fiscal 2005 was $4.4 million. Net income for the first quarter of fiscal 2004 includes a benefit of $1.4 million from the release of a tax valuation allowance. The first quarter revenue decline is primarily the result of a reduction in the amount of bonded work that IES performed during the quarter. As a result of the company's strategic review process, IES has decided to reduce its dependence on bonded work in an effort to improve profitability and return on capital invested. Roddy Allen, IES' president and chief executive officer, stated "IES has made significant progress during the quarter. We are ahead of our previously announced divestiture plan and have divested six business units on our Planned Divestiture list for a total of $19.6 million in cash. We continue to see an upswing in attractive new project opportunities and look forward to the profitable execution of that work. Additionally, we have redesigned the incentive compensation programs for our operations' employees to focus on profitability with a modifier for collections; we believe this will increase cash generation from the new work we are performing." David Miller, IES' chief financial officer, added "IES will continue to focus on improving its capital structure by carefully managing its working capital and by utilizing operating cash flow and the proceeds from the announced divestitures to de-lever the company. IES was in full compliance with all financial covenants for the quarter." Segment Details First quarter segment revenues for commercial/industrial were $232.8 million in fiscal 2005 compared to $268.6 million in fiscal 2004. The decrease is a result of lower revenues in certain regions, primarily from a decrease in revenues from bonded projects. First quarter gross profit for commercial/industrial was $20.9 million in fiscal 2005 versus $32.7 million in fiscal 2004. The decrease was a result of reduced revenues and weak performance from certain business units that are not part of the Core business units. First quarter residential segment revenues were $70.4 million in fiscal 2005 compared to $63.0 million in fiscal 2004. The increase is a result of continued strong demand for new single and multi- family housing. First quarter gross profit for residential was $13.5 million in fiscal 2005 versus $14.0 million in fiscal 2004. Residential gross profit was down in the first fiscal quarter of 2005 as a result of margin pressure from increased competition. As was announced in the Fiscal 2004 year-end earnings release on December 14, 2004, the company now breaks out its business units into three broad categories: Core, Under Review, and Planned Divestitures. A summary of the results of these groups has been added later in this release. Backlog and Bonding Excluding discontinued operations, IES' backlog was $566.9 million compared to $667.7 million for the same units at the end of the first quarter a year ago and compared to $614.9 million for the same units at the end of the fourth quarter of 2004. The lower year to year backlog is primarily due to a decrease in work that requires surety bonding. As was reported in a January 19, 2005 press release, the company reached an agreement with its surety bond provider to provide surety bonds to the company on terms that are acceptable to the company. As was permitted in its amended credit facility, the company pledged accounts receivable and certain other assets to the surety provider. The company was not required to post additional cash collateral or letters of credit as part of the agreement with the surety provider. The company is currently in the process of identifying a co-surety to further expand bonding capacity and allow the company to fulfill its bonding requirements. Since January 19, IES has requested and received $20 million in new surety bonds from its surety provider for bonded projects. Cash Flow, Debt and Liquidity The company generated negative cash flow from operations of $9.0 million for the first fiscal quarter of 2005 versus $6.4 million provided in the first fiscal quarter of 2004. The decrease is primarily a result of having posted, prior to the January 19th agreement, $10 million as collateral with the company's surety provider and the reduced earnings in the current year. As of December 31, 2004, total debt was $241.6 million, excluding a $2.7 million entry to mark to market the convertible debt, compared to the prior year of $248.3 million. Total debt as of September 30, 2004 was $231.3 million. As of February 11, 2005, IES' total debt was approximately $228.5 million, and cash and availability on its revolving credit line totaled approximately $55 million. Additionally, as previously disclosed, IES posted with its surety provider $17.5 million of cash collateral and $5.0 million in letters of credit through December 31, 2004. Interest expense for the first fiscal quarter was $8.8 million compared to $6.5 million for the same fiscal quarter of 2004. The increase in 2005 is primarily due to a $2.7 million non-cash charge for marking to market the convertible bond issue. Divestitures and Supplemental Financial Data In its previously announced strategic review, IES assessed its business units based on consistency of profitability; return on capital, including capital employed for bonding; construction spending and growth trends; and management strength. As a result, IES now views its business units in three broad categories: Core, Under Review and Planned Divestitures. The Core units, which include the residential units, have what IES considers acceptable performance in the above categories. The units Under Review are businesses that may have underperformed in some category, necessitating further evaluation to determine whether or not the unit should be divested. The Planned Divestiture group is comprised of units that have unacceptable performance per IES' criteria, and these units will be divested in order to strengthen and improve the overall quality of IES' operations. The Planned Divestiture group was disclosed in an October 28, 2004 press release, as having revenues of $289 million and an operating loss of $13.1 million in fiscal 2004. As part of a constant evaluation of business units, that Planned Divestiture list has changed slightly. The business units that now make up the updated Planned Divestiture list had fiscal 2004 revenues of $327 million and an operating loss of $11.7 million. IES has already sold six of the Planned Divestiture units. During the fiscal first quarter of 2005, IES completed the sale of substantially all of the assets of three business units, primarily serving the commercial segment, for total cash proceeds of $11.8 million. These units had combined revenues of $57.7 million and operating income of $1.1 million in fiscal 2004. Since the end of the quarter, the company has sold an additional three units, whose combined fiscal 2004 revenues and operating income were $44.6 million and $0.1 million respectively, for a combined price of $7.8 million. IES continues to move forward with its divestiture process. About the Company Integrated Electrical Services, Inc. is a leading national provider of electrical solutions to the commercial and industrial, residential and service markets. The company offers electrical system design and installation, contract maintenance and service to large and small customers, including general contractors, developers and corporations of all sizes. * * * As reported in the Troubled Company Reporter on Jan. 12, 2005, Standard & Poor's Ratings Services assigned its 'B-' corporate credit rating and 'CCC' subordinated debt rating to Integrated Electrical Services Inc. -- IES. The outlook is developing. INTERSTATE BAKERIES: Court Okays Hiring Hilco as Consultant ----------------------------------------------------------- Hilco Real Estate, LLC, and Hilco Industrial, LLC, are limited liability companies and members of the Hilco Trading Co., Inc., family of companies that are nationally recognized as leaders in providing liquidation and appraisal services. J. Eric Ivester, Esq., at Skadden Arps Slate Meagher & Flom, LLP, tells Judge Venters that Hilco and its current principals have extensive experience working with financially troubled companies in complex financial restructurings and providing a broad range of services for monetizing assets of all types including machinery, equipment and real estate. Hilco's clients include: -- WorldCom/MCI, -- Pillowtex Corp., -- Burlington Industries, -- Jacobson's Department Stores, and -- One Price Clothing. Hilco's food industry experience includes auctioning plants for Kohl's Stores, Marc Baking, Mary Ann Baking, Primrose Baking, Sara Lee and Cookie Man, as well as rendering valuations for Parco Foods, Pate Foods, Perfection Bakeries, Petrie Baking Pioneer, and Sara Lee. By this application, Interstate Bakeries Corporation and its debtor-affiliates seek the U.S. Bankruptcy Court for the Western District of Missouri's authority to employ a joint venture composed of Hilco Real Estate and Hilco Industrial, as their disposition consultant with respect to machinery and equipment and certain real estate owned or leased by the Debtors. Pursuant to an Asset Disposition Agreement dated December 21, 2004, Hilco will: (a) meet with the Debtors and their representatives to ascertain the Debtors' goals, objectives and financial parameters for the sale of the Assets in an orderly fashion to maximize their value; (b) at the Debtors' behest, provide a written valuation of any real estate owned or leased by the Debtors; (c) develop, design and implement a marketing program for the sale of the Assets; (d) coordinate and organize the bidding procedures and sale processes for the sale of the Assets, utilizing, where appropriate, the Standing Bidding Procedures approved by the Court at the hearing on December 14, 2004; (e) negotiate the terms of agreements with any prospective purchaser of the Assets in whole or in part; (f) conduct any auctions necessary for the disposition of the Assets; (g) report to the Debtors and their representatives regarding the status of the marketing and sale of the Assets on a periodic, as requested basis; (h) provide other services as agreed to with the Debtors to implement the orderly liquidation of the Assets; (i) participate, attend and testify at, where appropriate, all Court hearings where approval is sought for any transaction involving the Assets; and (j) if requested by the Debtors, attend creditors committee meetings. The Debtors agree to pay Hilco under this structure: (1) Hilco will have 8.5% of M&E Gross Proceeds less than or equal to $10,000,000 and 6.5% of M&E Gross Proceeds in excess of $10,000,000; (2) Hilco will earn 5.5% of Real Estate Gross Proceeds less than or equal to $2,000,000, 3.75% of Real Estate Gross Proceeds greater than $2,000,000, but less than or equal to $10,000,000, and 3% of Real Estate Gross Proceeds greater than $10,000,000. Real Estate Gross Proceeds will also include the present value, at a 7% discount rate, of base rent to be received by the Debtors during the initial term of any lease that the Debtors, as lessor, enter into with respect to a Real Estate Asset. Hilco will be paid directly out of the applicable gross proceeds without further Court order; (3) To the extent that, at the Debtors' direction, Hilco renegotiates or restructures any obligations under a Leased Real Estate Asset, Hilco will earn a fee equal to 4% of the present value, at a 7% discount rate, of the total base rent reduction achieved through this renegotiation or restructuring. Any Rent Reduction Fee will be paid to Hilco directly without further order of the Court. Specifically, 50% of the Rent Reduction Fee will be paid on the later of: -- the date the rent reduction agreement is executed; -- if Court approval is required, the date the rent reduction agreement is approved by the Court; and -- the date the Debtors begin to receive the benefit of the rent reduction and the balance of the Rent Reduction Fee will be paid on the sixth month anniversary of the payment; (4) To the extent that, at the Debtors' direction, Hilco provides a written valuation of Owned Real Estate or a Leased Real Estate Asset, Hilco will earn a fee equal to $1,000 for the valuation of each parcel of Owned Real Estate, and $250 for the valuation of each Leased Real Estate Asset; (5) To the extent that, at the Debtors' direction, Hilco negotiates the waiver or reduction of any claim that would have been otherwise asserted under Section 502(b)(6) of the Bankruptcy Code in connection with a Leased Real Estate Asset, Hilco will be entitled to a fee equal to 4% of the distribution that would have been made under any plan of reorganization or liquidation confirmed in the Debtors' Chapter 11 cases or paid to creditors in a Chapter 7 case, as the case may be, on account of an unsecured claim in an amount equal to the amount of any waiver or reduction; (6) To the extent that, at the Debtors' direction, a Leased Real Estate Asset is assumed and assigned to a third party, Hilco will be entitled to a fee equal to 4% of the distribution that would have been made under any plan of reorganization or liquidation confirmed in the Debtors' Chapter 11 cases or paid to creditors in a Chapter 7 case, as the case may be, on account of an unsecured claim in an amount equal to the amount of the claim that would otherwise have been asserted if the Leased Real Estate Asset was not assumed and assigned, provided, however, that in the event that there are fees earned by Hilco, it will only be entitled to one fee per Leased Real Estate Asset; (7) Fees due to Hilco will be paid: -- whenever the fee can be finally determined under a confirmed plan of reorganization; or -- in the event of conversion of the case to a Chapter 7 case, whenever a Chapter 7 trustee can reasonably determine the amount of distribution that will be paid to unsecured creditors; and (8) To the extent that, as part of a sale of substantially all of the Debtors' assets, any Assets are included in the sale, the Debtors and Hilco will agree on a valuation of the Assets included in the sale, which amount will be deemed to be M&E Gross Proceeds or Real Estate Gross Proceeds, as the case may be. The Debtors will also reimburse Hilco for pre-approved out-of- pocket expenses, including, but not limited to, pre-approved marketing and travel expenses. In connection with the marketing of the Assets, Hilco will not incur costs or expenses in excess of line item amounts set forth in a pre-approved budget without the Debtors' prior written consent. Mitchell Kahn, a principal at Hilco, assures the Court that Hilco: (i) does not have any connection with the Debtors, their creditors, or any other party-in-interest, or their attorneys or accountants; (ii) is a "disinterested person" under Section 101(14) of the Bankruptcy Code, as modified by Section 1107(b); and (iii) does not hold nor represent any interest adverse to the Debtors' estate. * * * Judge Venters grants the Debtors' request. The Court emphasizes that Hilco is prohibited from holding money or assets on behalf of the Debtors, unless Hilco has posted a fidelity bond in form and amount acceptable to the United States Trustee for the Western District of Missouri. Headquartered in Kansas City, Missouri, Interstate Bakeries Corporation -- http://www.interstatebakeriescorp.com/-- is a wholesale baker and distributor of fresh baked bread and sweet goods, under various national brand names, including Wonder(R), Hostess(R), Dolly Madison(R), Baker's Inn(R), Merita(R) and Drake's(R). The Company employs approximately 32,000 in 54 bakeries, more than 1,000 distribution centers and 1,200 thrift stores throughout the U.S. The Company and seven of its debtor-affiliates filed for chapter 11 protection on September 22, 2004 (Bankr. W.D. Mo. Case No. 04-45814). J. Eric Ivester, Esq., and Samuel S. Ory, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $1,626,425,000 in total assets and $1,321,713,000 (excluding the $100,000,000 issue of 6.0% senior subordinated convertible notes due August 15, 2014, on August 12, 2004) in total debts. (Interstate Bakeries Bankruptcy News, Issue No. 12; Bankruptcy Creditors' Service, Inc., 215/945-7000) J.P. MORGAN: Moody's Puts Ba2 Rating on $1.075MM Class B-4 Certs. ----------------------------------------------------------------- Moody's Investors Service has assigned an Aaa rating to the senior certificates issued by J.P. Morgan Mortgage Trust and ratings ranging from Aa2 to B2 to the subordinate certificates in the deal. The securitization is backed by hybrid Jumbo mortgage loans. The mortgage loans are segregated into five pools for the purposes of allocating distributions among the Certificates. All of the mortgages in Pools 1 and 5 are 7/1 Mortgage Loans, all of the mortgage loans in Pool 2 are 3/1 Mortgage Loans, all of the mortgage loans in Pool 3 are 5/1 Mortgage Loans and all of the mortgage loans in Pool 4 are 10/1 Mortgage Loans. Approximately 26% of the loans were originated by Chase Manhattan Mortgage Corporation, 35% by Countrywide Home Loans, Inc., 35% by Cendant Mortgage Loans, and 4% by Mid America Bank, FSB. The mortgage loans were acquired by J.P. Morgan Mortgage Acquisition Corp. The ratings are based primarily on the credit quality of the loans, and on the protection from subordination. Chase Manhattan Mortgage Corporation, Cendant Mortgage Corporation, Countrywide Home Loans Servicing LP, and Mid America Bank FSB, will service the related mortgage loans, and Wells Fargo Bank, N.A. will act as Master Servicer for all loans. Moody's has assigned Chase Manhattan Mortgage Corporation and Countrywide Home loans Servicing LP its top servicer quality rating (SQ1) as primary servicers of prime loans. The complete rating actions are: -- J.P. Morgan Mortgage Trust Mortgage Pass-Through Certificates Series 2004-A6 * Class 1-A-1, Adjustable Rate $123,584,300 rated Aaa * Class 1-A-2, Adjustable Rate $4,580,000 rated Aa1 * Class 2-A-1, Adjustable Rate $41,641,100 rated Aaa * Class 3-A-1, Adjustable Rate $124,642,300 rated Aaa * Class 3-A-2, Adjustable Rate $15,615,400 rated Aaa * Class 3-A-3, Adjustable Rate $10,384,600 rated Aaa * Class 3-A-4, Adjustable Rate Interest Only rated Aaa * Class 4-A-1, Adjustable Rate $69,113,900 rated Aaa * Class 5-A-1, Adjustable Rate $23,833,300 rated Aaa * Class 5-A-2, Adjustable Rate, $915,800 rated Aa1 * Class 5-A-3, Adjustable Rate, Interest Only rated Aaa * Class A-R, Adjustable Rate, $100 rated Aaa * Class B-1, Adjustable Rate, $5,808,400 rated Aa2 * Class B-2, Adjustable Rate, $4,302,290 rated A2 * Class B-3, Adjustable Rate, $2,366,260 rated Baa2 * Class B-4, Adjustable Rate, $1,075,570 rated Ba2 * Class B-5, Adjustable Rate, $645,340 rated B2 LAIDLAW INT'L: Jeffrey McDougle Acquires 2,500 Common Shares ------------------------------------------------------------ In a regulatory filing with the Securities and Exchange Commission on February 3, 2005, Jeffery McDougle, Laidlaw International, Inc.'s Vice President and Treasurer, reports that he acquired 2,500 shares of Laidlaw International Common Stock on Feb. 2 and disposed of 600 shares of Laidlaw Common Stock at $21.59 per share on the same day. As of February 2, 2005, Mr. McDougle beneficially owns 6,900 shares of Laidlaw International Common Stock. Mr. McDougle reports that also holds 7,500 Deferred Shares. One share of common stock will be issued for each deferred share, vesting in four equal installments of 25% each, with 2,500 shares subject to the original grant having vested on February 2, 2005, the first anniversary of the grant date, and 2,500 shares scheduled to vest on each of February 2, 2006, 2007 and 2008. Headquartered in Arlington, Texas, Laidlaw, Inc., now known as Laidlaw International, Inc., -- http://www.laidlaw.com/-- is North America's #1 bus operator. Laidlaw's school buses transport more than 2 million students daily, and its Transit and Tour Services division provides daily city transportation through more than 200 contracts in the US and Canada. Laidlaw filed for chapter 11 protection on June 28, 2001 (Bankr. W.D.N.Y. Case No. 01-14099). Garry M. Graber, Esq., at Hodgson Russ LLP, represents the Debtors. Laidlaw International emerged from bankruptcy on June 23, 2003. * * * As reported in the Troubled Company Reporter on Dec. 27, 2004, Moody's Investors Service has placed the long-term debt ratings of Laidlaw International, Inc., under review for possible upgrade. The review is prompted by the recent announcement by the company that it had entered into a definitive agreement to sell both of its healthcare businesses to Onex Partners LP, an affiliate of Onex Corporation, for $820 million. Net proceeds after fees and assumption of a small amount of debt by the buyer is estimated at $775 million, with a majority of the proceeds intended to be used to repay substantial levels of Laidlaw's existing debt. Moody's has also assigned a Speculative Grade Liquidity Rating of SGL-2 to Laidlaw International, Inc. As part of the rating action, Moody's has reassigned to Laidlaw International, Inc., certain ratings, including the senior implied and senior unsecured issuer ratings, originally assigned at Laidlaw, Inc., in order to reflect more appropriately the company's current organizational structure. As reported in the Troubled Company Reporter on Dec. 9, 2004, Standard & Poor's Ratings Services placed its ratings, including its 'BB' corporate credit rating, on Laidlaw International, Inc., on CreditWatch with positive implications. The rating action follows Laidlaw's announcement that it has entered into definitive agreements to sell both of its health care companies, American Medical Response and Emcare, to Onex Partners L.P. for $820 million. Laidlaw expects to receive net cash proceeds of $775 million upon closing of the transaction, which is expected by the end of March 2005. Naperville, Illinois-based Laidlaw currently has about $1.5 billion of lease-adjusted debt. LAS VEGAS LODGING: Case Summary & 33 Largest Unsecured Creditors ---------------------------------------------------------------- Lead Debtor: Las Vegas Lodging Development, LLC c/o Gordon & Silver. Ltd. 3960 Howard Hughes Parkway, Ninth Floor Las Vegas, Nevada 89109 Tel: (702) 796-5555 Bankruptcy Case No.: 05-11025 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Moscow Inn-Vestments, LLC 05-11029 Type of Business: Subject to a Receivership Order, the Debtors operate and manage an 87-room hotel under the AmeriHost Inn nameplate, located at 4035 North Nellis Blvd. in North Las Vegas, Nevada. The hotel was built in July 2002, and began life as part of the Hampton Inn chain. That franchise deal fell apart. Because of a on-going dispute with Cendant Corporation, the AmeriHost Web site and reservation center show no rooms are ever available. The Debtors intends to dump the AmeriHost name and join a third hotel chain. Ashley Hall was appointed to serve as the Receiver for the hotel on Aug. 26, 2004, by the Eighth Judicial District Court in Clark County, Nevada (Case No. A490797). Chapter 11 Petition Date: February 15, 2005 Court: District of Nevada (Las Vegas) Judge: Bruce A. Markell Debtors' Counsel: Ambrish S. Sidhu, Esq. Gerald M. Gordon, Esq. Thomas H. Fell, Esq. Gordon & Silver, Ltd. 3960 Howard Hughes Parkway, 9th Floor Las Vegas, Nevada 89109 Tel: (702) 796-5555 Fax: (702) 369-2666 Total Assets: $1 million to $10 million Total Debts: $1 million to $10 million A. Las Vegas Lodging Development, LLC's 14 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Paul Block, et al. Promissory Note $1,385,633 c/o JMK Investments, Ltd. dated July 1, 2002 630 Trade Center Drive as amended Las Vegas, NV 89119 Hilton Hotels Corporation Franchise License $405,422 Attn: Ted C. Raynor Agreement VP and Senior Counsel 755 Crossover Lane Memphis, TN 38117-4900 Clark County Treasurer Room Tax $207,556 c/o Bankruptcy Clerk 500 South Grand Central Parkway PO Box 551401 Las Vegas, NV 89155-1220 Cendant Corporation Franchise Fees $138,597 Attn: Christopher Nowak, Esq. One Campus Drive Parsippany, NJ 07054-0642 Internal Revenue Service 941-2004 2nd and $47,000 Special Procedures Function 3rd quarters Ashley Hall & Associates State Court $11,600 Receiver Fees Vendor Capital Group Lease Payment $8,598 Layton, Layton & Tobler Accounting Fees $8,192 Owed to Receiver's Accountant Triad Leasing & Financial, Inc. Lease Payment on $1,538 Phone System James Adam Law Group Legal Fees for $1,520 Receiver's Attorney Sprint Trade Debt $479 Thyssenkrupp Elevator Trade Debt $202 Corporation Farmers Brothers Company Trade Purveyor $42 Cintas Corporation Trade Purveyor $22 B. Moscow Inn-Vestments, LLC's 19 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Hilton Hotels Corporation Franchise License $288,054 Attn: Ted C. Raynor Agreement VP and Senior Counsel 755 Crossover Lane Memphis, TN 38117-4900 Riverview Community Bank Litigation $214,635 c/o Heurlin Potter Attn: Stephen G. Leatham PO Box 611 Vancouver, WA 98666 Idaho State Tax Commission Sales/Use Tax and $28,000 1118 F. Street Lewiston, ID 83501 Fork Refrigeration, Inc. Trade Debt $17,033 PO Box 9364 Moscow, ID 83843-0117 Remington Insurance Agency Trade Debt $12,417 203 East Third Street Moscow, ID 83843 Clark & Feeney $8,149 Attorneys at Law PO Drawer 285 Lewiston, ID 83501 Guest Distribution Trade Debt $5,993 Avista Utilities Trade Debt $3,451 Food Services of America Trade Debt $3,261 B&C Telephone Inc. Trade Debt $2,767 Cintas Corporation (RAC) Trade Debt $2,516 Moscow Building Supply Trade Debt $2,468 City of Moscow $2,163 Traveler Discount Guide Trade Debt $1,829 Federal Express Trade Debt $1,755 KXLY News Radio Trade Debt $1,300 Patriot Fire Protection Trade Debt $1,193 MSI Multi-Systems Inc. Trade Debt $1,149 Ecolab Inc. Trade Debt $1,083 LAS VEGAS SANDS: 98% of Noteholders Agree to Amend Mortgage Notes ----------------------------------------------------------------- Las Vegas Sands Corp.'s (NYSE: LVS) subsidiaries, Las Vegas Sands, Inc. and Venetian Casino Resort, LLC, have received the consents necessary to adopt the proposed amendments to the indenture governing their 11% Mortgage Notes Due 2010 in connection with their previously commenced tender offer and related consent solicitation for any and all of the outstanding notes. A total of approximately $542.3 million, or over 98% in aggregate principal amount of the outstanding Notes, were validly tendered and not validly withdrawn before 5:00 p.m. New York City time on Feb. 14, 2005. The Offer and Consent Solicitation is scheduled to expire at 12 midnight, New York City time, on Tuesday, March 1, 2005. The Issuers, U.S. Bank National Association, as trustee, and the note guarantors named in the Indenture have executed a Third Supplemental Indenture setting forth amendments to eliminate most of the restrictive covenants and certain events of default from the Indenture. The amendments will become operative upon the acceptance for purchase of any note validly tendered by the Consent Time and not withdrawn. Such amendments to the Indenture, once operative, will be binding upon all holders of the notes, including those not tendering pursuant to the Offer. This news release is not an offer to purchase, a solicitation of an offer to sell or a solicitation of consent with respect to any securities. The Offer is being made solely by the Offer to Purchase and Consent Solicitation Statement dated Feb. 1, 2005. About the Company Las Vegas Sands Corp. is a hotel, gaming, resort and exhibition/convention company headquartered in Las Vegas, Nevada. The company owns The Venetian Resort Hotel Casino and the Sands Expo and Convention Center, where it hosts exhibitions and conventions, in Las Vegas and the Sands Macao in the People's Republic of China Special Administrative Region of Macau. The company is also developing additional casino hotel resort properties in Macau, including the Macao Venetian Casino Resort. * * * As reported in the Troubled Company Reporter on Feb. 3, 2005, Moody's Investors Service assigned a B2 rating to Las Vegas Sands Corp.'s (NYSE:LVS) proposed $250 million senior unsecured notes due 2015. Moody's also assigned a B1 senior implied rating, B3 long-term issuer rating, positive ratings outlook, and SGL-3 speculative grade liquidity rating. Las Vegas Sands Corp. is a holding company that owns 100% of Las Vegas Sands, Inc. Las Vegas Sands Corp. completed an initial public offering of its common stock in December 2004. Moody's also assigned a B1 rating to Las Vegas Sands, Inc.'s and Venetian Casino Resorts, LLC's (the Restricted Group) proposed $400 million senior secured term loan B add-on and $275 million senior secured revolving credit facility availability add-on. Existing Restricted Group ratings were confirmed. Once the transaction closes, the Restricted Group's B1 senior implied, B3 long-term issuer, and speculative grade liquidity ratings will be withdrawn. Although these ratings will be located at the highest rated entity, once the new transactions close, Moody's ratings and analysis will continue to reflect the credit profile and financing structure of the Restricted Group. The ratings reflect the Restricted Group's continued operating and financial improvements, favorable outlook for the Las Vegas Strip, successful expansion efforts to date, and good risk/reward profile of the $1.6 billion Palazzo Casino Resort (Phase II) development which should further enhance the competitive position and overall asset quality of the Company. The ratings also reflect the popularity and quality of Venetian's casino property and the position of Las Vegas as one of the largest entertainment markets and trade show destinations in the U.S. The positive outlook considers the recent redemption of almost $300 million of the Restricted Group's 11% second priority mortgage notes due 2011, using the proceeds of the recent initial public offering, as well as the lower financing costs that will likely result from the proposed transactions. The proposed transactions are designed to replace the remaining $844 million of 11% second priority mortgage notes due 2011 with lower cost debt. The positive outlook also incorporates Moody's expectation that the Company's Macau casino development will be self-financing and, as a result, will not absorb Restricted Group cash flow. The positive rating outlook does not anticipate a major acquisition and significant expansion activity by the Restricted Group other than those currently being pursued. A ratings upgrade is possible within the next 12-18 month period to the extent operating results continue to improve and Restricted Group debt/EBITDA, including holding company debt guaranteed by the Restricted Group, approaches a range of between 4.0 to 4.5 times (x). Restricted Group debt/EBITDA at the end of fiscal year 2004 was about 5.4x. The SGL-3 reflects the Restricted Group's considerable reliance on its bank facility over the next 12-18 months. Proceeds from the proposed bank facility and entire senior unsecured note offering will be used to repurchase or redeem the Restricted Group's outstanding 11% mortgage notes due 2011 and pay financing fees and expenses. The bank facility will also be used to finance a portion of the design, development and pre-opening costs of the Palazzo Casino Resort that is currently scheduled to open in the first quarter of 2007. In addition to using debt to finance a portion of the Palazzo project, the Company also has available to it a portion of the proceeds from the May 2004 sale of the Grand Canal Shoppes that raised $766 million in gross proceeds. The upsized senior secured bank facility will be comprised of a $400 million 5-year senior secured revolver, a $1.065 billion 6-year senior secured tranche B funded term loan, and a $105 million senior secured delayed draw tranche B term loan. Although the new senior unsecured notes will be issued by Las Vegas Sands Corp., a holding company outside of the Restricted Group structure, they will be jointly and severally guaranteed on senior unsecured basis by the same existing and future domestic subsidiaries that guarantee the Restricted Group's senior secured bank debt. The Restricted Group's upsized bank agreement will include a provision that allows the Restricted Group to make debt service payments towards Las Vegas Sands Corp.'s new senior unsecured notes without being limited by a restricted payments covenant. The new ratings assigned to Las Vegas Sands Corp. are: * $250 million senior unsecured notes due 2015 -- B2; * Senior implied rating -- B1; * Long-term issuer rating -- B3; * Speculative grade liquidity rating -- SGL-3; and * Positive rating outlook. The new ratings assigned to the Restricted Group: * $400 million senior secured term loan B due 2011 add-on -- B1; and * $275 million senior secured revolving credit facility due 2010 add-on -- B1. The existing ratings for the Restricted Group confirmed are: * $105 million senior secured delayed draw term loan B due 2011, at B1; * $125 million senior secured revolver due 2009, at B1; and * $665 million senior secured term B loan due 2011, at B1; The existing ratings for the Restricted Group were confirmed, and will be withdrawn once the new senior unsecured notes and upsized bank facility become effective: * Senior implied rating, at B1; * Long-term issuer rating, at B3; * Speculative grade liquidity rating, at SGL-3; * $115 million senior secured delayed draw term loan A due 2009, at B1; and * $844 million 11% second priority mortgage notes due 2010, at B2. LB-UBS COMMERCIAL: Fitch Puts Low-B Ratings on Six Classes ---------------------------------------------------------- Fitch Ratings affirms LB-UBS Commercial Mortgage Trust commercial mortgage pass-through certificates, series 2002-C4: -- $46.2 million class A-1 at 'AAA'; -- $90 million class A-2 at 'AAA'; -- $132.8 million class A-3 at 'AAA'; -- $86 million class A-4 at 'AAA'; -- $850.5 million class A-5 at 'AAA'; -- Interest-only classes X-CL, X-CP and X-VF at 'AAA'; -- $18.2 million class B at 'AA+'; -- $20 million class C at 'AA'; -- $20 million class D at 'AA-'; -- $12.7 million class E at 'A+'; -- $16.4 million class F at 'A'; -- $10.9 million class G at 'A-'; -- $12.7 million class H at 'BBB+'; -- $12.7 million class J at 'BBB'; -- $12.7 million class K at 'BBB-'; -- $20 million class L at 'BB+'; -- $7.3 million class M at 'BB'; -- $7.3 million class N at 'BB-'; -- $3.6 million class Q at 'B'; -- $1.8 million class S at 'B-'; -- $3.6 million class T at 'CCC'. Fitch does not rate the $7.3 million class P or the $16.4 million class U certificates. The rating affirmations reflect the stable pool performance and minimal paydown since issuance. As of the January 2005 distribution, the pool's aggregate principal balance has been reduced by 3.2% to $1.41 billion from $1.46 billion at issuance. Currently, there is one loan (0.2%) in special servicing which is secured by a 117,103 square foot office building located in Norwalk, Connecticut. As of June 2004, the property was 34% occupied. The borrower is actively marketing the vacant space in an effort to stabilize net cash flow. The loan remains current. As part of its analysis, Fitch reviewed the five credit assessed loans (44.5% of the pool). Westfield Shoppingtown Valley Fair Mall (20.3%), 605 Third Avenue (11.4%), 1166 Avenue of the Americas (5.9%), Hamilton Mall (5.4%), and the Horizon Portfolio (1.5%) have performed at or better than at issuance. Fitch will review the year-end 2004 performance data when it becomes available. LIN TV: 88% of Noteholders Agree to Amend Senior Note Indenture --------------------------------------------------------------- LIN TV Corp. (NYSE: TVL) disclosed that the cash tender offer for all of the outstanding 8% Senior Notes due 2008 of its wholly owned subsidiary, LIN Television Corporation, expired on Feb. 15, 2005, at 9:00 a.m., New York City time. LIN Television Corporation received tenders from holders of approximately $145.9 million, or 88%, in aggregate principal amount of the outstanding 8% senior notes, all of which were accepted for payment on Feb. 1, 2005. In conjunction with the tender offer, LIN Television Corporation solicited and obtained consents from requisite holders of the 8% senior notes to amend the indenture under which the notes were issued to eliminate substantially all of the restrictive covenants and certain events of default contained in the indenture. LIN Television Corporation has notified the trustee for the 8% senior notes that it is calling for redemption on March 17, 2005, all of the remaining $20,510,000 in aggregate principal amount of 8% senior notes outstanding and not tendered in the tender offer at a redemption price of $1,040.00 per $1,000 principal amount of such notes, plus accrued and unpaid interest to, but excluding, the Redemption Date. LIN Television has instructed the trustee to mail the redemption notice to the registered holders of the 8% senior notes. J.P. Morgan Securities Inc. and Deutsche Bank Securities Inc. acted as Dealer Managers and Solicitation Agents and Global Bondholder Services Corporation acted as Information Agent for the tender offer and related consent solicitation. About the Company LIN TV Corp. owns or operates its network of about 25 TV stations. Its properties are located in the Midwest (WISH-TV, Indianapolis), Northeast (WWLP-TV; Springfield, Massachusetts), and South (KXAN- TV and KNVA-TV, Austin). * * * As reported in the Troubled Company Reporter on Feb. 4, 2005, Moody's Investors Service assigned LIN TV Corp.'s $175 million of senior subordinated add on notes a B1 rating and affirmed the company's existing ratings including its Ba2 senior implied and SGL-2 speculative grade liquidity ratings. LIN TV's ratings continue to reflect the Company's good operating performance, particularly relative to its peers and meaningful asset value offset by concerns regarding potential event risk as well as the company's vulnerability to the cyclical nature of the advertising cycle and longer term concerns regarding the decline in television audiences. The rating outlook is stable. Proceeds will be used to tender for the Company's senior notes. The ratings affirmed are: * Ba2 Senior Implied Rating, * Ba3 Senior Unsecured Issuer Rating, * SGL-2 Speculative Grade Liquidity rating, * Ba1 Senior Secured Revolver - $191 million, * Ba1 Senior Secured Term B - $175 million, * Ba3 rated Senior Notes -- Tender Offer in process, * B1 Senior Subordinated Debentures - $200 million, and * B1 Senior Subordinated Notes - $110 million. MASONITE INT'L: Posts $27.3 Million of Net Income in 4th Quarter ---------------------------------------------------------------- Masonite International Corporation (TSX:MHM)(NYSE:MHM) reported its results for the fourth quarter and year ended Dec. 31, 2004. The Company's fourth quarter and fiscal year 2004 earnings were impacted by plant closure, employee consolidation and transaction charges. The total impact of these items was $9.7 million pre-tax and is included in Other Expense. Sales for the three-month period ended December 31, 2004, were $570.2 million, a 25% increase over the $455.9 million reported in the same period in 2003. For the year ended December 31, 2004, sales were $2.2 billion, compared to $1.8 billion reported in the same period in 2003. Net income for the three-month period ended December 31, 2004 was $27.3 million compared to $29.2 million reported in the same period in 2003. Earnings per share were $0.50 for the three-month period compared to $0.54 per share in the same period in the prior year. Net income for the year ended December 31, 2004, was $128.0 million compared to $107.7 million reported in the same period in 2003. Earnings per share were $2.34 for the year compared to $2.00 per share for the year ended December 31, 2003. Organic sales growth was 8% in the fourth quarter and 12% for the year ended December 31, 2004. EBITDA margins declined slightly in the fourth quarter of 2004 compared to the fourth quarter of 2003 principally because of material and transportation cost increases not being fully offset by price increases. Costs continue to increase for petroleum-based products such as resins and foam, as well as for steel used in the Company's exterior doors. Continuous effort is being made to manage the impact of these cost increases, including cost saving and pricing initiatives. Depreciation and amortization expense is up $15 million from 2003 and has increased steadily each quarter, in part due to the five acquisitions completed during the year. As part of the purchase accounting for these acquisitions, certain amortizing intangible assets, including customer lists, have been recorded and are being amortized over their useful lives. Included in Other Expense in the fourth quarter are: (1) costs associated with the shutdown of the Company's Richmond, Indiana exterior steel door plant; (2) the transfer of the Seoul, South Korea post forming molded door facing production to another facility; (3) the consolidation of senior operating management in the Company's Tampa, Florida headquarters; and (4) the previously announced transaction with Kohlberg Kravis Roberts & Co. -- KKR. The shutdown of the Richmond operation, the Company's smallest exterior door facility acquired in the Johnson Door transaction in 1997, is part of the Company's ongoing program of rationalization of exterior door capacity and standardization of exterior door production and product specifications. The charges at the South Korea operation are the result of transferring all of that facility's molded door facing production to the Company's molded door facing plant in Malaysia, which was acquired in the third quarter of 2004. Employee consolidation in the Company's Tampa headquarters, which included employee transfer and severance costs, is the completion of the consolidation in Tampa of key operating executives that began with the shutdown of the former Masonite Corporation Chicago headquarters in 2002. The Company has incurred significant legal, accounting and other costs related to the proposed KKR transaction. The Richmond facility shutdown resulted in a charge to Other Expense of $4.2 million, primarily for severance and asset impairment charges. The transfer of the South Korea production resulted in a charge to Other Expenses of $0.6 million, primarily for employee termination costs. At this time, the Company expects that in the first quarter of 2005 an additional $1.5 million will be incurred for the Richmond shutdown and the South Korea termination costs. The senior operating employee transfer and severance costs resulted in a charge to Other Expense of $2.4 million. The legal, accounting and other costs related to the proposed KKR transaction resulted in a charge to Other Expense of $2.5 million. The Company's net working capital balance increased $42 million to $427 million as at December 31, 2004, from $385 million at December 31, 2003. The rise is primarily the result of an increase in inventory from the third quarter to the fourth quarter of 2004 of approximately $30 million. The inventory increase occurred primarily because of a buildup of finished goods related to retail sales in January as well as the delayed receipt of raw materials, including steel, molded door facings and pine products, from offshore sources due to earlier shipping capacity shortages that occurred throughout 2004. In view of the shareholder meeting tomorrow, February 18, the Company will not be hosting a fourth quarter and year-end results conference call. Masonite is a unique, integrated building products company with its Corporate Headquarters in Mississauga, Ontario, Canada and its International Administrative Offices in Tampa, Florida. Masonite operates more than 70 facilities with over 12,000 employees worldwide, spanning North America, South America, Europe, Asia, and Africa. Masonite sells its products -- doors, components, industrial products and entry systems -- to a wide variety of customers in over 50 countries. * * * As reported in the Troubled Company Reporter on Dec. 28, 2004, Standard & Poor's Ratings Services placed ratings on Mississauga, Ontario-based Masonite International Corp., including its 'BB+' long-term corporate credit rating on CreditWatch with negative implications. The CreditWatch placement follows the announcement that it is to be acquired by an affiliate of Kohlberg Kravis Roberts & Co. -- KKR -- in a transaction valued at C$3.1 billion. MCCANN: Wants to Settle Lawsuit Against the U.S. Govt. for $300K ---------------------------------------------------------------- Lee E. Buchwald, the chapter 11 Trustee of McCann, Inc., asks the U.S. Bankruptcy Court for the Southern District of New York for authority to settle and compromise its lawsuit filed against the United States of America. On May 26, 2001, McCann filed a complaint against the government in the U.S. District Court for the Eastern District of New York seeking $1,652,263 delay damages related to the construction of the Mid-Island processing and distribution center post office located in Melville. The Trustee tells the Court that the Government agrees to pay $300,000 to settle all claims for delay with respect to the project upon approval by the Court. Mr. Buchwald believes that the settlement is fair and reasonable since pursuing the case in Court will add expenses to the estate. In addition, the Trustee acknowledges that the complaints filed against the government are difficult to pursue based on their merits. Headquartered in New York, New York, McCann, Inc., is a commercial interior general contracting company. On April 15, 2004, a group of creditors filed an involuntary Chapter 7 petition against McCann, Inc. On June 23, 2004, the Debtor exercised its right under Sec. 706(a) of the Bankruptcy Code to convert its bankruptcy case to a Chapter 11 case, and an order for relief was entered on June 25, 2004 (Bankr. S.D.N.Y. Case No. 04-12596 (SMB)). On July 22, 2004, the court appointed Lee E. Buchwald to serve as Chapter 11 Trustee. Mr. Buchwald hired Scott S. Markowitz, Esq., at Todtman, Nachamie, Spizz & Johns, P.C., as his counsel. MERIT SECURITIES: Fitch Downgrades Class B-3 Rating to B -------------------------------------------------------- Fitch Ratings takes these rating actions on Merit Securities Corp., series 11: -- Classes 2A-3 and 3A-1 affirmed at 'AAA'; -- Class B-1 affirmed at 'AA'; -- Class B-2 affirmed at 'A'; -- Class B-3 downgraded to 'B' from 'BBB'. The downgrade reflects the poor performance of the collateral pool and its potential impact on the above-referenced subordinate certificates. Downgrades affect approximately $20 million of certificates while the affirmations affect $104.6 million. The downgrades reflect collateral losses higher than initial expectations. A key to the poor performance of the collateral is the high percentage of manufactured housing loans remaining in the pool. Manufactured housing loans typically experience a higher rate of default and higher loss severities on liquidated loans. At origination, the collateral consisted of over 90% single family-detached units, 13% manufactured housing and 9% planned unit developments. Currently, the collateral is comprised of over 77% manufactured housing, 18% single family detached unites and less than 1% planned unit developments. Credit Enhancement in the form of over-collateralization -- OC -- declines at a rate of between 15-20 basis points - bps -- a month. This transaction's pool factor (the percentage of mortgage principal outstanding to the initial mortgage pool at closing) is just over 13%. The loans supporting Merit 11 were originated and continue to be serviced by Origen Financial, previously under the name Dynex Financial, Inc. Further information is available on the Fitch Ratings web site at http://www.fitchratings.com/ MERRILL LYNCH: Fitch Maintains Junk Rating on $29M Mortgage Certs. ------------------------------------------------------------------ Fitch Ratings affirms Merrill Lynch Mortgage Investors, Inc.'s commercial mortgage pass-through certificates, series 1995-C3: -- $22 million class C at 'AAA'; -- $38.6 million class D at 'AAA'; -- Interest-only class IO-2 at 'AAA'; -- $45.1 million class E at 'A-'; -- $29 million class F remains at 'CCC'. Fitch does not rate the $1.9 million class G. The affirmations are the result of stable collateral performance, loan amortization, and payoffs. As of the January 2005 distribution date, the transaction's aggregate principal balance has been reduced 62.9% to $136.6 million from $643.6 million at issuance. There are two loans in special servicing (8.4%), one of which is real estate owned - REO -- (5.1%). The REO is a 48,826-square- feet retail property located in Orlando, Florida. The loan transferred to special servicing in August 2002 due to monetary default, and was subsequently foreclosed in October 2004. Fitch expects losses upon the sale of the property. The loss is expected to impact class F. The other specially serviced loan (3.3%) is a 308-unit apartment complex located in Dallas, Texas. The loan transferred to the special servicer in June 2004 due to monetary default. The loan has been brought current. MERRILL LYNCH: Moody's Lifts Rating on Series 1995-C2 Certificates ------------------------------------------------------------------ Moody's Investors Service upgraded the ratings of three classes and affirmed the ratings of five classes of Merrill Lynch Mortgage Investors, Inc., Mortgage Pass-Through Certificates, Series 1995-C2 as: * Class A-1, $14,201,058, WAC, affirmed at Aaa * Class A-2, $3,839,928, WAC, affirmed at Aaa * Class IO, Notional, affirmed at Aaa * Class B, $10,106,853, WAC, affirmed at Aaa * Class C, $12,136,485, WAC, upgraded to Aaa from Aa2 * Class D, $12,126,337, WAC, upgraded to Aa2 from A3 * Class E, $9,602,771, WAC, upgraded to Ba1 from Ba2 * Class F, $9,777,429, WAC, affirmed at B3 As of the January 18, 2005 distribution date, the transaction's aggregate balance has decreased by approximately 92.3% to $73.9 million from $962.4 million at securitization. The Certificates are collateralized by 33 loans secured by commercial and multifamily properties. The loans range in size from less than 0.1% to 11.2% of the pool, with the top ten loans representing 55.4% of the pool. Eleven loans have been liquidated from the pool resulting in aggregate realized losses of approximately $25.4 million. There are no loans in special servicing. Fourteen loans, representing 35.7% of the pool, are on the master servicer's watchlist. The trust has realized interest shortfalls due to appraisal reductions, special servicing fees and trust expenses. As of the January 2005 distribution date, unrated Class G has experienced interest shortfalls of approximately $2.4 million. Moody's was provided with year-end 2003 operating results for 95.9% of the pool and limited operating results for partial year 2004. Moody's weighted average loan to value ratio ("LTV") is 62.5%, compared to 63.9%, excluding specially serviced loans at Moody's last full review in June 2003 and 64.5% at securitization. Based on Moody's analysis, 10.4% of the pool has a LTV greater than 100.0%, compared to 8.6% at Moody's last review. The upgrade of Classes C, D and E is due to increased subordination levels and stable pool performance. The top three loans represent 25.3% of the outstanding pool balance. The largest loan is the Greenville Medical Tower Loan ($8.3 million - 11.2%), which is secured by a 77,000 square foot medical office building located in Dallas, Texas. The property is 98.0% occupied. Moody's LTV is 78.8%, essentially the same as at last review. The second largest loan is the Mesa Kmart Loan ($5.2 million - 7.1%), which is secured by an 115,000 square foot single tenant retail property located in Mesa, Arizona. The property is occupied by Kmart on a lease that expires in March 2019. Moody's LTV is 74.0%, compared to 77.9% at last review. The third largest loan is the Kmart Loan ($5.2 million - 7.0%), which is secured by an 115,000 square foot single tenant retail property located in Glendale, Arizona. The property is occupied by Kmart on a lease that expires in April 2019. Moody's LTV is 80.9%, compared to 83.1% at last review. The pool's collateral is a mix of retail (44.1%), office (33.4%), multifamily (14.9%) and industrial (7.6%). The collateral properties are located in 16 states. The highest state concentrations are Arizona (16.3%), California (15.0%), Tennessee (12.5%), Texas (11.3%) and Georgia (11.2%). All of the loans are fixed rate. The weighted average remaining term for the pool is 63 months; however, 41.4% of the pool matures within the next 12 months, including six loans representing 28.1% of the pool, which mature in August 2005. MIRANT CORP: Gets Court Nod to Modify Cash Management Procedures ---------------------------------------------------------------- On October 30, 2003, the U.S. Bankruptcy Court for the Norterhn District of Texas entered an Amended Order authorizing Mirant Corporation and its debtor-affiliates to obtain postpetition financing from General Electric Capital Corporation, as agent, and grant liens and superpriority claims. The Amended DIP Order contains a comprehensive settlement among the Debtors and the Official Committee of Unsecured Creditors appointed in the Debtors' Chapter 11 cases, which modifies the Debtors' cash management procedures. Among other things, the Modified Cash Management Procedures granted junior liens and superpriority claims in connection with all intercompany transfers. The Modified Cash Management Procedures also placed limitations on the amount of Intercompany Loans -- exclusive of certain ordinary course transfers -- that may be outstanding at any one time. Specifically, paragraph 30(g) of the Amended DIP Order provides: "(g) The aggregate principal amount of borrowings in respect of any Intercompany Loans, exclusive of any intercompany transfer of goods and/or services for value incurred in the ordinary course of business and consistent with prior practice (which shall be settled in a manner consistent with past practice), incurred by each Sub-Group may not exceed the amount set forth against the name of such Sub-Group []: Sub-Group Amount --------- ------ MIRMA Sub-Group $200 million MAG Sub-Group $150 million MAEM $100 million Mirant Sub-Group $100 million; provided that, that certain Intercompany Loan existing as of the date of this Order between Mirant, as borrower, and MAEM, as lender, shall not be included for the purposes of calculating the Mirant Sub-Group's borrowings in respect of Intercompany Loans. ;provided that the Debtors' failure to comply with the foregoing restrictions shall not limit the amount or priority of (i) any 365(c)(1) superpriority administrative expense claims granted pursuant to paragraph (c) herein, or (ii) any Lien or security interest granted pursuant to paragraph (d) herein. Notwithstanding the foregoing, the principal amount of borrowings by MAEM from the MIRMA Sub-Group and the MAG Sub-Group in the aggregate shall not exceed at any time the outstanding balance in respect of the MAEM/Mirant Intercompany Loan." The purpose of restricting the Intercompany Loan amounts outstanding at any one time is to protect the assets of one Debtor or group of Debtors from being depleted as a result of the funding another Debtor's losses. Mirant Americas Energy Marketing, LP, acts as asset manager for the Debtors' North American generation business. In its capacity as asset manager, MAEM contracts with third parties to: -- supply the fuel used by asset companies to generate power; -- selling off-take generated by the asset companies; and -- hedging the fuel and off-take requirements of the asset companies. MAEM is often required to prepay or collateralize with cash or letters of credit its obligations to those third parties. Historically, MAEM does not require the asset companies to credit support their obligations to MAEM as asset manager. At present, the underlying obligations between MAEM and the asset companies relating to MAEM's asset management activities are automatically credit-enhanced pursuant to the terms of the Amended DIP Order. Additionally, consistent with prior practice, those obligations are not cash-collateralized in the sense that "cash is not transferred by the asset companies to MAEM" to support the transaction's collateral requirements. Consequently, regardless of whether MAEM is required to post cash collateral with its third-party counterparties on account of asset management activities, no cash is transferred from the asset companies to MAEM on account of the activities until the underlying obligations are actually settled. To date, the Debtors have treated cash transfers from the asset companies to MAEM to support MAEM's asset management collateral or other liquidity requirements as Intercompany Loans not within the ordinary course of business and therefore subject to the Borrowing Limitations set forth in paragraph 30(g) of the Amended 7DIP Order. MAEM's Business During the pendency of the Debtors' Chapter 11 cases, MAEM has not been a net cash generator as most of the gross margin realized by the Debtors' North American enterprise is passed through to the asset companies and any gross margin attributable to MAEM's proprietary business has been consumed by "unreimbursed" cash losses from continued service of the PEPCO back-to-back agreements and, prior to their expiration, the PEPCO TPA agreements. From time to time, due to commodity price volatility, MAEM's collateral requirements have been substantial and its liquidity constrained. MAEM's liquidity, however, is substantially consumed by its asset management activities from which the asset companies depend upon and receive the direct benefits. In fact, if MAEM's liquidity were to be constrained beyond acceptable limits, the remainder of the Debtors' North American enterprise would suffer the greatest harm. Proposed Modifications to the Cash Management Procedures As MAEM is the sole party that bears the burden of posting collateral to run the entire North American enterprise, it is not surprising that MAEM has been liquidity challenged. Nevertheless, the Debtors as an enterprise possess substantial liquidity in the form of hundreds of millions of dollars of excess cash in addition to continued DIP Facility availability. The excess cash, however, is not available presently to MAEM due to the Borrowing Limitations set forth in the Amended DIP Order. In consultation with each of the Creditors Committees, the Debtors have determined that it is in the best interests of all of the operating estates to make additional liquidity available to MAEM. The Debtors believe the most effective way to accomplish that goal is to modify the cash management procedures contained in the Amended DIP Order to exclude from the Borrowing Limitations intercompany transfers made to supporting asset management activities, subject to certain other terms and restrictions. In particular, the Debtors propose to exclude from the Borrowing Limitation borrowings made by MAEM from the non-MAEM Sub-Groups in amounts equal to the sum of cash collateral posted and cash prepayments made to third-parties on account of transactions entered into by MAEM for the benefit of the members of the non-MAEM Sub-Groups. These Collateral Borrowings will be allocated pro rata among the non-MAEM Sub-Groups and adjusted bi- monthly based upon the amount of outstanding cash collateral posted and prepayments made by MAEM on behalf of the members of each of the non-MAEM Sub-Groups. For so long as a Collateral Borrowing remains outstanding, MAEM will be required to use commercially reasonable efforts to ensure that daily cash balances are maintained below $25 million; provided, however, that in no event may daily cash balances at MAEM exceed $25 million at the close of business for three consecutive business days. * * * Judge Lynn authorizes the Debtors to modify the Cash Management Procedures pursuant to the Amended DIP Order. Paragraph 30(g) of the Amended DIP Order is revised to provide that: "The aggregate principal amount of borrowings in respect of any Intercompany Loan, exclusive of (i) any intercompany transfer of goods and/or services for value incurred in the ordinary course of business of business and consistent with prior practice (which shall be settled in the manner consistent with prior practice), and (ii) amounts borrowed by MAEM from the non-MAEM Sub-Groups in an amount equal to the sum of cash collateral posted and cash prepayments made to third parties on account of transactions entered into by MAEM for the benefit of the members of the non-MAEM Sub-Groups incurred by each Sub-Group may not exceed the amount set forth against the name of that Sub-Group: Sub-Group Amount --------- ------ MIRMA Sub-Group $200 million MAG Sub-Group $150 million MAEM $100 million Mirant Sub-Group $100 million; provided that, that certain Intercompany Loan existing as of the date of this Order between Mirant, as borrower, and MAEM, as lender, shall not be included for the purposes of calculating the Mirant Sub-Group's borrowings in respect of Intercompany Loans. ";provided that the Debtors' failure to comply with the restrictions will not limit the amount or priority of (i) any (365(c)(1) superpriority administrative expense claims granted pursuant to paragraph (c) herein, or (ii) any Lien or security interest granted pursuant to paragraph (d) herein. Notwithstanding the foregoing, and except with respect to Collateral Borrowings, the principal amount of borrowings by MAEM from the MIRMA SUB-Group and the MAG Sub-Group in the aggregate shall not exceed at any time the outstanding balance in respect of the MAEM/Mirant Intercompany Loan." Within five business days after (a) the 15th of each month -- of the following business day if that day is not a business day -- and (b) the last business day of each month, the Debtors will determine the aggregate collateral posted and prepayments made to third parties by MAEM as of the most recent Collateral Allocation Day on account of transactions entered into by MAEM for the benefit of the members of each non-MAEM Sub-Group, in accordance with the Debtors' "Collateral Allocation Policy," and decrease that Allocated Collateral for both non-cash collateral outstanding and cash collateral outstanding as a result of draws of letters of credit to determine the aggregate cash collateral posted and cash payments made by MAEM for the benefit of non-MAEM Sub-Group. The Debtors report the results of the Cash Collateral Allocation determination. A full-text copy of the Collateral Allocation Policy is available at no charge at: http://bankrupt.com/misc/Mirant_Collateral_Allocation_Policy.pdf The Court further rules that: (1) The Collateral Allocation Policy will not be further amended or modified without further Court order, except by written agreement with the Debtors and each of the Notice Parties; (2) If MAEM determines to make a Collateral Borrowing, that borrowing will be made from each of the non-MAEM Sub-Group on a pro rata basis, based on the Cash Collateral Allocation as determined on the immediately proceeding Collateral Allocation Day; (3) For so long as the Collateral Borrowing remains outstanding, on each Collateral Allocation Day, the Debtors will adjust the Collateral Borrowings among the non-MAEM Sub-Groups in that each is consistent with the then Cash Collateral Allocation; (4) Repayments by MAEM of Collateral Borrowings will be made on a pro rata basis to each of the non-MAEM Sub-Groups, based on the Cash Collateral Allocation as determined on the immediately proceeding Collateral Allocation Day; and (5) For so long as the Collateral Borrowing remains outstanding, MAEM will use commercially reasonable efforts to ensure that daily cash balances are maintained below $25 million, provided, however, that in no event will the daily cash balances at MAEM exceed $25 million at the close of business for three consecutive business days. Headquartered in Atlanta, Georgia, Mirant Corporation -- http://www.mirant.com/-- together with its direct and indirect subsidiaries, generate, sell and deliver electricity in North America, the Philippines and the Caribbean. Mirant Corporation filed for chapter 11 protection on July 14, 2003 (Bankr. N.D. Tex. 03-46590). Thomas E. Lauria, Esq., at White & Case LLP, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $20,574,000,000 in assets and $11,401,000,000 in debts. (Mirant Bankruptcy News, Issue No. 53; Bankruptcy Creditors' Service, Inc., 215/945-7000) MULTI SECURITY: S&P Puts Low-B Ratings on Six Classes of Certs. --------------------------------------------------------------- Standard & Poor's Ratings Services assigned its preliminary ratings to Multi Security Asset Trust's $740.6 million CMBS pass- through certificates series 2005-RR. The preliminary ratings are based on information as of Feb. 15, 2005. Subsequent information may result in the assignment of final ratings that differ from the preliminary ratings. The preliminary ratings reflect the credit support provided by the subordinate classes of securities and the geographic and property type diversity of the mortgaged properties securing the underlying CMBS collateral. The collateral pool consists of 43 classes of pass-through certificates from 16 CMBS transactions. A copy of Standard & Poor's complete presale report for this transaction can be found on RatingsDirect, Standard & Poor's Web- based credit analysis system, at http://www.ratingsdirect.com/ The presale can also be found on the Standard & Poor's Web site at http://www.standardandpoors.com/ Select Credit Ratings, and then find the article under Presale Credit Reports. Preliminary Ratings Assigned Multi Security Asset Trust 2005-RR4 Class Rating* Amount ----- ------- ------ A-1 AAA $137,462,000 A-2 AAA $137,000,000 A-3 AAA $231,000,000 X-1* AAA $740,604,309** X-2* AAA $597,675,000** B AA $43,510,000 C AA- $10,184,000 D A $18,515,000 E A- $10,183,000 F BBB+ $13,887,000 G BBB $12,960,000 H BBB- $20,367,000 J BB+ $22,218,000 K BB $12,960,000 L BB- $7,406,000 M B+ $9,258,000 N B $9,258,000 O B- $5,554,000 * Interest only ** Notional amount NORTEL NETWORKS: Has Until March 15 to File Financial Reports ------------------------------------------------------------- Nortel Networks Corporation's (NYSE:NT)(TSX:NT) principal operating subsidiary, Nortel Networks Limited -- NNL, has obtained a new waiver from Export Development Canada -- EDC -- under the EDC performance-related support facility of certain defaults related to the delay by the Company and NNL in filing their respective 2003 Annual Reports on Form 10-K and Q1, Q2 and Q3 2004 Quarterly Reports on Form 10-Q, in each case with the U.S. Securities and Exchange Commission, the trustees under the Company's and NNL's public debt indentures and EDC. The waiver also applies to certain additional breaches under the EDC Support Facility relating to the delayed filings and the restatements and revisions to NNL's prior financial results. The new waiver from EDC will remain in effect until the earlier of certain events including: -- the date on which the Company and NNL's respective Q3 2004 Quarterly Reports on Form 10-Q have been filed with the SEC; or -- March 15, 2005. NNL's prior waiver from EDC expired yesterday, February 15, 2005. As previously announced, the Company and NNL have filed their respective 2003 Annual Reports on Form 10-K and their respective Q1 and Q2 2004 Quarterly Reports on Form 10-Q with the SEC. If the Company and NNL fail to file the Third Quarter Reports with the SEC by March 15, 2005, EDC will have the right, on such date (absent a further waiver in relation to the delayed filings and the Related Breaches), to terminate the EDC Support Facility, exercise certain rights against collateral or require NNL to cash collateralize all existing support. If the Company and NNL fail to file the Third Quarter Reports with the SEC by March 15, 2005, there can be no assurance that NNL would receive any further waivers or as to the terms of any such waivers. In addition, the Related Breaches will continue beyond the filing of the Reports. Accordingly, EDC will have the right (absent a further waiver of the Related Breaches) beginning on the earlier of the date upon which the Company and NNL file the Third Quarter Reports with the SEC and March 15, 2005, to terminate or suspend the EDC Support Facility notwithstanding the filing of the Reports. While NNL intends to seek a permanent waiver from EDC in connection with the Related Breaches, there can be no assurance that NNL will receive any further waivers or as to the terms of any such waivers. The EDC Support Facility provides up to US$750 million in support, all presently on an uncommitted basis. The US$300 million revolving small bond sub-facility of the EDC Support Facility will not become committed support until all of the Reports are filed with the SEC and NNL obtains a permanent waiver of the Related Breaches. As of February 14, 2005, there was approximately US$257 million of outstanding support utilized under the EDC Support Facility, approximately US$179 million of which was outstanding under the small bond sub-facility. Nortel Networks 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. * * * As reported on the Troubled Company Reporter on Jan. 31, 2005, Standard & Poor's Ratings Services affirmed its 'B-' credit rating on Nortel Networks Lease Pass-Through Trust certificates series 2001-1 and removed it from CreditWatch with negative implications, where it was placed Dec. 8, 2004. OAKWOOD HOMES: High Losses Prompt Fitch to Junk 52 Classes ---------------------------------------------------------- Fitch Ratings affirms 40 classes (representing approximately $829 million in outstanding principal) and downgrades 24 classes (representing approximately $561 million in outstanding principal) of Oakwood Homes Manufactured Housing (Oakwood) transactions: Series 1995-A: -- Class A-4 is affirmed at 'AA+'; -- Class B-1 is downgraded to 'CCC' from 'B-'. Series 1995-B: -- Class A-3 is affirmed at 'AAA'; -- Class A-4 is affirmed at 'AA+'; -- Class B-1 is downgraded to 'CC' from 'B-'. Series 1996-A: -- Class A-3 is affirmed at 'AAA'; -- Class A-4 is affirmed at 'AA+'; -- Class B-1 is affirmed at 'B-'; -- Class B-2 remains at 'C'. Series 1996-B: -- Class A-5 is affirmed at 'AAA'; -- Class A-6 is downgraded to 'A' from 'AA-'; -- Class B-1 is downgraded to 'C' from 'CCC'; -- Class B-2 remains at 'C'. Series 1996-C: -- Class A-5 is affirmed at 'AAA'; -- Class A-6 is downgraded to 'A' from 'AA-'; -- Class B-1 is downgraded to 'C' from 'CCC'; -- Class B-2 remains at 'C'. Series 1997-A: -- Classes A-4 and A-5 are affirmed at 'AAA'; -- Class A-6 is downgraded to 'A' from 'AA-'; -- Class B-1 is downgraded to 'C' from 'CCC'; -- Class B-2 remains at 'C'. Series 1997-B: -- Classes A-4 and A-5 are affirmed at 'AAA'; -- Class M is downgraded to 'A-' from 'A'; -- Class B-1 is downgraded to 'C' from 'CCC'; -- Class B-2 remains at 'C'. Series 1997-C: -- Classes A-3, A-4, A-5 and A-6 are affirmed at 'AAA'; -- Class M is downgraded to 'BBB+' from 'A-'; -- Class B-1 is downgraded to 'C' from 'CCC'; -- Class B-2 remains at 'C'. Series 1997-D: -- Classes A-3, A-4 and A-5 are affirmed at 'AAA'; -- Class M is affirmed at 'BBB+'; -- Class B-1 remains at 'C'; -- Class B-2 remains at 'C'. Series 1998-B: -- Classes A-3, A-4 and A-5 are affirmed at 'AA-'; -- Class M-1 is downgraded to 'B-' from 'B'; -- Class M-2 remains at 'C'; -- Class B-1 remains at 'C'; -- Class B-2 remains at 'C'. Series 1998-C: -- Classes A-1, A-1A are downgraded to 'BBB+' from 'A-'; -- Class M-1 is downgraded to 'CC' from 'CCC'; -- Class M-2 remains at 'C'; -- Class B-1 remains at 'C'; -- Class B-2 remains at 'C'. Series 1999-A: -- Class A-2 is affirmed at 'AAA'; -- Class A-3 is affirmed at 'AA-'; -- Class A-4 and A-5 are affirmed at 'BBB-'; -- Class M-1 is affirmed at 'BB-'; -- Class M-2 remains at 'C'; -- Class B-1 remains at 'C'; -- Class B-2 remains at 'C'. Series 1999-B: -- Class A-2 is affirmed at 'AAA'; -- Class A-3 is affirmed at 'AA-'; -- Class A-4 is affirmed at 'BB+'; -- Class M-1 is downgraded to 'CC' from 'CCC'; -- Class M-2 remains at 'C'; -- Class B-1 remains at 'C'; -- Class B-2 remains at 'C'. Series 1999-C: -- Class A-2 is downgraded to 'BB-' from 'BB+'; -- Class M-1 is downgraded to 'CC' from 'CCC'; -- Class M-2 remains at 'C'; -- Class B-1 remains at 'C'; -- Class B-2 remains at 'C'. Series 1999-E: -- Class A-1 is affirmed at 'BB'; -- Class M-1 is remains at 'CCC'; -- Class M-2 remains at 'C'; -- Class B-1 remains at 'C'; -- Class B-2 remains at 'C'. Series 2000-A: -- Class A-2 is affirmed at 'AA-'; -- Class A-3 is affirmed at 'BBB'; -- Class A-4 is affirmed at 'BB'; -- Class A-5 is affirmed at 'B'; -- Class M-1 is downgraded to 'C' from 'CCC'; -- Class M-2 is remains at 'C'; -- Class B-1 remains at 'C'; -- Class B-2 remains at 'C'. Series 2000-B: -- Class A-1 is downgraded to 'C' from 'CCC'; -- Class M-1 remains at 'C'; -- Class B-1 remains at 'C'; -- Class B-2 remains at 'C'. Series 2000-D: -- Class A-2 is affirmed at 'AAA'; -- Class A-3 is affirmed at 'A'; -- Class A-4 is downgraded to 'CCC' from 'B'; -- Class M-1 remains at 'C'; -- Class M-2 remains at 'C'; -- Class B-1 remains at 'C'; -- Class B-2 remains at 'D'. Series 2001-B: -- Class A-2 is affirmed 'AA'; -- Class A-3 is affirmed at 'A-'; -- Class A-4 is downgraded to 'BBB-' from 'A-'; -- Class M-1 is downgraded to 'C' from 'CC'; -- Class M-2 remains at 'C'; -- Class B-1 remains at 'C'. High collateral losses continue to erode credit enhancement in Oakwood transactions. High default or repo levels combined with elevated loss severities have typically exhausted once-available overcollateralization -- OC -- and, in many cases, have resulted in the significant or entire write-down of the most subordinate class of bond. As a result, other junior and/or mezzanine classes are now threatened by, if not already experiencing, write-downs due to such losses. While poor performance characterizes the portfolio as a whole, there are discernable differences between vintages. Less seasoned vintages (i.e., more recent transactions) are generally performing worse than their older counterparts. Although transactions from the 2000 and 2001 vintages have only yielded 45 to 55 months of performance and have between 40%-45% of their original collateral remaining, the losses incurred on such pools are proportionally more severe than transactions seasoned 80 or more months. For example, series 1996-A has 22.5% of its original principal remaining and to date has lost 12.52% of its collateral. In contrast, there is 41% of series 2000-D outstanding, while 28.8% of the original balance was reduced by losses. ORIGEN FINANCIAL: Fitch Holds Junk Ratings on Two 2001-A Classes ---------------------------------------------------------------- Fitch Ratings has performed a review of Origen Financial, Inc. Manufactured Housing contracts, series 2001-A, and these rating actions have been taken: -- Class A-4 affirmed at 'AAA'; -- Class A-5 affirmed at 'AA'; -- Classes A-6 and A-7 are affirmed at 'A'; -- Class M-1 is affirmed at 'BB'; -- Class M-2 is downgraded to 'C' from 'CCC'; -- Class B-1 remains at 'C'. The downgrade affects approximately $12.7 million in outstanding principal, while the affirmations affect nearly $69.5 million. The downgrade reflects losses higher than initial expectations and the continued reduction of credit enhancement - CE -- for the subordinate tranches. CE in the form of overcollateralization - OC -- was depleted in January 2004. As a result, class B-1 has been absorbing collateral losses and is nearly fully written down. Once class B-1 is fully depleted, losses will be applied to class M-2. Class M-2 has seen its CE drop from 7.75% at closing to a current level of only 0.61%. The pool factor (the percentage of mortgage principal outstanding to the initial mortgage pool at closing) for the series is currently 50%. Cumulative losses as a percent of the original pool balance of $165,000,000, for the January distribution period are 16.90%. Further information regarding current delinquency, loss, and credit enhancement statistics is available on the Fitch Ratings web site at http://www.fitchratings.com/ PEGASUS SATELLITE: Court Approves Administrative Claim Bar Date --------------------------------------------------------------- As previously reported, Pegasus Satellite Communications, Inc. and its debtor-affiliates asked the United States Bankruptcy Court for the District of Maine to set the 20th day after the Effective Date of their Chapter 11 Plan as the last date for parties-in-interest to file Administrative Claims. Judge Haines approved the Debtors' request and approved the form and manner of notice of the proposed administrative claim filing procedures. Headquartered in Bala Cynwyd, Pennsylvania, Pegasus Satellite Communications, Inc. -- http://www.pgtv.com/-- is a leading independent provider of direct broadcast satellite (DBS) television. The Company, along with its affiliates, filed for chapter 11 protection (Bankr. D. Me. Case No. 04-20889) on June 2, 2004. Larry J. Nyhan, Esq., James F. Conlan, Esq., and Paul S. Caruso, Esq., at Sidley Austin Brown & Wood, LLP, and Leonard M. Gulino, Esq., and Robert J. Keach, Esq., at Bernstein, Shur, Sawyer & Nelson, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $1,762,883,000 in assets and $1,878,195,000 in liabilities. (Pegasus Bankruptcy News, Issue No. 18; Bankruptcy Creditors' Service, Inc., 215/945-7000) PENTECOSTAL HOUSING: Voluntary Chapter 11 Case Summary ------------------------------------------------------ Debtor: Pentecostal Housing Corporation aka Berea Apostolic Housing for the Elderly 1401 North Lakewood Avenue Baltimore, Maryland 21213 Bankruptcy Case No.: 05-13288 Type of Business: Real Estate Chapter 11 Petition Date: February 15, 2005 Court: District of Maryland (Baltimore) Judge: E. Stephen Derby Debtor's Counsel: Marc Robert Kivitz, Esq. 201 North Charles Street, Suite 1330 Baltimore, MD 21201 Tel: 410-625-2300 Total Assets: $5,500,000 Total Debts: $3,200,000 The Debtor did not file a list of its 20-largest creditors. PHILADELPHIA'S CHURCH: Case Summary & Largest Unsecured Creditors ----------------------------------------------------------------- Debtor: Philadelphia's Church of Our Saviour aka Church of Our Saviour, ESCA 700 Baltimore Pike Glen Mills, Pennsylvania 19342 Bankruptcy Case No.: 05-11915 Type of Business: The Debtor operates a church and school. Chapter 11 Petition Date: February 11, 2005 Court: Eastern District of Pennsylvania (Philadelphia) Judge: Bruce I. Fox Debtor's Counsel: J. Eric Kishbaugh, Esq. 10 Foster Avenue, Suite D3 Gibbsboro, NJ 08026 Tel: 856-627-4300 Total Assets: $4,471,727 Total Debts: $2,741,538 Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Sprague & Sprague Judgment $195,432 135 S. 19th St., Ste. 400 Philadelphia, PA Bonnie Ahlquist Loan $125,000 506 Meadow Ct. Glen Mills, PA 19342 Key Equipment Financing Trade $38,421 P.O. Box 203901 Houston, TX 77216 Richard Price Funds $27,059 American Express Trade $19,335 Advanta Bank Corp. Trade $15,995 Advanced Directory Sales Trade $14,468 Chitwood & Chitwood Trade $10,900 Staples Trade $9,732 Bank of America Trade $9,627 MBNA America Trade $8,818 Ehret Construction Trade $8,766 Clark's Landscaping Trade $6,653 Sprung Instant Structures Trade $5,700 Blake & Vaughan Eng. Trade $4,211 The Rainer Group Trade $4,066 A Beka Foods Trade $3,918 American Express Trade $3,721 Philadelphia Electric Trade $4,400 Robert E. Madden, Esq. Trade $3,570 PLASTECH ENGINEERED: S&P Puts BB- Corp. Rating on CreditWatch Neg. ------------------------------------------------------------------ Standard & Poor's Ratings Services placed its 'BB-' corporate credit rating on Plastech Engineered Products Inc., on CreditWatch with negative implications. "The action followed indications that 2004 financial results were materially weaker than expected and that a waiver will be sought from lenders to avoid violation of certain covenants under the company's senior secured credit agreement," said Standard & Poor's credit analyst Nancy Messer. Those covenants include fixed-charge coverage, total leverage, senior leverage, and EBITDA. In addition, the company will seek to permanently amend the agreement to provide for lower EBITDA and somewhat higher borrowing in 2005 than was anticipated in the original credit agreement. Dearborn, Michigan-based Plastech is a privately held major producer of plastic interior and exterior trim components for the automotive industry. Total balance sheet debt was about $504 million at Dec. 31, 2004. The CreditWatch listing reflects Plastech's lower credit measures resulting from relatively weak 2004 revenues and EBITDA and the high likelihood that 2005 credit measures will remain depressed relative to previous expectations because of continuing industry challenges that worsened in the fourth quarter. Difficult 2004 industry conditions included delayed original equipment manufacturer (OEM) launches, pricing concessions exchanged for future business wins, and higher-than-budgeted costs for raw material (resins). Certain new vehicles for 2004, including the Ford Freestyle and the Mercedes M class, were launched behind schedule; and, although Plastech did not precipitate the launch delays, its revenues and earnings were depressed by the ensuing production shortfalls. High material costs and difficult pricing conditions have continued into 2005, in addition to possibly weak production volumes, since certain OEMs have reduced production schedules for the first half of the year because of soft demand. Standard & Poor's expects to resolve the CreditWatch on Plastech after talking with management and analyzing the company's business prospects and liquidity situation for the intermediate term, including the terms and conditions of the anticipated credit facility amendment. PMA CAPITAL: Posts $10.3 Million Net Loss in Fourth Quarter ----------------------------------------------------------- PMA Capital Corporation (NASDAQ:PMACA) reported financial results for the fourth quarter and year ended Dec. 31, 2004. PMA Capital reported a net loss of $10.3 million, or 33 cents per share, for the fourth quarter, compared to a net loss of $20.0 million, or 64 cents per share, for the same period last year. Net income was $1.8 million for full year 2004, compared to a net loss of $93.6 million for 2003. Vincent T. Donnelly, President and Chief Executive Officer commented, "We achieved our most important goal in 2004, the restoration in the fourth quarter of The PMA Insurance Group's A- A.M. Best financial strength rating. While executing the capital plan necessary to achieve this goal contributed to the fourth quarter loss, we believe that the improved liquidity at the holding company and increased financial flexibility provided through the completion of the exchange offer and the sale of additional securities was crucial." "We are entering 2005 with positive momentum and enhanced confidence," Mr. Donnelly continued. "Our goal in 2005 is to achieve measured written premium growth by capitalizing on our solid franchise while adhering to our underwriting standards." PMA Capital also announced today the election of James C. Hellauer to the Board of Directors. Jim replaces Mark Wilcox, who resigned from the Board for personal reasons. Jim, a Naval Academy and Harvard business school graduate, has 38 years of senior management experience. Neal Schneider, Chairman of the Board of PMA Capital, noted, "We are very fortunate to have Jim join the Board. His breadth of experience will be invaluable to PMA Capital as we continue our work to build the value of the organization." During the fourth quarter of 2004, PMA Capital exchanged $84.1 million principal amount of 6.50% convertible debt for $84.1 million principal amount of its 4.25% convertible debt and sold $15 million of new 6.50% convertible debt. Costs associated with the exchange and sale of convertible debt reduced results by $6.4 million after-tax ($9.8 million pre-tax), or 20 cents per share, which included a loss on the debt exchange of $3.9 million after- tax ($6.0 million pre-tax) and a loss of $2.5 million after-tax ($3.8 million pre-tax) for the subsequent increase in the fair value of the derivative component of the convertible debt. The loss associated with the derivative component is included in net realized investment gains and losses. Including the increase in the fair value of the derivative component of the convertible debt, after-tax net realized investment results were losses of $5.1 million, or 16 cents per share, for the fourth quarter and gains of $4.2 million, or 14 cents per share, for the full year. After-tax net realized investment gains were $2.3 million, or seven cents per share, for the fourth quarter of 2003 and $9.0 million, or 28 cents per share, for the full year. Also included in fourth quarter 2004 results was a $4.3 million after-tax gain ($6.6 million pre-tax), or 14 cents per share, on the sale of a partnership interest, which is included in other revenues. Results for the fourth quarter of 2003 included a non- cash charge of $25 million, or 80 cents per share, to increase the valuation allowance for our deferred tax asset, a net charge of $4.6 million ($7.0 million pre-tax), or 15 cents per share, due to lower underwriting results at The PMA Insurance Group for workers' compensation business written for accident years 2001 and 2002 and an after-tax charge of $3.7 million ($5.7 million pre-tax), or 12 cents per share, related to our exit from the reinsurance business. Results for full year 2004 also include an after-tax charge of $3.9 million ($6.0 million pre-tax), or 12 cents per diluted share, to purchase reinsurance covering potential adverse loss development at the Run-off Operations. Results for full year 2003 included the third quarter after-tax charge of $97.5 million, or $3.11 per share, to increase loss reserves for our reinsurance business. In addition, the total valuation allowance on the deferred tax asset of $49 million recorded in 2003 impacted results by $1.56 per share for the full year. Consolidated revenues were $105.0 million and $608.0 million for fourth quarter and full year 2004, respectively, compared to $369.4 million and $1,301.2 million for the same periods in 2003, reflecting lower net premiums earned due to our fourth quarter 2003 withdrawal from the reinsurance business. To a lesser extent, the lower revenues reflect the impact of The PMA Insurance Group's B++ A.M. Best financial strength rating, which was upgraded to A- (Excellent) on November 15, 2004. Financial Condition Total assets were $3.3 billion as of December 31, 2004, compared to $4.2 billion as of December 31, 2003. Shareholders' equity was $445.5 million as of December 31, 2004, compared with $463.7 million as of December 31, 2003. Book value per share was $14.06 as of December 31, 2004, compared with $14.80 as of December 31, 2003. The decreases in shareholders' equity and book value per share are primarily due to lower net unrealized gains on our investment portfolio. Net unrealized holding gains were $13.6 million, or 43 cents per share, as of December 31, 2004, compared to $31.4 million, or $1.00 per share, at year-end 2003, mainly due to higher market interest rates. At December 31, 2004, we had $31.3 million in cash and short-term investments at the holding company and its non-regulated subsidiaries. The statutory surplus of The PMA Insurance Group was $300.0 million at December 31, 2004, compared to $296.8 million at December 31, 2003. The PMA Insurance Group has the ability to pay $23.5 million in dividends during 2005 without the prior approval of the Pennsylvania Insurance Commissioner. The statutory surplus of PMA Capital Insurance Company, PMA Capital Corporation's directly held reinsurance subsidiary, was $224.5 million at December 31, 2004, compared to $500.6 million at December 31, 2003. The statutory surplus of PMACIC at December 31, 2003 included $296.8 million of statutory surplus from the insurance subsidiaries comprising The PMA Insurance Group. Ownership of The PMA Insurance Group was transferred from PMACIC to PMA Capital in June 2004. Segment Operating Results Operating income (loss), which we define as net income (loss) under accounting principles generally accepted in the United States of America (GAAP) excluding net realized investment gains and losses, is the financial performance measure used by our management and Board of Directors to evaluate and assess the results of our insurance businesses. Accordingly, we report operating results by segment in the disclosures required under SFAS No. 131, "Disclosures About Segments of an Enterprise and Related Information." Our management and Board of Directors use operating results as the measure of financial performance for our insurance operations because (i) net realized investment gains and losses are unpredictable and not necessarily indicative of current operating fundamentals or future performance of the business segments and (ii) in many instances, decisions to buy and sell securities are made at the holding company level, and such decisions result in net realized gains and losses that do not relate to the operations of the individual segments. Operating income (loss) does not replace net income (loss) as the GAAP measure of our consolidated results of operations. The PMA Insurance Group The PMA Insurance Group had pre-tax operating income of $261,000 for the fourth quarter of 2004, compared to a pre-tax operating loss of $982,000 for the same period last year. Results for the fourth quarter of 2003 included a pre-tax net charge of $7.0 million due to lower underwriting results from accident years 2001 and 2002. Pre-tax operating income was $13.2 million for full year 2004, compared to $21.5 million for 2003, primarily reflecting lower underwriting results and lower net investment income. Net premiums written were $62.9 million and $377.8 million for the fourth quarter and full year 2004, compared with $140.8 million and $603.6 million for the same periods of 2003. Net premiums written for 2003 include $35 million of retrospectively rated premiums which were a component of the $7.0 million charge discussed above. From November 2003 until the November 2004 restoration of its A- financial strength rating, The PMA Insurance Group was rated B++ by A.M. Best, which constrained its ability to attract and retain business during 2004. Our renewal retention rate on existing workers' compensation accounts was 62% in 2004. New business production continued in 2004, although at a lower rate than in 2003. The PMA Insurance Group continues to obtain price increases in all of its commercial lines of business, although at lower overall rates of increase than in 2003. Average rate increases for workers' compensation business were approximately 6% in 2004. The combined ratio on a GAAP basis in 2004 was 108.5% for the fourth quarter and 105.4% for the full year, compared to 105.6% and 102.8% for the same periods last year. The combined ratios for the fourth quarter and full year 2003 include approximately 4 points and 1 point, respectively, due to the higher than expected losses and LAE from prior accident years. The increases in the combined ratio in 2004 primarily reflect a higher total expense ratio and, to a lesser extent, overall loss trends in workers' compensation that are rising modestly ahead of price increases. We estimate medical cost inflation, which is the primary reason for increasing loss costs in 2004, to be approximately 11%. Net investment income was $6.5 million for the fourth quarter and $31.0 million for full year 2004, compared to $8.3 million and $32.9 million for the same periods of 2003, reflecting lower yields on the portfolio, partially offset by a higher average invested asset base for full year 2004. Run-off Operations Results of the Run-off Operations are driven principally by underwriting results from our former PMA Re operating segment. Run-off Operations also includes the results of our former excess and surplus lines business. The Run-off Operations recorded a pre-tax operating loss of $1.9 million for the fourth quarter and pre-tax operating income of $5.5 million for full year 2004, compared to pre-tax operating income of $11.7 million for the fourth quarter of 2003 and a pre- tax operating loss of $80.4 million for full year 2003. Full year 2004 results include a charge of $6.0 million for a reinsurance agreement covering potential adverse loss development, partially offset by a gain of $2.5 million from the sale of our ownership interest in Cathedral Capital PLC. Included in results for the fourth quarter of 2003 are exit costs of $2.6 million, mainly employee termination benefits. Pre-tax operating results for full year 2003 reflect the $150 million ($97.5 million after-tax) third quarter reserve charge associated mainly with accident years 1997 to 2000. Corporate and Other The Corporate and Other segment includes unallocated investment income and expenses, including debt service. Corporate and Other recorded pre-tax operating losses of $5.4 million and $21.2 million for the fourth quarter and full year 2004, respectively, compared to $6.3 million and $22.7 million for the same periods last year. During the fourth quarter of 2004, we sold our interest in a partnership which owns real estate for net proceeds totaling $7.7 million, resulting in a pre-tax gain of $6.6 million, which is recorded in other revenues. Partially offsetting the gain was a pre-tax loss of $6.0 million on our convertible debt exchange which closed in November 2004. Results for the fourth quarter of 2003 included approximately $3 million of costs associated primarily with salary obligations under employment contracts with our former executive officers. Interest expense for the fourth quarter and full year 2004 increased by $531,000 and $2.5 million, respectively, over the comparable periods last year due to a higher average amount of debt outstanding in 2004, compared with 2003. Quarterly Statistical Supplement Our Fourth Quarter Statistical Supplement, which provides more detailed historical information about us, is available on our website. Please see the Investor Information section of our website at http://www.pmacapital.com/You may also obtain a copy of this supplement by sending your request to: PMA Capital Corporation 1735 Market Street Philadelphia, PA 19103 Attention: Investor Relations Alternatively, you may submit your request by telephone (215-665- 5046) or by e-mail to InvestorRelations@pmacapital.com. We have also furnished a copy of this news release and the Statistical Supplement to the SEC under cover of Form 8-K dated Feb. 15, 2005. A copy of the Form 8-K is available on the SEC's website at http://www.sec.gov/ * * * As reported in the Troubled Company Reporter on Feb. 7, 2005, Standard & Poor's Ratings Services raised its counterparty credit and senior debt ratings on PMA Capital Corp. -- PMACC -- to 'B' from 'CC' and removed these ratings from CreditWatch, where they were placed on June 29, 2004. The outlook is stable. "These rating actions are based on significant improvement in PMACC's financial flexibility in 2004 and strong capital adequacy at the group's main workers' compensation operating subsidiaries," said Standard & Poor's credit analyst Laline Carvalho. Partially offsetting these factors is the group's damaged franchise, weak operating performance at its workers' compensation subsidiaries, poor (albeit improving) fixed-charge coverage, and negative operating cash flows. "Although uncertainty also remains with regards to the reserve adequacy of PMACC's run-off operations, this factor has been partially mitigated by the purchase in 2004 of reserve development cover protecting these operations," Ms. Carvalho added. QUEBECOR MEDIA: Earns $88.2 Million of Net Income in 2004 --------------------------------------------------------- Quebecor Media, Inc., generated revenues of $2.46 billion in 2004, an increase of $164.3 million (7.1%) compared with 2003. In the fourth quarter of 2004, Quebecor Media realized revenues of $695.6 million, a $68.9 million (11.0%) increase. All segments contributed to the growth in revenues. Operating income rose $24.3 million (13.5%) to $204.2 million, mainly as a result of increases in the Cable ($12.7 million), Business Telecommunications ($8.5 million) and Newspapers ($6.5 million) segments. Quebecor Media made net debt repayments totalling $163.8 million in 2004, including mandatory payments of $37.5 million and $3.5 million by Videotron and Sun Media Corporation respectively, and voluntary payments of $97.0 million and $25.8 million by Quebecor Media and Sun Media Corporation respectively. Quebecor Media's net income was $88.2 million in 2004. Excluding unusual items, which include a $153.7 million gain recorded in 2003 on the purchase of the preferred shares held by The Carlyle Group in Videotron Telecom Ltd., net income would have been up $26.2 million (45.5%) in 2004. Quebecor World's net income, also excluding unusual items, which include the reserve for restructuring, impairment of assets and other special charges, and gains (losses) on debt refinancing, would have been US$202.4 million (US$1.52 per basic share) in 2004 compared with US$21.4 million (US$0.16 per basic share) in 2003. Quebecor Media, Inc., a subsidiary of Quebecor Inc. (TSE: QBR.MV.A, QBR.SV.B), has operations in Canada, the United States, Chile, France, Spain, Italy and the UK. It is engaged in newspaper publishing (Sun Media Corporation), cable television (Videotron ltee), broadcasting (TVA Group Inc.), Web technology and integration (Nurun Inc. and Mindready Solutions Inc.), Internet portals (Netgraphe Inc.), books and magazines (Publicor and TVA Publishing Inc.), retailing of cultural products (Archambault Group Inc. and Le SuperClub Videotron ltee) and business telecommunications (Videotron Telecom ltee). * * * As reported in the Troubled Company Reporter on Nov. 17, 2004, Moody's Investors Service affirmed all ratings and the stable outlook of the Quebecor Media, Inc., group and assigned a Ba3 senior unsecured rating to Videotron Ltee's proposed US$300 million debt issue. The ratings have not changed as a result of the new debt issue because the proceeds will ultimately be used to reduce other debt within the Quebecor Media group, as funds flow relatively freely amongst group members. Ratings affected by this action are: * Quebecor Media Inc. -- Senior Implied, Ba3 (unchanged) -- Issuer, B2 (unchanged) -- Senior Unsecured Notes, B2 (unchanged): * 11.125% due July 2011 US$715 million -- Senior Unsecured Discount Notes, B2 (unchanged): * 13.75% due July 2011 US$232 million (US$295 million principal amount) * Videotron Ltee -- Senior Unsecured Notes, rated Ba3 (unchanged): * 6.875% Due January 2014 US$335 million -- Proposed Senior Unsecured Notes, Ba3 (assigned): * Due January 2014 US$300 million * CF Cable TV Inc. -- Senior Secured First Priority Notes, Ba3 (unchanged): * 9.125% due July 2007 US$76 million * Sun Media Corporation -- Senior Secured Revolving Bank Facility, Ba2 (unchanged): * Due 2008 C$75 million (C$nil outstanding) -- Senior Secured Term Loan B, Ba2 (unchanged): * Due 2009 US$202 million (original amount US$230 million) -- Senior Unsecured Notes, Ba3 (unchanged): * 7.625% Due Feb 2013 US$205 million As reported in the Troubled Company Reporter on Nov. 17, 2004, Standard & Poor's Ratings Services assigned its 'B+' rating to Montreal, Quebec-based Videotron Ltee's proposed US$300 million 6.875% senior unsecured notes due Jan. 15, 2014, to be issued under Rule 144A with registration rights. The loan is rated one notch below the long-term corporate credit rating, reflecting its junior position in the company's capital structure. At the same time, Standard & Poor's affirmed its 'BB+' bank loan rating and assigned a recovery rating of '1+' to Videotron's proposed C$450 million senior secured five-year revolving credit facility. The loan is rated two notches higher than the long-term corporate credit rating; this and the '1+' recovery rating indicate that lenders can expect full recovery of principal in the event of a default or bankruptcy. The ratings are based on preliminary documentation and are subject to review on receipt of final documentation. In addition, all ratings outstanding on Videotron and its parent company, Quebecor Media, Inc., along with the ratings on its subsidiaries Sun Media Corp. and CF Cable TV, Inc., including the 'BB-' long-term corporate credit rating, were affirmed. The outlook is stable. RADIANT ENERGY: Taps Brant Securities to Market Secured Debentures ------------------------------------------------------------------ Radiant Energy Corporation reported the appointment of Brant Securities Limited of Toronto, Canada as Agent for the Private Placement of the Series D Convertible Secured Debentures. On February 9, 2005, the Board of Directors approved the issuance of up to 7,000 Series D Convertible Secured Debentures with a face value of US $1,000 each. Total gross proceeds are expected to be US $7,000,000. The Series D Debentures will carry no interest rate and mature in 5 years. The conversion rate during the first two years will be 7,129 common shares per debenture (approx. $0.175 Cdn.). The net proceeds of the Series D Debentures will be used to finance the completion of the construction of the Radiant owned deicing service center in Oslo, Norway, build out of prospective Company owned deicing service centers, expansion of the sales activities and for general working capital. The common shares certificates, if issued, will bear a legend that the shares cannot be sold, transferred, or otherwise traded for four months from the date of issuance of the Series D Debentures. Securities of Radiant Energy Corporation trade on the TSX Venture Exchange (symbol RDT). There are currently 31,719,171 common shares outstanding. Radiant Energy Corporation, through its wholly owned subsidiary Radiant Aviation Services developed and sells the world's only infrared alternative to traditional glycol-based aircraft deicing. Its fully patented InfraTek(R) systems are approved for use by the FAA. Prior to the introduction of InfraTek, spraying with glycol was the only feasible method to satisfy FAA safety guidelines for ensuring that aircraft are properly deiced prior to take-off. The Company's July 31 balance sheet shows $452,569 in assets and $10.2 million in liabilities. RIVIERA HOLDINGS: Dec. 31 Balance Sheet Upside-Down by $29.3 Mil. ----------------------------------------------------------------- Riviera Holdings Corporation (Amex: RIV) reported financial results for the fourth quarter ended Dec. 31, 2004. Net revenues for the quarter were $47.5 million, up $2.1 million or 4.7 percent from the fourth quarter of 2003. Income from operations was $5.2 million, up $5.1 million from the fourth quarter of 2003. Adjusted EBITDA was $8.9 million, up $2.5 million from the fourth quarter of 2003 and a record for any fourth quarter in the Company's history. The net loss for the quarter was $1.5 million, compared with a net loss of $6.7 million in the fourth quarter of 2003. Fourth Quarter 2004 Highlights -- Riviera Las Vegas revenues were up $1.1 million or 3.4 percent -- Riviera Las Vegas EBITDA was up $1.6 million or 38.2 percent -- Riviera Black Hawk revenues were up $995,000 or 8.2 percent -- Riviera Black Hawk EBITDA was up $789,000 or 24.9 percent -- Riviera Las Vegas occupancy was 89.4 percent compared with 86.5 percent in the fourth quarter of 2003, ADR (Average Daily Rate) increased $2.15 to $64.46 and RevPar (Revenue Per Available Room) increased $3.73 to $57.60 -- The Company has $19 million in cash plus a $30 million revolver Net revenues for the year ended December 31, 2004 were $201.4 million, up $11.2 million or 5.9 percent from 2003. Income from operations was $25.0 million, up $12.1 million or 93.5 percent from a year ago. Adjusted EBITDA was $40.0 million, up $8.5 million or 27.1 percent from 2003 and a record for any year in the Company's history. The net loss for the year ended December 31, 2004 was ($2.1 million) or ($0.59) per share compared with a net loss of ($14.5 million) or ($4.16) per share in 2003. Riviera Las Vegas Robert Vannucci, President of Riviera Las Vegas, said, "Our excellent fourth quarter performance contributed to a very strong year for the Riviera. Net revenues for the quarter increased by $1.1 million or 3.4 percent compared to the fourth quarter last year. EBITDA increased by $1.6 million or 38.2 percent. Revenue increases combined with lower marketing expenses and operating costs produced an EBITDA margin of 16.9 percent versus 12.6 percent for the same period last year. "Gaming revenues for the quarter increased $200,000 or 1.5 percent, over the same period last year. Cash room revenue increased $449,000 or 4.8 percent, compared to the fourth quarter last year. Rev Par was $57.60, an increase of $3.73 or 6.9 percent over the same period last year. Entertainment revenues increased $268,000 or 5.6 percent over the same period last year. "Net revenues for the year increased $7.0 million or 5.0 percent to $147.9 million and EBITDA increased $4.5 million or 19.8 percent to $27.2 million. "Our marketing department has been testing new programs which we feel will enable us to efficiently grow our revenues and bottom line going forward. We continue to adapt our operations to market conditions and have capitalized on increased demand for leisure and convention rooms. "The Las Vegas market continues to show its elasticity and ability to grow. We are anticipating an increase in demand created by the opening of the new Wynn property, the Las Vegas centennial celebrations and our own 50th anniversary celebration in April. "Riviera Las Vegas is located on 26 acres of prime real estate on the north end of the Las Vegas Strip. We anticipate that our location will benefit from the development of new casinos, hotels and luxury condominiums in the near term. Recent land transactions on or near the Las Vegas Strip are indicators that our land has a fair market value well in excess of its $21 million recorded book value." Riviera Black Hawk Ron Johnson, President of Riviera Black Hawk, said, "The fourth quarter was another record breaking quarter for Riviera Black Hawk. We were able to achieve record fourth quarter results for gaming revenue, total revenue, EBITDA, and market share. Net revenues reached a record $13.1 million during the quarter. EBITDA for the quarter grew by 24.9 percent to a record $4.0 million. EBITDA margin increased by 4.0 percentage points to 30.2 percent. "For the year we were able to achieve all time highs in revenue, EBITDA and EBITDA margin. Net revenue in 2004 was $53.4 million, up 8.5 percent over 2003. EBITDA reached an all time high of $16.9 million, up $3.6 million or 27.1 percent over last year and EBITDA margin was up 4.6 percentage points to 31.6 percent. "The fourth quarter and entire year benefited from the continued strength and consistency of our marketing programs. We continue to invest our marketing dollars in areas that profitably build slot revenues and market share. "We are also encouraged that gaming revenue in the Black Hawk/Central City market grew by 4.2 percent in the fourth quarter compared to last year's fourth quarter. For the year, gaming revenues were up 3.5 percent. We are most pleased with December's results. Gaming revenues in Black Hawk were up $2.5 million or 6.4 percent in December, compared to December 2003, and $1.4 million or 38 percent in Central City, reflecting the first full month's impact of the new access road to the market. We believe this new road will be instrumental in the growth of the market going forward." Consolidated Operations William L. Westerman, Chairman of the Board, said, "We are pleased that the trend of improved financial results continued in the fourth quarter of 2004. It is most significant that adjusted EBITDA increased by 27 percent for the year, with only a 6 percent increase in net revenues. This can be attributed to the increased effectiveness of the Company's marketing programs and continued stringent cost control measures. In 2004, we paid down our debt by $3.9 million and we reinvested $10.6 million of our cash flow in equipment and property improvements to maintain our competitive position. We have reduced our net loss for the year from $14.5 million in 2003 to $2.1 million in 2004, which includes development and projects costs of $1.1 million. "As we are coming closer to the first call date for our 11 percent bonds on June 15, 2006, it becomes increasingly apparent that a refinancing of our debt at lower interest rates, or other form of recapitalization, should result in a substantial improvement in net income." About the Company Riviera Holdings Corporation owns and operates the Riviera Hotel and Casino on the Las Vegas Strip and the Riviera Black Hawk Casino in Black Hawk, Colorado. Riviera's stock is listed on the American Stock Exchange under the symbol RIV. Informal discussions with Amex staff indicate that the Company may meet the standards of Amex policy Sec. 1003(a). According to that policy, Amex will not normally consider suspending dealings in or delisting the securities of a company, which is below the earnings or net worth standards if the Company is in compliance with the following: (1) Total value of market capitalization of at least $50,000,000; or total assets and revenue of $50,000,000 each in its last fiscal year, or in two of its last three fiscal years; and (2) The company has at least 1,000,000 shares publicly held, a market value of publicly held shares of at least $15,000,000 and at least 400 round lot shareholders. If the Company's share price were to fall below approximately $5.50 (market capitalization for "publicly held shares" of $15 million) and the Company were eventually delisted from Amex, the marketability and liquidity of the Company's stock could be significantly reduced. At Dec. 31, 2004, Riviera Holdings' balance sheet showed a $29,293,000 stockholders' deficit, compared to a $30,037,000 deficit at Dec. 31, 2003. RIVIERA HOLDINGS: Board Approves Three-for-One Stock Split ---------------------------------------------------------- Riviera Holdings Corporation (Amex: RIV), owner of the Riviera Hotel and Casino in Las Vegas and the Riviera Black Hawk in Black Hawk, Colorado, disclosed that its Board of Directors has approved a three-for-one stock split of the Company's Common Stock. As a result of the stock split, shareholders will receive two additional shares of Common Stock for every share held on the record date of Feb. 25, 2005, and payable on March 11, 2005. The stock split will increase the number of shares of the Company's Common Stock outstanding to approximately 11.9 million. William L. Westerman, Riviera Holdings' Chairman of the Board, said, "This stock split represents our commitment to increasing shareholder value and our belief in the future outlook of the Company. We expect that the increase in outstanding shares should improve the liquidity of our stock and serve to attract a broader spectrum of both institutional and individual investors. "We also announced that we have requested our financial advisor, Jefferies & Company, Inc. to explore strategic alternatives to maximize shareholder value." About the Company Riviera Holdings Corporation owns and operates the Riviera Hotel and Casino on the Las Vegas Strip and the Riviera Black Hawk Casino in Black Hawk, Colorado. Riviera's stock is listed on the American Stock Exchange under the symbol RIV. Informal discussions with Amex staff indicate that the Company may meet the standards of Amex policy Sec. 1003(a). According to that policy, Amex will not normally consider suspending dealings in or delisting the securities of a company, which is below the earnings or net worth standards if the Company is in compliance with the following: (1) Total value of market capitalization of at least $50,000,000; or total assets and revenue of $50,000,000 each in its last fiscal year, or in two of its last three fiscal years; and (2) The company has at least 1,000,000 shares publicly held, a market value of publicly held shares of at least $15,000,000 and at least 400 round lot shareholders. If the Company's share price were to fall below approximately $5.50 (market capitalization for "publicly held shares" of $15 million) and the Company were eventually delisted from Amex, the marketability and liquidity of the Company's stock could be significantly reduced. At Dec. 31, 2004, Riviera Holdings' balance sheet showed a $29,293,000 stockholders' deficit, compared to a $30,037,000 deficit at Dec. 31, 2003. ROGERS COMMUNICATIONS: Posts $450.5M Net Loss in 4th Quarter ------------------------------------------------------------ Rogers Communications, Inc., disclosed its consolidated financial and operating results for the fourth quarter and twelve months ended December 31, 2004. "We ended 2004 with solid results across our businesses, reflecting our continued success in delivering innovative offerings and convenience for our customers and the execution of our recent strategic initiatives and associated financings," said Ted Rogers, President and CEO of Rogers Communications. "The markets for wireless, cable and high-speed Internet services have continued to be robust, and our focus in 2005 remains on the disciplined execution of our strategy of profitable growth, the integration of our recently acquired wireless assets and the continued deployment of innovative products that add value to our customers' lives." Consolidated revenue for the three months ended December 31, 2004, was $1,566.3 million, an increase of $274.6 million, or 21.3%, from $1,291.7 million in the corresponding period of 2003. Of the increase, Wireless contributed $224.0 million, Cable $33.3 million, Media $2.5 million and BlueJays $19.8 million. On a pro forma basis, consolidated quarterly operating revenue increased by 13.9% and by 20.3% at Wireless. Consolidated operating profit for the three months ended December 31, 2004, was $450.5 million, an increase of $81.2 million, or 22.0%, from $369.3 million in the corresponding period in 2003. Of this increase, Wireless contributed $47.2 million, Cable $14.3 million, Media $9.6 million and the Blue Jays $2.9 million. On a pro forma basis, consolidated quarterly operating profit increased by 25.1% and by 35.4% at Wireless. Consolidated quarterly operating profit as a percentage of revenue increased modestly to 28.8% in the fourth quarter of 2004 from 28.6% in 2003. Operating Income Operating income increased to $110.4 million for the three months ended December 31, 2004, an increase of $15.0 million, or 15.7%, from the $95.4 million earned in the corresponding period of 2003. This increase primarily reflects the $81.2 million growth in operating profit partially offset by the $66.2 million increase in depreciation and amortization. Net Income (Loss) and Earnings (Loss) per Share The Company recorded a loss of $15.5 million in the three months ended December 31, 2004, or a loss per share of $0.12 per share, compared to net income of $68.8 million or earnings per share of $0.24 per share in 2003. The year-over-year decline in net income (loss) reflects primarily the increase in operating profit offset by the increases in depreciation and amortization and in interest on long-term debt. Distributions and accretions on Convertible Preferred Securities, totalling $13.6 million in the fourth quarter of 2004 and $13.3 million in the fourth quarter of 2003, had the impact of increasing the basic loss per share by $0.06 for 2004 and decreasing basic earnings per share by $0.06 for 2003. Rogers Communications, Inc., (TSX: RCI; NYSE: RG) is a diversified Canadian communications and media company engaged in three primary lines of business. Rogers Wireless is Canada's largest wireless voice and data communications services provider and the country's only carrier operating on the world standard GSM/GPRS technology platform; Rogers Cable is Canada's largest cable television provider offering cable television, high-speed Internet access and video retailing; and Rogers Media is Canada's premier collection of category leading media assets with businesses in radio, television broadcasting, televised shopping, publishing and sport entertainment. * * * As reported in the Troubled Company Reporter on Nov. 10, 2004, Standard & Poor's Ratings Services lowered its long-term corporate credit ratings on Rogers Communications, Inc. -- RCI, Rogers Cable Inc., and Rogers Wireless Inc. -- RWI -- to 'BB' from 'BB+' following RWI's successful tender for various equity securities of Microcell Telecommunications, Inc. Given the success of the offer, and lack of any other material conditions RWI is expected to complete the acquisition of Microcell in the near term. The outlook is currently stable. ROUGE INDUSTRIES: Wants Plan Filing Period Extended to June 16 -------------------------------------------------------------- Rouge Industries, Inc., and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of Delaware to extend the period within which they have the exclusive right to file a plan of reorganization to June 16, 2005. The Debtors also ask the Court to extend their exclusive period to solicit acceptances for the plan to August 16, 2005. Substantially all of the Debtors' assets were acquired on Jan. 30, 2004, by SeverStal N.A. in exchange for $285.5 million and other consideration pursuant to the terms of an Asset Purchase Agreement approved by the Court on Dec. 2, 2003, and subsequently amended and executed on Jan. 30, 2004. Alicia B. Davis, Esq., at Morris Nichols Arsht & Tunnell, in Wilmington, Delaware tells the Court that despite consummation of the Asset Sale, the Debtors' chapter 11 cases continue to raise numerous complex issues including: * matters relating to the Debtors' significant and multifaceted relationship with Ford Motor Company; * matters related to claims for benefit and compensation made by the Debtors' unionized and salaried former employees; * sizeable claims asserted by and related litigation involving Duke/Fluor Daniel. Judge Mary F. Walrath will convene a hearing on March 23, 2005, to consider the Debtors' request. By application of Rule 9006-2 of the Local Rules of Bankruptcy Practice and Procedures of the United States Bankruptcy Court for the District of Delaware, the Debtors' exclusive filing deadline is automatically extended through the conclusion of that hearing. Headquartered in Dearborn, Michigan, Rouge Industries, Inc., an integrated producer of flat-rolled steel, filed for chapter 11 protection on October 23, 2003 (Bankr. Del. Case No. 03-13272). Donna L. Harris, Esq., Robert J. Dehney, Esq., at Morris, Nichols, Arsht & Tunnell represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed total assets of $558,131,000 and total debts of $558,131,000. SALTON INC: Third Point Demands CEO Termination ASAP ---------------------------------------------------- Third Point LLC, one of the two largest shareholders of Salton, Inc. (NYSE:SFP), wants to see the Company's chief executive officer, Leonhard Dreimann, terminated immediately. Third Point says the CEO's position should be filled either by David Sabin or William Rue as interim CEO until such time as a qualified executive can be found. In a letter sent to Salton's board of directors on Feb. 14, Third Point CEO Daniel S. Loeb says: "In the most recent quarterly results announced Wednesday, February 9th, the Company reported yet another "miss" on both lower revenues and poor margins. Short interest is one of the few benchmarks that seem to remain stable, with nearly 50% of the shares lent out to speculators who are betting that Mr. Dreimann will lead this Company into bankruptcy. Meanwhile, the Company's proposed restructuring, which has been in the works for over a year, remains a chimera." For the second fiscal quarter ended Jan. 1, 2005, Salton reported net sales of $377 million for the quarter versus $397 million for the same period in fiscal 2004. The decrease in net sales was due primarily to a $49 million decline in domestic sales, which offset a $28.9 million increase internationally. The international sales growth resulted from $20.3 million in favorable foreign currency effects and double digit growth in AMAP, partially offset by retail buying freezes in a soft UK retail environment. Salton reported net income of $2.8 million, versus net income of $12.3 million for the second quarter of fiscal 2004. Gross profit margins in the second fiscal quarter of 2005 were 26.4% of net sales, compared to 23.1% of net sales in the first fiscal quarter of 2005. This compares with 31.1% in the second fiscal quarter of 2004. The decline in gross profit from the year earlier period was a result of lower gross margins domestically, principally as a result of high raw materials costs and a higher volume of AMAP electronics sales, which carry lower margins. Selling, general and administrative expense declined by $13.1 million, driven by a $20.8 million domestic decline, as a result of the Company's cost reduction initiatives. This reduction was partially offset by an increase of $7 million in international expenses, due to start-up costs to enter new markets and $4.3 million in foreign currency effects. For the six months ended Jan. 1, 2005, Salton reported net sales of $651.1 million versus $635.6 million for the same period in fiscal 2004. Salton reported a net loss of $0.4 million, versus net income of $13.1 million, for the first six months of fiscal 2004. Mr. Loeb added, "How can the Board's compensation committee possibly justify granting Mr. Dreimann's exorbitant $600,000 annual salary? One would assume that only a Board of Directors with no vested interest would look on while a CEO wastes corporate assets, is accused of irregularities with respect to the Company's distribution channel and is accused of trying to bully customers into engaging in uncompetitive behavior with respect to pricing." $125 Million Comes Due Dec. 15 Shares in Salton trade around $3 today. They've lost more than 75% of their value since January 2004. Salton has $125 million of 10-3/4% Senior Subordinated Notes coming due on Dec. 15, 2005. Bloomberg data shows those junk- rated notes trading at 83 this week, for a near-36% yield. Another $150 million layer of 12.25% Senior Subordinated Notes matures on April 15, 2008. The 2008 Notes, Bloomberg data shows, trade at 71, for a 26.33% yield. Houlihan Lokey on Board Houlihan Lokey Howard & Zukin is providing the company with advice about how to refinance its debt obligations. Harris Rubinroit at Bloomberg News reports that the company may try to secure a bank loan to retire the bonds. Silver Point Finance, LLC, arranged a $275 million line of credit for Salton in June 2004. About the Company Salton, Inc., is a leading designer, marketer and distributor of branded, high quality small appliances, electronics, home decor and personal care products. Its product mix includes a broad range of small kitchen and home appliances, electronics for the home, tabletop products, time products, lighting products, picture frames and personal care and wellness products. The company sells its products under a portfolio of well recognized brand names such as Salton(R), George Foreman(R), Westinghouse(TM), Toastmaster(R), Melitta(R), Russell Hobbs(R), Farberware(R), Ingraham(R) and Stiffel(R). It believes its strong market position results from its well-known brand names, high quality and innovative products, strong relationships with its customer base and its focused outsourcing strategy. * * * As reported in the Troubled Company Reporter on Nov. 25, 2004, Standard & Poor's Ratings Services lowered its corporate rating on small appliance manufacturer Salton Inc. to 'CCC' from 'CCC+', and lowered its subordinated debt rating to 'CC' from 'CCC-'. The outlook on Lake Forest, Illinois-based Salton is negative. Total debt outstanding as of October 2, 2004, was $490.0 million. "The downgrade is based on Salton's increasingly constrained liquidity and lower prospects for improving profitability for the upcoming Christmas selling season," said Standard & Poor's credit analyst Martin S. Kounitz. The ratings reflect Salton's weak liquidity, a result of increasingly challenging conditions in the small appliance market. For the past 12 months ended October 2, 2004, Salton's EBITDA declined precipitously, by more than 50%. Underlying this decline is saturated domestic consumer demand for the George Foreman line of products, and a cost structure built while the company was continuing to grow. Recently introduced new products, such as the Melitta One:One coffee maker, compete in extremely challenging categories and often have lower margins than the products they replace. Profitability has declined with raw material price increases and sales of discounted merchandise to reduce inventory. Standard & Poor's is also concerned about the company's potentially lower Christmas sales for the 2004 season, reflecting weaker demand and product shortages of better-selling lines occurring from operational bottlenecks at its third-party suppliers in China. SANMINA-SCI: Moody's Puts B1 Rating on $300MM Senior Sub. Notes --------------------------------------------------------------- Moody's Investors Service assigned a B1 rating to the proposed $300 million eight-year senior subordinated notes issue of Sanmina-SCI Corporation. At the same time, the Company's existing ratings and stable outlook were affirmed. Net proceeds from this unregistered notes offering are expected to be utilized to refinance a portion of the Company's existing zero coupon convertible subordinated debentures due September 2020. The Company will retain the option to refinance the residual portion of these subordinated debentures' scheduled September 2005 put (estimated accreted residual value of $332 million as of the put date) through cash, stock or some combination of it. The new rating assignment and affirmation of existing ratings reflect Sanmina-SCI's consistently solid operating performance, with healthy year-over-year (six consecutive quarters of double-digit growth) and sequential sales growth as well as margin expansion realized from stabilizing enterprise spend and an increased contribution from emerging end markets (industrial & semiconductor, aerospace & defense, medical and automotive). Further, these ratings incorporate the expectation that IT enterprise spend will improve in the latter half of 2005, and that increased margins will be attained from sales growth (accelerating outsource trends of non-IT & telecom end markets), greater internal components sourcing (Pentex-Schweizer acquisition) and ongoing operational cost restructuring benefits. The ratings also reflect the company's highly leveraged capital structure (4.1x total debt and 4.5x rent adjusted total debt to adjusted TTM EBITDA as of December 2004), sub-optimal capital return levels and recently increased free cash flow generating volatilities. These ratings also incorporate the Company's solid tier 1 market position serving high margin end markets that include enterprise computing & storage and communications infrastructure (43% total sales). The Company's vertical components manufacturing solution, when operating efficiently and in a "bundled" concept with Sanmina's emerging original design manufacturing and long established EMS offerings, delivers tangible competitive differentiation in terms of the value proposition offered to the various end market OEMs. The market appeal of these offerings has been affirmed through recent, across the board program wins involving industry leading companies. Looking ahead through 2005, it is expected that continued operating performance enhancement (more favorable demand dynamics; increased ODM activity; lower cost base; more effectively utilized PCB operations), long awaited margins acceleration and a return to moderately positive, sustainable free cash flow will be realized. The Company's SGL-1 speculative grade liquidity rating is supported by its significant cash balances, totaling ~$1.1 billion as of December 2004, and access to a committed $500 million secured revolving line of credit (unutilized and fully available, pro forma for this notes offering). This liquidity rating also incorporates the expectation that the company will partially refinance the 0% coupon convertible notes possessing a September 2005 put option with proceeds from this proposed notes offering, with the residual notes' accreted balance of ~$332 million as of the put date settled with on-hand liquidity. The ratings may encounter near term upward pressure from the company's ability to deliver stronger, sustainable cash flow from operations and free cash flow, resulting from some combination of: (i) more favorable end market demand dynamics; (ii) fuller realization of prior period restructuring initiatives and (iii) more efficient PCB operating results, driven in part by Pentex-Schweizer broadening the total available marketplace, lowering the overall cost base and raising aggregate utilization levels; and (iv) continued ramp of the highly profitable ODM offerings. Resulting improved credit statistics would consist of total leverage at or below 3.0x and EBITDA less Capital Expenditures to Interest at or in excess of 3.0x. Further, the Company would secure more efficient operating results in the form of a cash conversion cycle in the low-to-mid 20 days area and returns on tangible invested capital in the high teens. Conversely, the ratings may encounter near term downward pressure from some combination of the: (i) reversal in recent, favorable sales and margin improvements resulting from more sustained softening in end markets' demand, as well as associated negative operating leverage realized from PCB results; and (ii) resulting increased pressures on working capital management practices and ability to return / sustain positive free cash flow generation. Such challenges would produce deteriorated credit statistics, to include total leverage at or in excess of 5.5x and EBITDA less Capital Expenditures to Interest of less than 2.0x. The new rating assigned is: (i) B1 rating on Sanmina's new $300 million senior subordinated notes, due 2013 The existing ratings have been affirmed are: (i) Ba1 rating on Sanmina's $500 million guaranteed senior secured (first lien) revolving credit facility, due 2007; (ii) Ba2 rating on Sanmina's $750.0 million 10.375% senior secured notes (second lien), due 2010; (iii) B1 rating on SCI Systems Inc.'s $521.3 million 3% convertible subordinated notes, due 2007 (guaranteed by Sanmina-SCI Corporation); (iv) B1 rating on Sanmina's $614.2 million (accreted value) zero coupon convertible subordinated debentures, due 2020; (v) Ba2 senior implied rating; (vi) Ba3 senior unsecured issuer rating; and (vii) SGL-1 speculative grade liquidity rating. The new notes will be sold in a privately negotiated transaction without registration. However, the issue is structured to permit resale under Rule 144A and for the notes to become registered within the next six months. Sanmina-SCI Corporation, headquartered in San Jose, California, is a leading electronics contract manufacturing services company providing a full spectrum of integrated, value-added solutions. For the last twelve months ended December 2004, the Company generated approximately $12.5 billion in net sales and $460 million in Adjusted EBITDA (excludes non-recurring and unusual charges). SATCON TECH: Names David O'Neil as VP of Finance & Treasurer ------------------------------------------------------------ SatCon Technology Corporation(R) (Nasdaq NM: SATC), a developer and manufacturer of electronic power control systems, has appointed David E. O'Neil as Vice President of Finance and Treasurer, effective March 1, 2005. Dave O'Neil joined SatCon in February of 2002 as Controller of the Electronics Division. In November of 2002 he was promoted to Vice President and General Manager of that Division. As such, he has provided the strategic and tactical leadership to enable the management team to turn the Electronics Division into a profitable operating unit. Mr. O'Neil holds a BS in Accounting from Bentley College, and an MBA from Suffolk University. Prior to joining SatCon, Mr. O'Neil's career spanned over 29 years at Polaroid Corporation, with the past 15 years in executive level positions in the Controller and Purchasing functions. As Division Vice President and Group Controller of Global Sales and Marketing, he led a multi-cultural financial organization in restructuring the efforts required to support the Sales and Marketing teams. Dave also served as Division Vice President of Purchasing where he provided strategic direction and tactical leadership for the procurement of over a billion dollars worth of materials and services for multiple global manufacturing and marketing locations. He also led a cross functional team to reorganize Purchasing into commodity focused teams which resulted in annual cost reductions of over $20 million. Also, he reduced the annual working capital needs by over $20 million per year for three consecutive years by implementing and managing a series of metrics. As Group Controller for Global Manufacturing and Logistics, he successfully led the efforts to reduce manufacturing costs by 3% annually for five years in a row. "We think Dave will be a strong member of the management team in this new position," said David Eisenhaure, SatCon Chairman and Chief Executive Officer. "Dave's knowledge of performance management reporting and metrics, along with his skills in financial analysis, Balance Sheet management and team building are his greatest strengths. His first three years at SatCon have shown that he brings a wealth of experience and a collaborative style to the workplace and his appointment to the position of vice president of finance should be a seamless transition for the company." About the Company SatCon Technology Corporation -- http://www.satcon.com/-- manufactures and sells power control systems for critical military systems, alternative energy and high-reliability industrial automation applications. Products include inverter electronics from 5 kilowatts to 5 megawatts, power switches, and hybrid microcircuits for industrial, medical, military and aerospace applications. SatCon also develops and builds digital power electronics, high-efficiency machines and control systems for a variety of defense applications with the strategy of transitioning those technologies into multiyear production programs. Going Concern Doubt SatCon Technology received a going concern opinion from its auditors contained in its Form 10-K for the fiscal 2004 fourth quarter and year-end, which ended Sept. 30, 2004, filed with the Securities and Exchange Commission. Revenues for the 12 month period ending September 30, 2004, increased by 27% from $26.9 million in fiscal 2003 to $34.2 million for fiscal 2004. Backlog was up 20% to $24 million, the highest quarterly backlog reported since the Company began reporting quarterly backlog data about two years ago. The Company decreased its operating losses from $26 million in fiscal 2003 to $4 million in fiscal 2004. The Company also raised $8 million in cash through an equity financing. SAXON ASSET: Moody's Reviews Ratings on 11 Certs. & May Downgrade ----------------------------------------------------------------- Moody's Investors Service has placed under review for possible downgrade eleven subordinate certificates from five transactions, and placed under review for possible upgrade three subordinate certificates from three transactions, all issued by Saxon Asset Securities Trust in 2000 and 2001. These certificates are secured by fixed rate and adjustable rate home equity loans. The review will focus on the bonds' current credit enhancement levels compared to the current projected loss numbers. The underlying collateral of the certificates being placed on review for possible downgrade appears to be performing worse than Moody's original expectations. The credit profile of the certificates being reviewed for possible upgrade appears to have strengthened. This is in large part due to the build-up of credit enhancement relative to expected future losses in the underlying mortgage pools. The complete rating actions are: Under Review for Possible Downgrade: * Series 2000-1; Class MF-2, current rating A2, under review for possible downgrade * Series 2000-1; Class BF-1, current rating Ba3, under review for possible downgrade * Series 2000-4; Class MF-2, current rating Baa2, under review for possible downgrade * Series 2000-4; Class BF-1, current rating B1, under review for possible downgrade * Series 2001-1; Class MF-2, current rating Baa2, under review for possible downgrade * Series 2001-1; Class BF-1, current rating B2, under review for possible downgrade * Series 2001-2; Class M-1, current rating Aa2, under review for possible downgrade * Series 2001-2; Class M-2, current rating A2, under review for possible downgrade * Series 2001-2; Class B-1, current rating Baa2, under review for possible downgrade * Series 2001-3; Class M-2, current rating A2, under review for possible downgrade * Series 2001-3; Class B, current rating Baa2, under review for possible downgrade Under Review for Possible Upgrade: * Series 2000-1; Class MV-2, current rating Aa2, under review for possible upgrade * Series 2000-4; Class MV-2, current rating Aa2, under review for possible upgrade * Series 2001-1; Class MV-2, current rating Aa3, under review for possible upgrade SBA COMMUNICATIONS: Changes Accounting for Ground Leases -------------------------------------------------------- SBA Communications Corporation (Nasdaq: SBAC) disclosed that, in connection with the Feb. 7, 2005, SEC statement issued by the Staff of the Office of the Chief Accountant and consistent with other public companies in the tower and other industries, it has reviewed its accounting practices and determined that it will adjust its method of accounting for certain types of ground leases underlying its tower sites. As a result of this accounting adjustment, SBA will calculate its straight-line ground lease expense for certain types of leases using a time period that equals or exceeds the time period used for depreciation of the tower, which is typically 15 years. Prior to the adjustment, SBA calculated its straight-line ground rent expense using the current lease term (typically five years) without regard to renewal options. SBA, in consultation with its external auditors, is reviewing the impact of the adjustment on its historical financial statements. SBA expects to complete its review of this matter and determine the impact on 2004 and prior years' financial statements prior to releasing fourth quarter and full year 2004 results on Feb. 28, 2005. In the event that the Company concludes that the impact of the adjustment is material to prior period financial statements, restatements of those prior period financial statements will be made as appropriate. Any adjustments will be non-cash in nature, and will not affect historical or future cash flows from operations or the timing of payments under related ground leases. Any adjustment is not expected to have an impact on cash balances, compliance with any financial covenant or debt instrument, or the current economic value of SBA's leaseholds and its tower assets. The Company anticipates that the non-cash adjustment will increase reported ground rent expense by approximately $1.5 million to $2.5 million for fiscal 2005 and have no impact on cash flows from operations. About the Company SBA Communications Corporation -- http://www.sbasite.com/-- is a leading independent owner and operator of wireless communications infrastructure in the United States. SBA generates revenue from two primary businesses -- site leasing and site development services. The primary focus of the Company is the leasing of antenna space on its multi-tenant towers to a variety of wireless service providers under long-term lease contracts. Since it was founded in 1989, SBA has participated in the development of over 25,000 antenna sites in the United States. * * * As reported in the Troubled Company Reporter on Dec. 8, 2004, Moody's Investors Service assigned a Caa1 rating to the recently issued $250 million 8.5% Senior Notes due 2012 of SBA Communications Corp. Moody's also upgraded the ratings of SBA Communications and its subsidiaries, as outlined below, based upon the improved free cash flow profile of the company from cash flow growth and the benefits of its recent financing activities. The affected ratings are: -- SBA Communications Corporation * Senior Implied Rating -- B2 (upgraded from B3) * Issuer Rating -- Caa1 (upgraded from Caa2) * 8.5% Senior Notes due 2012 -- Caa1 (assigned) * 10.25% Senior Notes due 2009 -- rating withdrawn -- SBA Telecommunications, Inc. * 9.75% Senior Discount Notes due 2011 -- B3 (upgraded from Caa1) -- SBA Senior Finance, Inc. * $75 million senior secured revolving credit facility expiring 2008 -- B1 (upgraded from B2) * $325 million senior secured term loan maturing 2008 -- B1 (upgraded from B2) SOLUTIA INC: Cuts Rent on Ashley Warehouse Lease by $540,000 ------------------------------------------------------------ Solutia, Inc., and its debtor-affiliates seek the authority of the U.S. Bankruptcy Court for the Southern District of New York to amend and assume a certain lease with Ashley Brownstown South, LLC, which relates to Solutia's lease of warehouse space in Brownstown Township, Michigan. On February 11, 1999, Ashley leased to Solutia a 275,886-square foot warehouse space at 19881 Brownstown Center Drive, Suites 820 and 850, in Brownstown Township, Michigan. The Lease will expire on October 31, 2009, with monthly rent of $93,173. M. Natasha Labovitz, Esq., at Gibson, Dunn & Crutcher, LLP, in New York, relates that the Premises are located near Solutia's Trenton, Michigan plant, where Solutia's performance products division manufactures Saflex(R). Saflex(R) is a protective interlayer material made of polyvinyl butyral used by glass manufacturers and laminators, especially for the automotive and architectural sectors, to enhance the performance and appearance of glass products. Saflex is a very profitable component of the Solutia Group's performance films division. Due to its unique characteristics, Saflex must be stored in a refrigerated space. The Premises have been specifically outfitted for this type of storage, and their proximity to the Trenton Plant facilitates Solutia's ability to transport and store the Saflex that it produces. Solutia primarily uses the Premises for staging material prior to shipping and also for housing a stock of inventory. The Debtors use the Premises as the primary North American distribution center for Saflex. The ability to safely and efficiently store Saflex and prepare distribution to customers near the Trenton Plant is crucial to facilitating the Debtors' ability to satisfy customer demands, Ms. Labovitz says. Because of the need for refrigerated warehouse space close to the Trenton Plant, and because the coolers necessary for refrigeration installed in the Premises are owned by Solutia and would be very difficult and expensive to move, it was very likely that Solutia would have assumed the Lease at some time during its Chapter 11 case whether or not Ashley was willing to amend the contract. Amendment to the Lease The parties agree to amend the Lease to extend the term by 18 months so that it would now expire in April 2011. If there are changes in Solutia's business which affect its need for warehouse space, the Amended Lease retains Solutia's right to reduce its space commitments -- the original Lease provides Solutia a one-time option to reduce the Premises, either by 170,824 square feet or 105,062 square feet, upon the payment of a fee to Ashley to reimburse Ashley for its costs. The Amended Lease retains these options but extends their exercise date to Sept. 30, 2008. The Amended Lease also reduces the cost of leasing the Premises, effective as of January 1, 2005. Solutia believes that the reduction in rent will result in savings of $540,000, reducing cost by 7.5% over the life of the Amended Lease. Solutia and Ashley agree that there are no outstanding prepetition amounts due and owing under the Lease. Furthermore, Solutia believes that adequate assurance of future performance under the Amended Lease is provided by its operational credibility and history of dealings with Ashley. Headquartered in St. Louis, Missouri, Solutia, Inc. -- http://www.solutia.com/-- with its subsidiaries, make and sell a variety of high-performance chemical-based materials used in a broad range of consumer and industrial applications. The Company filed for chapter 11 protection on December 17, 2003 (Bankr. S.D.N.Y. Case No. 03-17949). When the Debtors filed for protection from their creditors, they listed $2,854,000,000 in assets and $3,223,000,000 in debts. (Solutia Bankruptcy News, Issue No. 32; Bankruptcy Creditors' Service, Inc., 215/945-7000) STELCO INC: Board Will Review Bids This Friday ---------------------------------------------- Stelco, Inc.'s (TSX:STE) board of directors will be meeting on February 18 to assess the various bids in the company's capital raising process. Once the subsequent detailed analysis of the bids has been conducted, the Board will be in a position to make decisions regarding the bids and the next steps to pursue in the process. Any bids accepted by Stelco will be subject to the approval of the Superior Court of Justice (Ontario). In accordance with the Court-approved procedures governing this process, offers for the recapitalization or purchase of Stelco's core integrated steel business, its non-core subsidiaries or any combination thereof were due by the end of February 14, 2005. Several interested parties, including Deutsche Bank as the 'stalking horse' bidder, participated in the process. The Company declined to identify the bidders or to discuss the terms of the offers. As reported in yesterday's edition of the Troubled Company Reporter, Severstal Group said it made a formal offer. With respect to the Company's non-core subsidiaries, Stelco says a number of offers were received. Here, too, the Company declined to identify the bidders or to discuss the terms of the offers. Hap Stephen, Stelco's Chief Restructuring Officer, said, "We're pleased with the outcome of the Court-supervised process and with the number of offers that have been submitted. Our goal from the outset has been a competitive process in the interests of all our stakeholders. We believe that objective has been achieved." Mr. Stephen indicated that the Company, its financial advisors and the Court-appointed Monitor will proceed to assess the bids and to seek clarification as may be required from the bidders. 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. TELCORDIA TECHNOLOGIES: S&P Puts B+ Corp. Credit Rating to Stable ----------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B+' corporate credit rating to Piscataway, New Jersey-based Telcordia Technologies Inc. The outlook is stable. In addition, a 'B+' bank loan rating was assigned to Telcordia Technologies' $620 million senior secured bank facilities. A recovery rating of '2' also was assigned to the loan, indicating the expectation for a substantial recovery of principal (80%-100%) in the event of a default. At the same time, a 'B-' rating was assigned to the company's $350 million senior subordinated notes due in 2013. "The ratings reflect Telcordia Technologies' below-average business profile (a result of its narrow and mature addressed market), significant customer concentration, and a leveraged financial profile," said Standard & Poor's credit analyst Philip Schrank. The ratings are, however, supported by a leading position in providing products and services for regional Bell operating companies and global carriers, and a solid recurring revenue stream. Telcordia Technologies has experienced double-digit revenue declines over the past three years; however, Standard & Poor's expects stabilization and modest growth over the next few years as telecom service providers begin to reinvest in their infrastructure, offsetting likely continued modest declines in profitable maintenance revenues. Operations are defensible over the intermediate term because of customers' investment in Telcordia Technologies' proprietary and scalable technology, coupled with contractual relationships with very high switching costs. The company's backlog of contracted maintenance provides good near-term revenue visibility despite Standard & Poor's expectation for continuing pricing pressure. TIMBERLAND LOGGING: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------------- Debtor: Timberland Logging 7904 Alabama Highway 191 Maplesville, Alabama 36750 Bankruptcy Case No.: 05-30367 Type of Business: The Debtor is a logger. Chapter 11 Petition Date: February 10, 2005 Court: Middle District of Alabama (Montgomery) Judge: William R. Sawyer Debtor's Counsel: Robert L. Shields, III, Esq. The Shields Law Firm 2025 Third Avenue, North Suite 301, The Massey Building Birmingham, AL 35203 Tel: 205-323-0010 Total Assets: $1,161,384 Total Debts: $3,218,444 Debtor's 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Peachtree Bank 80 Acres 023017 $2,400,000 P.O. Box 39 9324001401000.000 Maplesville, AL 36750 Lumber & Wood + Equipment 1996 John Deere 750C Dozer; 1996 John Deere 648G Skidder; 1998 John Deere 648G Sk Secured value: $830,000 Layton & Sue Lenoir $199,776 7904 AL Hwy 191 Maplesville, AL 36750 Southwest Tyre $26,285 P.O. Box 5172 Silver City, NM 88062 Bowden Oil $23,087 Internal Revenue Services $14,754 Hullett, Kellum & McKinney $7,612 Chevron & Texaco Card $6,554 Service Warrior Tractor $4,546 Timber Products Southeast $2,759 Farm Plan $2,464 Alabama Dept. of Revenue $2,114 Withholding Tax Revenues Sue Lenoir $2,000 Cintas $1,735 Interstate Batteries $1,356 Hawkins & Rawlinson, Inc. $1,200 Mike's Auto Parts $1,046 Terry's Small Engines $992 Dennis Welding $943 Schaffer Oil Co. $786 Southern Company $455 TOWER AUTOMOTIVE: Bankruptcy Prompts Moody's to Withdraw Ratings ---------------------------------------------------------------- Moody's Investors Service withdrew all ratings for Tower Automotive, Inc., and its wholly owned subsidiaries R.J. Tower Corporation and Tower Automotive Capital Trust following the company's filing for Chapter 11 bankruptcy protection on February 2, 2004. RJ Tower did not make the scheduled Euro 6.9 million semiannual interest payment that was due on February 1, 2005 for its Euro 150 million of 9.25% guaranteed senior unsecured notes due August 2010. Management additionally determined that it would not be prudent to activate the 30-day grace period, given the belief that Tower Automotive's problems stemmed from the fact that the company required significant relief from its highly leveraged capital structure. Tower's operating performance had actually demonstrated steady improvement over the past year as the new management team restructured operations, improved launch procedures and rolled out a meaningful series of large new programs. In conjunction with its Chapter 11 filing, Tower Automotive has arranged commitments for up to $725 million in debtor-in- possession financing, subject to court approval. The specific ratings associated with Tower and its subsidiaries that were withdrawn are: * Withdrawal of the B3 ratings for RJ Tower's $424 million of remaining guaranteed first-lien senior secured credit facilities, consisting of: * $50 million revolving credit facility due May 2009; * $374 million remaining term loan B due May 2009; * Withdrawal of the Caa2 rating for RJ Tower's $155 million guaranteed second-lien senior secured synthetic letter of credit term loan facility; * Withdrawal of the Ca rating for RJ Tower's $258 million of 12% guaranteed senior unsecured notes due June 2013; * Withdrawal of the Ca rating for RJ Tower's Euro 150 million of 9.25% guaranteed senior unsecured notes due August 2010; * Withdrawal of the C rating for Tower Automotive Capital Trust's $258.75 million of 6.75% guaranteed trust convertible preferred securities due June 2018; * Withdrawal of Tower's Caa1 senior implied rating; * Withdrawal of Tower's Ca senior unsecured issuer rating; * Withdrawal of Tower's SGL-4 speculative-grade liquidity rating * Withdrawal of the negative rating outlook Tower Automotive, Inc., headquartered in Novi, Mich., is a Tier 1 supplier of structural components and assemblies for automotive manufacturers. Annual revenues approximate $3.0 billion. US AIRWAYS: Court Denies Pegasus' Request for Adequate Protection ----------------------------------------------------------------- As reported in the Troubled Company Reporter on Jan. 5, 2005, Pegasus Aviation and its affiliate Pacific AirCorp 24554, Inc., ask the U.S. Bankruptcy Court for the Eastern District of Virginia to require US Airways, Inc., and its debtor-affiliates to provide adequate protection for its aircraft. Pacific AirCorp 24554, Inc., owns a Boeing 737-400 with Tail No. N432US, that is leased to the Debtors for $90,000 per month. Debtors Object Pursuant to a March 31, 2003, Lease Agreement with Pacific Aircorp 24554, Inc., a Pegasus affiliate, the Debtors lease a Boeing 737-400. Subject to extensions, the Lease expires in July 2008. Brian P. Leitch, Esq., at Arnold & Porter, in Denver, Colorado, informs the Court that the Debtors are current on all postpetition obligations under the Lease. According to Mr. Leitch, Pegasus appears to be seeking adequate protection because the Aircraft recently underwent maintenance and each day that passes diminishes the value of the Aircraft. Moreover, Pegasus asserts that each hour the Aircraft is used causes wear and tear, bringing it closer to the next maintenance event, which diminishes its value. Mr. Leitch argues that worries about diminution in value are misplaced. The Debtors performed a heavy airframe maintenance check on the Aircraft in September 2004. If the Debtors returned the Aircraft today, the airframe would be in a better condition than required under the Lease. Moreover, the Lease does not require "maintenance reserves." Pursuant to Section 1110 protections and a 1110 Agreement, the Debtors are compelled to perform all obligations required under the Lease, except maintenance reserves. Therefore, Pegasus' request for adequate protection payments exceeds what is necessary to adequately protect its interest in the Aircraft. Pegasus cannot unilaterally decree what constitutes additional adequate protection requirements, especially when those requirements are not even included in the Lease. Mr. Leitch contends that Pegasus' request is misplaced and should be denied or, at the very least, be deemed moot and should be withdrawn. * * * Judge Mitchell denies Pegasus' request for adequate protection payments, or in the alternative, for relief from the automatic stay. Judge Mitchell will hold a status hearing on May 19, 2005, at 9:30 a.m. to determine whether a date should be set for the Debtors to assume or reject the lease. Headquartered in Arlington, Virginia, US Airways' primary business activity is the ownership of the common stock of: * US Airways, Inc., * Allegheny Airlines, Inc., * Piedmont Airlines, Inc., * PSA Airlines, Inc., * MidAtlantic Airways, Inc., * US Airways Leasing and Sales, Inc., * Material Services Company, Inc., and * Airways Assurance Limited, LLC. Under a chapter 11 plan declared effective on March 31, 2003, USAir emerged from bankruptcy with the Retirement Systems of Alabama taking a 40% equity stake in the deleveraged carrier in exchange for $240 million infusion of new capital. US Airways and its subsidiaries filed another chapter 11 petition on September 12, 2004 (Bankr. E.D. Va. Case No. 04-13820). Brian P. Leitch, Esq., Daniel M. Lewis, Esq., and Michael J. Canning, Esq., at Arnold & Porter LLP, and Lawrence E. Rifken, Esq., and Douglas M. Foley, Esq., at McGuireWoods LLP, represent the Debtors in their restructuring efforts. In the Company's second bankruptcy filing, it lists $8,805,972,000 in total assets and $8,702,437,000 in total debts. (US Airways Bankruptcy News, Issue No. 81; Bankruptcy Creditors' Service, Inc., 215/945-7000) US HOTEL CORP: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: US Hotel Corporation 200 East Rand Road Mount Prospect, Illinois 60056 Bankruptcy Case No.: 05-04783 Type of Business: The Debtor provides a variety of professional hotel services to individual owners, financial institutions, investors and hospitality related companies. The Debtor specializes in operating both stable and turnaround properties. See http://members.aol.com/hotelcorp/hotel.html Chapter 11 Petition Date: February 14, 2005 Court: Northern District of Illinois (Chicago) Judge: Carol A. Doyle Debtor's Counsel: Ariel Weissberg, Esq. Weissberg & Associates Ltd. 401 South LaSalle Street, Suite 403 Chicago, Illinois 60605 Tel: (312) 663-0004 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Internal Revenue Service $150,000 Kansas City, MO 64999 Ramada Franchise Systems, Inc. $40,000 PO Box 360113 Pittsburg, PA 15251-6113 Illinois Department of Revenue $35,803 PO Box 19447 Springfield, IL 62794-9447 ComEd $18,222 Bill Payment Center PO Box 805376 Chicago, IL 60680-5376 Clear Channel Airports $7,200 I.D.E.S. $4,494 Lato Supply Corporation $2,915 Nicor Gas $1,696 MPower Communications $1,363 Ecolab $1,096 A. Barr Sales, Inc. $660 State Chemical Manufacturing Company $616 Sara Lee Coffee & Tea $585 NSI Signs, Inc. $550 Saflok $527 SBC Ameritech $513 Farmer Brothers Company $430 Nextel Communications $363 Alsco $370 RGI Publications, Inc. $321 VALOR COMMS: Appoints Six New Directors to Board ------------------------------------------------ Valor Communications Group (NYSE: VCG) disclosed the addition of six new members to the company's board of directors effective Feb. 8, 2005. They are as follows: Stephen B. Brodeur is the former chief executive officer of the Cambridge Strategic Management Group. CSMG, now a major division of The Management Network Group, is a leading provider of management consulting services to emerging and established telecommunications operators, equipment manufacturers and financial services companies. As a consultant to telecommunications and related industries for 18 years, Mr. Brodeur has helped clients evaluate business opportunities and identify critical risk factors in entering new markets or deploying new technologies. He has consulted for domestic and international companies including Verizon, Bell Canada, SBC, Sprint, AT&T, CenturyTel, FPL, British Telecom, Telstra, Nextel, Siemens, Nortel, Corning and Cisco. Michael Donovan is an associate at Welsh, Carson, Anderson & Stowe (WCAS). Before joining WCAS in 2001, Donovan worked at Windward Capital Partners and in the investment banking division at Merrill Lynch. He is currently a board member of Accuro Healthcare Solutions Inc. and Onward Healthcare Inc. Edward Lujan is chairman of the board of Manuel Lujan Agencies, a family insurance and real estate business in New Mexico. Mr. Lujan is also chairman of the board for the National Hispanic Cultural Center of New Mexico and serves on numerous state and local advisory councils and boards for business, economic development and education. He also served as a member of the New Mexico Governmental Ethics Oversight Committee, and was a member of VALOR Telecom's original board of directors and board of managers. John (Jack) J. Mueller is president and chief executive officer of VCG. He joined VALOR Telecom in April 2002 as executive vice president and chief operating officer, and later president. Before joining VALOR, Mr. Mueller spent 23 years at Cincinnati Bell Inc., serving as president of Cincinnati Bell Telephone Company; president of various business units; and general manager of Consumer Markets. M. Ann Padilla is president and chief executive officer of Sunny Side, Inc./Temp Side, a staffing resource company in Denver, Colo., specializing in administrative, professional and technical recruiting. Ms. Padilla has served on the board of directors and advisory councils at various banks and financial institutions and is also a trustee for the Denver Center for Performing Arts. She was a member of VALOR Telecom's original board of directors, and has received numerous awards from national and state business organizations. Federico Pena is a managing director at Vestar Capital Partners in Denver, Colo., since 1999. Pena was formerly the U.S. Secretary of Energy and the U.S. Secretary of Transportation in the Clinton Administration. Prior to serving in the cabinet, he was president and chief executive officer of Pena Investment Advisors from 1991 to 1992 and the mayor of Denver from 1983 to 1991. Mr. Pena was a member of VALOR Telecom's original board of directors and board of managers. New members will join the current board comprised of: -- Anthony J. de Nicola, chairman and director; -- Kenneth R. Cole, vice chairman and director; and -- directors Todd Khoury and Sanjay Swani. "We welcome our new board members to VCG, and we look forward to their leadership and expertise," said Mr. de Nicola. "This is an exciting time for VCG as we embark on a new course as a publicly traded company." Anne K. Bingaman, board chairman of VALOR Telecom, announced her retirement from the company. Ms. Bingaman was the company's founder and served as VALOR Telecom's chief executive officer from the company's inception through January 1, 2002. Prior to founding VALOR, Ms. Bingaman served as president of the local services division of LCI International, Inc.; Assistant Attorney General in charge of the Antitrust Division at the United States Department of Justice from 1993 to 1996; and was a partner at Powell, Goldstein, Frazier & Murphy in Washington, D.C. "Anne's vision was the catalyst for creating VALOR Telecom, and we thank her for the strong commitment, passion and years of outstanding service to the company and to the board," said Mr. de Nicola. VCG also recognizes and thanks the original members of the board of directors of VALOR Telecom for their years of service and the leadership role they played in the company's formation and success. Former board members include: Toney Anaya, Ernesto M. Chavarria, John C. Corella Jr., William (Bill) E. Garcia, Manuel Lujan Jr., Ronald E. Montoya, Andrew Ramirez, Henry Rivera, Ambassador Edward L. Romero, and J. Ben Trujillo. "I personally, and everyone else associated with VALOR, understand the enormous contributions made by our original board members," said Bingaman. "We are grateful for their service and commitment to the company." About the Company Valor Communications Group -- http://www.valortelecom.com/-- is one of the largest providers of telecommunications services in rural communities in the southwestern United States. The company offers to residential, business and government customers a wide range of telecommunications services, including: local exchange telephone services, which covers basic dial-tone service as well as enhanced services, such as caller identification, voicemail and call waiting; long distance services; and data services, such as providing digital subscriber lines. Valor Communications Group is headquartered in Irving, Texas. * * * As reported in the Troubled Company Reporter on Jan. 21, 2005, Standard & Poor's Ratings Services assigned its 'BB-' corporate credit rating to Valor Communications Group, Inc., which will become the new parent company of Valor Telecommunications LLC upon the successful completion its initial public offering. The outlook is negative. Simultaneously, Standard & Poor's assigned its 'BB-' rating to Valor Telecommunications Enterprises LLC's -- VTE -- proposed $965 million senior secured bank facility. A recovery rating of '3' also was assigned to the bank loan, indicating the expectation for a meaningful recovery of principal (50%-80%) in the event of a default or bankruptcy. VTE is an indirect subsidiary of Valor. Closing of the IPO is contingent upon completion of the new credit facility. In addition, Standard & Poor's assigned its 'B' rating to the $280 million senior unsecured notes due 2015, to be issued under Rule 144A with registration rights by VTE and Valor Telecommunications Enterprises Finance Corp. -- co-issuers. The IPO is not contingent upon the issuance of these notes. Cash proceeds of about $500 million from the IPO will be used to pay down the company's second-lien loan and senior subordinated loan. Proceeds from the new bank facility and senior unsecured notes will be used to repay the existing term loan. Ratings on the existing second-lien loan, senior subordinated loan, and senior secured term loan will be withdrawn upon completion of the proposed transactions. In addition, the corporate credit rating on Valor Telecommunications Enterprises LLC and Valor Telecommunications Enterprises LLC II will be withdrawn due to the guarantees provided by the new parent company of these subsidiaries' debt. If the proposed transactions are not completed, existing ratings will remain at their current levels; therefore, these ratings were removed from CreditWatch. "The new ratings reflect the deleveraging impact of the proposed IPO," said Standard & Poor's credit analyst Rosemarie Kalinowski. "However, the negative outlook assigned to Valor addresses the potential longer-term impact of cable telephony on the company's competitive position." Pro forma for the transactions, total debt outstanding was about $1.2 billion as of Sept. 30, 2004. Valor plans to pay a significant annual dividend of about 75% of free cash flow. VEO: List of its 20 Largest Unsecured Creditors ----------------------------------------------- Veo released a list of its 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Horng Technical Enterprises Co. $1,176,961 9F 301 Sec 2 Tiding Blvd. Neihu, Taipei Ability Enterprise Co., Ltd. $439,470 Optic Product Business Unit 4FL., NO. 8, Lane 7, Wuchiuan Wugu, Shiang, Taipei Mao-Shen Lin $300,353 13962 Pierce Road Saratoga, CA 95070 World Optical Co., Ltd. $171,000 Cromwell PTE, Ltd. $144,336 Best Wise International Computes $139,946 Atmel Corporation $132,991 IGM Corporation $132,470 Multi-Fineline $129,420 Sanyo Semiconductor $84,545 Aglient Technologies $46,440 Wearnes Technology $35,878 GCI Group $32,586 Atlantic Specialty Insurance Co. $31,922 Mao Ann Enterprises, Co., Ltd. $30,872 Chrontel $30,000 Micron Semiconductor Products $25,663 Asia Optical Int'l, Ltd. $18,158 Cygnal Integrated Products, Inc. $14,050 Payment Remittance Center $13,963 Headquartered in San Jose, California, Veo fdba Xirlink, Inc. -- http://www.veo.com/-- is a hardware technology company that develops quality digital imaging devices. The Company filed for chapter 11 protection (Bankr. N.D. Calif. Case No. 05-50680) on February 9, 2005. David A. Boone, Esq., at Law Offices of David A. Boone, represents the Company in its restructuring efforts. When the Debtor filed for protection from its creditors, it estimated assets and debts between $10 million to $50 million. VERITAS FINANCIAL: Case Summary & 9 Largest Unsecured Creditors --------------------------------------------------------------- Cherry Debtor: Veritas Financial Corporation 241 Fifth Avenue, Suite 302 New York, New York 10016 Bankruptcy Case No.: 05-10774 Type of Business: The Debtor is in the financial services business. The Debtor principal activity is the ownership of a 63% shareholder interest in East Coast Venture Capital, Inc., a Specialized Small Business Investment Company, whose largest dealings involve financing New York City 'black' radio cars and small businesses. See http://www.eastcoastventure.com/ Chapter 11 Petition Date: February 10, 2005 Court: Southern District of New York (Manhattan) Debtor's Counsel: Mark A. Frankel, Esq. Backenroth Frankel & Krinsky, LLP 489 Fifth Avenue New York, New York 10017 Tel: (212) 593-1100 Fax: (212) 644-0544 Total Assets: $30,731,500 Total Debts: $5,757,900 Debtor's 9 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ David Berney Damages $5,200,000 c/o Raice Paykin & Krieg 185 Madison Ave, 10th fl New York, NY 10016 Brown Rudnick Berlack Israels Legal Fees $211,000 120 West 45th Street New York, NY 10036 Hampshire Holdings, LLC Guarantee for East $150,000 600 Third Avenue, 25th Floor Coast New York, NY 10016 Fredrick Schulman Consulting Fees $30,000 Veritas Financial Corporation 241 Fifth Avenue, Suite 302 New York, NY 10016 Zindel Zelmanovitch Consulting Fees $30,000 1934 E. 18th Street Brooklyn, NY 11229 Stewart Occhipinti LLP Legal fees $25,000 1350 Broadway, Suite 2200 New York, NY 10018 The Jomax Group, Inc. Consulting fees $6,000 23 Linden Avenue West Orange, NJ 07052 RDG Funding Corporation Expense $3,000 241 Fifth Avenue reimbursement New York, NY 10016 Mendlowitz Weitsen, LLP Accounting, Tax $2,900 K2 Briar Hill Court preparation East Brunswick, NJ 08816 W.R. GRACE: Asks Court to Approve New CEO Employment Agreement -------------------------------------------------------------- W.R. Grace & Co., and its debtor-affiliates seek the authority of the U.S. Bankruptcy Court for the District of Delaware to enter into a new employment agreement with their current Chief Operating Officer and President, Alfred E. Festa, in connection with his assuming the position of Chief Executive Officer. On November 19, 2004, the Debtors' current CEO, Paul J. Norris, announced his intention to resign from the company, effective May 31, 2005. Consequently, the Debtors' Board of Directors anointed Mr. Festa to be the new CEO. Mr. Festa became the Debtors' COO in November 2003, and at that time, it was anticipated that he would be a candidate to succeed Mr. Norris as CEO upon his retirement. Since Mr. Festa has become the COO, each of the Debtors' businesses has reported directly to Mr. Festa and those businesses have performed well. For the first nine months of 2004, the Debtors reported sales of $1,670.8 million, which means a 13.7% increase over 2003. Also, for the same period, pre-tax income from core operations increased almost 50%, from $97.4 million in 2003 to $145.5 million in 2004. Net income through September 2004 was $85.1 million. The Debtors' Board believes that Mr. Festa has made significant contributions to the company's business performance since his appointment as COO, and possesses the values, vision and leadership to succeed Mr. Norris as CEO. Mr. Festa would report directly to the Board. The CEO Agreement After determining to offer Mr. Festa the CEO position, the Debtors and their representatives developed a competitive CEO compensation package to present to him. The Debtors and Mr. Festa then negotiated and finalized the terms under which he would agree to assume the position. The initial term of the CEO Agreement is for four years, commencing on June 1, 2005, which is Mr. Festa's first day as the Debtors' CEO. The CEO Agreement includes competitive compensation arrangements that are consistent with arrangements provided to other CEOs in similar positions with corporations similar to the Debtors. Specifically, Mr. Festa will receive a $760,000 initial base salary and be able to participate in the Debtors' existing annual incentive compensation program, at a targeted award equal to 100% of the base salary. Also, the CEO Agreement provides for participation in each of the Debtors' annual "long-term incentive compensation programs," with a targeted value under the 2005-2007 LTIP of $1,690,000. However, payments will only be made under the Annual Bonus Program and the LTIPs to the extent that specific financial targets are achieved by the Debtors for the applicable performance period. Mr. Festa will be entitled to a Chapter 11 emergence bonus equal to $1,750,000, which will be paid to him at specific times after the Debtors emerge from bankruptcy, provided he is still employed by the Debtors when payments are due under the Agreement. Mr. Festa will also be provided with a severance benefit equal to two times 175% of his base salary at the time of his termination, in the event he is terminated by the Debtors without "cause" or he terminates his employment with the Debtors as a result of "constructive discharge" during the initial term of the CEO Agreement. In all other aspects, Mr. Festa will be provided with benefits and prerequisites that are available to the Debtors' other senior officers, the current form of which have previously been approved by the Court. Headquartered in Columbia, Maryland, W.R. Grace & Co., -- http://www.grace.com/-- supplies catalysts and silica products, especially construction chemicals and building materials, and container products globally. The Company and its debtor- affiliates filed for chapter 11 protection on April 2, 2001 (Bankr. Del. Case No. 01-01139). James H.M. Sprayregen, Esq., at Kirkland & Ellis, and Laura Davis Jones, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, represent the Debtors in their restructuring efforts. (W.R. Grace Bankruptcy News, Issue No. 80; Bankruptcy Creditors' Service, Inc., 215/945-7000) X10 WIRELESS: Confirmation Hearing Scheduled for March 16 --------------------------------------------------------- The Honorable Samuel J. Steiner of the U.S. Bankruptcy Court for the Western District of Washington approved a stipulation among X10 Wireless Technology, Inc., the Official Committee of Unsecured Creditors appointed in X10 Wireless' chapter 11 case, the United States Trustee for Region 18, and Advertising Banners, Inc., resetting the hearing to consider confirmation of the Plan of Reorganization to March 16, 2005. The plan confirmation hearing was originally set for Feb. 3, 2005. All creditors' ballots and any confirmation objections are due by March 7, 2005. Terms of the Plan According to the Plan, X10 will continue its operations after paying the majority of all unsecured claims on a pro-rata basis over a ten-year period from the Effective Date. The Debtor intends to implement the Plan a year after its confirmation. General Unsecured creditors' claims, totaling approximately $9 million, will be paid in eight equal annual installments. The Debtor's largest creditors: -- Advertisement Banners.com filed a $5,975,683 claim. A Court order reduced that amount to $1.9 million. $1.4 million will be treated as a general unsecured claim under the plan. The remaining $500,000 is treated as punitive damage award and will be paid in two annual installments beginning on the tenth year after the confirmation of the Plan; -- X10 Ltd. agreed to subordinate its $11,010,800 claim to other general unsecured creditors in exchange for the Debtor's agreement to waive all avoidance claims. The Debtor will start paying X10 Ltd. $500,000 annually after Advertisement Banner.com's punitive damage claim is fully satisfied. X10 Ltd. will extend a $5 million product line of credit to the Debtor. The debt will be secured by all product delivered and all sales proceeds (which will be deposited into a bank account in which X10 Ltd. has a security interest). Headquartered in Kent, Washington, X10 Wireless Technology, Inc., is an internet pop-up advertiser and offers an integrated suite of affordable hardware and software products that provide powerful and affordable wireless solutions for homes and small business. The Company filed for chapter 11 petition on Oct. 21, 2003(Bankr. W.D. Wash. Case No. 03-23561). Mary Jo Heston, Esq., at Lane Powell Spears Lubersky LLP represents the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed $10 million in assets and $50 million in debts. YUKOS OIL: Plan of Reorganization's Overview & Summary ------------------------------------------------------ Yukos Oil Company's Plan of Reorganization provides for the resolution of the outstanding claims against and equity interests in the Debtor, as well as the establishment of certain trusts. Zack A. Clement, Esq., at Fulbright & Jaworski L.L.P., in Houston, Texas, relates that the Debtor's Disclosure Statement is still being prepared and will be filed later. The Disclosure Statement contains a discussion of the Debtor's history, business, results of operations, historical financial information, projections and properties, and a summary and analysis of the Plan. There also are other agreements and documents, which will be filed with the Bankruptcy Court later. The Plan groups claims against and interests in the Debtor into nine classes. The unimpaired classes are: (a) Class 1 - Priority Non-Tax Claims (b) Class 2 - Secured Claims The impaired classes are: (a) Class 3 - General Unsecured Claims (b) Class 4 - Yukos Guaranty Claims (c) Class 5 - Convenience Claims (d) Class 6 - Claims of Yukos Subsidiaries (e) Class 7 - Subordinated Claims (f) Class 8 - Claims of Holders of Existing Preferred Stock (g) Class 9 - Claims of Holders of Existing Common Stock Administrative and Priority Tax Claims are unclassified and paid in full, in cash. Russian Government's Tax Claim In its Schedules of Assets and Liabilities, the Debtor has listed certain of the Russian Government Tax Claims as disputed. If the Russian Government fails to file a proof of claim, Mr. Clement says, the Russian Government Tax Claim will be disallowed pursuant to Section 1141 of the Bankruptcy Code. If the Russian Government files a proof of claim, the disputes relating to the proof of claim and the Debtor's objections and counterclaims to that Claim will be referred to an international arbitration as agreed by the Russian Government in its Foreign Investment Law. If the Russian Government is found to have an Allowed Claim, an adversary proceeding will be brought to equitably subordinate the Claim under Section 510(c) based on the inequitable and unlawful conduct of the Russian Government in assessing and executing on confiscatory taxes, which had the effect of expropriating or nationalizing the Debtor's assets and to disallow the Claim under Section 502 of the U.S. Bankruptcy Code because the Russian Government Tax Claims arose through actions by the claimant which were: (a) illegal under Russian law; (b) not in keeping with international norms; and (c) done without due process that would be expected of any fair and independent court system. An Allowed Claim based on the Russian Government Tax Claim, if any, will be paid pari passu with all other Allowed Class 7 Claims. Litigation Trust On or before the Effective Date, Yukos will execute a Litigation Trust Agreement and will take all other steps necessary to establish a Litigation Trust. The Debtor will transfer to the Litigation Trust all of its rights, title, and interests in the Litigation Trust Claims together with all files, documents, electronic data relating to the Litigation Trust Claims. The Litigation Trust Claims are all of the Debtor's rights of recovery, claims and causes of action asserted, or which may be asserted. The Debtor will transfer the Litigation Trust Claims to the Litigation Trust in exchange for 12,000,000 beneficial interests in the Litigation Trust for the ratable benefit of the Litigation Trust Beneficiaries. According to Mr. Clement, the Litigation Trust will be established for the sole purpose of liquidating its assets, with no objective to continue or engage in the conduct of a trade or business. Upon the creation of the Litigation Trust, the Debtor, in its absolute discretion, will transfer those amounts of Cash as necessary to fund the operations of the Litigation Trust. The Debtor and the Reorganized Debtor may, but will have no further obligation to, provide additional funding with respect to the Litigation Trust. The Litigation Trustee will liquidate and convert to Cash the assets of the Litigation Trust, and make timely distributions. The Litigation Trustee will have the power to prosecute, decline to prosecute or settle all claims, rights and causes of action transferred to the Litigation Trust. Yukos Charitable Trust On or before the Effective Date, the current Holders of Interests who fund the Yukos Charitable Trust through the donation of a portion of their Interests in the Debtor may execute the Yukos Charitable Trust Agreement and take all other steps necessary to establish the Yukos Charitable Trust. Each Yukos Charitable Trust Donor will transfer the Donated Interests to the Yukos Charitable Trust. Mr. Clement relates that the Yukos Charitable Trust will be established for the purpose of receiving payments made by the Debtor on account of the Donated Interests for distribution to the Yukos Charitable Trust Beneficiaries. The Yukos Charitable Trustee will distribute to the Yukos Charitable Trust Beneficiaries all net cash income plus all net cash proceeds from the liquidation of assets and all payments received on account of its ownership of the Donated Interests. Disbursement Accounts On or prior to the Effective Date, the Debtor will establish one or more segregated bank accounts in the name of the Reorganized Debtor as Disbursing Agent under the Plan, which accounts will be trust accounts for the benefit of Creditors and holders of Administrative Expense Claims pursuant to the Plan and utilized solely for the investment and distribution of Cash consistent with the terms and conditions of the Plan. The Debtor or Reorganized Debtor will deposit into the Disbursement Account(s) all Cash of the Debtor, less amounts reasonably determined by the Debtor or the Reorganized Debtor, as the case may be, as necessary to fund the ongoing implementation of the Plan and operations of the Reorganized Debtor. A full-text copy of Yukos' Chapter 11 Plan is available at no charge at: http://bankrupt.com/misc/yukosplan.pdf 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. 9; Bankruptcy Creditors' Service, Inc., 215/945-7000) * Morrison & Foerster Names Larren Nachelsky as Managing Director ----------------------------------------------------------------- Morrison & Foerster LLP reported that Larren M. Nashelsky, who chairs the firm's bankruptcy and restructuring practice, has been selected as one of three firm-wide managing partners. Mr. Nashelsky, who works in Morrison & Foerster's New York office, succeeds Laurie S. Hane (San Francisco), who returns to her technology transaction practice full-time. Mr. Nashelsky, will share management responsibilities with the firm's two other managing partners, Mark W. Danis (San Diego) and Pamela J. Reed (San Francisco). "Larren is one of those rare attorneys who can navigate easily between the worlds of business/transaction law and litigation, which gives him a considerable advantage in understanding our core legal franchises," said Morrison & Foerster Chair Keith Wetmore. Larren's experience as a top-tier restructuring attorney is an added boon - as someone who spends his time working to understand and restructure distressed companies, he has a tremendous grasp of management, finance and operational issues that are equally invaluable in running a healthy business," Mr. Wetmore added. "We are pleased that he has agreed to join Pam and Mark in overseeing day-to-day operations for the firm and helping set strategy for our future growth." Although the three managing partners share a number of duties, Mr. Nashelsky will be the primary management liaison for Morrison & Foerster offices in New York, Washington, D.C. and Northern Virginia, as well as Brussels and London, the latter of which has seen a major growth spurt in new lateral acquisitions in the last two months. He will also help direct financial and real estate matters, including oversight of the firm's extensive commercial leases. New or additional space is in the planning for London, Washington, San Diego, and other offices. Mr. Nashelsky said he intends to maintain an active bankruptcy practice alongside his new role as managing partner. "I'm planning on a 75%-75% split in my time," he joked. "In truth, I want to continue to stay hands-on with client work and practice matters while also helping the firm grow in my management capacity." "I am looking forward to working with Mark and Pam and hope to make the kinds of invaluable contributions that Laurie Hane has done over the past four years," he continued. "We are in a tremendously strong position these days as a firm. My goal is to continue improving our economic performance overall, while helping to strengthen some of our key practices, including our national litigation franchise, and our corporate and financial transactions practices in key markets, such as Tokyo, London and New York." Mr. Nashelsky joined Morrison & Foerster in 1999 as a partner in the New York office, having previously been a member of the Business, Finance & Restructuring group at Weil Gotshal & Manges LLP. His bankruptcy practice focuses on representing financial institutions and other creditors and debtors in complex transaction, litigation and advisory work relating to Chapter 11 bankruptcy cases, non-bankruptcy workouts and restructurings, as well as financial transactions. Morrison & Foerster LLP -- http://www.mofo.com/-- is a leading international law firm with more than 1,000 lawyers in 19 offices. Larren M. Nashelsky is a partner in the New York office of Morrison & Foerster LLP, where he serves as the Chair of the firm- wide Bankruptcy and Restructuring practice group. The group has approximately 25 members in 9 cities worldwide, including, New York, San Francisco, Los Angeles, Washington, D. C. and Tokyo. Mr. Nashelsky also heads the 75-person Business Department in the New York Office. The Business Department includes attorneys in the Bankruptcy& Restructuring , Corporate, Financial Transactions, Financial Services, Project Finance, Real Estate and Technology Transactions practice groups. Mr. Nashelsky's bankruptcy and restructuring practice focuses on representing creditors and debtors in complex transactional, litigation, and advisory work relating to Chapter 11 bankruptcy cases, non-bankruptcy workouts, real estate restructurings and pre-packaged Chapter 11 cases. Mr. Nashelsky has extensive experience in finance transactions, real estate restructurings and distressed M&A transactions. Mr. Nashelsky has represented secured, undersecured, and unsecured creditors in major bankruptcy cases, including WorldCom, Inc., Enron Corp., Global Crossing, NorthWestern Corporation, Key 3 Media, Excite@Home, Pacific Gas & Electric Company, Fas Mart Convenience Stores, Inc., Conti Financial Corp., Golden Ocean Group Limited, Unitel Video, Inc., and In re Recycling Industries, Inc. Mr. Nashelsky has also represented debtors in such Chapter 11 cases as In re Olympia & York Realty Corp., In re NBL Development Group Limited Partnership (the owner of a Jack Nicklaus signature golf course and residential development), In re Phar-Mor, Inc., In re Olympia & York Maiden Lane Company and Olympia & York Maiden Lane Finance Corp., and In re Consolidated Hydro, Inc. Mr. Nashelsky is the author and co-author of numerous articles and professional materials concerning Chapter 11, new economy restructurings, out of court restructurings and workouts, prepackaged Chapter 11 cases and transnational bankruptcies. Prior to joining the firm as a partner in 1999, Mr. Nashelsky worked in the New York office of Weil, Gotshal & Manges LLP where he was a member of the Business Finance and Restructuring Department. * Dennis Stout Joins Alvarez & Marsal as Senior Director -------------------------------------------------------- Alvarez & Marsal, a global professional services firm, announced that Dennis Stout has joined Alvarez & Marsal's Real Estate Advisory Services Group as a Senior Director in the Washington, D.C. office. He joins a national team of seasoned real estate professionals including Jay Brown, an A&M Managing Director who heads the Washington D.C. real estate practice. Mr. Stout has over 15 years of experience in providing an array of transactional, analytical and business process-related real estate advisory services to public sector entities. Over the course of his career, he has worked with the Department of Veterans Affairs in connection with enhanced use lease and vendee loan programs; the Department of Housing and Urban Development in connection with multifamily and single-family asset restructuring and disposition programs; the General Services Administration in connection with leasing and construction programs; the Federal Judiciary in connection with facilities planning and construction programs; and the Small Business Administration in connection with business lending programs, among other clients. Prior to joining A&M, Mr. Stout worked for more than six years at a Big Four accounting firm. Before that, he served for more than seven years in the Executive Office of the President, Office of Management and Budget, where he specialized in federal asset management. Mr. Stout earned a bachelor's degree with a double concentration in economics and political science from the University of California at Berkeley. He also holds a master's degree in business administration from Columbia University and a master's degree in politics from Princeton University. Alvarez & Marsal's Real Estate Advisory Services group provides a range of services including: transaction advisory services for real estate buyers, sellers, investors and lenders; restructuring and real estate litigation services, including consulting and expert witness services related to real estate matters; strategy and operations services, including executive management consulting to institutional owners, investors, lenders and users of real estate; and owner advisory services, including financial strategies and execution for private companies and institutional owners of real estate. About Alvarez & Marsal Alvarez & Marsal is a leading global professional services firm with expertise in guiding companies and public sector entities through complex financial, operational and organizational challenges. Employing a unique hands-on approach, the firm works closely with clients to improve performance, identify and resolve problems and unlock value for stakeholders. Founded in 1983, Alvarez & Marsal draws on a strong operational heritage in providing services including turnaround management consulting, crisis and interim management, creditor advisory, financial advisory, dispute analysis and forensics, tax advisory, real estate advisory and business consulting. A network of nearly 400 seasoned professionals in locations across the US, Europe, Asia and Latin America, enables the firm to deliver on its proven reputation for leadership, problem solving and value creation. For more information, visit http://www.alvarezandmarsal.com/ * Michael Sullivent Joins Alvarez & Marsal's Dispute Analysis ------------------------------------------------------------- Alvarez & Marsal, a global professional services firm, announced that Michael Sullivent has joined the firm's national Dispute Analysis and Forensics group -- DA&F -- as an Associate in the Dallas office. Mr. Sulllivent specializes in conducting computer related investigations and analysis. He has been involved in civil cases including investigating matters such as fraud, theft of intellectual property and trade secrets, inappropriate employee conduct, and electronic evidence recovery for litigation. He also has investigated criminal cases. Mr. Sullivent is a Certified Computer Examiner and a member of the High Technology Computer Investigation Association, the International Association of Computer Investigations Specialists, and Alpha Phi Sigma, the National Criminal Justice Honors Society. He currently maintains a "Secret" level security clearance from the Department of Defense. "Michael is the latest addition to A&M's highly regarded electronic evidence practice and adds even greater depth to our ability to provide a range of analytical and investigative services to clients involved in complex disputes," said Larry Kanter, a Managing Director who is in charge of A&M's electronic evidence practice. Alvarez & Marsal's Dispute Analysis and Forensics group provides a range of analytical and investigative services to major law firms, corporate counsel and management involved in complex legal and financial disputes. DA&F provides sophisticated financial and economic analysis to assist clients in resolving high-stakes issues ranging from internal matters to litigation - in the boardroom to the courtroom. The group also conducts corporate, technology and healthcare investigations to help companies identify and mitigate risks and properly address internal or external financial inquiries. DA&F services include: expert testimony, lost profits analysis, business valuation, business interruption claims, accounting and financial analysis, claims preparation and review, arbitration service, forensics investigations, technology forensics investigations including electronic evidence and computer forensics analysis and healthcare investigations. About Alvarez & Marsal Founded in 1983, Alvarez & Marsal is a global professional services firm that helps businesses and organizations in the corporate and public sectors navigate complex business and operational challenges. With professionals based in locations across the U.S., 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, implement change and favorably influence results. The firm's range of service offerings includes Turnaround Management Consulting, Crisis and Interim Management, Creditor Advisory, Financial Advisory, Dispute Analysis and Forensics, Real Estate Advisory, Business Consulting and Tax Advisory. ********* 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 2005. 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 ***